FROM THE OFFICE OF PUBLIC AFFAIRS May 3, 2000LS-601 TESTIMONY BEFORE THE HOUSE COMMITTEE ON WAYS AND MEANS Chairman Archer, Ranking Member Rangel, and Members of the Committee, I thank you for the opportunity to testify today on what I believe to be the most important issue that Congress will face this year: the decision to grant China permanent Normal Trade Relations, or PNTR. Last fall, the United States signed a bilateral agreement with China to bring it into the World Trade Organization, on strong terms that will open its markets to American exports. After China completes its agreements with other countries, and completes the multilateral part of the negotiation, it will join the WTO. But for us to enjoy the full benefits of the market opening that we negotiated, we must first grant China the same permanent normal trading status that we have already granted to every other country with which we share the benefits of the WTO. The legislation presently before Congress enables the United States to grant PNTR to China once it has completed its accession, provided that it is on terms at least as good as those in our 1999 bilateral agreement. In fact, the terms can only get better, as we benefit from all further concessions China makes to other countries. I will discuss in a few moments the concrete commercial advantages for the United States of passing this bill. I believe they are enormous. Moreover, the agreement with China is a one-way street. China opens its markets to an unprecedented degree, while in return the United States simply maintains its current market access policies. It is also important to keep in mind what granting PNTR to China is not:
It is difficult to discern any disadvantage to the United States in passing this legislation. We will continue to press our full agenda with China regardless of how Congress votes. And China will open its markets to other members of the WTO when it joins the system, regardless of how Congress votes. There are, however, three crucial advantages to the United States in passing this bill, which I would like to focus on today:
First, the economic and commercial benefits of granting PNTR are significant and all on the side of US businesses and workers. By passing PNTR, we will be agreeing to continue to grant China the same access to our markets that its producers currently enjoy. What we will get in return - as a result of the agreement we concluded last fall - is unprecedented new access to what could ultimately become the largest market in the world. I might note that it is evidence of the compelling nature of these benefits that economists reflecting the full diversity of academic opinion have been united in their support for the Administration's approach. On April 25, 138 economists, including 13 Nobel Laureates, released a joint letter to the American people strongly supporting China's accession to the WTO on the terms that we negotiated last fall. It has sometimes been remarked that asking five economists a question will generate ten different answers. On this issue there has been only one answer: that welcoming China into the global economic system is right for the American economy and for the global economy. The scope of this new access is impressive, with reductions in tariff and non-tariff barriers on industrial and agricultural goods and the elimination or reduction of barriers to American service providers:
In addition to this new access to China's markets, we will benefit from unprecedented special safeguards and protections to defend American workers and farmers from import surges, unfair pricing, and abusive investment practices. No agreement on WTO accession has ever contained stronger measures. Notably:
We are already preparing for the most intensive enforcement and compliance effort ever mounted for a single trade agreement. The President has requested an additional $22 million for new enforcement and compliance efforts, which will focus in large part on China. The Administration's aggressive monitoring and enforcement efforts will include the private sector, other WTO partners, and Congress. For the first time, China's compliance will be subject to multilateral enforcement under the WTO dispute settlement mechanism, which will force China to comply with WTO rulings or be subject to trade sanctions. II. America's Stake in Promoting Successful Market Reform in China There are also crucial indirect advantages for the United States in China's WTO membership in that it will both support the cause of market reform within China - and provide an effective rule-based framework for future Chinese reforms to take place. China has come a long way since the beginnings of market reforms a little over 20 years ago. Its economy has grown by more than 350 percent in real terms. It has risen to being the 10th largest trading nation. And the number of Chinese with access to a television has risen one hundred-fold, to one billion. This transformation has brought enormous benefits for the Chinese people. But it has also unleashed new forces for change in the Chinese economy and society more broadly, forces that the authorities fear they will ultimately be unable to control. As a result, there are powerful voices within China today in favor of halting, or even reversing, the process of economic reforms - and all that reform implies. By supporting China's decision to sign this agreement and enter the WTO:
The potential economic and broader benefits of supporting the forces of Chinese reform are evident when we consider the impact on China's growing technology sector. By the end of this year, some analysts predict that China will become the world's second largest market in both telecommunications and personal computers. Last year the number of Chinese Internet users quadrupled, from 2 million to 9 million. And this year, it should more than double, to 20 million. No amount of censorship or monitoring can completely control this explosion of information. WTO membership will not only open Chinese markets, but will also provide China's people with an unprecedented opening to the outside world. As the President has said: consider how much the Internet has changed America, which is already an open society, then imagine how much it could change China. Already, in the wake of the agreement last fall, there are clear signs of renewed commitment to reform at the highest levels of the Chinese leadership, a commitment that is expressly linked to the need to prepare the economy for tougher competition from the outside world.
We recognize that the kind of changes that we seek to support in China will not happen overnight. In the meantime, the United States will remain continuously vigilant on human rights abuses in China, and we will continue to express forcefully our disapproval when such abuses occur. The Administration already engages the Chinese on this issue through bilateral channels, monitors the situation continuously and issues annual reports. We are, however, convinced that we will have much more positive influence over China's behavior if we are actively engaged with China, rather than trying to isolate it. And I might note that a large number of prominent activists in this area have the same view. For example:
Finally, a policy of welcoming China into the community of nations - rather than being a voice that keeps China out, even when it commits to live by the rules - is a policy that supports our deepest national security interests and values. Ever since the rise of Assyria and Sparta, emerging economic strength and major changes in the economic balance of power have raised the specter of war and conquest. In this century alone we have seen two World Wars that followed closely on the emergence of major new economic powers. And the pace of economic change in China over the past 20 years - and indeed through much of Asia - is literally unprecedented in history, with standards of living for hundreds of millions of people quadrupling or more in a single generation. This has so far been achieved with the minimum of conflict, despite the pervasive rivalries between the peoples of Asian nations, is a reflection of the progress that has been made across the region toward openness and integration. And it speaks to the success of postwar international institutions in helping to cement that progress. But if the next quarter century in Asia is to be as successful as the last, it will be crucial that China use its emerging power in a constructive way, that it fits into the global economic system, and that it continues to maintain economic growth and stability. As President Clinton has said, if we have learned anything in the last few years, it is that rapidly changing, insecure nations can pose as a great a challenge to the United States as strong and confident ones. Our long-term strategy must be to encourage the right kind of success in China: to help it grow into a strong, prosperous and open society; to come together not fall apart; and to become part of institutions that promote our deepest values and interests and can build mutual trust. And we have a much greater chance of having a positive influence if we welcome it into the broader global system. By learning to "play by the rules," both internationally and domestically, China will strengthen the rule of law, which will enable it to become a more reliable partner and a fairer society. It can even lay the groundwork for protection of core values in China, such as human rights, religious freedom, workers' rights and environmental protection. We believe that in a 21st century global economy, China will increasingly have to recognize that, to maintain stability and growth at home, it must meet, rather than stifle, the growing demands of its people for openness and accountability. We must not seek to cut China off from the economic and broader forces that are most likely to change it in the right direction. This is not a policy based on mutual affection. As I said at the beginning, we can and will continue to express our differences with China both forthrightly and consistently. Simply bringing China into the WTO does not guarantee that its government will take a responsible, constructive course. But it will lead the authorities to confront that choice sooner, and it will make stronger and more visible the imperative to make the right choice. IV. Concluding Remarks Mr. Chairman, I have emphasized today three key reasons: the commercial benefits to the US of this agreement; America's deep economic and broader interest in China's continuing evolution; and our deep national interest in a more stable and peaceful global system. This is why we believe granting China PNTR to be enormously in America's core interests. As important as PNTR is, we recognize that it is but one piece in a much larger mosaic as we consider the kind of China we would like to see - and the kind of global economic system that we want to create. The President has called it "the challenge of the millennial generation...to create a world trading system, attuned both to the pace and scope of a new global economy and to the enduring values which give direction and meaning to our lives." If we want this new global economy to work, we have to make sure it works for people. And we have to make sure it works to support our deep values. This imperative will continue to guide our international economic policy more broadly - in areas ranging from our support for international efforts to address environmental problems, to support for core labor standards. And it can and must continue to guide our broader policy toward China in the months and years ahead. In this context, let me say that the Administration believes that the proposals being developed by Congressman Levin with others are constructive, address issues of major importance, and we welcome further dialogue on these proposals among Members on both sides of the aisle. For example:
The Administration could not, of course, accept anything that would in any way condition PNTR. However, we are committed to working with Congress to address these concerns, and are receptive to ideas that make good substantive sense and can garner broad bipartisan support.Mr. Chairman, granting PNTR to China represents but one of the aspect of the relationship with China that we will be pursuing in the years ahead - and one piece of the global economic system we would like to build. It will, however, be an exceptionally important piece - one that is fundamentally supportive of our broader long-term economic and broader national interests. Indeed, with due respect to all the other issues we work on, I believe this is the only vote that Congress will take this year that is likely to appear in a prominent way in history books 25 or 50 years from now. I look forward to working with this Committee and the House as we work toward the best result on this crucial issue. Thank you. |
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