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Labor Aspects of PNTR: Benefits for American Workers and Farmers May 12, 2000

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Office of the Press Secretary

For Immediate Release May 12, 2000

Labor Aspects of PNTR:
Benefits for American Workers and Farmers
May 12, 2000

Permanent Normal Trade Relations For China Means More U.S.-Made Exports To China. American Workers And Farmers Will Get The Full Benefits Of China’s Accession Only If Congress Grants PNTR. If Congress enacts PNTR, there will be more exports to China of products made in the United States by American workers and farmers. If Congress does not grant PNTR, our competitors will enjoy the full market access and enforcement rights in China that we will be denied.

The U.S.-China WTO Accession Agreement Gives American Workers And Farmers Unprecedented Access To China’s Market. The one-way Agreement negotiated in November requires China to open its market, while we are required only to maintain the market access policies we already apply to China by granting PNTR. Denying China PNTR will cost American exports and the jobs they support, as our competitors in Europe, Asia, and elsewhere capture Chinese markets that we fought to open. Under the strong, enforceable market opening Agreement negotiated by the U.S.:

  • China will cut agricultural tariffs by more than half on U.S. priority products. USDA estimates that China’s WTO accession would result in $2 billion annually in additional U.S. agricultural exports by 2005.
  • China will sharply reduce industrial tariffs. Industrial tariffs on U.S. products will fall from an average of 24.6% in 1997 to an average of 9.4% by 2005.
  • China will allow new rights to import and distribute. At present, China severely restricts trading rights (the right to import and export) and the ability to own and operate distribution networks -- both essential to move goods and compete effectively in any market. China will phase in trading rights and distribution services for almost all products over 3 years. This will allow our businesses to export to China from here at home, and to have their own distribution networks in China rather than being forced to set up factories abroad to sell products through Chinese middlemen.

The Agreement Gives American Workers And Farmers New Leverage To Ensure Fair Trade And To Protect Against Import Surges and Unfair Pricing. No agreement on WTO accession has ever contained stronger measures to strengthen guarantees of fair trade and to address practices that distort trade and investment.

  • The Agreement gives the U.S. strong protections against unfair trade practices, including dumping. The U.S. and China have agreed that we will be able to maintain our current anti-dumping methodology (treating China as a non-market economy) in future anti-dumping cases. This provision will remain in force for 15 years after China’s accession to the WTO.
  • The Agreement’s China-specific safeguard improves our ability to respond to import surges. China has agreed to a 12-year China-specific import safeguard mechanism that will provide stronger and more targeted relief than that provided under our current Section 201 law. This ensures that the U.S. can take effective action in case of increased imports of a particular product from China that cause or threaten to cause market disruption in the U.S. This permits us to act based on a lower showing of injury than Section 201.
  • China has agreed to prohibitions on practices that can cost Americans jobs and technology. China will no longer require U.S. companies to transfer their technology in order to export to or invest in China. This will better protect U.S. competitiveness and the results of U.S. research and development. In addition, China will no longer require U.S. manufacturers to export as a condition for importing inputs, to use Chinese-made parts for products sold in China, or to balance the value of their exports and imports so as to prevent a net loss in foreign exchange. If existing contracts contain such provisions, China has committed not to enforce those contract requirements. This Agreement will make it significantly easier for American companies to export to China from the U.S., rather than having to set up in China to sell products there.
  • China’s commitments will be enforceable through WTO dispute settlement for the first time. In no previous trade agreement has China agreed to subject its decisions to impartial review, and ultimately imposition of sanctions if necessary. If China loses a dispute, it will have to change the offending practice, provide compensation, or be subject to denial of access to our market in an amount proportional to the harm it causes.
  • The United States maintains the right to use the full range of American trade laws. These include Special 301, Section 301, Section 201, and our antidumping laws, all of which continue to be effectively used to advance U.S. interests in a WTO-consistent manner.
  • The U.S. will maintain its ability to protect its important interests. Strong provisions in the WTO rules allow the U.S. -- even when dealing with a country enjoying NTR status -- to continue to block imports of goods made with prison labor, to maintain our export control policies, to use our trade laws. And Congress can, at any time, choose to revoke PNTR, if circumstances warrant and Congress is willing to forego WTO benefits.

The United States Will Monitor Vigilantly And Enforce Aggressively. We are already preparing for an increased monitoring and enforcement effort through President Clinton’s request for $22 million in new enforcement and compliance resources for USTR, the Commerce Department, USDA, and the State Department. The President is requesting resources for the largest monitoring and enforcement effort for any agreement ever, covering China’s obligations in the WTO and strong enforcement of our trade laws. For the Department of Commerce, the new initiative would triple resources dedicated to China trade compliance -- including administration of our unfair trade laws. The additional resources sought for USTR would strengthen its ability to pursue a two-track strategy of negotiating good, smart agreements, and ensuring that the terms of those agreements are fulfilled. The new Commerce/State Overseas Compliance Program would strengthen our capacity to gather information “on the ground” by providing for trade experts to monitor compliance with international trade obligations and support enforcement of U.S. trade laws. The President’s budget also calls for providing additional resources to the U.S. Department of Agriculture to bolster its legal and technical expertise in areas covered by trade agreements and U.S. trade law.

The President’s Recently Proposed Manufacturing Initiatives Would Further Increase Opportunities And Protections For American Workers. On February 4, the President announced $386 million in new proposals and program expansions that will help strengthen American manufacturers, workers, and communities and help keep manufacturing a strong and vital part of the U.S. economy in the 21st century. The President’s FY 2001 Budget request calls for expanding trade promotion and financing, expanding and enhancing assistance for workers and communities, developing and making available technologies that enable smaller manufacturers to thrive, and upgrading the skills of the manufacturing workforce.

The President's New Markets Initiative Will Spur New Capital Investment In Businesses In Economically-Distressed Areas. The President's New Markets Initiative is designed to spur private investment and economic activity in distressed areas, both urban and rural. Finding business financing and the right kind of technical business advice is a critical need in many economically distressed communities. These programs help entrepreneurs find the financing and advice they need to start up, and once started, to grow. As part of the New Markets Initiative, which will spur at least $22 billion in new capital investment in businesses in economically-distressed areas, the President has proposed to more than double the proposed New Markets tax credit at a cost of about $5 billion over 10 years and expand Empowerment Zone Tax Incentives at a cost of $4.4 billion.

Passage Of PNTR And China’s WTO Accession Will Further Open China To American Values And Practices. U.S. companies are more committed than their Asian competitors to progressive labor management practices and protecting the safety of their workers.

We Will Continue to Press China To Respect Internationally Recognized Labor Rights. The United States continues to make clear our concerns about labor rights violations in China. President Clinton and President Jiang announced a dialogue on labor issues in June 1998 that addresses core labor standards, labor law, and development of social safety net issues. In 1998, China joined the United States and other members of the International Labor Organization (ILO) in adopting a new Declaration of Fundamental Rights and Principles at Work. This Declaration included a follow-up compliance mechanism and covered rights such as freedom of association, right of collective bargaining, non-discrimination, and the abolition of forced labor. The Chinese Minister of Labor and Social Security visited Washington in 1999 to begin the bilateral labor dialogue. Secretary Herman made clear the priority we place on implementation of internationally recognized labor standards, and our firm opposition to and deep concern about the detention, arrest, and imprisonment of persons for labor-related activities that are protected by ILO standards. The U.S. has supported ILO findings on China’s law and practice in the area of freedom of association.

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