September 05,2000

Roth Urges Normalized Trade Relations With China

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today urged support for normal trading relations with China. His statement from the Senate floor follows:

"Mr. President, I rise today to encourage my colleagues to support the motion to proceed to H.R. 4444 and to pass this legislation without amendment. Our vote on normalizing trade relations with China will mark the most significant vote we take in this Congress. Indeed, it will be one of the most important votes we will take during our time in the Senate.

"At the outset, I want to be clear - because of PNTR's significance and because we have so little time left before the 106th Congress adjourns, I will oppose all amendments to PNTR, regardless of their merit.

"The House bill takes the one essential step that we must take to ensure that American workers, American farmers and American businesses reap the benefits of China's market access commitments.

"There is nothing that we can add to this bill that will improve upon its guarantee that our exporters benefit from the agreement it took three presidents of both parties 13 years to negotiate with the Chinese.

"I ask my colleagues to join me in adopting this approach because the risks of going to conference on this bill, in this political season, are too great. Bluntly, a vote to amend is a vote to kill this bill and, with it, any chance that U.S. workers, farmers and businesses will benefit from China's accession to the WTO.

"The significance of this vote is due both to the economic benefits that will flow from opening China's market to our exports and the broader impact that normalizing our trade will have on our relationship with China. I want to address each of those points in turn.

"Let me clarify, first, what this debate is about. The vote on PNTR is not a vote about whether China will get into the World Trade Organization, as some have said. I assure you that China will get into the WTO whether we vote to normalize our trade relations with China or not.

"What this vote is about, as I indicated at the outset, is whether American manufacturers, farmers, service providers and workers will get the benefits of a deal that American negotiators under three presidents of both parties fought for 13 years to achieve. Or, will we simply concede the benefits of that deal to their European and Japanese competitors for the Chinese market?

"As I explained just prior to the August recess, my reason for supporting this legislation is first and foremost because of the benefits that normalizing trade with China will offer my constituents back home in Delaware.

"China is already an important market for firms, farmers, and workers located in my state. Delaware's exports to China in many product categories nearly doubled between 1993 and 1998. Delaware's trade with China now exceeds $70 million.

"What China's accession to the WTO means to Delaware is a dramatic further opening of China's markets to goods and services that are critical to Delaware's economy. China, for example, is already the second leading market for American poultry products worldwide.

"Poultry producers in Delaware and elsewhere have built that market in the face of both quotas and high tariffs. China's accession to the WTO will mean that the tariffs Delaware poultry producers face will be cut in half, from 20 to 10 percent, and quotas that now limit their access to the Chinese market will be eliminated.

"Normalizing our trade relations with China will also make a huge difference to the chemical and pharmaceutical industries which make up a significant share of my state's manufacturing base.

"In the chemical sector alone, China has agreed to eliminate quotas on chemical products by 2002 and will cut its tariffs on American chemical exports by more than one-half.

"Delaware is also home to two automobile manufacturing plants, one Chrysler and one Saturn. Once in the WTO, China will be obliged to cut tariffs on automobiles by up to 70 percent and on auto parts by more than one-half.

"The agreement also ensures that U.S. automobile manufacturers will be able to sell directly to consumers in China and finance those sales directly as our auto companies do here in the United States.

"What holds true for Delaware holds true for the country as a whole. Independent economic analysis by Goldman Sachs suggests that the package may mean an increase of as much as $13 billion annually in U.S. exports to China. That's right - $13 billion annually.

"What that figure reflects is the fact that China's accession to the WTO will benefit every sector of the U.S. economy from agriculture to manufacturing to services:

• Agriculture tariffs will be cut by more that half on priority products like beef, pork, and poultry. China will also eliminate many of the barriers to sales of bulk commodities such as wheat, corn and rice.

• Industrial tariffs would be slashed across the board by more than one-half -- from an average rate of 24 percent to 9 percent. Equally important, American exporters will be able to sell directly to Chinese consumers and avoid the restrictions imposed on their sales by the state-owned enterprises they must currently use to distribute their products in China.

• The deal will create broad new access for American services like telecommunications, banking and insurance. In particular, I want to stress that China not only agreed to open its market to new ventures in the banking and insurance areas but agreed to grandfather the existing hard-won market access that American financial service firms have already achieved. I expect those obligations to be met fully by the Chinese.

• The agreement also provides unprecedented safeguards to American manufacturers here at home. The agreement reached this past November permits the United States to invoke a country-specific safeguard against imports from China that may disrupt our markets. In addition, the agreement allows the United States to apply special rules regarding unfair pricing practices by Chinese firms for 15 years after the agreement goes into force.

• The agreement even addresses a concern that has been raised by many concerned with the efforts of China to convert U.S. technology to military uses. The WTO agreement specifically obliges China to end the practice of demanding that American firms cough up their manufacturing technology as a condition of exporting to or investing in the Chinese market.

• Significantly, the agreement and China's accession to the WTO gives the United States rights against Chinese trade practices that we do not currently enjoy. It also ensures that the United States has a forum in which it will benefit from the support of the rest of China's WTO trading partners should disputes over China's obligations arise.

"In the Finance Committee, which I chair, we devoted many hours to consultations with the President and his representatives as the negotiations proceeded.

"We devoted an equal number of hours to a review of the agreement finally reached this past November. I believe I can speak for my colleagues on the Committee in saying that there was overwhelming support for the agreement so ably negotiated by Ambassador Barhshefsky.

"That support is warranted not only by the terms of the agreement, but by the testimony we heard and the support expressed from a broad and diverse spectrum of U.S. interests.

"The agreement was supported not only by U.S. businesses, American farmers, and groups representing virtually every sector of the U.S. economy. The agreement garnered the support of Presidents from Gerald Ford to George Bush, former Secretaries of State and Treasury, and an impressive array of national security specialists from Richard Perle to General Colin Powell all of whom underscored the importance of China's accession to the WTO and normalizing our trade relations with China as good not only in economic terms but in strategic terms as well.

"The testimony before the Finance Committee left little doubt that China's re-emergence as a world power presents challenges to the world community and to U.S. interests. But, the testimony before the Committee was unequivocal on one point - that our interests are best served by drawing China into that community of nations, rather than isolating China from that community through restrictions on trade.

"General Powell said it best in his public statement on PNTR, indicating that --

'. . . from every standpoint -- from the strategic standpoint, from the standpoint of our national interests, from the standpoint of our trading and economic interests -- it serves all of our purposes to grant permanent normal trading relations to China.'

"Opponents of this legislation have often tried to downplay the importance of normalizing our trade relations with China. They argued that we are entitled to the benefits of the WTO agreement based on our bilateral trade arrangements with China dating back to 1979. They argue that we will suffer no competitive disadvantage if we fail to take the steps necessary on our end to comply with our own WTO obligations.

"I want to lay that argument to rest. That argument was contradicted by Ambassador Barshefsky, by our own legal counsel, and by every trade expert consulted by the Finance Committee.

"However, just to make sure, my distinguished colleague and the Ranking Member of the Finance Committee, Senator Moynihan and I, together with the Chairman and Ranking Member of the House Ways and Means Committee, specifically put that question to the General Accounting Office.

"The GAO has had a team following the WTO negotiations with the Chinese closely for several years. We asked them for their assessment of the terms of the agreement and whether we could rely on our 1979 agreement to obtain the benefits of China's accession to the WTO.

"The GAO, in testimony before the Committee and in a report it released prior to House passage of PNTR, concluded that the 1979 bilateral arrangement would not guarantee the rights three presidents of both parties spent 13 years negotiating with the Chinese.

"According to the GAO, the essential step in obtaining the benefits of China's accession to the WTO was the passage of PNTR. Indeed, the GAO emphad that failure to approve PNTR would "put U.S. business interests at a considerable competitive disadvantage" in the Chinese market.

"In other words, the single step we must take to obtain the benefits of the Chinese agreement to open their markets is the passage of H.R. 4444.

"In light of that fact, let me turn briefly to an explanation of the legislation before us. The bill authorizes the President to normalize our trade relations with China when China has completed the WTO accession process provided that the terms of China's accession are equivalent to those negotiated this past November.

"That action will assure that American firms, farmers, and workers will receive the benefit of the bargain Ambassador Barshefsky struck with China.

"But, the House bill does considerably more to ensure that we get the benefit of our bargain and more to address many of the concerns that opponents of this legislation have raised regarding China's human rights practices and more to encourage the development of political pluralism in China.

"On the trade front, the House bill provides for the aggressive monitoring of China's compliance with its WTO obligations and the enforcement of U.S. rights under the WTO agreement.
"The bill would offer particular help to small and medium- businesses, and to workers, in making use of the remedies available under U.S. law to address any violations of U.S. WTO rights or to address any unfair Chinese trade practices.

"In addition, the House bill implements the special safeguard mechanism that was a part of the November agreement. In effect, the bill provides the counterpart in domestic law to the provisions of the bilateral agreement that offer import-sensitive industries in the United States protection in any dramatic surge in imports from China that disrupt U.S. markets.

"The bill also addresses a concern that I am sure all of us share with respect to Taiwan's economic future. Taiwan has applied for admission to the World Trade Organization and its accession process is essentially complete.

"The House bill expresses the sense of Congress that the WTO should approve Taiwan's accession to the WTO at the same time that it approves China's. As a matter of WTO rules, there is no need to debate Taiwan's designation or its relationship to China. The WTO rules permit the accession of Taiwan regardless of its designation.

"China has long provided assurances that it would not stand in the way of Taiwan's accession at the same time China itself enters the WTO, and I expect China to live up to those assurances, just as the House bill makes clear.

"Apart from securing the trade benefits of China's accession to the WTO, the House bill represents an important step forward on the issues of human rights, internationally-agreed labor standards, and religious freedom.

"In an innovative approach, the bill would create a commission made up of members of both the Congress and the Executive Branch, modeled on the successful domestic counterpart to the Helsinki Commission on human rights, to monitor Chinese practices in those areas, as well as the development of the rule of law and democracy.

"One of the significant advantages of the approach adopted by the House bill is that it ensures a constructive, ongoing review of China's practices throughout the year, rather than what has become an unproductive once-a-year effort tied to a congressional vote.

"More fundamentally, the commission will ensure that the United States' concerns and our message to the Chinese leadership regarding Chinese human rights practices is undiluted by a debate over whether to renew China's trade status.

"There are some who have suggested that the bill should have gone farther. They suggest that the bill should have empowered the proposed commission to address national security concerns as well.

"Those concerns, however, have been mooted by the recent action taken by the Senate in the context of the Defense Authorization bill. I want to congratulate my distinguished colleagues, Senators Warner, Levin and Byrd, the Chairman of the Armed Services Committee, the Committee's Ranking Member, and one of the most senior members of that panel for proposing the creation of a separate commission to look at precisely those issues of national security and the link between those issues and our expanding trade relationship with China.

"In sum, the House bill preserves what we in the Finance Committee sought to do in the bill we reported out, which was to ensure that American firms, farmers and workers gain the benefits of the agreement reached this past November and takes additional steps to secure those trade benefits and offers a new approach to addressing U.S. concerns regarding human rights practices in China.

"I believe that H.R. 4444 not only merits our support, but that it strikes a careful and appropriate balance of the interests we have in our broader relationship with China.

"For that reason, I intend not only to support the legislation as drafted, but, as I said at the outset, I will oppose any amendment to the House bill no matter how meritorious the amendment might be standing on its own.

"That brings me to my final point. There are a number of my colleagues that see this vote as an opportunity to link other issues to our trading relationship with China.

"I am certain that we will have the opportunity to debate amendments on everything from the release of political prisoners to China's implementation of a "one child" policy to its recurring threats against Taiwan to issues of weapons proliferation. I respect my colleagues point of view and recognize that these are serious issues that should remain a part of the broader dialog with China on our bilateral relations.

"What I fundamentally disagree with is the approach of linking progress in those areas to our trade with China.

"I do so for three reasons. First, the approach of linking progress to our trading relations with China has proved to be a failure. We have tried the approach of linking progress in other areas, such as human rights, to trade and it simply has not worked. It is time to try a different approach.

"Second, the threat of economic sanctions would only work if the target country feels that there is something fundamental at risk. Here, I want us to think through the logic of voting no on PNTR. The net effect of a no vote on PNTR would be to cut off U.S. exports to China.

"China already has access to our market. We do not enjoy reciprocal access to China's market. That is what the WTO agreement provides. In voting no on PNTR, we would only be voting to deny ourselves the benefits of the WTO agreement to American firms, farmers, and workers.

"Denying ourselves the benefit of the WTO agreement is simply no threat to the Chinese. They will simply obtain the goods, services and technology they want from other WTO members.

"In other words, even if you accepted the logic of economic sanctions, voting no on PNTR does not serve the objective of modifying China's behavior or the views of its leadership.

"Finally, there are some who decry the pursuit of profit when issues of human rights and human freedoms are at stake. While I share their concerns for human rights conditions in China, I feel compelled to say that they are wrong and their criticisms are misplaced.

"In the end, human freedom is indivisible. It is not neatly divided between political freedom and economic freedom, as some suggest. Economic freedom is freedom, pure and unadulterated. The reason is that, absent economic freedom, no person has the wherewithal to defend their political rights.

"What that means in practical terms in the context of modern China is that we should do whatever we can to empower the Chinese people to pursue their own course toward freedom.

"One essential step toward that goal is to ensure that the Chinese people are free to pursue their own economic destiny free from the heavy hand of the state. That is because the roots of political pluralism lie in economic interests that differ from those of the Chinese Communist Party and those of the Chinese leadership.

"The noted Chinese human rights activist Fu Sheni (Foo Shen-EE), active in defense of Chinese human rights and political freedoms since the 1979 Democracy Wall Movement, has made this point more eloquently than I can.

"In a public statement on PNTR, Fu emphad that -

'the annual argument over NTR renewal exerts no genuine pressure on the Chinese Communists and performs absolutely no role in compelling them to improve the human rights situation . . . . [I]mprovement of the human rights situation and advancement of democracy in China must mainly depend on the greatness of the Chinese people, in the process of economic modernization, gradually creating the popular citizen consciousness and democratic conscience and struggling for them. It will not be achieved though the action of the U.S. Congress in debating Normal Trade Relations . . . .'

"Fu's point was echoed by the China Democracy Party, founded two years ago in Zheijian, in its public statement on PNTR. In declaring its support for China's accession to the WTO and for the normalization of our trade relations with China, the Democracy Party stated - 'We believe the closer the economic relationship between the United States and China, the more chances to politically influence China, the more chances to monitor human rights, and the more effective the United States to push China to launch political reforms.'

"The Democracy Party's statement went on to say that the Communist leadership's power in China is "planted in state ownership." A vote for PNTR is a vote to end the Communist leadership's monopoly on power within Chinese society. A vote against PNTR would condemn the Chinese people to work for the state-owned enterprises that are the Communist leadership's most effective means of political control.

"That is why, beyond the economic benefits for my home state of Delaware and for our nation as a whole, I support normalizing our trade relations with China. It is a vote for freedom and that is where I will cast my lot every time.

"I thank my colleagues and urge their support for the motion to proceed and for passage of this essential legislation."