<DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:93683.wais]
INFLUENCING CHINA'S WTO COMPLIANCE AND COMMERCIAL LEGAL REFORM: BEYOND
MONITORING
=======================================================================
ROUNDTABLE
before the
CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
APRIL 2, 2004
__________
Printed for the use of the Congressional-Executive Commission on China
Available via the World Wide Web: http://www.cecc.gov
______
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CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA
LEGISLATIVE BRANCH COMMISSIONERS
House Senate
JIM LEACH, Iowa, Chairman CHUCK HAGEL, Nebraska, Co-Chairman
DOUG BEREUTER, Nebraska CRAIG THOMAS, Wyoming
DAVID DREIER, California SAM BROWNBACK, Kansas
FRANK WOLF, Virginia PAT ROBERTS, Kansas
JOE PITTS, Pennsylvania GORDON SMITH, Oregon
SANDER LEVIN, Michigan MAX BAUCUS, Montana
MARCY KAPTUR, Ohio CARL LEVIN, Michigan
SHERROD BROWN, Ohio DIANNE FEINSTEIN, California
DAVID WU, Oregon BYRON DORGAN, North Dakota
EXECUTIVE BRANCH COMMISSIONERS
PAULA DOBRIANSKY, Department of State
GRANT ALDONAS, Department of Commerce
LORNE CRANER, Department of State
JAMES KELLY, Department of State
STEPHEN J. LAW, Department of Labor
John Foarde, Staff Director
David Dorman, Deputy Staff Director
(ii)
C O N T E N T S
----------
Page
STATEMENTS
Levine, Henry A., Deputy Assistant Secretary for Asia Pacific
Policy, Market Access and Compliance, International Trade
Administration, U.S. Department of Commerce, Washington, DC.... 2
Griffin, Leslie, Director, Asian Affairs, International Affairs
Division, U.S. Chamber of Commerce, Washington, DC............. 5
Wells, Linda, Chief Counsel for Commercial Law Development,
Director, Commercial Law Development Program, Office of General
Counsel, U.S. Department of Commerce, Washington, DC........... 9
APPENDIX
Prepared Statements
Griffin, Leslie.................................................. 28
Wells, Linda..................................................... 31
INFLUENCING CHINA'S WTO COMPLIANCE
AND COMMERCIAL LEGAL REFORM:
BEYOND MONITORING
----------
FRIDAY, APRIL 2, 2004
Congressional-Executive
Commission on China,
Washington, DC.
The roundtable was convened, pursuant to notice, at 10:30
a.m., in room 2255, Rayburn House Office building, John Foarde
(staff director) presiding.
Also present: David Dorman, deputy staff director; Susan
Roosevelt Weld, general counsel; Selene Ko, chief counsel for
trade and commercial law; Carl Minzner, senior counsel; and
Keith Hand, senior counsel.
Mr. Foarde. Good morning, everyone. My name is John Foarde.
I am the staff director of the Congressional-Executive
Commission on China [CECC]. Welcome to this issues roundtable
on influencing China's WTO compliance and commercial legal
reform.
Since China's accession to the WTO in 2001, the Commerce
Department has been conducting a small number of one-day
technical assistance seminars in China, covering such topics as
IPR enforcement, franchising, and legislative drafting. While
effective within the limited scope that the Department
intended, the Commerce
Department organized these seminars on an ad hoc basis and
Commerce Department offices with relatively little experience
in providing technical assistance have been conducting these
sessions. These seminars have been funded by unobligated funds
that had originally been allocated for other purposes in the
Commerce Department budget.
To date, the Administration has not dedicated specific
funds to providing technical assistance to increase China's
capacity to fulfill its WTO commitments. The fiscal 2004 budget
increases funds for several Federal agencies to dedicate to
China's WTO compliance efforts, but these monies are directed
toward enhanced monitoring and enforcement and not toward
technical assistance. Congress has dedicated no funds
specifically to technical assistance to increase China's
capacity to meet its WTO commitments.
The Commission's Annual Report in 2002 recommended that the
Administration develop a comprehensive plan for WTO-related
technical assistance to China, and the same report also
recommended that Congress appropriate funds for the Commercial
Law Development Program [CLDP] to implement a commercial rule
of law training program in China.
Given this background, we wanted to spend some time today
with Commerce Department representatives and with a
representative from the business community to talk about
commercial law technical assistance to China and how we might
move forward on a program similar to those sponsored by China's
other trading partners and that might be helpful to, and
benefit, U.S. business and trade interests.
We have three distinguished panelists this morning. All
three are good friends, and we welcome them all. I will
introduce them in more detail in a minute, but we have Hank
Levine, Linda Wells, and Leslie Griffin.
Our procedure on these roundtables, as we have done for the
last two years, is that we give each of you 10 minutes to make
an opening presentation. After eight minutes have elapsed I
will tell you that you have two minutes remaining. Then when
everyone has spoken, we will open it up to questions and
answers from the staff panel. We hope to be joined by some
personal staff of Commission members. It is conceivable, since
they are in session, that we might even be joined by one of our
Commission members, in which case the member would preside and
take over the chairing of this roundtable.
So we will begin with Hank Levine. Henry Levine is Deputy
Assistant Secretary of Commerce for Asia Pacific Policy, Office
of Market Access and Compliance in the International Trade
Administration at Commerce. Hank's responsibilities include
market
access concerns and compliance with international trade
agreements. He is a member of the Senior Foreign Service and on
detail from the State Department to Commerce. He has served the
U.S. Government as an East Asia policy expert in a number of
capacities, including as U.S. Consul General in Shanghai, a
Deputy
Director for Economic Affairs at the State Department's Office
of Chinese and Mongolian Affairs, and as Director for Asia-
Pacific Economic Cooperation [APEC] Affairs in the Office of
the U.S. Trade Representative.
Welcome, Hank. Welcome back from China. Over to you for 10
minutes.
STATEMENT OF HENRY A. LEVINE, DEPUTY ASSISTANT SECRETARY FOR
ASIA PACIFIC POLICY, MARKET ACCESS AND COMPLIANCE,
INTERNATIONAL TRADE ADMINISTRATION, U.S. DEPARTMENT OF
COMMERCE, WASHINGTON, DC
Mr. Levine. Thank you very much, John.
First of all, thanks to the Commission for the invitation
and the opportunity to be here and explain a bit about what we
are doing. As I think you know, of course, we at the staff
level also enjoy our work with the Commission and appreciate
what you all are doing. Again, I am just happy to be here.
I thought what I would do is say a few words, first, about
the background and the rationale for what we are doing in the
technical assistance area, and then a little bit about some of
the things that we are doing. As you mentioned, I come from the
market access and compliance part of Commerce. Some might even
question why it is that we, on market access and compliance,
are so actively involved in the technical assistance area.
Obviously, we spend a lot of our time working with individual
companies that have individual market access problems in China,
a variety of different things. In addition to that, of course,
we work closely with the other agencies, USTR in particular, as
well as State, and so forth, in pressing China to live up to
its WTO commitments.
That work spans the realm from quiet persuasion; to jumping
up and down and expressing intense unhappiness; to formal
negotiations, in some cases; to ultimately, as we saw a few
weeks ago,
actually filing a case in the WTO dispute resolution process.
So we are involved directly in market access and compliance
with individual companies, and more broadly in pressing China
on its commitments. However, we recognize that, while we are
pressing China to do the right thing, it is also true that
China needs a lot of assistance in developing the laws, the
regulations, the trained personnel, and so forth that are
necessary for it to implement its WTO commitments. For this
reason, we see our technical assistance or capacity building
efforts as a very important part of our overall efforts to
ensure market access for U.S. companies in China.
I would note, by the way, that in addition to the normal
efforts that China has to make to implement its WTO
commitments--after all, any country that joins the WTO has to
go through a process of rewriting laws and regulations--on top
of that, I would emphasize, there is another whole layer of
activity going on in China. The fact is that China is
undergoing a massive transformation, moving from a planned
economy in the direction of a market economy, and virtually
every aspect of China's laws and economic structure is
undergoing changes, whether it is the health care system,
whether it is government procurement, whether it is the
retirement system, technical standards, education, the news
media, and so forth.
The Chinese, I will say, are very hungry for ideas about
how other countries are pursuing these issues. And while we as
Americans realize that we are not perfect in everything we do,
the fact of the matter is that we have the strongest major
economy in the world and we have a pretty darned good system in
many other respects. Therefore, we have a lot to offer the
Chinese as they are pursuing their transformation.
In fact, since our system is based on principles such as
transparency, the rule of law, and having an objective and fair
judicial process, in providing our views and perspectives to
China, I think we are broadly promoting a number of U.S.
interests while we are also making a contribution to China's
own reform and development efforts.
Finally, I would just note in this regard that of course
the EU, Japan, and other countries are very active in their
technical assistance programs in China, and in many cases, of
course, we share the same values and attitudes as the EU,
Japan, and others. Therefore, their efforts are complementary
or additive to ours. To be honest about it, however, in certain
areas, in economic areas, for example, in areas such as
technical standards or other approaches to the market
competition policy in other areas, we may have a different
perspective from the EU, Japan, or other countries. Therefore,
it is particularly important that we make our perspective
available to the Chinese as they are pursuing their reforms and
their restructuring. Otherwise, we could wind up in a situation
where all of their reforms and restructuring are based on
principles and concepts from other countries, to the detriment
of U.S. companies and our economic involvement in the China
market. So, it is important in that regard, too.
So there are some brief comments on the background, the
philosophy that drives our efforts.
With regard to the activities of my part of the
organization, these are led out of our China office, as John
mentioned, using money otherwise appropriated to Commerce. To
give you some sense of some of the activities that we are
undertaking, we have two major events coming up in May. One,
our U.S.-China Health Care Forum, undertaking with HHS. Again,
I note that China is redoing its entire health care system,
and, working with our companies, we want to provide our
perspectives on how you develop a modern health care system,
employing principles of transparency, protection of
intellectual property rights, and so forth.
Also in May, we are working with U.S. private companies to
host a major seminar on the Chinese logistics system, which
really relates to our interest in distribution services and
trading rights, a key part of China's WTO commitments. We are
trying to help China understand how we in the United States
have gone about creating such a vibrant, efficient logistics
system, primarily by allowing market principles to drive the
development rather than micromanaging by government agencies.
We are doing a lot in the area of standards. We have done a
number of standard seminars in the past in China. We have
another one that we are looking at for the late spring or
summer. We are also working with a group of private U.S.
standards organizations on opening a U.S. standards office in
China, we hope with some support from the Commerce Department.
Briefly, many other topics. We are working with the
National People's Congress on legislative drafting. We have
done seminars on pharmaceutical regulatory issues and anti-
counterfeit training. We have done medical device regulatory
training, and government procurement seminars. IPR enforcement
has been one of the major themes and we have worked directly
with China's enforcement agencies, the Procuratorate, and
others, on how to strengthen their enforcement of IPR.
To sum up, I think we have a broad set of programs that we
are undertaking, keyed to the priorities of the U.S. private
sector, using the resources that we have on hand. We consider
it an important part of our market access and compliance
activities.
I look forward to taking your questions and discussing this
with you further. Thank you.
Mr. Foarde. Thank you very much, Hank.
Let us go on. Let me recognize Leslie Griffin. Leslie is
Director of Asian Affairs at the U.S. Chamber of Commerce here
in Washington, and also Executive Director of the U.S.-Korea
Business Council.
In her work as Director of Asian Affairs, Leslie develops
and executes U.S. Chamber programs and policy relating to U.S.
trade and investment in the Asia Pacific region. In carrying
out the Chamber's Asia trade agenda, she works extensively with
member companies, state and local chambers of commerce,
business coalitions, American chambers of commerce abroad, and
U.S. and foreign governments. Her responsibilities include
issues relating to U.S. business interests in greater China,
Japan, and Korea. She serves as staff executive for the
chamber's China WTO Implementation Working Group.
Before coming to the Chamber, she served as a legislative
analyst on tax and trade issues for the American Petroleum
Institute and worked as a budget analyst in the Congressional
Budget Office. She has lived and taught in Nanjing, China, so
she has a special relationship with China as well. We asked her
to come this morning to give a business perspective on
commercial rule of law development programs.
Over to you, Leslie, for 10 minutes. Thanks.
STATEMENT OF LESLIE C. GRIFFIN, DIRECTOR, ASIAN AFFAIRS,
INTERNATIONAL AFFAIRS DIVISION, U.S. CHAMBER OF COMMERCE,
WASHINGTON, DC
Ms. Griffin. Thank you, John. Thank you all for inviting me
to participate today.
As John said, I was asked to talk about some of the
business challenges that we are seeing in China, and then try
to link those to how a commercial law development program could
be of assistance.
The Chamber definitely thinks that a Commercial Law
Development Program, CLDP, consistent with Section 511 of the
U.S.-China Relations Act, would make a positive contribution to
helping China develop its capacity to fully implement its WTO
commitments and to create a more transparent business
environment for our companies.
The Chamber strongly supported China's WTO accession, and
we did so because we thought it would help support the
country's broader reform efforts, as Hank mentioned, and, as I
said, to create a sound business environment. The trade and
investment commitments that China made are enormous in scope,
and the steps needed to carry them out are equally enormous.
Well over 1,000 Chinese trade laws, regulations, and rulings
had to be reviewed for WTO consistency. Many new laws are now
being drafted to cover sectors that were previously closed to
foreign participation. Throughout the government, major
departments are setting up WTO committees to review industry-
specific laws and millions of officials, legislators, and
judges are being trained. This challenge is particularly
difficult in the interior of China, where there is less
familiarity with the WTO's mandates.
We understood all along that the implementation of these
commitments was going to be difficult. We did not see this as
an easy ride. We think that in some areas their work has been
impressive, but in other areas there is a lot of additional
progress to be made. We do think that the Chinese Government
has made a serious commitment to WTO compliance. But the same
officials that make these commitments readily acknowledge that
they do not have the depth of experience and the trained
personnel on hand to carry these commitments out, especially in
some of the major reform areas such as financial services and
distribution rights.
I think that a CLDP program would give us a chance to work
with Chinese officials outside the context of a very specific
negotiation or decision in ways that would allow us to build
cooperation for the future and present issues in their broad
context.
So let us look at some of the compliance challenges we have
seen. The Chamber has a Chinese WTO Implementation Working
Group that is chaired by corporate leaders from various
sectors. In the last couple of years, we have done reports on
China's progress.
Rather than presenting a long list of sectoral issues,
which I could do, I am just going to focus on four broad
baskets of concerns that we have seen.
The first is transparency, which remains a key concern. The
legal and regulatory environment is not transparent. We do not
see a consistent enough use of advance consultations in the
development of new regulations, and we think that this type of
consultation would really advance the prospects for success in
many sectors: autos, telecom, direct selling, and such. It also
would benefit China. The professionalism and the experiences
that foreign companies have had in other markets would be very
beneficial as China tries to develop regulations that are
economically sound and market
oriented. We hope to see ministries developing a regular dialog
with affected industries, as they have in some sectors, such as
insurance. There has been a very good ongoing business-
government dialog. Express services. There have been some good
examples of dialog, and we want to see that continue.
The second broad area I would highlight would be, of
course, intellectual property rights protection, where after
two years of China's membership, it is clear that the
enforcement system is far from effective. American companies
lose billions of dollars each year to piracy and
counterfeiting. Examples include counterfeit pharmaceuticals,
especially those sold outside of hospitals, pirated movies,
books, films, and software. The unauthorized use of business
software is rampant.
Then we are starting to see counterfeiting in industrial
sectors, like automotives, where there is theft of industrial
designs. We think that enforcement is not going to be effective
until civil, administrative, and criminal penalties are
routinely applied to infringers. And while we do see raids
carried out at the central and provincial levels, the penalties
are just not at a high enough level to really serve as a
deterrent. We would like to see China continue with its efforts
to train judges in IPR laws, to provide adequate resources to
police, prosecutors, and administrative agencies, and, to make
sure that these penalties are sufficiently high to serve as a
deterrent.
The third broad area I would highlight would be standards.
We obviously have a major issue confronting us right now with
respect to the wireless local area networks and encryption
standards that China is trying to mandate. China's adoption of
mandatory standards that are out of step with international
standards efforts and that do not consistently respect
intellectual property rights are a major concern to the United
States IT industry. We would like to see the Chinese Government
participate more actively in international standard-setting
bodies and to align its own standard
development efforts with internationally recognized standards
and practices.
Finally, I would highlight government procurement, where we
are concerned about China's implementation of its government
procurement law, which just came into force in January 2003. It
applies to all goods and services procured by government
entities. They are going to be releasing detailed implementing
regulations sector by sector, starting with software. We think
that the regulations they come up with in software are going to
give us some hint as to their thinking for many other sectors,
and it is important they get those right. They are going to be
issuing a definition of local software, and we hope that that
sets a low threshold of what is considered domestic software so
that more American companies can participate in the procurement
market for software.
So then how, looking at those broad challenges, can a CLDP
be helpful? Well, first, I would acknowledge the excellent
programs that the Department of Commerce is already carrying
out, the technical assistance seminars on IP standards,
franchising, and other areas. I would also recognize the good
work of some private sector entities, including John's former
employer, the U.S.-China Business Council, which launched a
U.S.-China Legal Cooperation Fund in 1998. That fund has
extended a number of important grants over the years to further
develop transparent and impartial legal institutions in both
countries.
But despite the impressive efforts being carried out,
obviously the challenges remain. In the case of IP, they seem
to be expanding in scope and dimension, not diminishing, so we
think that a CLDP could make a valuable contribution to the
business landscape.
Looking at how CLDP is operating in other countries, its
programs are helping political, regulatory, judicial, and
commercial leaders make important improvements in their
policies. Significantly, a lot of CLDP's work is actually
focused on WTO accession, and then implementation of WTO
disciplines such as IP product standards and market access. So
it is easy to see a link between the problems that we are
facing and the kinds of positive contributions that a CLDP
could make.
For example, with respect to transparency and the need for
a more consistent use of advance consultations, CLDP is working
with host countries to promote more transparent decisionmaking
and to involve businesses in the development of policies that
impact them. CLDP efforts resulted in the first-ever public
outreach programs conducted by Russia's Ministry of the
Interior, and regular business outreach programs by the
Albanian Ministry of Trade and Industry, to name just two
examples. And a CLDP program in Egypt has increased the
acceptance of U.S. standards by initiating a relationship
between ASTM International and the Egyptian Organization for
Standardization and Quality Control.
I think the importance of having a U.S. Government program
along these lines is even more clear when you consider what
Hank raised, which is the efforts that our other trading
partners with China are making, such as the EU and Japan. In
the case of the EU, they are investing significant efforts into
the development of cooperative programs in China that are
geared toward improving the business prospects for European
companies, and raising the profile of the EU in that market. In
2000, the EU launched an EU-China Legal and Judicial
Cooperation Program, focused on reform of laws in the criminal,
trade and commercial, and administrative areas. China's MOFCOM
is the main implementing agency, but this program also involves
China's Ministry of Justice, the Supreme People's Court, and
the National People's Congress. These are all important
partners for the U.S. Government to be engaging in a more
sustained way through a CLDP program.
I think standards, as Hank said, also represent a key issue
on which the government has to adopt a more active approach.
The EU and Japan, in many cases, have a more natural advantage
because of their domestic industrial policies. In some cases,
the United States has companies involved in competing
standards, which restricts our ability to advocate. But in
those areas where U.S. companies have a unified position, I
think the CLDP could help us marshal our advocacy resources to
help those companies.
Finally, I would just say that beyond the efforts that
Commerce could carry out on its own, CLDP could make new funds
available for, and help coordinate better the efforts of, other
existing academic, research, and NGO efforts in this area.
As one example, the U.S. Chamber-affiliated Center for
International Private Enterprise [CIPE] is eager to expand its
rule of law programs in China. Its mission is to promote
democracy through economic reform and private sector
development. They would be effective in organizing, just as one
example, a series of workshops to explore mechanisms and
policies appropriate for the new economic environment created
by China's WTO membership. A CLDP might also support an
initiative like the new U.S.-China Business Mediation Center.
The Chamber serves on an advisory committee to the Center. It
is a commercial dispute facility that is helping U.S. companies
and Chinese companies look for alternatives for the
adjudication of disputes. We think that the greatest obstacle
to increased use of mediation is a lack of awareness of how
mediation can be beneficial, and a CLDP might be helpful in
this regard.
So, wrapping up, we do think that the Chinese Government
has made a sincere effort with respect to carrying out its
commitments. We think it is important to distinguish, in areas
where there are shortcomings, between those areas where they
are willfully not carrying out their commitments and where
there is a genuine effort under way, but there is just not the
technical capacity to get the job done. I think a CLDP program
could be helpful in those latter cases. CLDP programs have made
a meaningful contribution in countries all over the world, and
they certainly belong in China, a country that holds so much
promise for U.S. companies. American companies have a great
stake in China's success, and we should be deploying all
available resources to help improve the environment.
Thanks.
[The prepared statement of Ms. Griffin appears in the
appendix.]
Mr. Foarde. Leslie, thank you very much. Lots of food for
thought there.
Let me go on and recognize Linda Wells. Linda is the Chief
Counsel for Commercial Law Development and the Director of the
Commercial Law Development Program at the Department of
Commerce in the Office of the General Counsel. We will hear
more about the program from her, I am sure. But before she
became the first director of CLDP she was Senior Commercial
Counsel for the Overseas Private Investment Corporation [OPIC]
here in Washington, and was also associated with the law firm
of White & Case.
Linda, welcome. Please.
STATEMENT OF LINDA WELLS, CHIEF COUNSEL FOR COMMERCIAL LAW
DEVELOPMENT, DIRECTOR, COMMERCIAL LAW DEVELOPMENT PROGRAM,
OFFICE OF THE GENERAL COUNSEL, U.S. DEPARTMENT OF COMMERCE,
WASHINGTON, DC
Ms. Wells. Thank you very much. Thank you for the
opportunity to meet with you this morning. Not only is it
always a pleasure to talk with you all, but it is always nice
to hear somebody sing our praises.
The Commercial Law Development Program is part of the
Office of General Counsel at the Commerce Department. We were
created about 12 years ago for the purpose of providing support
to countries that are either developing or in some form of
transition to help them develop a more market-friendly legal
and regulatory environment. So, basically, more briefly stated,
our mission is to make it easier to do business.
We are a part of the General Counsel's office, as I
mentioned. I should just explain because it confuses people
sometimes. We are a separate part of the General Counsel's
office, independent from the policymaking and the compliance
aspects of the rest of the
General Counsel's office, for example, the Chief Counsel for
International Commerce or the Chief Counsel for Import
Administration, and also from the International Trade
Administration, people who are involved directly in negotiating
and in compliance matters. The advantage to that is that,
although our policy obviously is the same, we can take a track
that is slightly outside the sometimes more confrontational or
controversial aspect of the Department's relationship with
other countries.
In addition to the programs that Hank mentioned, the
General Counsel's office has also been engaged in a series of
roundtables with its counterparts in China. Most recently, in
December of last year, there was a program on U.S. corporate
law. Previously, the Chinese have provided us with information
about the changes that they are making as part of the review of
their legislation for WTO compliance. The difference between
what they can do and are doing, which is very important, and
what we can do, is that the CLDP has the capacity to do types
of assessments and follow-up and the development of an
integrated package of assistance that is sometimes outside the
capacity of some of the other offices, not only within the
General Counsel's office, but also in other parts of the
Department.
CLDP provides consultations. We do conferences. We have
skills development programs. We can exchange experts. We
actually sometimes post people inside ministries. We had one
fellow working inside the Albanian Ministry of Trade for four
years. He had an office there and just basically augmented
their staff, in order to help them develop the internal
capacity to achieve some of the things that they needed to do
in their accession to the WTO, and then, later, compliance with
the commitments that they had made.
One of the things that CLDP can do is be a catalyst for
reform. The WTO work that we do, which, as Hank and Leslie
mentioned, is a very significant part of our portfolio, is
oftentimes really just a lever that we can use to try to
promote wider reforms, either in macroeconomic policy or in
support of transparency and cooperation with the business
community.
The strengths of CLDP, being a government agency, are
largely in the government-to-government area and in helping
governments work better with their private sector, because that
is what we do. So, we can share that experience and, I think,
bring some credibility and some shared pressures, concerns, and
perspective to our counterparts that provides us, I think, with
some measure of access that we might not otherwise have.
We work on a very wide variety of issues, financial
services, intellectual property, standards, public procurement,
privatization, judicial reform, pretty much the whole panoply
of anything that might affect business. But WTO is a major part
of our focus.
In the WTO work, we have done both accession and post-
accession implementation assistance. In the course of an
accession assistance program, our work may focus on policy
development, for example, working with senior officials to
understand market-oriented issues in countries that maybe
perhaps have not had so much experience with that. Also, we do
the technical side of it, providing skills development in
macroeconomic analysis, econometric modeling, and things of
that sort. We also provide assistance in the actual accession
process. So, for example, supporting preparation of the
memorandum of trade regime, helping with the preparation of
answers to ensure that they are responsive to the concerns of
the working party that is reviewing an application.
We also provide skills development training and
negotiation, and also even for interpreters. One of the things
that we found in many places is that the language becomes an
artificial barrier because the interpreters do not know how to
say what the policy people are trying to communicate.
From a more institutional perspective, we can work with our
host governments to develop government organizations and
private-public communication fora that enable them to formulate
sound economic policy and to implement it within the government
and through the business community. One of the things we find
in many countries, for example, is they do not have a mechanism
for coordinating within a government input into trade policy
formation, and then later, execution. You wind up with a
disjointed system where the people at the Ministry of Trade are
totally on board, fully committed, but the guy in the next
ministry does not really understand what they have done on his
behalf and does not know how to execute what they have
promised. So we can work, and have worked with many countries,
to try to help support the development of both institutions and
processes that lead to sound and consistent trade policies and
compliance.
We work, obviously, in the legal and regulatory reform
area, helping countries to evaluate their legal systems for
compliance with WTO commitments and norms, and to develop
reforms, amendments, new legislation where that is necessary in
order to bring them into compliance.
One of the steady things in all of the work that CLDP does
is trying to promote transparency and trying to promote private
sector participation in the formation of trade policy. As
Leslie mentioned, I think this is one of the areas where,
independent of the direct results that we are achieving, I
think the attitude changes that come with that are really a
significant part of what we are accomplishing around the world.
A large part of our accomplishment, I think, is actually
outside the context of the specific technical assistance
programs that we are conducting, although I do not choose to
diminish those. I think we are achieving some very significant
changes in both law, policy, and organizational structures. But
I think we are also serving a useful purpose in the change of
attitudes and the comfort level of foreign officials that the
United States is working with. One of the advantages of a
Commercial Law Development Program or other kinds of technical
assistance is that you can discuss these issues outside the
context of a specific negotiation or a specific trade dispute.
In doing so, you can raise the comfort level of officials and
others who may not really understand what you are asking or why
you are asking it of them in this other context. If you can
have the conversation as a sidebar, you can actually make them
understand much better than in negotiations that are being
undertaken why there is a conflict, and perhaps resolve it more
quickly, or prevent it entirely.
I mentioned earlier, I think the ripple effect of what we
are doing, particularly in the transparency area, is also
significant. Once officials become comfortable talking with the
business community, talking with other agencies, perhaps
publishing things that they are considering doing before the
decision is made, as they see that those are not really
threatening, it is much easier for them to adopt those
practices in other parts of their work and much more likely
that they will demand others do the same with respect to them.
Finally, the development of professional relationships. One
of the significant advantages, in my mind, of a Commercial Law
Development Program is that, through our assistance programs,
we get to know each other. We understand each other's ideas. We
understand the values that we are using in approaching issues.
We
understand the technical difficulties that our counterparts
have, either we have or our counterparts overseas have. That
mutual understanding, and just simply the personal
introductions, I think, have good, long-lasting effect. I know
I can see in many of these, these are just programs that we
have conducted, that people who participated have continued to
have a relationship through the years afterward. That has made
it possible for them to send an e-mail and say, ``I am thinking
about doing this, or I am going to do that, or what do you
think, or do you know anything about this? '' The communication
that continues after the technical assistance program ends has
been invaluable to the people at the Commerce Department and
the other agencies with which we work.
Just in conclusion, Leslie talked about our work with other
organizations. One of the things that CLDP prides itself on is
working with both private sector organizations from the United
States, and also with other international donors. Where the
European Union is doing a program, we may do it with them or we
may balance their presentation with one of our own. Sometimes
there are areas where we definitely, 100 percent, are on track
with them, so we will let them spend their money on one thing,
and then we can spend our money on something else, so that the
result is a much greater use of both of our resources. There
are a lot of times where the private sector can better affect
the sort of results that we are looking for, and as a
consequence of that, we bring in private advisors, we work in
partnership with organizations such as CIPE and CIME, and the
University of Maryland, and some of the other donors that you
may know around here. I think that has proven a very effective
strategy for us because it enables us to coordinate and to
bring in all types of resources rather than just Commerce
Department resources or government resources.
[The prepared statement of Ms. Wells appears in the
appendix.]
Mr. Foarde. Linda, thank you so much.
Thanks to all three of our panelists.
I am going to give you a chance to rest your voices for
just a minute while I make an administrative announcement or
two. In a few weeks, the entire transcript of today's
roundtable will be available on our website. That is,
www.cecc.gov. If you have not signed up already for our alerts,
please do so there. You can also unsubscribe there.
I would also like to announce that our next roundtable will
be held on Monday, April 19, after the Easter break, at 2 p.m.
here in this room, 2255. Our topic will be North Korean
refugees in China, and looking at the legal and policy aspects
of the Chinese Government's attitude toward North Korean
refugees. We will have three distinguished panelists: one from
Refugees International, one from the Defense Forum Foundation,
and a South Korean gentleman who has been very active in
working on behalf of North Korean refugees in China. So, we
look forward to seeing you here on April 19. An announcement
will go out on our e-mail list in a couple more days.
Now let us turn to our question and answer session. Each of
the staff members here will get a chance to ask a question and
listen to the answer for about five minutes, and then we will
do as many rounds as we have time for before about 12 noon. I
understand that Hank may have to leave a few minutes early, so
if you do, just let us know. We appreciate very much your
participation while you are here.
Let me begin the questions by picking up on a couple of
things that were both in Hank's presentation and Linda's. That
is, in your work in other countries with CLDP, are there
benefits that come from separating the compliance budgets and
personnel from the technical assistance budgets and personnel,
and would that be a good model for what we do with China?
Ms. Wells. I think there is a place for both to be
involved. Both can accomplish slightly different things. The
advantage of having a separate group outside the compliance
context is that we do not show up giving advice in week one,
and then negotiating or filing cases against them in week two.
We are still part of the Commerce Department, so it is not
total separation, but it gives us a little more credibility.
Mr. Foarde. There is never any bleed-over? You never hear
from your cooperators that, well, you guys are beating up on us
because you just filed under 301, or something like that. Has
that ever happened?
Ms. Wells. We get lots of complaints. Sure. But what they
can do, is they can say, those guys have filed a case against
us. We are doing the best we can. What else do you want us to
do? We can help them figure out how to resolve the problem, how
to change what they are doing or how they are doing it so that
it does come into compliance. We can offer them a sounding
board so they can explore some of the options before they
actually go into a negotiation to better understand why things
are being asked of them, for example.
Mr. Foarde. Anybody else have a comment on that?
[No response.]
Can you talk a little bit about where the funds come from
for your CLDP programs?
Ms. Wells. Ninety-nine percent of our funding comes from
either USAID or the State Department through interagency
agreements. They basically hire us to provide technical
assistance.
Mr. Foarde. So you have no program budget of your own, to
speak of, for this sort of thing.
Ms. Wells. Not even just to speak of. We have no program
budget of our own. We also do occasionally work for USDA in
cooperation with other international organizations, but, as I
said, 99 percent of it is AID or State.
Mr. Foarde. And those AID funds are normally ESF funds, or
DA funds, or both? Do you know?
Ms. Wells. It is a mix. It depends on where it is and even
in some countries, we have a combination of different types.
Mr. Foarde. Let me hand the microphone over to Dave Dorman,
my friend and colleague, who is the deputy staff director of
the Commission and works for Senator Chuck Hagel, our Co-
chairman.
Dave.
Mr. Dorman. Well, first, thank you very much to all of you
for coming today. This is a topic that is of great interest to
all of our Commissioners. I should say, in particular, this is
a topic that is of great interest to Senator Hagel, who has
been working with our ranking member on the Senate side,
Senator Baucus, and other members on the Senate side, to find
some way to fund a CLDP for China in a very tough budget
environment.
In conversations with Senate staff on this particular
topic, a number of questions have come up. It would be very
useful to answer these questions on the record because they are
the sorts of questions other people might think of when
considering a program like this. For the most part, I think
that Congressional staff are aware that the Office of Market
Access and Compliance is conducting technical assistance
seminars. Understanding there is no CLDP program in China right
now, but there are technical seminars ongoing, if funding was
found for CLDP, what happens at that point? Do the sorts of
technical seminars that are being conducted by Market Access
and Compliance stop and CLDP picks up those programs? Based on
our own roundtable announcement, some technical seminars being
conducted by Commerce offices with less than perfect skills in
conducting such seminars. So the first part of that question
is, what happens to the seminars that are being conducted right
now? Is that a function that would be transferred to the CLDP
office?
The adjunct of that question, and one that has come up
frequently, is what sorts of coordinating mechanisms--occur
between the CLDP office and Market Access and Compliance when
both offices are active in a country? What are the sorts of
contacts and conversations that go on between Market Access and
Compliance and CLDP in terms of ensuring that we are making the
best use of our dollars?
Ms. Wells. Do you want to start?
Mr. Levine. Yes. I am happy to take a shot at the first
question. Then Linda, based on her experience, can either add
to that or whatever, and then Leslie can comment, too. What the
heck. [Laughter.]
The first question, essentially, is a hypothetical in the
sense of, ``What would we be doing if there were a CLDP
program? '' I guess what I could say is that, were we in that
position, we would obviously want to take a good, hard look at
the current programs and activities, and then look at what CLDP
could do. It would certainly be my hope--obviously depending on
the budget situation at that time--that we in Market Access and
Compliance would be able to continue to undertake activities
that could dovetail with, or supplement, the activities that
CLDP would be doing.
Getting to your second question, we would want to
coordinate very carefully with CLDP and make sure that we are
not duplicating and wasting scarce resources. So, I would hope
that we could continue to add value by filling in gaps, or
supplementing, or supporting and adding to other things CLDP
would be doing.
Ms. Wells. I would second that idea. As I said in my
earlier comment, I think there is a place for both and there is
a need for both. When the compliance people go and do technical
assistance, they are there with a slightly different face than
my folks are. That can be extremely useful. Just like we use
private sector people to do some things and government people
to do some things, having people from different parts of the
government also can be useful.
I would share Hank's hope that what we would wind up with
is a more integrated package. One of the things that having
CLDP would do, in addition to the existing compliance programs,
would be to enable us to perhaps do a little more of the
diagnostic work to support them and get their work as part of a
coordinated package. We could do some of the followup and some
of the supporting assistance that might make it more likely for
their programs to show the results that we would like to see. I
think we would want to coordinate.
To answer your second question, whenever we are launching a
new program, and periodically throughout the implementation of
an existing program, we are consulting not only with other
parts of the Department of Commerce, but also the business
community, USTR, the State Department, Department of
Agriculture, and other organizations to make sure that we are
staying focused on the issues that are of greatest concern,
either because they are most important for our economic
interests or because they are proving to be sticking points in
the bilateral relationship. So, we are already consulting on a
regular basis with other parts of the Department, and I am sure
that that would continue.
Mr. Dorman. Good. Thank you.
Mr. Foarde. Susan Roosevelt Weld is our general counsel.
Over to her for questions.
Susan.
Ms. Weld. I am interested in having the views of all of
you, but especially Linda, from your experience in doing CLDP
programs elsewhere. Are laws such as those in the PRC having to
do with state secrets a problem with promoting transparency? Do
any of the countries that you work in have that kind of legal
framework?
Ms. Wells. I will not comment directly on the Chinese law
because I am not enough of an expert at this point. But, when
we started working in Poland, for example, it was illegal for a
business to show us their books. So it is not uncommon in the
rest of the world that there are rules about what kind of
information can be shared, that there is no prior publication.
Forget about something you are considering for announcement or
a notice-and-comment process. They do not even publish the
laws, sometimes, even after they are adopted. They think, in
some places, that it is bizarre of us to ask for them to do
that.
Our experience has been, most of the time, that when you
explain, when you have a discussion, when you can show your
counterpart examples of what the benefits are of discussing
things in advance, what the benefits of sharing the information
are, if the objective of a law is to have people change the way
they behave, then they need to know about it. If you give them
some skills and you give them some experience, and you give
them some comparative models that may not be quite as extreme
as in the United States but are in that direction, that we
found people to be quite responsive.
Ms. Weld. Thanks a lot.
Mr. Foarde. It is now my privilege to recognize our friend
and colleague, Selene Ko, who is chief counsel for commercial
law on the Commission staff, and responsible for helping
organize this roundtable. But I have to begin on a somewhat
melancholy note, because this is Selene's very last issues
roundtable for us. She is leaving us April 9 to go to the
Office of the Legal Adviser at the U.S. State Department, where
I worked some years ago. Perhaps in the future, she will help
keep Hank Levine out of trouble. I want to thank Selene for
being such a stalwart colleague, and such a dynamic force, on
the Commission staff these past two years.
Now it is time for your questions. Go ahead.
Ms. Ko. Thank you all for being here. As the panelists here
know, this has been a particular effort on my part to examine
the CLDP issue. One thing I thought might be good to have on
the record, something that we have all discussed, both in the
context of the CECC Annual Report and in private conversations,
is: if everyone believes that CLDP would be such a good thing
in China, why is there no U.S. Government budget for it? To
whatever extent you all might be able to share your thoughts on
that, it would be appreciated.
Mr. Levine. Well, obviously, when we are looking at the
overall Administration budget, those decisions are made at the
White House, and ultimately by the President, looking at, as we
all know, an enormous number of competing demands for limited
tax dollars. Frankly, there is not much more that I could say.
At my level, and generally in the Commerce Department, we work
within the framework provided both by the White House budget,
and then the money that is appropriated by the Congress.
Ms. Griffin. Well, my understanding, too, is that I think
there are some reasons why AID is not operating in China now,
much like the Overseas Private Investment Corporation [OPIC] is
not operating in China now. We would like to see these programs
opened in China. I think that OPIC, just for example, is
something that could be a valuable resource for American
companies there. So, there are legacies of some past sanctions,
I think, that have prevented some of these organizations from
extending money for programs in China. We think it would be
helpful to see us be able to take advantage of those.
Ms. Ko. Thank you.
Mr. Foarde. Let me recognize Carl Minzner, who is a senior
counsel on the Commission staff as well.
Carl.
Mr. Minzner. Thank you very much for coming here today. I
quite appreciate the opportunity to hear your opinions about
the CLDP program that I think many people would like to
undertake. I want to return to something that you all touched
on a little bit earlier. I think all of you talked,
particularly you, Ms. Griffin, about types of projects and
issues that the CLDP could be used to address. For the moment,
I think I would also like to get more of your input on the
format of particular projects, the particular way in which
projects might be able to be carried out. All of you touched on
this a little bit earlier. For example, we talked about having
full-time staff members in other countries, notably in Albania.
Ms. Griffin raised funding possibilities such as the U.S.-China
Legal Cooperation Fund.
Could you all talk about programs in a little bit more
detail? Speculate. It does not have to be a promise to
undertake a particular program. Speculate on particular formats
of programs that might be useful to undertake in China.
I appreciated something that Ms. Wells mentioned, that you
noted that one of the things that is important in the Chinese
context is establishing long-term relationships. I think you
also said that with regard to many other countries. How could
some of these issues be addressed through particular types of
formats that programs might take if a CLDP China program were
to be initiated?
Ms. Wells. I do think, based on what I know about China,
that the long-term issue is going to be particularly
significant. I think, if we were in China, we would probably
want to focus on that in structuring things. That insight would
lead me to think that we would probably place a higher emphasis
on having people resident in China. Given the problems that we
see in national versus
sub-national, central versus sub-central, implementation of WTO
commitments, that probably also means putting people outside
Beijing. I think that one of the strategies we would want to
employ in the sector-specific work that we might do would be to
establish working groups that would meet on a regular basis. We
have done this, for example, in Eastern Europe.
In Southeast Europe, we have, through the Stability Pact,
some trade working groups that meet a couple of times a year.
It is the same people. Simply getting those people together in
one room has provided some continuity and some results that I
think have been really significant, and might be a model to
replicate in China.
Mr. Levine. I would just add for the record that I guess
there have been a couple of references to the fact that some of
the ongoing programs are undertaken by folks who do not have an
enormous amount of background in doing programs. I think our
folks who have been working on the current programs really are
doing a superb job, with the resources and under the
circumstances that they have been working.
Having said that, clearly, one of the limitations that we
face in our current work is the constraints on our ability to
have the more sustained type of effort, I think, that you are
talking about. We do try to build in continuity to the extent
that we can, so we might go out one year and have a seminar on
IPR enforcement, and the next year try to build on that and
follow up, and so forth. But in terms of the types of things
that Linda is talking about that a CLDP is capable of mounting
with a more sustained presence on the ground, that type of
sustained and deep continuity is beyond our abilities at the
moment.
Ms. Wells. Could I just second what Hank is saying? A lot
of the people who are doing the ad hoc work that the Commerce
Department has been doing are the same people that we would
use. It is not that those individuals are not good at what they
are doing, it is simply that, when they come home, they have a
primary responsibility to do something else. Their availability
for designing and implementing follow-up work is just not the
same as somebody whose purpose in life is to try to do that.
Ms. Griffin. I do not really have a lot to add, other than
if you look at the U.S.-China Legal Cooperation Fund's website
and see the fund that they established, the types of grants
that they have given, there are many different things you can
do, whether it is an interdisciplinary seminar on WTO standards
issues, or best practices manuals in Chinese, or training
seminars for judges. There is just a whole series of things
that can be helpful to us.
Mr. Foarde. I would now recognize our friend and colleague
Keith Hand, who is also a senior counsel on the Commission
staff.
Keith.
Mr. Hand. Thank you all very much for your comments. A
number of you raised the issue of local inaction versus lack of
capacity. I am wondering if you could tell us what areas fall
under the willful inaction category as opposed to lack of
capacity. In the areas where the problems are primarily
political, do you see CLDP playing a role or is CLDP only
useful in the capacity building context?
Ms. Griffin. It is funny. When I put that in my remarks, I
feared I would get that question. There are far more baskets
you could create. I mean, there are examples where there are
legitimate, if unwelcome, interpretations of ambiguous
commitments that they made. At times there are aggressive
interpretations of things that could be reasonably interpreted
either way. There are cases where there is a blatant disregard
for a commitment, cases where it is a technical capacity issue,
and cases where they are just not putting enough resources into
the problem, into addressing a problem. I would not try to
assign a particular commitment to a particular category. When
we entered into this process, we knew certain areas were going
to be particularly politically sensitive, in agriculture and in
other areas, where we knew the challenges would be particularly
great.
But I do think that, in those cases where it is a case of
technical ability and training that is keeping China from being
able to carry out its commitments, that a CLDP program could be
beneficial. There is one example that I think is really
telling. If you look at, say, in the insurance sector and the
kinds of changes China needs to make; in the case of the China
Insurance Regulatory Commission [CIRC], is, at the same time,
trying to create a regulatory regime for the insurance industry
that is compliant with WTO; it is trying to review about 100
pending license applications; it is trying to train and deploy
new officials in the new cities that are opening up as
geographic restrictions come off; and it is trying to approve
new insurance product offerings. All of this, for the entire
country of China, with 600 officials at CIRC.
Now, by comparison, New York State's Insurance Commission
has 900 people just working on that one state. So, it gives you
a sense of the scope of the training effort that is needed and
the technical capacity that is needed to be able to fulfill
some of these commitments.
Mr. Levine. I think it was Albert Einstein who once said,
``Things should be made as simple as possible, but no
simpler.'' The fact is, in looking at China, this is an
enormously complex problem. Like Leslie, I would hesitate to
draw any percentages as to what percent is due to the lack of
skills and what is due to lack of political will, or to assign
particular topics to baskets. The simple fact of the matter is
that there is no magic bullet here. In promoting U.S. interests
in our relationship with China, we need to be making maximum
efforts in every one of the areas. That is, on the policy side,
we and USTR, by negotiating, and pressing and bringing WTO
cases where we need to do that. But also on the development
side, pursuing the maximum amount of capacity building and
technical assistance that we can provide. Without assigning
particular percentages or areas here, in fact both sides of the
coin are enormously important and we really need to do as much
as we can.
Ms. Wells. If I can just add one technical point. There are
ways that technical assistance programs can be used to help
overcome policy resistance. I am thinking, for example, in the
area of intellectual property. The people who are pirating
products are very vocal and will make it clear that clamping
down on them is going to cause problems for them. The rights
holders whose product is being stolen, the local rights
holders, and the people from the
community who are being disadvantaged because they do not have
access to products because companies will not sell into an
environment where there is so much piracy, tend not to be
vocal. One of the things that assistance can do is to help them
mobilize and more effectively articulate that they are an
interest group, that they want their government to provide the
sort of protection that the pirates may not want provided. It
gives a different constituency a voice, and that can help
overcome the policy issue.
Mr. Foarde. Let me pick up the next round by trying to
clarify a couple of things.
Linda, who are the experts that work for you? I know that
CLDP here in Washington is a lean and hardworking group. So,
clearly, with the level of effort that you have in the
countries that you are operating in, you cannot do it all out
of your office. Where do you get the people that work on
programs in individual countries?
Ms. Wells. From other parts of the Department, other
government agencies, the private bar, the judiciary,
educational organizations, people who are retired government
officials. It is a wide mix. What we try to do is to identify
who is going to have the best expertise, and then go after
them. Who is going to be able to best communicate the issue to
their counterpart?
Mr. Foarde. So not just people from Commerce, but it could
be from any part of the U.S. Government or educational
institutions in the United States.
Ms. Wells. Or law firms.
Mr. Foarde. Law firms. Everything.
Ms. Wells. Or other technical assistance providers. There
are times we will hire someone else to do something. We have
worked with CIPE, we have worked with CIME, we have worked with
the International Law Institute [ILI], and a number of other
not-for-profit organizations. We will also bring in consultants
who will work for us for a daily fee.
Mr. Foarde. So, without trying to get into too much of a
hypothetical, in principle, if you had CLDP in China, you would
draw on this same universe of experts to do the type of work
that you might be able to do, if there were a program.
Ms. Wells. That would be my expectation.
Mr. Foarde. Right.
Another question for you that is related, and also comes
from a comment that Leslie made in her remarks, about the
capacity of CLDP to serve as a coordinator of U.S. NGO efforts
and a clearinghouse, if I understood correctly. Is this
happening already in the places elsewhere in the world where
you work? If so, how does it work, exactly?
Ms. Wells. It is happening. How it works in any given place
may vary. In Russia, for example, where we have been working
with them on their WTO accession for several years, we actually
sit down a couple of times a year with the European Union and
the British to talk about what their resources are, what issues
they may address, what we might address, what things we want to
do together and separately, so that we get the maximum bang for
our buck.
Just for example, I mentioned earlier the Southeast Europe
program. We are working there, among other things, on customs
implementation for the regional free trade agreements that they
are entering into. So we have got the World Customs Union, as
well as the U.S. Customs Service, involved. We are also doing a
program with the American Chambers of Commerce [AmChams]
throughout the region, so we have got the AmChams involved in
that.
In other cases, one of the things that we have done with
them is actually work on negotiation skills. So, we have
brought in ILI, which does a very good negotiation training
program, to essentially serve as a subcontractor to us. So what
we are trying to do in all cases is identify what the obstacles
are and figure out which resources should best be applied to
get the results we are looking for.
Mr. Foarde. While at the same time you are trying to avoid
duplication. In other words, your own program is not doing
something that a U.S. NGO is already doing.
Ms. Wells. Right.
Mr. Foarde. Or another country is already doing.
Ms. Wells. Right. In fact, one of the things we sometimes
do is offer to co-sponsor something that someone else was
already doing, or to send people that we are working with to
somebody else's
program. In West Africa, for example, we have been doing some
work in public procurement. We actually sent some people to
another organization's conference because we thought it would
be a good opportunity for them to meet with some international
players.
I should mention that one of the things that we do,
particularly in our regional programs, that might have some
applicability in China, in Western Africa, for example, sub-
Saharan West Africa, we are helping them to establish and to
strengthen the capacity of alternative dispute resolution and
mediation centers. There may be some applicability in China.
And in addition to connecting them to centers here in the
United States and to some Internet-based mediation services, we
have also got them working together so that they are helping
each other figure out how to select and train mediators. We
have helped them put out a brochure about the resources
available in the region. So, we are also working with our local
counterparts to help them network.
Mr. Foarde. Let me go on and recognize Dave Dorman for
another question.
David.
Mr. Dorman. Yes. I think we have come to conclusion on the
difficult question of whether everyone here would support a
CLDP program for China. But let me turn it around. Have the
Chinese indicated in any way that they would be receptive to
such a program? I know in your written statement, Linda, you
mentioned you went to a seminar some years ago, and part of the
purpose of that seminar was to gauge the receptiveness of the
Chinese to a program like this. Do we know that there are open
arms in China waiting for something like this to happen?
Ms. Wells. Well, I will start, but I think Hank probably
has more recent information. My experience with them personally
has been that they were very receptive, that they are really
very interested in hearing what we have to say. Whether they do
something with it, I am not going to judge at this point, but
they were extremely willing to talk. We spent hours over
scheduled time going through issues and discussing the
consequences of some of the things that we were talking about.
The rest of the General Counsel's office, as I mentioned,
has been doing this legal exchange program. They have had the
same experience: the program has been very much in demand on
the part of the Chinese, and the information has been very well
received and the follow-up communication quite steady. But you
may have better information, Hank.
Mr. Levine. No. I think that, as a general matter, there is
enormous hunger in China for the types of information, the
types of activities that a CLDP undertakes. Again, we see it.
Our problem, typically, is not being able to do enough, really,
to meet the demand on the Chinese side for seminars, for
information in many of the areas that are so critical to our
interests. As a general matter, then, I think there is
absolutely no doubt that China would welcome enhanced
cooperation and activities in these areas. Now, I do not know
enough about CLDP to know whether there are any specific
elements or ways of cooperation and so on that would be
particular problems in China.
If we talk about issues, as I understand it, CLDP is quite
flexible in how it pursues its cooperation and, I would assume,
would adapt itself to the Chinese system. For example, Linda
mentioned that in some countries you might have someone who was
actually assigned to a host government ministry. Again, at this
stage, whether that type of an arrangement could work in China
as a particular method, I do not know. The program would have
to adapt itself. But there is absolutely no doubt in my mind
that, in terms of the content, the types of activities, the
Chinese would be very receptive, indeed.
Ms. Griffin. I cannot speak to their views on accepting
government-to-government assistance, but just in terms of
business input, we have definitely seen a willingness of the
Chinese to ask for our companies' input in a few different
sectors. In particular, I know in direct selling and insurance
there has been some good dialog going on. Typically, I found
that they like to do it outside, in a low-key fashion, not with
cameras flashing in a U.S.-China business negotiation of some
kind. But, in a private way, they have reached out to us to
have us bring some companies together to talk about an issue.
I think it speaks to the point each of us made earlier,
which is that it is helpful to have a program like this outside
of a formal decision that needs to be made, or a negotiation
that is going on, and they are perfectly willing to hear what
our companies have to say. It is in their interests to hear
about the experiences our companies have had in other
countries.
Mr. Dorman. One of the things that always comes up in
discussions that I have been involved with concerning CLDP--and
you have already touched on it, Linda--is that our European
friends and allies are much more involved in providing
technical assistance of the type that we are talking about here
than the United States has been engaged in. The underlying
piece of this issue that always seems to be just there, is that
the sorts of technical assistance that the Europeans are
providing are beneficial to China, are beneficial to European
countries, but somehow are against our interests. Is this true?
Now, what I suspect, and maybe what you can help me with, is
the answer to this question is far more complex.
But beyond that, this question plays into something that
you said, Linda. Do our CLDP programs interact with other
countries that are providing similar sorts of assistance, and
coordinate those activities? Are programs like this reinforcing
across the board?
So if you could all comment just briefly on these questions
I would appreciate it. Thanks.
Mr. Levine. I am happy to start, and then Linda can talk in
more detail about CLDP.
What you said is absolutely right. There are obviously
elements of the programs that the EU or Japan, for example, or
Australia, Canada, and others are running in China that are
entirely consistent with the kinds of programs we would run if
we had the
resources and we were running them, and they contribute to
transparency. They contribute to the rule of law, et cetera,
and there is no issue.
On the other hand, clearly there are also areas in which
some of the ideas that are being presented, to the extent they
are accepted by the Chinese, would give companies from the EU,
for example, or from Japan an edge in the market. One of the
obvious outstanding areas is the area of technical standards.
In fact, what we have seen in any number of areas is China
adopting standards that are based on European standards, for
example, in many cases to the detriment of our companies.
Interestingly, what you find is that very often the
companies in the United States that would have the greatest
problems as a result of that type of standard-setting process
tend to be the smaller companies.
The big multinational company that is already operating
globally, they are operating in Europe, they are operating in
Japan, and so forth, might find it easier to accommodate itself
to a European-type standard, for example, for a product that
could be sold in China. On the other hand, our smaller U.S.
companies would be the ones who would have a much harder time
with that, and that is why with the resources that we currently
have, we have put a relatively large amount of effort into the
standards area. We really do see it as a priority.
So I think that standard setting is a classic example of
where the agendas are slightly different, but there are going
to be many other areas where they are quite similar, with no
problem at all.
Ms. Wells. Just to reinforce what Hank said, standards, I
think, is the key area where we find that there is some
difference. Particularly since so many of CLDP's clients are
countries that are in the process of acceding to the European
Union and are very Europe-oriented, standards is a special
issue in a lot of our programs. We can provide a balance. We
can explain that you can set up standards that provide you with
safe, quality products without excluding anybody's products.
Just that added perspective, I think, sometimes is very
beneficial to U.S. exporters.
The other area you mentioned has about reinforcing
messaging. One of the reasons that we like working with other
assistance providers is that if the United States goes in and
says, this is a good idea, it is the United States saying it is
a good idea. But if the United States, and the Europeans, and
the Japanese, and some other countries come in and say, ``We
all do the same thing, or some version of the same thing,'' it
is not a policy push, it is just the way the international
market works, and it makes some of those reforms that we are
suggesting a lot more palatable.
Mr. Levine. Maybe I would add just two further thoughts.
There is one other area that comes to mind, for example, at
least potentially. I do not think it has been that much of an
issue, but an area such as competition policy, for example,
where there could well be some differences in the way that the
United States and the European Union look at the issue of
competition policy. So, there are some other issues that would
come to mind. But reflecting on it here, beyond that there is
another point in all of this. Even in areas where the ideas
that we would be presenting would be identical, or quite
similar to the ideas that other countries were presenting, in
the process of running the program you are developing
relationships. In many of these programs, in fact, the audience
is not just government officials. The government that is
funding the program will bring in representatives of their
companies to participate. So even where the fundamental content
and the ideas of the third country's program are identical to
something we might do, there is a relationship building in a
U.S. program. I do not want to say a marketing effort, but
there can be some significance. So just to flag that when we
are thinking about the competitive aspect here. It is a
significant issue and leads us in the direction of concluding
that the United States should be doing the maximum that we are
able to do in undertaking these types of programs.
Ms. Griffin. There is nothing I can really add to what has
been said on the subject, other than the point that Hank
brought up about small business. Just to put on the table that,
yes, small business has a real stake in these programs and
their success, whether it is in standards or whether it is in,
for example, transparency. I think more small businesses would
be looking at China if it did not seem like such a morass of
regulations that they do not understand. With respect to IP
protection, these companies do not have armies of lawyers to go
out and file patent cases and things like that. So, I think
that these programs could be really beneficial for small
business.
Mr. Foarde. Susan Weld, another question?
Ms. Weld. I would love to ask about your programs to
encourage implementation, especially in the IP area. How do you
go about that? I am thinking of a seminar out of one of the
Asian conferences about implementation of the laws against
piracy. One
presenter said foreign firms go in and do implementation work
on behalf of the Chinese Government, whose efforts had not been
effective. I wonder, what are your views?
Ms. Wells. We are the slow and steady type rather than
fixing a problem quickly, which some people find frustrating,
but in our view it has a more beneficial long-term effect. Our
objective is to put ourselves out of business, essentially. Our
strategies are designed to make it possible for our host to do
whatever it is that needs to be done themselves. So what we
would do on focusing on any sort of implementation issues, is
to figure out why it is not already being implemented. So
whether it is a policy matter; whether the senior management
did not really buy into the commitment that somebody else made
on their behalf; whether it is a knowledge issue--they do not
know how to do what they have committed to do; whether it is a
resources issue; we are a lot more limited in what we can do to
solve that sort of thing, except that we can bring attention to
the fact that there is a resources issue. Sometimes it is a
communication issue. We can help with that. So, we will try to
figure out what is missing in the implementation chain and see
if we can focus on that. Is that responsive to what you were
trying to get to?
Ms. Weld. More or less. I wanted to follow-up, to ask about
the idea of placing someone inside of a Chinese Government
agency. Do you think that is something that would be possible?
I know, with respect to some of our assistance on HIV-AIDS, it
has been effective to put people inside of the Ministry of
Health. So, I wonder if that is something which could be done
as you do your work in China.
Ms. Wells. I do not think there is a single answer to that.
I think that, in some places, it might be possible and welcome.
In other places, even if it were welcome, it might not be
appropriate.
My experience is similar, I think, to what Leslie was
saying, that while people were eager to talk with us, sometimes
they did not want to talk to us in their office. So, it might
be more effective to have some off-site place. In our other
programs, we have found that the utility of having somebody
inside the government has evolved. In Russia, for example, we
had somebody inside the Ministry of Trade for a long time. Then
we got to a certain point in the relationship where that really
was not the practical way to do things, and we moved them
offsite. In fact, at this point our Russia office is staffed by
Russians rather than being staffed by Americans.
So things evolve. I think we just have to figure out, with
respect to the particular agency that we wanted to work with,
what the best way of doing it would be.
Ms. Griffin. Correct me if I am wrong, but the Quality
Brand Protection Committee in China [QBPC], which is bringing
together U.S. entities, Japanese entities, EU entities to try
to make progress on IP enforcement is, if I am not mistaken,
actually housed within a government entity. It is within an
association for enterprises with foreign investment that falls
within the Ministry of Commerce. I think they have found that
to be an effective means to develop a comfort level within the
government about their activities.
Mr. Levine. I would just add that I think the answer is, as
Linda also was suggesting, that it depends. It would be
something that would have to be approached on a case-by-case
basis, thinking through--again, as Linda said--whether this
approach is the best way forward on this particular issue. In
fact, my understanding is that the U.S. Centers for Disease
Control has someone in Beijing who is co-located basically with
the Ministry of Health.
Ms. Weld. That is right.
Mr. Levine. So on that issue, CDC does have someone. Now,
whether that is something that could be automatically or easily
replicated across the board with all ministries on all issues
would remain to be seen. But certainly that, as one tool would
be one of the things that people would want to look at and see.
If it turns out in a particular case that that is not possible
or not the most effective method, then I know CLDP has lots of
other arrows in its quiver.
Mr. Foarde. It is fitting that, as we are coming up on the
end of our time this morning, that I would offer the last set
of questions to Selene Ko.
So, Selene, please go ahead.
Ms. Ko. This is a question for Leslie and Hank. When you
talk to people in China who participate in technical assistance
programs, what kind of feedback do you get from them with
respect to U.S.-sponsored technical assistance as compared with
the kinds of programs that are offered by China's other trading
partners? Beyond substantive differences, do they find there to
be any other differences in terms of quality or the way
information is presented that could inform how a U.S.
Government-sponsored CLDP program might be able to operate in
China?
Ms. Griffin. I have not talked to folks who have compared
for me.
Mr. Levine. I do not have a detailed response, but it is a
very good question. I have not had occasion, ever, to get into
a detailed discussion and hone in on the topic of discussion.
It would be interesting for me to ask my colleagues out at our
embassy. What we do hear frequently is that, quality aside, we
hear the issue of quantity. Chinese officials note the very
extensive efforts that the EU, in particular, is undertaking.
We often hear that comparison, that the U.S. Government
seems to be doing a lot less than, for example, the EU is
doing. So, in terms of quantity, we hear that. With regard to
quality, that is something to look into.
Ms. Griffin. Actually, the only thing related to your
question is, first of all, our companies say that they want to
make sure that, with these CLDP programs, that the private
sector has an adequate opportunity to contribute to the shaping
of the training programs. So, that is one point.
The second thing I would say with respect to transparency
in our own system, is that I think people need to get a better
understanding of where exactly funds for this type of effort
reside throughout the U.S. Government. It seems like there will
be a Patent and Trademark Office [PTO] delegation out in China,
and then they will learn that there is a State Department
delegation in a neighboring province. I just think it would be
helpful if someone could somehow put in one place all of these
activities and all of the sources of funding that exist for
them.
Ms. Ko. Thank you very much.
Mr. Foarde. We are close to the end of our time. So, on
behalf of Congressman Jim Leach, our Chairman, and Senator
Chuck Hagel, our Co-chairman, and the other members of the
Congressional-Executive Commission on China, thanks to Hank
Levine, Leslie Griffin, and Linda Wells for being so generous
with your time this morning on this gray, rainy Friday, and for
sharing your views and your insights with us.
Again, the Commission staff will hold another staff-led
issues roundtable on Monday, April 19 at 2 p.m. here in this
room on North Korean refugees in China.
Thanks to our panelists and to all who attended. We will
bring this one to a close for today. Thank you all.
[Whereupon, at 12 p.m. the roundtable was concluded.]
A P P E N D I X
=======================================================================
Prepared Statements
----------
Prepared Statement of Leslie C. Griffin
april 2, 2004
i. introduction
Thank you for inviting me here this morning to share the U.S.
Chamber's views on establishing a program to support commercial rule of
law development in China. As the largest business federation in the
world, with member companies of every size, sector, and region, the
U.S. Chamber is well placed to offer its views on issues of commercial
significance in the U.S.-China relationship.
The U.S. Chamber believes that there would be great value in
establishing a Commercial Law Development Program (CLDP) in China
consistent with Section 511 of U.S.-China Relations Act of 2000. New
initiatives and technical assistance provided under such a program
would help China strengthen its capacity to more fully implement its
WTO commitments and to create a more predictable and transparent
business environment for U.S. companies.
ii. u.s. chamber support for china's wto accession
The U.S. Chamber strongly supported China's accession to the World
Trade Organization.
It did so because of its belief that China's entry into the global
trading body would encourage the growth of private enterprises in
China, foster greater openness, deepen the country's reform efforts,
and help to create a sound business and legal framework.
The trade and investment liberalization measures to which the
Chinese government has committed itself are impressive and the steps
required to implement them are enormous. Well over 1,000 Chinese trade
laws, rulings, and regulations have been reviewed for WTO consistency,
and many new laws and regulations are being written to cover industries
previously off-limits to foreign participants.
Throughout the Chinese government, major departments have set up
WTO committees to review industry-specific laws. Meanwhile, millions of
officials, legislators and judges are being trained to regulate a
market economy. The challenge is particularly difficult in China's
interior, where few officials are familiar with the WTO's mandates.
Hundreds of WTO case studies are being translated into Chinese and WTO
training centers have been established in a number of cities.
Implementation of obligations as broad as China's was always
understood to be difficult, and American businesses have never assumed
that it would be a short or easy ride. In some respects, China's
implementation efforts have been impressive, and the rapid growth in
two-way trade and investment into China reflects this. But in other
areas, including intellectual property rights protection, transparency,
standards, and government procurement, among others, additional
progress is needed and a CLDP in China could be very beneficial.
China's leaders have made a serious commitment to WTO compliance
and to more transparent decisionmaking. But these same leaders
acknowledge that they don't have the depth of experience or trained
personnel on hand in many areas to carry through with the major
commitments the country has made in such areas as financial services or
the expansion of distribution rights. Having the opportunity to work
with Chinese officials outside the framework of a specific negotiation
or decision will allow U.S. officials to share expertise and best
practices, frame issues in a broader context, and generally encourage
greater cooperation in the future.
iii. continuing compliance challenges
Over the first 2 years of China's WTO membership, the U.S. Chamber
has undertaken to observe and encourage the country's progress with
implementing its WTO commitments through its China WTO Implementation
Working Group chaired by corporate leaders in a range of industries. In
its 2002 and 2003 reports, the Chamber highlighted both China's areas
of progress and its shortcomings. Without going into a long list of
sector-specific issues, let me highlight a small number of the broad
challenges faced by our member companies in China and the changes that
we hope to see before offering some thoughts on the potential benefits
of a commercial rule of law program in addressing these issues.
Transparency
Transparency in the legal and regulatory environment remains a key
concern for U.S. Chamber members operating in China. Improvements in
regulatory clarity and the consistent use of advance consultations
would do much to advance the prospects for success in industries
ranging from autos to direct selling to insurance to telecom.
In line with its WTO commitments, as well as internationally
accepted standards and good business practices, China should give both
local and foreign professionals a reasonable period of time to review
and comment on proposed new measures. The international experience that
many foreign professionals bring to China can be of great assistance in
the development and acceptance of market-oriented and economically
sound policies. Ministries should establish and maintain a regular
dialog with industry experts to address the needs of various sectors.
Regulators must not also be competitors in the marketplace. In the
area of
express delivery services, for example, China Post's regulatory
functions must be separated from its business functions. Similarly, in
the telecommunications sector, additional measures are necessary to
increase the independence of the regulator, the Ministry of Information
Industries, from the major state-owned operators in the telecom
industry.
China's transparency obligations will make its governing
institutions more accountable, thus limiting opportunities for
corruption. Government procurement transparency, for example, will help
stimulate competition and reduce the likelihood that business
opportunities will be directed to well-connected enterprises.
Intellectual property rights
After nearly 2 years of membership in the WTO, it is clear that the
China's intellectual property rights (IPR) enforcement system still has
significant weaknesses and is far from effective. Foreign investors in
China lose billions of dollars each year due to piracy and
counterfeiting.
Enforcement of IPR will not be effective until civil,
administrative, and criminal penalties are routinely applied to
infringers of IPR. While China's government at the central and
provincial levels carries out raids and other enforcement actions,
administrative penalties are small or nonexistent and there is no
commitment to pursue criminal prosecutions with deterrent penalties.
Counterfeit pharmaceuticals are a significant problem in China,
especially in the area of over-the-counter products sold outside of
hospitals, and the agriculture sector reports evidence of counterfeit
fertilizer. Pirated music, books, business software, movies, and video
games are also readily available on the market, and unauthorized use of
software by businesses is rampant, hindering the ability of both
indigenous and U.S. creators and rights holders to build successful
businesses. Newly emerging problems include Internet piracy, such as
the illegal and unauthorized download of online journals and other
materials. Moreover, counterfeiting is taking place in industrial
sectors such as the automobile industry, where there is increasing
theft of industrial designs.
The U.S. Chamber would like to see China undertake a coordinated
nationwide IPR enforcement campaign. The government should make
revisions to the penal code such that it fully applies to all rights
under copyright as well as all other piracy-related crimes. At the same
time, China should take more effective customs and border measures to
curtail the massive importation of pirated materials into the country.
To support these efforts, China should continue with its efforts to
train judges in IPR laws; provide adequate resources to relevant
police, prosecutors, and administrative agencies; and ensure that
penalties for intellectual property violations are sufficiently strong
to serve as a deterrent.
Standards
The U.S. Chamber is concerned about China's use of discriminatory
standards to erect barriers to fair competition. For example, China's
adoption of mandatory national technology standards that are out of
step with international standards efforts and that don't consistently
respect intellectual property rights are troubling to the U.S. IT
industry, many members of which have made significant investments in
China. With its strong manufacturing capabilities and rapidly growing
consumer base, China will play an increasingly important role in the
development of the Asian and global IT industry.
The U.S. Chamber would like to see the Chinese government
participate more actively in international standard setting bodies and
align China's national standard development efforts with
internationally recognized and developed standards and practices. In
addition, we hope to see the government foster respect for intellectual
property rights embodied in standards, including through the adoption
of rules that are consistent with international practice for the
treatment of intellectual property in standards negotiations. For
China, these steps will ensure the interoperability of products used
and/or produced in China with those in the rest of the world.
Government procurement
The U.S. Chamber is also concerned about China's use of the
government procurement law to protect local industry. The procurement
law came into force on January 1, 2003, and applies to all goods and
services procured by government entities. Implementing rules will
eventually be developed for all sectors, but the government is
beginning with the software sector. The way in which the law is
implemented for software will set a precedent for the way the other
sectors are treated. An open, competitive, transparent,
nondiscriminatory and technology-neutral government procurement regime
is in China's interest and in the interest of China's major trading
partners.
Detailed implementing regulations and a definition of local
software are expected to be released in May. U.S. industry has proposed
definitions of ``domestic'' to
Chinese authorities for their consideration, but it is unclear whether
this input will utilized. We encourage the Chinese government to make
the threshold for what constitutes ``domestic'' as low as possible to
maximize the number of U.S. companies that can participate in the
government procurement market for software.
iv. value of a commercial law development program in china
Since the passage of the U.S.-China Relations Act in 2000, the U.S.
Department of Commerce has conducted a number of technical assistance
seminars in China, including valuable training programs focused on
intellectual property rights, standards, and franchising. Private
sector commercial rule of law efforts also exist, such as the U.S.-
China Legal Cooperation Fund established by the U.S.-China Business
Council in 1998. The latter program has extended a number of important
grants over the years to support the further development of strong,
transparent, impartial, and equitable legal institutions in both
nations.
But despite the impressive efforts being undertaken by the U.S.
government and private sector to address China WTO compliance and
commercial rule of law issues, significant challenges remain. And in
the case of intellectual property protection, the challenges seem to be
expanding, not shrinking, in size and dimension. Beginning a Department
of Commerce-run Commercial Law Development Program (CLDP) in China
would make a much-needed contribution to the long-term improvement of
the business landscape faced by American companies in China.
CLDP programs operating in other parts of the world are helping
political, regulatory, judicial, and commercial leaders to make
important improvements in their policies, laws, and organizational
structures. Significantly, a major portion of CLDP's efforts support
WTO accessions and implementation of WTO disciplines, including in
areas like intellectual property rights, product standards, and market
access, among other areas. One can quickly see a link between the types
of challenges encountered by the U.S. business community in China and
the beneficial role that a CLDP program could play.
With respect to transparency and the need for a more consistent use
of advance consultations, for example, CLDP is working with host
countries to promote more transparent decisionmaking and to involve
businesses in the development of policies that impact them. CLDP
efforts resulted in the first-ever public outreach programs conducted
by the Russian Ministry of the Interior and regular business outreach
programs by the Albanian Ministry of Trade and Industry, to name but
two examples. And a CLDP program in Egypt has increased the acceptance
of U.S. standards by initiating a relationship between ASTM
International and the Egyptian Organization for Standardization and
Quality Control.
The importance of having a sustained U.S. Government program along
these lines in China becomes more clear when one considers the
commercial rule of law efforts being undertaken by other Chinese
trading partners, like the European Union. The EU is investing
significant efforts into the development of cooperative programs in
China that are geared toward improving the business prospects for
European companies in China. Currently, for example, the European Union
runs a EU-China Legal and Judicial Cooperation Program that helps to
address the concerns of European companies in China and raises the
profile of the EU in that market.
Launched in March of 2000, the program's focus is on reform of laws
in the criminal, trade/commercial, and administrative areas and on
capacity building in China's legal and judicial organizations. China's
Ministry of Commerce is the main executing agency, but other
implementing agencies include the Ministry of Justice, the Supreme
People's Court, and the National People's Congress. These are important
partners for the U.S. government to be engaging in a more sustained
way, through a program like CLDP, on commercial rule of law issues.
Standards represent a key issue on which the U.S. Government must
adopt a more active and strategic approach in China. The EU, the
Japanese, and others in many instances have a natural advantage on
standards because of their domestic industrial policies, and they work
hard to advance their companies' interests. Though in some cases U.S.
companies are involved in competing standards, which restricts the U.S.
government's ability to intervene, through a program like CLDP the U.S.
Government could marshal its advocacy resources for those sectors and
technologies in which there exists a unified U.S. company position.
v. support for other ngo efforts
Beyond the efforts that Commerce could carry out itself with its
own internal expertise, a CLDP could make new funds available for other
business, academic, and other non-governmental efforts focused on
promoting private sector participation in trade policy formation and
efforts to strengthen the commercial rule of law.
As one example, the U.S. Chamber-affiliated Center for
International Private Enterprise (CIPE) has expressed interest in
expanding its rule of law programs in China. CIPE's mission is to
promote democracy through economic reform and
private-sector development. CIPE would be effective in organizing a
series of workshops in China to explore mechanisms and policies
appropriate for the new
economic and social environment created by China's WTO membership. With
participation by local government officials, business executives,
legislators, economists, and lawyers, CIPE programs could, for example,
focus on the economic impact of China's WTO membership, emphasizing the
need for specific institutional changes including making the judicial
system more independent of government and political interests.
A CLDP also could support such initiatives as the new U.S.-China
Business Mediation Center, just launched in the fall of 2003. The U.S.
Chamber serves on an advisory committee to the Center, a commercial
dispute resolution facility that helps U.S. and Chinese companies
develop alternatives to adjudication of disputes that may arise between
them. The greatest obstacle to increased use of mediation between
Chinese and American businesses is a lack of awareness among companies
and lawyers of how mediation works and the business benefits that
mediation can offer. A CLDP could be useful in this regard.
A CLDP could also play an important role in coordinating these
various non-governmental efforts by sharing access to relevant players
and promoting consistent messages in ways that would make each effort
more effective.
vi. conclusion
The U.S. Chamber believes China has made a sincere commitment and
effort to comply with WTO obligations. But China does not currently
have sufficient personnel with the experience or technical background
and training needed to develop and implement market-oriented laws and
regulations. As one considers China's WTO shortcomings, it is important
to distinguish between areas where the country is willfully not
carrying through with a commitment versus those where there is a
legitimate effort underway but there is a lack of technical capacity to
get the job done. A CLDP program could be of great assistance in the
latter cases.
CLDP programs have made a meaningful contribution in countries all
around the globe, from Central and Eastern Europe to the Middle East to
Africa to the former Soviet Union. They certainly belong in China, a
country that holds so much opportunity for American companies of all
sizes and for the global economy. China's WTO compliance and economic
reform challenges are enormous and the U.S. Government should be
deploying all available resources and working cooperatively with China
on these efforts. Clearly the American business community has a strong
stake in China's success.
______
Prepared Statement of Linda Wells
april 2, 2004
mission
The mission of the US Department of Commerce Commercial Law
Development Program (CLDP) is to improve the legal environment for
doing business in developing and transitional countries around the
globe, and thereby foster greater political stability and economic
opportunity for local entrepreneurs and U.S. companies alike.
methods and issues
CLDP consultative services and training programs assist political,
regulatory, judicial and commercial leaders to identify and make needed
improvements in their policies, laws and organizational structures.
CLDP activities are designed to meet the evolving needs of its hosts.
They include, among other things, major conferences that introduce
large groups to new issues, highly technical skills training for small
cadres of local experts and resident (or itinerant) consultants who
spend significant time working in a country executing longer-term
projects or consulting on issues that benefit from on-going
cooperation. CLDP activities serve as a catalyst for change, enabling
leaders to take steps that, while important for the long term economic
health of their nation, may be difficult in the short term. As a U.S.
Federal agency, CLDP is particularly strong in providing government-to-
government assistance and in helping governments and their business
communities to communicate more effectively. Most CLDP activities are
funded by the US Agency for International Development.
During fiscal year 2003, CLDP conducted approximately 100 discrete
technical assistance activities. This is in addition to the daily
assistance provided by CLDP's overseas offices and resident advisors
and the information provided by the websites and newsletters CLDP
sponsors.
A significant portion of CLDP's activities support WTO accessions
and implementation of WTO disciplines including laws and procedures
affecting intellectual
property rights, customs valuation, market access, trade remedies, and
product standards, among other things. In addition to its work with
respect to WTO disciplines, CLDP provides technical assistance with
respect to mortgage, insurance and other financial service regulatory
matters, government, judicial and business ethics, public procurement,
electronic commerce, anti-trust, privatization of state-owned
enterprises, alternative dispute resolution, investment, judicial case
management, trade policy analysis, econometric modeling, project
finance, trade finance, spectrum management, public notice and comment
processes and negotiation skills.
CLDP also provides support to local business, research and
governmental organizations that promote private sector participation in
trade policy formation and
regional legal harmonization (merging common law and civil law
traditions, for example) and regional economic integration (simplifying
cross-border trade within a region).
In addition to its policy and skills oriented activities, CLDP
works with leaders to develop more effective intra-ministerial and
intra-governmental organizational structures and administrative
procedures.
results
Since its inception in 1992, CLDP has provided technical assistance
to more than fifty countries in Central and Eastern Europe, the former
Soviet Union, the Middle East, Northern and Sub-Saharan Africa and
South-East Asia. In addition to maintaining full-time advisors and
assistance support offices in Moscow, Kiev, Chisinau, Riga, Vilnius,
Tallinn, Bucharest, Sofia and Tirana over the years, CLDP has conducted
more than 500 separate training and short-term consultation programs
and provided training to more than 8,000 policymakers, regulators,
judges, lawyers, teachers and business persons.
CLDP provided WTO accession technical assistance to six of the
first eight post-Soviet states to join the WTO (Bulgaria, Estonia,
Latvia, Lithuania, Albania and Moldova). CLDP also is working with the
governments of Russia, Ukraine and Algeria to facilitate their WTO
accessions. CLDP continues to provide assistance to Moldova, Albania,
Egypt and other nations struggling to implement their WTO commitments.
CLDP assistance has been instrumental in public procurement reform,
adoption of investment, intellectual property, insurance, mortgage, and
a wide range of other legislative and regulatory reforms in many of its
host countries. CLDP has assisted with the creation or reorganization
of trade policy agencies in Eastern Europe, the Middle East and
Northern Africa, anti-monopoly offices in Northern Africa and Eastern
Europe, and intellectual property regulatory and business organizations
in Nigeria, to name a few.
CLDP also has served as a catalyst for regional economic
integration in Eastern Europe, Sub-Saharan Africa and Western Africa
through facilitation of the negotiation and implementation of free
trade agreements and the creation or strengthening of regional
organizations working to promote harmonization of laws, regulatory
procedures and dispute resolution mechanisms of importance to business.
CLDP is working with all of its host countries to promote more
transparent decisionmaking and, in particular, to involve businesses in
the formation of policies that affect them. These efforts have resulted
in the first-ever public outreach programs conducted by the Russian
Ministry of the Interior and regular business outreach programs by the
Albanian Ministry of Trade and Industry, to cite but two examples.
In addition to the direct results of its technical assistance, CLDP
has found that its activities have equally important indirect benefits.
First, the exposure to new, market-oriented ideas helps host
country participants to explore concepts that may be totally unfamiliar
to them or with which they may have only enough familiarity to feel
uncomfortable, and therefore resistant, when expected to incorporate
the concepts into their daily work. Having the opportunity to discuss
the concepts with knowledgeable parties outside the context of a
specific negotiation or decision enables them to become comfortable
with the issue, to understand its broader significance and to
understand how it affects their role and the concerns of their
constituencies. This, in turn, results in more effective participation
in future negotiations and better decisionmaking when presented with
these issues in the course of their work.
Second, experience has shown that principles shared during the
course of technical assistance activities blend into other aspects of
the participants' lives. An official who grasps the benefits of
transparency and has learned to incorporate transparent procedures in
one aspect of his work, for example, is more likely to incorporate such
procedures in additional aspects of his work, and to demand that others
do the same.
Third, the opportunity to discuss issues of common interest outside
the demands of our official relationships has enabled all participants,
whether from the US or abroad, to develop a better understanding of the
challenges we all face, the special obstacles that each country must
grapple with and the values and processes we are applying when making
decisions. Counterparts from both countries also have an opportunity to
spend time working together toward a common objective. All of this
leads to better communication and generally better cooperation in the
future; we and our overseas partners know who to call if a question or
a problem arises and what each of us is likely to consider in trying to
address the matter.
synopsis of cldp programs
CLDP has conducted too many assistance activities to note here with
any completeness, but the following provides a brief synopsis of its
work.
Central and Eastern Europe
CLDP assistance in Estonia, Latvia, Lithuania, Poland, the Czech
Republic, Slovakia, Romania and Bulgaria and Albania concentrated on
WTO accession, public procurement, government ethics, intellectual
property rights, foreign investment, project and trade finance,
customs, export controls and product standards matters. The countries
with which CLDP worked on WTO accession and export control matters all
succeeded in joining the WTO in relatively short order after CLDP began
working with them and all became founding members of the Wassenauer
Arrangement. These CLDP programs (other than in Albania) ended in the
mid-1990s when AID closed or curtailed its funding for work in those
countries.
In 2000, CLDP returned to the region as part of the USG's Stability
Pact activities with the twin objectives of promoting trade
liberalization in each of the countries in the region and promoting
greater trade and economic integration within the region. CLDP and
other donors are working with Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, Macedonia, Romania and Yugoslavia on this project.
In addition to these regional efforts, CLDP has been working with
Albania continuously since 1992, first to help with the creation of key
commercial laws and the introduction of market-oriented policies, then
to support Albania's WTO accession and now to aid implementation of its
obligations as a new member and to strengthen its technical capacity to
make sound trade policy decisions.
New Independent States
CLDP began working with Russia, Ukraine and Moldova in the mid-
1990s to
facilitate their accessions to the WTO, including the policy,
legislative, regulatory, negotiation, communication and other skills
development work inherent in those countries' transition to market
economies and to WTO compliance. The focus of CLDP's work in Moldova
shifted to implementation with their recent accession. CLDP's Ukrainian
program continues to support the working party process, but has a
particular emphasis on improving intellectual property rights
protection. In addition to ongoing efforts to support the working party
process and legislative reform, CLDP's activities in Russia have added
significant efforts to encourage public outreach and to assist with
sub-national implementation of WTO commitments that Russia will be
making. CLDP also conducted a limited program in Russia with the
objective of improving communication among Russian law enforcement
bodies and between them and the Russian business community,
particularly US businesses operating in Russia.
Middle East and North Africa
CLDP's Egypt program is quite eclectic, incorporating work in
intellectual property rights, trade policy, anti-trust, trade remedies,
alternative dispute resolution, mortgage and insurance regulation, e-
commerce-related spectrum management issues, and training of diplomats
in economic policy and international commerce issues, among other
things. CLDP, which was a relative late-comer to the Egyptian
assistance provider community, has been able to work very successfully
with other assistance providers to complement their work by providing
information or advisors to which they did not have the same level of
access as CLDP or by being able to fill specific assistance requests on
very short notice.
CLDP's work in Northern Africa (Tunisia, Algeria and Morocco) has
concentrated primarily on electronic commerce, public procurement,
anti-trust, insurance regulation, technology sector development and WTO
accession/compliance issues. In 2003, CLDP also launched a program to
support negotiation and implementation of the Moroccan Free Trade
Agreement.
We expect to launch a regional commercial law and financial
services reform program that will involve most of the countries of
North Africa, the Middle East and the Gulf as part of the Middle East
Partnership Initiative during 2004.
Sub-Saharan Africa
In West Africa, CLDP has focused on alternative dispute resolution,
judicial case management, intellectual property rights, judicial ethics
and investment codes and has fostered creation of several international
committees, all with the overall objective of increasing regional legal
integration. Countries participating in the West Africa program include
Benin, Burkina Faso, Cameroon, Chad, Congo, Cote d'Ivoire, Equatorial
Guinea, Gabon, Guinea, Guinea Bissau, Mali, Niger, Nigeria, Senegal and
Togo.
In Nigeria, CLDP's work has concentrated on improving the
protection of intellectual property rights through strengthening the
public and private stakeholder organizations, fostering dialog between
them modernizing the legislative and regulatory framework for
protection of patents, trademarks and copyrights and increasing public
appreciation of the value of (and need to respect) intellectual
property rights.
CLDP worked with the Southern African Development Community (SADC)
to help its members self-diagnose compliance with their TRIPs
obligations and to develop strategies for bringing themselves into
compliance and for using the SADC administrative structures to
facilitate that result. Countries participating in the SADC program,
which has now concluded, were Angola, Botswana, Lesotho, Malawi,
Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland,
Tanzania, Zambia and Zimbabwe.
CLDP has been working with Angola to introduce modern judicial case
management techniques into the Angolan courts to support their efforts
to improve both the speed and transparency with which matters are
handled by the court.
CLDP also conducted four programs to introduce sub-Saharan business
persons to the African Growth and Opportunity Act (AGOA) and to
demonstrate how to take advantage of its incentives. Business and
government representatives from Benin, Botswana, Burkina Faso, Burundi,
Cameroon, Cape Verde, Central African Republic, Chad, Congo, Cote
d'Ivoire, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Ghana, Kenya,
Lesotho, Malawi, Mali, Mauritania, Mauritius, Namibia, Niger, Nigeria,
Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland,
Tanzania, Uganda, Zambia and Zimbabwe attended the AGOA programs.
Asia
Ad hoc funding arrangements have enabled CLDP to conduct a limited
amount of work in Asia.
A CLDP-sponsored consultant worked with Vietnamese officials to
draft Viet Nam's first commercial code and CLDP staff members have
provided support on WTO and trade policymaking concepts.
In April of 2000, CLDP Chief Counsel Linda Wells participated in a
two-week State Department Rule of Law program designed to share WTO-
related information with the Chinese and to gauge their knowledge of
the issues and their receptiveness to potential technical assistance on
WTO and other commercial law matters. The 2002 and 2003 annual reports
of the Congressional-Executive Commission on China included
recommendations that Congress appropriate funds to establish a CLDP
commercial rule of law program with China. CLDP is working with the
Department and others to endeavor to secure funding that would enable
it to engage in a more comprehensive cooperative program with China.
Latin America
CLDP has been asked on a number of occasions to provide technical
assistance to nations in the Western Hemisphere, particularly with
respect to transparency and trade issues. Several states have indicated
that they would like CLDP support as they prepare to enter into the
Free Trade Agreement of the Americas and the intermediate agreements
that will lead to it. CLDP is seeking the funding needed to fulfill
such requests.
For additional information, please contact the CLDP office in
Washington, DC.
Commercial Law Development Program, Office of General Counsel, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230 USA. Telephone: 202-482-2400; facsimile at 202-
482-0006; e-mail: cldp@doc.gov.
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