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| Permanent Normal Trade Relations for China: |
| An Historic Moment for U.S.-China Relations |
| September 19, 2000 |
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The Senate?s Passage Of Permanent Normal Trade Relations For China Marks An
Historic Moment In U.S.-China Relations. Passage of PNTR by both the House
and the Senate marks an historic moment in our pursuit of open markets and
stronger U.S.-China relations, and continues to pave the way toward
economic freedom for the Chinese people.
China?s Entry To The WTO Will Slash Barriers To The Sale Of American Goods
And Services In The World?s Most Populous Country. China?s entry into the
WTO will dramatically cut import barriers currently imposed on American
products and services. This agreement locks in and expands our access to a
market of over one billion people. China?s economy is already among the
world?s largest and over the past 20 years has expanded at a phenomenal
annual rate of nearly 10 percent. During this period, U.S. exports to
China have grown from negligible levels to over $14 billion each year. For
agriculture alone, USDA estimates that China's WTO accession would result
in $2 billion annually in additional U.S. agricultural exports by 2005.
China Made Unilateral Concessions; We Will Simply Maintain The Market
Access Policies We Already Apply To China. China made significant, one-way
market-opening concessions across virtually every economic sector,
including increasing access to its markets for agriculture, services,
technology, telecommunications, and manufactured goods. China also agreed
to eliminate ?unseen? barriers, such as exclusive rights to import and
distribute goods.
? Agriculture tariffs will be cut by more than half on priority
products. On U.S. priority agricultural products, tariffs will drop from
an average of 31% to 14% by January 2004, with even sharper drops for beef,
poultry, pork, cheese, and other commodities. China will significantly
expand export opportunities for bulk commodities such as wheat, corn, and
rice, and it will eliminate trade-distorting export subsidies. Our
producers may also export and distribute directly inside China for nearly
every agricultural product without going through state-trading enterprises
or middlemen. Sales in the Chinese market will be a boon to American
farmers, who have recently faced tough times.
? Industrial tariffs will be slashed. Industrial tariffs on U.S.
products will fall from an average of 24.6% in 1997 to an average of 9.4%
by 2005. Considering that manufactured goods comprise a large proportion
of American exports, the drop in Chinese tariffs is good news for our
high-tech manufacturers and basic industries.
? Right 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. Under the agreement, China will phase
in trading rights and distribution services over three years, and also open
up sectors related to distribution services, such as repair and
maintenance, warehousing, trucking, and air courier services. Trading
rights and distribution services 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 in China to sell
products through Chinese partners. This is a top priority of U.S.
manufacturers and agricultural exporters.
? New markets for information technology. China will participate in
the Information Technology Agreement and will eliminate tariffs on products
such as computers, semiconductors, and related products by 2005. Our IT
firms lead the world and stand to earn handsomely in this huge, expanding,
and information-hungry market.
? Broad new access for American services like
telecom/insurance/banking. The agreement also opens China?s market for
services. For the first time, China will open its telecommunications
sector and significantly expand investment and other activities for
financial services firms. And it will greatly increase the opportunities
open to professional services such as law firms, management consulting,
accountants, and environmental services. China also agrees to ensure the
existing level of market access already in effect at the time of China?s
accession for U.S. services companies currently operating in China,
protecting against new restrictions.
China?s Accession to the WTO Will Strengthen Our Ability To Ensure Fair
Trade And To Protect U.S. Agricultural And Manufacturing Base From Import
Surges, Unfair Pricing, And Abusive Investment Practices Such As Offsets Or
Forced Technology Transfer. Prior to the negotiation of the U.S.-China
accession deal, Democrats and Republicans in Congress raised legitimate
concerns about the importance of safeguards against unfair competition. As
a result, 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. This agreement addresses those concerns
through:
? A China-specific safeguard. For the first 12 years -- in addition to
the existing global safeguard provisions -- China has also agreed to a
country-specific safeguard that is 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
United States. This applies to all industries, permits us to act based on
a lower showing of injury, and permits us to act specifically against
imports from China.
? Strong anti-dumping protections. The agreement includes a provision
recognizing that the U.S. may employ special methods, designed for
non-market economies, to counteract dumping for 15 years after China?s
accession.
? Requiring China to eliminate barriers to U.S. companies that can cost
American jobs and technology. For the first time, Americans will have a
means, accepted under the WTO rules, to combat such measures as forced
technology transfer, mandated offsets, local content requirements and other
practices intended to drain jobs and technology away from the U.S. As
stated above, we will be able to export to China from home, rather than
seeing companies forced to set up factories in China in order to sell
products there.
? Provisions in WTO rules that 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 to withdraw benefits including NTR in a national security
emergency.
China?s Accession Will Help Promote Reform In China And Create A Safer
World. China?s accession to the WTO will encourage Chinese leaders to move
in the direction of meeting the demands of the Chinese people for openness,
accountability, and reform. The agreement:
? Deepens market reforms. Obligates China to deepen its market
reforms, empowering leaders who want their country to move further and
faster toward economic freedom. This agreement will expose China to global
competition and thereby bring China under even more pressure to privatize
its state-owned industries and expand the role of the market in the Chinese
economy. Chinese as well as foreign businessmen will gain the right to
import and export on their own, and to sell their products without going
through government middlemen.
? Accelerates removal of government from lives of China?s people.
Accelerates a process that is removing the government from vast areas of
China?s economic life. China?s people will have greater scope to live
their lives as they see fit. In opening China?s telecommunications market,
including to Internet and satellite services, the agreement will over time
expose the Chinese people to information, ideas and debate from around the
world. As China?s people become more mobile, prosperous, and aware of
alternative ways of life, they will seek greater say in the decisions that
affect their lives.
? Strengthens rule of law in China. Obliges the Chinese government to
publish laws and regulations and subjects pertinent decisions to review of
an international body. That will begin to strengthen the rule of law in
China and increase the likelihood that it will play by global rules as
well. It will advance our larger interest in bringing China into
international agreements and institutions that can make it a more
constructive player in the world, with a stake in preserving peace and
stability.
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