March 23,2000

Roth Statement at Hearing on Trade with China and Its Implications for U.S. National Interests

WASHINGTON -- The Senate Finance Committee met today to hear testimony on trade with China and to consider its implications for U.S. national interests. Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) delivered the following opening statement:

"This hearing is the second in a series the Finance Committee will conduct on China's accession to the World Trade Organization. I wish to announce that this morning I and Senator Moynihan, introduced in the Senate the legislation the President sent up to Congress that would enact permanent normal trade relations for China. We will require the President's continued strong support and an equally strong bipartisan effort here in Congress to ensure the consideration and movement of this legislation.

"Before we get started, I think it would be helpful to clarify once again what the vote on PNTR for China is all about. The vote on PNTR will not decide whether China gets into the World Trade Organization. China will accede to the WTO regardless of how Congress votes on PNTR.

"The question before Congress is whether our exporters will gain access to the Chinese market on the same terms as their competitors -- whether, after 13 years of arduous negotiations to open the Chinese market and encourage their adherence to a rules-based international trading system, we will now forego the benefits of that deal.

"Under the WTO, if we impose conditions on our trading relationship with China, even in the form of an annual vote, we will not have granted China the same access to our market as we have other WTO members. That, in WTO terms, would require us to invoke what is known as 'non-application,' meaning that we cannot fulfill the terms of our own WTO obligations with respect to China.

"In that event, China would be entitled to deny our exporters access to their markets on the terms available to all other WTO members. The losers will not be the Chinese government. Nor will the losers include heavily-subsidized state-owned industries in China that are the principal source of labor problems.

"The losers will be American firms and American workers who will be denied the opportunity to compete on a level-playing field with their British, French, German, and Japanese competitors. The losers will also include Chinese workers who will have no alternative but to work for state-owned Chinese firms that would deny them basic labor rights, or foreign firms that have in the past proved significantly less sensitive to labor concerns than have American firms.

"As a technical matter, the passage of PNTR will simply remove China from the ambit of the Jackson-Vanik amendment. Our focus today is on whether removing China from the scope of the Jackson-Vanik's freedom of emigration requirements has broader implications for U.S. national interests.

"That issue has been joined by the Administration's delivery of its PNTR legislation to the Congress in response to the concerns expressed by this Committee at our hearing last month. The President sent us a clean bill that simply authorizes the removal of China from the scope of the Jackson-Vanik amendment upon accession to the WTO, provided that the deal is consistent with the terms agreed to this past November between the United States and China.

"China's statements since our last hearing, on the other hand, have continued to be troubling. In the run-up to the presidential election in Taiwan this past Saturday, the PRC raised its rhetoric to new levels of hostility. As in Taiwan's last presidential contest in 1996, the people of Taiwan chose to shrug off the threats from Beijing. And in another manifestation of the island's democratic maturity, the people elected a President from the opposition Democratic People's Party for the first time.

"Lost in the sharp exchange of words has been Taiwan's consistent support for trade with China and China's accession to the WTO. Just two days ago, Taiwan's parliament dropped a five-decade-old ban on direct trade, transport and postal links between two of Taiwan's offshore islands and mainland China. And President-elect Chen was quoted in yesterday's L.A. Times as saying, 'We would welcome the normalization of U.S.-China trade relations, just like we hope the cross-strait relations [between Taiwan and China] can also be normalized,' Chen said. 'We look forward to both the People's Republic of China's and Taiwan's accession to the WTO.'

"I think it's also important to remember that within China it's the hardliners and the PLA who are most opposed to China joining the WTO. That's because they are the ones who most fear the forces China's greater economic openness will unleash.

"The fact that Taiwan supports China's global economic integration and PRC hardliners and the PLA adamantly oppose it, in my view only makes support for China's accession to the WTO and passage of PNTR legislation more important.

"We're fortunate today to have among our witnesses an array of experts who can address the impact of granting PNTR to China and that country's accession to the WTO on U.S. economic, political, military interests, and on other matters central to U.S. concerns such as labor conditions, human rights and religious freedom."