16 May 2000
Text: Deputy USTR Esserman May 16 Remarks in Ohio on China PNTR
("Yes" vote on China PNTR vital to U.S. interests) (2630)
The House of Representatives is preparing to vote on the question of
granting permanent Normal Trade Relations (NTR) status for China,
Deputy U.S. Trade Representative Susan Esserman said May 16.
That vote, scheduled for the week of May 22, "is the most important
trade and foreign policy decision America will make this year; perhaps
the most important we have made in many years," Esserman told her
audience in Dayton, Ohio.
That choice "will affect America's prospects on the farm and on the
job; reform and the rule of law in China; and America's most
fundamental national interests," she said.
The Senate, which will also vote on granting China permanent NTR
status, is expected to pass the legislation easily. The House vote is
expected to be closer.
China's accession to the World Trade Organization (WTO) and the
granting of permanent NTR status are trade issues, Esserman said.
The United States and China reached an agreement last year in Beijing
on the terms of that country's accession to the WTO. That agreement
called for China to open its markets to American goods and services.
To gain the benefits of those trade concessions, the United States
must grant to China the same trade status it grants to other members
of the WTO -- permanent NTR status. At present, China's trade status
is reviewed annually by Congress.
Failure to grant China permanent NTR status would mean the market
opening concessions the United States obtained from China would be
available to the other WTO members who give China permanent NTR
status, but not to the United States, Esserman said.
"Were we to retreat and reject these one-way concessions, we would
make a very dark statement about the future possibility of a stable,
mutually beneficial relationship with the world's largest country and
emerging economy," she said.
"That is the ultimate and most significant point at stake as we
conclude this important debate and make our decision," Esserman added.
"To reject permanent NTR would do more than severely damage American
trade interests: it would to set back the cause of reform in China;
and risk, without cause, a fundamental deterioration in our
relationship with the world's largest country," she warned.
But, Esserman continued, "if we have the wisdom and confidence to make
the right choice, the WTO accession and permanent NTR offer us a
remarkable opportunity: to help spur growth and opportunity at home;
to strengthen prospects for long-term reform within China, and
ultimately -- to expand U.S. exports, increasing our overall
trade...."
That is the opportunity, she said, "these are the stakes. The people
of the United States, (of) Ohio, of Dayton -- have a great stake in
this vote. And this is why it is so important that we approve
permanent Normal Trade Relations for China, on the basis of our
historic trade agreement."
Following is the text of Esserman's remarks, as prepared for delivery:
(begin text)
Remarks of Ambassador Susan G. Esserman
to the
International Trade Conference & Show Commemorating World Trade Week
Dayton, Ohio
May 16, 2000
Thank you very much. I am delighted to be here today in Dayton for
this conference on international trade.
Let me thank the Miami Valley International Trade Association, the
Cincinnati Export Assistance Center, the Ohio Department of
Development's International Trade Division, and the Dayton Area
Chamber of Commerce for organizing this event.
SUCCESS OF U.S. TRADE NATIONALLY AND IN OHIO
International trade has played a vitally important role in our
country's extraordinary economic growth and in expanding opportunities
for raising living standards for the American people. We have all
witnessed the phenomenal performance of our economy over the last
seven years including:
-- the longest period of uninterrupted growth in U.S. history,
-- the lowest levels of unemployment in over 30 years,
-- the creation of over 21 million jobs, and
-- the highest growth rates by far among the Group of Seven leading
industrialized nations; in fact, the growth of our economy alone since
1992 is larger than the entire German economy.
Unquestionably, the export success of U.S. businesses coupled with the
Administration's success and commitment to opening markets worldwide
have played a pivotal role in this performance.
It is not coincidental that we are both the strongest economy in the
world and the world's largest exporter, with U.S. exports up 56
percent since 1992, and a significant percentage of our GDP growth
accountable to our trade abroad.
Nearly twelve million Americans owe their jobs to exports. And jobs
related to exports pay 13-16 percent higher with better benefits.
Ohio, as the seventh largest exporting state, exemplifies the critical
importance of expanding trade to the prosperity and future of its
citizens.
Since 1992, Ohio's exports worldwide have increased 70 percent.
In 1999, Ohio exported 29 billion dollars of goods to over 200
countries and territories. This included $13.7 billion to Canada, 2
billion to France, 2.5 billion to Mexico, $1.2 billion to the UK, and
to Japan.
Ohio has also seen considerable growth in its exports to one of the
world's fastest growing markets: China. In 1999 Ohio's exports to
China totaled $435 million -- more than double the exports in 1993 --
and representing almost every major product category.
And these exports make a difference. In 1999, they added over $2
billion to Dayton's economy alone and over a billion dollars in each
of seven of Ohio's industry sectors: $8 billion to transportation
equipment; $5.3 billion to industrial machinery; $2.5 billion to
chemicals; $2.1 billion to electronic equipment; $2.2 billion to metal
products; $1.9 to rubber and plastics, and $1 billion to scientific
measuring instruments. Exports also accounted for gains in the
hundreds of millions in virtually every other Ohio industry sector --
from paper, to agriculture to furniture.
These export gains translate into more jobs, better paying jobs,
economic growth and ultimately, increased prosperity and a higher
standard of living for Ohio and its citizens.
Under the Clinton administration, the U.S. has pursued a number of
trade initiatives that have shaped the international trade environment
to enable our industries to take full advantage of their competitive
position.
This work has extended to every part of the world and every major
issue related to trade. Especially notable are the passage of the
North American Free Trade Agreement, conclusion of the Uruguay Round
Negotiations, creating the World Trade Organization (WTO), and the
trade agreements in information technology products,
telecommunications, and financial services, which together are larger
in scope than the Uruguay Round Agreements and have helped us to
maintain or gain our leadership in many high technology sectors. These
agreements have opened markets, created new business and export
opportunities for American companies and workers, and established fair
and predictable rules by which trade is conducted.
One of the most important trade policy decisions -- whether to grant
Permanent Normal Trade Relations status to China -- is immediately
ahead of us and it will have a tremendous impact on our country, our
economy, and the world.
THE STAKES
In just a little over one week, the House of Representatives will vote
on permanent Normal Trade Relations for China, as China enters the
World Trade Organization.
This is the most important trade and foreign policy decision America
will make this year; perhaps the most important we have made in many
years. The choice Congress makes will affect America's prospects on
the farm and on the job; reform and the rule of law in China; and
America's most fundamental national interests. But at the basic level,
the WTO accession and PNTR are trade issues -- so let me speak for a
few minutes on the implications they have for America's trade
interests.
TRADE IMPLICATIONS
As a trade issue, the PNTR decision presents us with a simple choice.
Our agreement on World Trade Organization accession secures
broad-ranging, comprehensive, one-way trade concessions on China's
part. These concessions:
-- Open China's markets to American exports of industrial goods,
services and agriculture to a degree unprecedented in the modern era.
-- Strengthen our guarantees of fair trade
-- And give us far greater ability to enforce China's trade
commitments.
By contrast, we change no market access policies -- not a single
tariff line. We amend none of our trade laws and none of our laws
controlling the export of sensitive technology. We agree only to
maintain the market access policies we already apply to China, and
have for over twenty years, by making China's current Normal Trade
Relations status permanent.
This is the only policy issue before Congress. Regardless of our
decision, China will enter the WTO. Regardless of our decision, it
will continue to sell in the American market. The only question
Congress will decide is whether we accept the benefits of China's
accession and the agreement we negotiated; or whether by turning away
from permanent NTR, we enable our competitors to get them while
American entrepreneurs, farmers and factory workers are left behind.
ONE-WAY CONCESSIONS
What are these benefits?
For example, in Ohio's rural districts, new markets will open for
farms. On
U.S. priority products, China's agricultural tariffs will drop from an
average of 31 percent to 14 percent in January 2004. Access for bulk
agricultural products like Ohio corn and soybeans will grow through
tariff-rate quotas that offer dramatic new opportunities, and the
first rights for private trade in these products and others in the
agricultural sector. China will end import bans, cap and reduce
trade-distorting domestic supports, eliminate export subsidies, and
base border inspections on science.
For Ohio's high-technology industries, China will eliminate tariffs
and quotas on high-tech goods such as semiconductors, pharmaceuticals
and computers; and deeply cut tariffs on medical equipment, scientific
instruments and other high-value products. It will give us new tools
to protect the results of our research on software, semiconductors and
other intellectual property-related goods. And it will eliminate
forced technology transfer as a condition for investment in China.
For Ohio's factories, China will open export opportunities and
strengthen guarantees of fair trade for manufacturing from steel to
autos, agricultural equipment, wood products, and home appliances.
Ohio is the leading state in machinery exports with two thirds of the
industrial workers in this state having jobs that benefit in whole or
part from exports.
Under our bilateral agreement, Chinese tariffs on industrial goods
will drop, from an average of 25 percent in 1997 to 9.4 percent by
2005.
China will allow distribution and trading rights. We will eliminate
unfair investment practices like local content requirements and forced
technology transfer. Beyond this, we will guarantee our right to use
special methods to fight dumping for 15 years. And we will create a
"product-specific safeguard" we can use to fight market-disrupting
import surges for 12 years.
The agreement also covers the artistic fields - books, music and film,
as well as other copyright industries like software and video games -
and each of the major services industries, from distribution to
telecommunications, banking, insurance, motion pictures, accounting,
law, travel and tourism, and other industries.
All these commitments are fully enforceable: through our trade laws;
WTO dispute settlement; multilateral pressure from all 135 WTO
members; increased monitoring by the U.S.; and other mechanisms such
as the special anti-dumping and anti-import surge remedies.
PNTR
By contrast to these historic commitments, our sole obligation is to
grant China permanent NTR. If we fail to do so, we risk losing the
full benefits of the agreement we negotiated, including broad market
access, special import protections, and rights to enforce China's
commitments through WTO dispute settlement.
On the other hand, Permanent NTR, in terms of our policy toward China,
is no real change. NTR is simply the tariff status which every
Administration and Congress in the past 20 years has reviewed and
found, even at the periods of greatest strain in our relationship, to
be in our fundamental national interest.
But the legislative grant of permanent NTR is critical. Without it, we
will lose the vast majority of China's concessions, while our
competitors take full advantage of them. Japanese auto firms could
sell where Americans could not. Ohio corn and soybean producers would
see other countries get the benefits of the agreement Americans
negotiated; high-tech manufacturers, like Dayton's NCR, would see
Europe and Japan take our markets; producers of transportation
equipment -- Ohio's leading export -- would lose to companies in
Germany and France.
WTO ACCESSION AND CHINESE REFORM
So from an economic standpoint, rejection of permanent NTR would
simply be a foolish decision. And this would likely be the least of
the consequences.
As China joins the WTO it will do much more than reduce tariffs and
other trade barriers at the border. The WTO accession will, in fact,
alter and reform policies dating to the very earliest years after the
Communist revolution. China will:
-- For the first time since the 1940s, permit foreign and Chinese
businesses to import and export freely from China.
-- Reduce, and in some cases remove entirely, state control over
internal distribution of goods and the provision of services.
-- Enable, again for the first time since the 1940s, foreign
businesses to participate directly in information industries such as
telecommunications, including the Internet.
-- And subject government decisions in all fields covered by the WTO
to impartial dispute settlement when necessary.
WTO ACCESSION AND U.S. NATIONAL SECURITY
But the full significance of the decision Congress will make is only
clear when we consider the WTO accession as part of a larger U.S.
relationship with China -- a relationship that is of fundamental
importance to peace and security in Asia and worldwide in the coming
decades.
We have substantial differences with China on issues relating to human
rights and religious freedom; on a number of security questions; and
in other areas as well. On these issues we vigorously assert our
interests and values.
In the WTO accession and PNTR we have an opportunity to create a more
open and reformed Chinese economy, which more fully reflects the rule
of law; to increase China's stake in prosperity and security beyond
its borders; and to spur jobs, growth and rising living standards for
America's farmers, businesses and workers. And we have created this
opportunity through a series of one-way concessions made by China.
Were we to retreat and reject these one-way concessions, we would make
a very dark statement about the future possibility of a stable,
mutually beneficial relationship with the world's largest country and
emerging economy.
CONCLUSION
That is the ultimate and most significant point at stake as we
conclude this important debate and make our decision. To reject PNTR
would do more than severely damage American trade interests: it would
to set back the cause of reform in China; and risk, without cause, a
fundamental deterioration in our relationship with the world's largest
country.
But if we have the wisdom and confidence to make the right choice, the
WTO accession and PNTR offer us a remarkable opportunity: to help spur
growth and opportunity at home; to strengthen prospects for long-term
reform within China, and ultimately-- to expand U.S. exports
increasing our overall trade and increasing trade in the Miami Valley.
That is the opportunity before us. These are the stakes. The people of
the U.S., Ohio, of Dayton -- have a great stake in this vote. And this
is why it is so important that we approve permanent Normal Trade
Relations for China, on the basis of our historic trade agreement.
Thank you very much, I would be happy to take some of your questions.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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