[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]




                               before the


                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION


                             APRIL 2, 2004


 Printed for the use of the Congressional-Executive Commission on China

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                           WASHINGTON : 2004
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House                                    Senate

JIM LEACH, Iowa, Chairman                CHUCK HAGEL, Nebraska, Co-Chairman                                      
DOUG BEREUTER, Nebraska                  CRAIG THOMAS, Wyoming                                
DAVID DREIER, California                 SAM BROWNBACK, Kansas                                 
FRANK WOLF, Virginia                     PAT ROBERTS, Kansas                                  
JOE PITTS, Pennsylvania                  GORDON SMITH, Oregon                                  
SANDER LEVIN, Michigan                   MAX BAUCUS, Montana                                 
MARCY KAPTUR, Ohio                       CARL LEVIN, Michigan                                 
SHERROD BROWN, Ohio                      DIANNE FEINSTEIN, California                                 
DAVID WU, Oregon                         BYRON DORGAN, North Dakota                                               


                 PAULA DOBRIANSKY, Department of State
                 GRANT ALDONAS, Department of Commerce
                   LORNE CRANER, Department of State
                    JAMES KELLY, Department of State
                  STEPHEN J. LAW, Department of Labor

                      John Foarde, Staff Director

                  David Dorman, Deputy Staff Director


                            C O N T E N T S



Levine, Henry A., Deputy Assistant Secretary for Asia Pacific 
  Policy, Market Access and Compliance, International Trade 
  Administration, U.S. Department of Commerce, Washington, DC....     2
Griffin, Leslie, Director, Asian Affairs, International Affairs 
  Division, U.S. Chamber of Commerce, Washington, DC.............     5
Wells, Linda, Chief Counsel for Commercial Law Development, 
  Director, Commercial Law Development Program, Office of General 
  Counsel, U.S. Department of Commerce, Washington, DC...........     9


                          Prepared Statements

Griffin, Leslie..................................................    28
Wells, Linda.....................................................    31


                      AND COMMERCIAL LEGAL REFORM:

                           BEYOND MONITORING


                         FRIDAY, APRIL 2, 2004

                                       Commission on China,
                                                    Washington, DC.
    The roundtable was convened, pursuant to notice, at 10:30 
a.m., in room 2255, Rayburn House Office building, John Foarde 
(staff director) presiding.
    Also present: David Dorman, deputy staff director; Susan 
Roosevelt Weld, general counsel; Selene Ko, chief counsel for 
trade and commercial law; Carl Minzner, senior counsel; and 
Keith Hand, senior counsel.
    Mr. Foarde. Good morning, everyone. My name is John Foarde. 
I am the staff director of the Congressional-Executive 
Commission on China [CECC]. Welcome to this issues roundtable 
on influencing China's WTO compliance and commercial legal 
    Since China's accession to the WTO in 2001, the Commerce 
Department has been conducting a small number of one-day 
technical assistance seminars in China, covering such topics as 
IPR enforcement, franchising, and legislative drafting. While 
effective within the limited scope that the Department 
intended, the Commerce 
Department organized these seminars on an ad hoc basis and 
Commerce Department offices with relatively little experience 
in providing technical assistance have been conducting these 
sessions. These seminars have been funded by unobligated funds 
that had originally been allocated for other purposes in the 
Commerce Department budget.
    To date, the Administration has not dedicated specific 
funds to providing technical assistance to increase China's 
capacity to fulfill its WTO commitments. The fiscal 2004 budget 
increases funds for several Federal agencies to dedicate to 
China's WTO compliance efforts, but these monies are directed 
toward enhanced monitoring and enforcement and not toward 
technical assistance. Congress has dedicated no funds 
specifically to technical assistance to increase China's 
capacity to meet its WTO commitments.
    The Commission's Annual Report in 2002 recommended that the 
Administration develop a comprehensive plan for WTO-related 
technical assistance to China, and the same report also 
recommended that Congress appropriate funds for the Commercial 
Law Development Program [CLDP] to implement a commercial rule 
of law training program in China.
    Given this background, we wanted to spend some time today 
with Commerce Department representatives and with a 
representative from the business community to talk about 
commercial law technical assistance to China and how we might 
move forward on a program similar to those sponsored by China's 
other trading partners and that might be helpful to, and 
benefit, U.S. business and trade interests.
    We have three distinguished panelists this morning. All 
three are good friends, and we welcome them all. I will 
introduce them in more detail in a minute, but we have Hank 
Levine, Linda Wells, and Leslie Griffin.
    Our procedure on these roundtables, as we have done for the 
last two years, is that we give each of you 10 minutes to make 
an opening presentation. After eight minutes have elapsed I 
will tell you that you have two minutes remaining. Then when 
everyone has spoken, we will open it up to questions and 
answers from the staff panel. We hope to be joined by some 
personal staff of Commission members. It is conceivable, since 
they are in session, that we might even be joined by one of our 
Commission members, in which case the member would preside and 
take over the chairing of this roundtable.
    So we will begin with Hank Levine. Henry Levine is Deputy 
Assistant Secretary of Commerce for Asia Pacific Policy, Office 
of Market Access and Compliance in the International Trade 
Administration at Commerce. Hank's responsibilities include 
access concerns and compliance with international trade 
agreements. He is a member of the Senior Foreign Service and on 
detail from the State Department to Commerce. He has served the 
U.S. Government as an East Asia policy expert in a number of 
capacities, including as U.S. Consul General in Shanghai, a 
Director for Economic Affairs at the State Department's Office 
of Chinese and Mongolian Affairs, and as Director for Asia-
Pacific Economic Cooperation [APEC] Affairs in the Office of 
the U.S. Trade Representative.
    Welcome, Hank. Welcome back from China. Over to you for 10 

                    COMMERCE, WASHINGTON, DC

    Mr. Levine. Thank you very much, John.
    First of all, thanks to the Commission for the invitation 
and the opportunity to be here and explain a bit about what we 
are doing. As I think you know, of course, we at the staff 
level also enjoy our work with the Commission and appreciate 
what you all are doing. Again, I am just happy to be here.
    I thought what I would do is say a few words, first, about 
the background and the rationale for what we are doing in the 
technical assistance area, and then a little bit about some of 
the things that we are doing. As you mentioned, I come from the 
market access and compliance part of Commerce. Some might even 
question why it is that we, on market access and compliance, 
are so actively involved in the technical assistance area. 
Obviously, we spend a lot of our time working with individual 
companies that have individual market access problems in China, 
a variety of different things. In addition to that, of course, 
we work closely with the other agencies, USTR in particular, as 
well as State, and so forth, in pressing China to live up to 
its WTO commitments.
    That work spans the realm from quiet persuasion; to jumping 
up and down and expressing intense unhappiness; to formal 
negotiations, in some cases; to ultimately, as we saw a few 
weeks ago, 
actually filing a case in the WTO dispute resolution process.
    So we are involved directly in market access and compliance 
with individual companies, and more broadly in pressing China 
on its commitments. However, we recognize that, while we are 
pressing China to do the right thing, it is also true that 
China needs a lot of assistance in developing the laws, the 
regulations, the trained personnel, and so forth that are 
necessary for it to implement its WTO commitments. For this 
reason, we see our technical assistance or capacity building 
efforts as a very important part of our overall efforts to 
ensure market access for U.S. companies in China.
    I would note, by the way, that in addition to the normal 
efforts that China has to make to implement its WTO 
commitments--after all, any country that joins the WTO has to 
go through a process of rewriting laws and regulations--on top 
of that, I would emphasize, there is another whole layer of 
activity going on in China. The fact is that China is 
undergoing a massive transformation, moving from a planned 
economy in the direction of a market economy, and virtually 
every aspect of China's laws and economic structure is 
undergoing changes, whether it is the health care system, 
whether it is government procurement, whether it is the 
retirement system, technical standards, education, the news 
media, and so forth.
    The Chinese, I will say, are very hungry for ideas about 
how other countries are pursuing these issues. And while we as 
Americans realize that we are not perfect in everything we do, 
the fact of the matter is that we have the strongest major 
economy in the world and we have a pretty darned good system in 
many other respects. Therefore, we have a lot to offer the 
Chinese as they are pursuing their transformation.
    In fact, since our system is based on principles such as 
transparency, the rule of law, and having an objective and fair 
judicial process, in providing our views and perspectives to 
China, I think we are broadly promoting a number of U.S. 
interests while we are also making a contribution to China's 
own reform and development efforts.
    Finally, I would just note in this regard that of course 
the EU, Japan, and other countries are very active in their 
technical assistance programs in China, and in many cases, of 
course, we share the same values and attitudes as the EU, 
Japan, and others. Therefore, their efforts are complementary 
or additive to ours. To be honest about it, however, in certain 
areas, in economic areas, for example, in areas such as 
technical standards or other approaches to the market 
competition policy in other areas, we may have a different 
perspective from the EU, Japan, or other countries. Therefore, 
it is particularly important that we make our perspective 
available to the Chinese as they are pursuing their reforms and 
their restructuring. Otherwise, we could wind up in a situation 
where all of their reforms and restructuring are based on 
principles and concepts from other countries, to the detriment 
of U.S. companies and our economic involvement in the China 
market. So, it is important in that regard, too.
    So there are some brief comments on the background, the 
philosophy that drives our efforts.
    With regard to the activities of my part of the 
organization, these are led out of our China office, as John 
mentioned, using money otherwise appropriated to Commerce. To 
give you some sense of some of the activities that we are 
undertaking, we have two major events coming up in May. One, 
our U.S.-China Health Care Forum, undertaking with HHS. Again, 
I note that China is redoing its entire health care system, 
and, working with our companies, we want to provide our 
perspectives on how you develop a modern health care system, 
employing principles of transparency, protection of 
intellectual property rights, and so forth.
    Also in May, we are working with U.S. private companies to 
host a major seminar on the Chinese logistics system, which 
really relates to our interest in distribution services and 
trading rights, a key part of China's WTO commitments. We are 
trying to help China understand how we in the United States 
have gone about creating such a vibrant, efficient logistics 
system, primarily by allowing market principles to drive the 
development rather than micromanaging by government agencies.
    We are doing a lot in the area of standards. We have done a 
number of standard seminars in the past in China. We have 
another one that we are looking at for the late spring or 
summer. We are also working with a group of private U.S. 
standards organizations on opening a U.S. standards office in 
China, we hope with some support from the Commerce Department.
    Briefly, many other topics. We are working with the 
National People's Congress on legislative drafting. We have 
done seminars on pharmaceutical regulatory issues and anti-
counterfeit training. We have done medical device regulatory 
training, and government procurement seminars. IPR enforcement 
has been one of the major themes and we have worked directly 
with China's enforcement agencies, the Procuratorate, and 
others, on how to strengthen their enforcement of IPR.
    To sum up, I think we have a broad set of programs that we 
are undertaking, keyed to the priorities of the U.S. private 
sector, using the resources that we have on hand. We consider 
it an important part of our market access and compliance 
    I look forward to taking your questions and discussing this 
with you further. Thank you.
    Mr. Foarde. Thank you very much, Hank.
    Let us go on. Let me recognize Leslie Griffin. Leslie is 
Director of Asian Affairs at the U.S. Chamber of Commerce here 
in Washington, and also Executive Director of the U.S.-Korea 
Business Council.
    In her work as Director of Asian Affairs, Leslie develops 
and executes U.S. Chamber programs and policy relating to U.S. 
trade and investment in the Asia Pacific region. In carrying 
out the Chamber's Asia trade agenda, she works extensively with 
member companies, state and local chambers of commerce, 
business coalitions, American chambers of commerce abroad, and 
U.S. and foreign governments. Her responsibilities include 
issues relating to U.S. business interests in greater China, 
Japan, and Korea. She serves as staff executive for the 
chamber's China WTO Implementation Working Group.
    Before coming to the Chamber, she served as a legislative 
analyst on tax and trade issues for the American Petroleum 
Institute and worked as a budget analyst in the Congressional 
Budget Office. She has lived and taught in Nanjing, China, so 
she has a special relationship with China as well. We asked her 
to come this morning to give a business perspective on 
commercial rule of law development programs.
    Over to you, Leslie, for 10 minutes. Thanks.

                         WASHINGTON, DC

    Ms. Griffin. Thank you, John. Thank you all for inviting me 
to participate today.
    As John said, I was asked to talk about some of the 
business challenges that we are seeing in China, and then try 
to link those to how a commercial law development program could 
be of assistance.
    The Chamber definitely thinks that a Commercial Law 
Development Program, CLDP, consistent with Section 511 of the 
U.S.-China Relations Act, would make a positive contribution to 
helping China develop its capacity to fully implement its WTO 
commitments and to create a more transparent business 
environment for our companies.
    The Chamber strongly supported China's WTO accession, and 
we did so because we thought it would help support the 
country's broader reform efforts, as Hank mentioned, and, as I 
said, to create a sound business environment. The trade and 
investment commitments that China made are enormous in scope, 
and the steps needed to carry them out are equally enormous. 
Well over 1,000 Chinese trade laws, regulations, and rulings 
had to be reviewed for WTO consistency. Many new laws are now 
being drafted to cover sectors that were previously closed to 
foreign participation. Throughout the government, major 
departments are setting up WTO committees to review industry-
specific laws and millions of officials, legislators, and 
judges are being trained. This challenge is particularly 
difficult in the interior of China, where there is less 
familiarity with the WTO's mandates.
    We understood all along that the implementation of these 
commitments was going to be difficult. We did not see this as 
an easy ride. We think that in some areas their work has been 
impressive, but in other areas there is a lot of additional 
progress to be made. We do think that the Chinese Government 
has made a serious commitment to WTO compliance. But the same 
officials that make these commitments readily acknowledge that 
they do not have the depth of experience and the trained 
personnel on hand to carry these commitments out, especially in 
some of the major reform areas such as financial services and 
distribution rights.
    I think that a CLDP program would give us a chance to work 
with Chinese officials outside the context of a very specific 
negotiation or decision in ways that would allow us to build 
cooperation for the future and present issues in their broad 
    So let us look at some of the compliance challenges we have 
seen. The Chamber has a Chinese WTO Implementation Working 
Group that is chaired by corporate leaders from various 
sectors. In the last couple of years, we have done reports on 
China's progress.
    Rather than presenting a long list of sectoral issues, 
which I could do, I am just going to focus on four broad 
baskets of concerns that we have seen.
    The first is transparency, which remains a key concern. The 
legal and regulatory environment is not transparent. We do not 
see a consistent enough use of advance consultations in the 
development of new regulations, and we think that this type of 
consultation would really advance the prospects for success in 
many sectors: autos, telecom, direct selling, and such. It also 
would benefit China. The professionalism and the experiences 
that foreign companies have had in other markets would be very 
beneficial as China tries to develop regulations that are 
economically sound and market 
oriented. We hope to see ministries developing a regular dialog 
with affected industries, as they have in some sectors, such as 
insurance. There has been a very good ongoing business-
government dialog. Express services. There have been some good 
examples of dialog, and we want to see that continue.
    The second broad area I would highlight would be, of 
course, intellectual property rights protection, where after 
two years of China's membership, it is clear that the 
enforcement system is far from effective. American companies 
lose billions of dollars each year to piracy and 
counterfeiting. Examples include counterfeit pharmaceuticals, 
especially those sold outside of hospitals, pirated movies, 
books, films, and software. The unauthorized use of business 
software is rampant.
    Then we are starting to see counterfeiting in industrial 
sectors, like automotives, where there is theft of industrial 
designs. We think that enforcement is not going to be effective 
until civil, administrative, and criminal penalties are 
routinely applied to infringers. And while we do see raids 
carried out at the central and provincial levels, the penalties 
are just not at a high enough level to really serve as a 
deterrent. We would like to see China continue with its efforts 
to train judges in IPR laws, to provide adequate resources to 
police, prosecutors, and administrative agencies, and, to make 
sure that these penalties are sufficiently high to serve as a 
    The third broad area I would highlight would be standards. 
We obviously have a major issue confronting us right now with 
respect to the wireless local area networks and encryption 
standards that China is trying to mandate. China's adoption of 
mandatory standards that are out of step with international 
standards efforts and that do not consistently respect 
intellectual property rights are a major concern to the United 
States IT industry. We would like to see the Chinese Government 
participate more actively in international standard-setting 
bodies and to align its own standard 
development efforts with internationally recognized standards 
and practices.
    Finally, I would highlight government procurement, where we 
are concerned about China's implementation of its government 
procurement law, which just came into force in January 2003. It 
applies to all goods and services procured by government 
entities. They are going to be releasing detailed implementing 
regulations sector by sector, starting with software. We think 
that the regulations they come up with in software are going to 
give us some hint as to their thinking for many other sectors, 
and it is important they get those right. They are going to be 
issuing a definition of local software, and we hope that that 
sets a low threshold of what is considered domestic software so 
that more American companies can participate in the procurement 
market for software.
    So then how, looking at those broad challenges, can a CLDP 
be helpful? Well, first, I would acknowledge the excellent 
programs that the Department of Commerce is already carrying 
out, the technical assistance seminars on IP standards, 
franchising, and other areas. I would also recognize the good 
work of some private sector entities, including John's former 
employer, the U.S.-China Business Council, which launched a 
U.S.-China Legal Cooperation Fund in 1998. That fund has 
extended a number of important grants over the years to further 
develop transparent and impartial legal institutions in both 
    But despite the impressive efforts being carried out, 
obviously the challenges remain. In the case of IP, they seem 
to be expanding in scope and dimension, not diminishing, so we 
think that a CLDP could make a valuable contribution to the 
business landscape.
    Looking at how CLDP is operating in other countries, its 
programs are helping political, regulatory, judicial, and 
commercial leaders make important improvements in their 
policies. Significantly, a lot of CLDP's work is actually 
focused on WTO accession, and then implementation of WTO 
disciplines such as IP product standards and market access. So 
it is easy to see a link between the problems that we are 
facing and the kinds of positive contributions that a CLDP 
could make.
    For example, with respect to transparency and the need for 
a more consistent use of advance consultations, CLDP is working 
with host countries to promote more transparent decisionmaking 
and to involve businesses in the development of policies that 
impact them. CLDP efforts resulted in the first-ever public 
outreach programs conducted by Russia's Ministry of the 
Interior, and regular business outreach programs by the 
Albanian Ministry of Trade and Industry, to name just two 
examples. And a CLDP program in Egypt has increased the 
acceptance of U.S. standards by initiating a relationship 
between ASTM International and the Egyptian Organization for 
Standardization and Quality Control.
    I think the importance of having a U.S. Government program 
along these lines is even more clear when you consider what 
Hank raised, which is the efforts that our other trading 
partners with China are making, such as the EU and Japan. In 
the case of the EU, they are investing significant efforts into 
the development of cooperative programs in China that are 
geared toward improving the business prospects for European 
companies, and raising the profile of the EU in that market. In 
2000, the EU launched an EU-China Legal and Judicial 
Cooperation Program, focused on reform of laws in the criminal, 
trade and commercial, and administrative areas. China's MOFCOM 
is the main implementing agency, but this program also involves 
China's Ministry of Justice, the Supreme People's Court, and 
the National People's Congress. These are all important 
partners for the U.S. Government to be engaging in a more 
sustained way through a CLDP program.
    I think standards, as Hank said, also represent a key issue 
on which the government has to adopt a more active approach. 
The EU and Japan, in many cases, have a more natural advantage 
because of their domestic industrial policies. In some cases, 
the United States has companies involved in competing 
standards, which restricts our ability to advocate. But in 
those areas where U.S. companies have a unified position, I 
think the CLDP could help us marshal our advocacy resources to 
help those companies.
    Finally, I would just say that beyond the efforts that 
Commerce could carry out on its own, CLDP could make new funds 
available for, and help coordinate better the efforts of, other 
existing academic, research, and NGO efforts in this area.
    As one example, the U.S. Chamber-affiliated Center for 
International Private Enterprise [CIPE] is eager to expand its 
rule of law programs in China. Its mission is to promote 
democracy through economic reform and private sector 
development. They would be effective in organizing, just as one 
example, a series of workshops to explore mechanisms and 
policies appropriate for the new economic environment created 
by China's WTO membership. A CLDP might also support an 
initiative like the new U.S.-China Business Mediation Center. 
The Chamber serves on an advisory committee to the Center. It 
is a commercial dispute facility that is helping U.S. companies 
and Chinese companies look for alternatives for the 
adjudication of disputes. We think that the greatest obstacle 
to increased use of mediation is a lack of awareness of how 
mediation can be beneficial, and a CLDP might be helpful in 
this regard.
    So, wrapping up, we do think that the Chinese Government 
has made a sincere effort with respect to carrying out its 
commitments. We think it is important to distinguish, in areas 
where there are shortcomings, between those areas where they 
are willfully not carrying out their commitments and where 
there is a genuine effort under way, but there is just not the 
technical capacity to get the job done. I think a CLDP program 
could be helpful in those latter cases. CLDP programs have made 
a meaningful contribution in countries all over the world, and 
they certainly belong in China, a country that holds so much 
promise for U.S. companies. American companies have a great 
stake in China's success, and we should be deploying all 
available resources to help improve the environment.
    [The prepared statement of Ms. Griffin appears in the 
    Mr. Foarde. Leslie, thank you very much. Lots of food for 
thought there.
    Let me go on and recognize Linda Wells. Linda is the Chief 
Counsel for Commercial Law Development and the Director of the 
Commercial Law Development Program at the Department of 
Commerce in the Office of the General Counsel. We will hear 
more about the program from her, I am sure. But before she 
became the first director of CLDP she was Senior Commercial 
Counsel for the Overseas Private Investment Corporation [OPIC] 
here in Washington, and was also associated with the law firm 
of White & Case.
    Linda, welcome. Please.

                         WASHINGTON, DC

    Ms. Wells. Thank you very much. Thank you for the 
opportunity to meet with you this morning. Not only is it 
always a pleasure to talk with you all, but it is always nice 
to hear somebody sing our praises.
    The Commercial Law Development Program is part of the 
Office of General Counsel at the Commerce Department. We were 
created about 12 years ago for the purpose of providing support 
to countries that are either developing or in some form of 
transition to help them develop a more market-friendly legal 
and regulatory environment. So, basically, more briefly stated, 
our mission is to make it easier to do business.
    We are a part of the General Counsel's office, as I 
mentioned. I should just explain because it confuses people 
sometimes. We are a separate part of the General Counsel's 
office, independent from the policymaking and the compliance 
aspects of the rest of the 
General Counsel's office, for example, the Chief Counsel for 
International Commerce or the Chief Counsel for Import 
Administration, and also from the International Trade 
Administration, people who are involved directly in negotiating 
and in compliance matters. The advantage to that is that, 
although our policy obviously is the same, we can take a track 
that is slightly outside the sometimes more confrontational or 
controversial aspect of the Department's relationship with 
other countries.
    In addition to the programs that Hank mentioned, the 
General Counsel's office has also been engaged in a series of 
roundtables with its counterparts in China. Most recently, in 
December of last year, there was a program on U.S. corporate 
law. Previously, the Chinese have provided us with information 
about the changes that they are making as part of the review of 
their legislation for WTO compliance. The difference between 
what they can do and are doing, which is very important, and 
what we can do, is that the CLDP has the capacity to do types 
of assessments and follow-up and the development of an 
integrated package of assistance that is sometimes outside the 
capacity of some of the other offices, not only within the 
General Counsel's office, but also in other parts of the 
    CLDP provides consultations. We do conferences. We have 
skills development programs. We can exchange experts. We 
actually sometimes post people inside ministries. We had one 
fellow working inside the Albanian Ministry of Trade for four 
years. He had an office there and just basically augmented 
their staff, in order to help them develop the internal 
capacity to achieve some of the things that they needed to do 
in their accession to the WTO, and then, later, compliance with 
the commitments that they had made.
    One of the things that CLDP can do is be a catalyst for 
reform. The WTO work that we do, which, as Hank and Leslie 
mentioned, is a very significant part of our portfolio, is 
oftentimes really just a lever that we can use to try to 
promote wider reforms, either in macroeconomic policy or in 
support of transparency and cooperation with the business 
    The strengths of CLDP, being a government agency, are 
largely in the government-to-government area and in helping 
governments work better with their private sector, because that 
is what we do. So, we can share that experience and, I think, 
bring some credibility and some shared pressures, concerns, and 
perspective to our counterparts that provides us, I think, with 
some measure of access that we might not otherwise have.
    We work on a very wide variety of issues, financial 
services, intellectual property, standards, public procurement, 
privatization, judicial reform, pretty much the whole panoply 
of anything that might affect business. But WTO is a major part 
of our focus.
    In the WTO work, we have done both accession and post-
accession implementation assistance. In the course of an 
accession assistance program, our work may focus on policy 
development, for example, working with senior officials to 
understand market-oriented issues in countries that maybe 
perhaps have not had so much experience with that. Also, we do 
the technical side of it, providing skills development in 
macroeconomic analysis, econometric modeling, and things of 
that sort. We also provide assistance in the actual accession 
process. So, for example, supporting preparation of the 
memorandum of trade regime, helping with the preparation of 
answers to ensure that they are responsive to the concerns of 
the working party that is reviewing an application.
    We also provide skills development training and 
negotiation, and also even for interpreters. One of the things 
that we found in many places is that the language becomes an 
artificial barrier because the interpreters do not know how to 
say what the policy people are trying to communicate.
    From a more institutional perspective, we can work with our 
host governments to develop government organizations and 
private-public communication fora that enable them to formulate 
sound economic policy and to implement it within the government 
and through the business community. One of the things we find 
in many countries, for example, is they do not have a mechanism 
for coordinating within a government input into trade policy 
formation, and then later, execution. You wind up with a 
disjointed system where the people at the Ministry of Trade are 
totally on board, fully committed, but the guy in the next 
ministry does not really understand what they have done on his 
behalf and does not know how to execute what they have 
promised. So we can work, and have worked with many countries, 
to try to help support the development of both institutions and 
processes that lead to sound and consistent trade policies and 
    We work, obviously, in the legal and regulatory reform 
area, helping countries to evaluate their legal systems for 
compliance with WTO commitments and norms, and to develop 
reforms, amendments, new legislation where that is necessary in 
order to bring them into compliance.
    One of the steady things in all of the work that CLDP does 
is trying to promote transparency and trying to promote private 
sector participation in the formation of trade policy. As 
Leslie mentioned, I think this is one of the areas where, 
independent of the direct results that we are achieving, I 
think the attitude changes that come with that are really a 
significant part of what we are accomplishing around the world.
    A large part of our accomplishment, I think, is actually 
outside the context of the specific technical assistance 
programs that we are conducting, although I do not choose to 
diminish those. I think we are achieving some very significant 
changes in both law, policy, and organizational structures. But 
I think we are also serving a useful purpose in the change of 
attitudes and the comfort level of foreign officials that the 
United States is working with. One of the advantages of a 
Commercial Law Development Program or other kinds of technical 
assistance is that you can discuss these issues outside the 
context of a specific negotiation or a specific trade dispute. 
In doing so, you can raise the comfort level of officials and 
others who may not really understand what you are asking or why 
you are asking it of them in this other context. If you can 
have the conversation as a sidebar, you can actually make them 
understand much better than in negotiations that are being 
undertaken why there is a conflict, and perhaps resolve it more 
quickly, or prevent it entirely.
    I mentioned earlier, I think the ripple effect of what we 
are doing, particularly in the transparency area, is also 
significant. Once officials become comfortable talking with the 
business community, talking with other agencies, perhaps 
publishing things that they are considering doing before the 
decision is made, as they see that those are not really 
threatening, it is much easier for them to adopt those 
practices in other parts of their work and much more likely 
that they will demand others do the same with respect to them.
    Finally, the development of professional relationships. One 
of the significant advantages, in my mind, of a Commercial Law 
Development Program is that, through our assistance programs, 
we get to know each other. We understand each other's ideas. We 
understand the values that we are using in approaching issues. 
understand the technical difficulties that our counterparts 
have, either we have or our counterparts overseas have. That 
mutual understanding, and just simply the personal 
introductions, I think, have good, long-lasting effect. I know 
I can see in many of these, these are just programs that we 
have conducted, that people who participated have continued to 
have a relationship through the years afterward. That has made 
it possible for them to send an e-mail and say, ``I am thinking 
about doing this, or I am going to do that, or what do you 
think, or do you know anything about this? '' The communication 
that continues after the technical assistance program ends has 
been invaluable to the people at the Commerce Department and 
the other agencies with which we work.
    Just in conclusion, Leslie talked about our work with other 
organizations. One of the things that CLDP prides itself on is 
working with both private sector organizations from the United 
States, and also with other international donors. Where the 
European Union is doing a program, we may do it with them or we 
may balance their presentation with one of our own. Sometimes 
there are areas where we definitely, 100 percent, are on track 
with them, so we will let them spend their money on one thing, 
and then we can spend our money on something else, so that the 
result is a much greater use of both of our resources. There 
are a lot of times where the private sector can better affect 
the sort of results that we are looking for, and as a 
consequence of that, we bring in private advisors, we work in 
partnership with organizations such as CIPE and CIME, and the 
University of Maryland, and some of the other donors that you 
may know around here. I think that has proven a very effective 
strategy for us because it enables us to coordinate and to 
bring in all types of resources rather than just Commerce 
Department resources or government resources.
    [The prepared statement of Ms. Wells appears in the 
    Mr. Foarde. Linda, thank you so much.
    Thanks to all three of our panelists.
    I am going to give you a chance to rest your voices for 
just a minute while I make an administrative announcement or 
two. In a few weeks, the entire transcript of today's 
roundtable will be available on our website. That is, 
www.cecc.gov. If you have not signed up already for our alerts, 
please do so there. You can also unsubscribe there.
    I would also like to announce that our next roundtable will 
be held on Monday, April 19, after the Easter break, at 2 p.m. 
here in this room, 2255. Our topic will be North Korean 
refugees in China, and looking at the legal and policy aspects 
of the Chinese Government's attitude toward North Korean 
refugees. We will have three distinguished panelists: one from 
Refugees International, one from the Defense Forum Foundation, 
and a South Korean gentleman who has been very active in 
working on behalf of North Korean refugees in China. So, we 
look forward to seeing you here on April 19. An announcement 
will go out on our e-mail list in a couple more days.
    Now let us turn to our question and answer session. Each of 
the staff members here will get a chance to ask a question and 
listen to the answer for about five minutes, and then we will 
do as many rounds as we have time for before about 12 noon. I 
understand that Hank may have to leave a few minutes early, so 
if you do, just let us know. We appreciate very much your 
participation while you are here.
    Let me begin the questions by picking up on a couple of 
things that were both in Hank's presentation and Linda's. That 
is, in your work in other countries with CLDP, are there 
benefits that come from separating the compliance budgets and 
personnel from the technical assistance budgets and personnel, 
and would that be a good model for what we do with China?
    Ms. Wells. I think there is a place for both to be 
involved. Both can accomplish slightly different things. The 
advantage of having a separate group outside the compliance 
context is that we do not show up giving advice in week one, 
and then negotiating or filing cases against them in week two. 
We are still part of the Commerce Department, so it is not 
total separation, but it gives us a little more credibility.
    Mr. Foarde. There is never any bleed-over? You never hear 
from your cooperators that, well, you guys are beating up on us 
because you just filed under 301, or something like that. Has 
that ever happened?
    Ms. Wells. We get lots of complaints. Sure. But what they 
can do, is they can say, those guys have filed a case against 
us. We are doing the best we can. What else do you want us to 
do? We can help them figure out how to resolve the problem, how 
to change what they are doing or how they are doing it so that 
it does come into compliance. We can offer them a sounding 
board so they can explore some of the options before they 
actually go into a negotiation to better understand why things 
are being asked of them, for example.
    Mr. Foarde. Anybody else have a comment on that?
    [No response.]
    Can you talk a little bit about where the funds come from 
for your CLDP programs?
    Ms. Wells. Ninety-nine percent of our funding comes from 
either USAID or the State Department through interagency 
agreements. They basically hire us to provide technical 
    Mr. Foarde. So you have no program budget of your own, to 
speak of, for this sort of thing.
    Ms. Wells. Not even just to speak of. We have no program 
budget of our own. We also do occasionally work for USDA in 
cooperation with other international organizations, but, as I 
said, 99 percent of it is AID or State.
    Mr. Foarde. And those AID funds are normally ESF funds, or 
DA funds, or both? Do you know?
    Ms. Wells. It is a mix. It depends on where it is and even 
in some countries, we have a combination of different types.
    Mr. Foarde. Let me hand the microphone over to Dave Dorman, 
my friend and colleague, who is the deputy staff director of 
the Commission and works for Senator Chuck Hagel, our Co-
    Mr. Dorman. Well, first, thank you very much to all of you 
for coming today. This is a topic that is of great interest to 
all of our Commissioners. I should say, in particular, this is 
a topic that is of great interest to Senator Hagel, who has 
been working with our ranking member on the Senate side, 
Senator Baucus, and other members on the Senate side, to find 
some way to fund a CLDP for China in a very tough budget 
    In conversations with Senate staff on this particular 
topic, a number of questions have come up. It would be very 
useful to answer these questions on the record because they are 
the sorts of questions other people might think of when 
considering a program like this. For the most part, I think 
that Congressional staff are aware that the Office of Market 
Access and Compliance is conducting technical assistance 
seminars. Understanding there is no CLDP program in China right 
now, but there are technical seminars ongoing, if funding was 
found for CLDP, what happens at that point? Do the sorts of 
technical seminars that are being conducted by Market Access 
and Compliance stop and CLDP picks up those programs? Based on 
our own roundtable announcement, some technical seminars being 
conducted by Commerce offices with less than perfect skills in 
conducting such seminars. So the first part of that question 
is, what happens to the seminars that are being conducted right 
now? Is that a function that would be transferred to the CLDP 
    The adjunct of that question, and one that has come up 
frequently, is what sorts of coordinating mechanisms--occur 
between the CLDP office and Market Access and Compliance when 
both offices are active in a country? What are the sorts of 
contacts and conversations that go on between Market Access and 
Compliance and CLDP in terms of ensuring that we are making the 
best use of our dollars?
    Ms. Wells. Do you want to start?
    Mr. Levine. Yes. I am happy to take a shot at the first 
question. Then Linda, based on her experience, can either add 
to that or whatever, and then Leslie can comment, too. What the 
heck. [Laughter.]
    The first question, essentially, is a hypothetical in the 
sense of, ``What would we be doing if there were a CLDP 
program? '' I guess what I could say is that, were we in that 
position, we would obviously want to take a good, hard look at 
the current programs and activities, and then look at what CLDP 
could do. It would certainly be my hope--obviously depending on 
the budget situation at that time--that we in Market Access and 
Compliance would be able to continue to undertake activities 
that could dovetail with, or supplement, the activities that 
CLDP would be doing.
    Getting to your second question, we would want to 
coordinate very carefully with CLDP and make sure that we are 
not duplicating and wasting scarce resources. So, I would hope 
that we could continue to add value by filling in gaps, or 
supplementing, or supporting and adding to other things CLDP 
would be doing.
    Ms. Wells. I would second that idea. As I said in my 
earlier comment, I think there is a place for both and there is 
a need for both. When the compliance people go and do technical 
assistance, they are there with a slightly different face than 
my folks are. That can be extremely useful. Just like we use 
private sector people to do some things and government people 
to do some things, having people from different parts of the 
government also can be useful.
    I would share Hank's hope that what we would wind up with 
is a more integrated package. One of the things that having 
CLDP would do, in addition to the existing compliance programs, 
would be to enable us to perhaps do a little more of the 
diagnostic work to support them and get their work as part of a 
coordinated package. We could do some of the followup and some 
of the supporting assistance that might make it more likely for 
their programs to show the results that we would like to see. I 
think we would want to coordinate.
    To answer your second question, whenever we are launching a 
new program, and periodically throughout the implementation of 
an existing program, we are consulting not only with other 
parts of the Department of Commerce, but also the business 
community, USTR, the State Department, Department of 
Agriculture, and other organizations to make sure that we are 
staying focused on the issues that are of greatest concern, 
either because they are most important for our economic 
interests or because they are proving to be sticking points in 
the bilateral relationship. So, we are already consulting on a 
regular basis with other parts of the Department, and I am sure 
that that would continue.
    Mr. Dorman. Good. Thank you.
    Mr. Foarde. Susan Roosevelt Weld is our general counsel. 
Over to her for questions.
    Ms. Weld. I am interested in having the views of all of 
you, but especially Linda, from your experience in doing CLDP 
programs elsewhere. Are laws such as those in the PRC having to 
do with state secrets a problem with promoting transparency? Do 
any of the countries that you work in have that kind of legal 
    Ms. Wells. I will not comment directly on the Chinese law 
because I am not enough of an expert at this point. But, when 
we started working in Poland, for example, it was illegal for a 
business to show us their books. So it is not uncommon in the 
rest of the world that there are rules about what kind of 
information can be shared, that there is no prior publication. 
Forget about something you are considering for announcement or 
a notice-and-comment process. They do not even publish the 
laws, sometimes, even after they are adopted. They think, in 
some places, that it is bizarre of us to ask for them to do 
    Our experience has been, most of the time, that when you 
explain, when you have a discussion, when you can show your 
counterpart examples of what the benefits are of discussing 
things in advance, what the benefits of sharing the information 
are, if the objective of a law is to have people change the way 
they behave, then they need to know about it. If you give them 
some skills and you give them some experience, and you give 
them some comparative models that may not be quite as extreme 
as in the United States but are in that direction, that we 
found people to be quite responsive.
    Ms. Weld. Thanks a lot.
    Mr. Foarde. It is now my privilege to recognize our friend 
and colleague, Selene Ko, who is chief counsel for commercial 
law on the Commission staff, and responsible for helping 
organize this roundtable. But I have to begin on a somewhat 
melancholy note, because this is Selene's very last issues 
roundtable for us. She is leaving us April 9 to go to the 
Office of the Legal Adviser at the U.S. State Department, where 
I worked some years ago. Perhaps in the future, she will help 
keep Hank Levine out of trouble. I want to thank Selene for 
being such a stalwart colleague, and such a dynamic force, on 
the Commission staff these past two years.
    Now it is time for your questions. Go ahead.
    Ms. Ko. Thank you all for being here. As the panelists here 
know, this has been a particular effort on my part to examine 
the CLDP issue. One thing I thought might be good to have on 
the record, something that we have all discussed, both in the 
context of the CECC Annual Report and in private conversations, 
is: if everyone believes that CLDP would be such a good thing 
in China, why is there no U.S. Government budget for it? To 
whatever extent you all might be able to share your thoughts on 
that, it would be appreciated.
    Mr. Levine. Well, obviously, when we are looking at the 
overall Administration budget, those decisions are made at the 
White House, and ultimately by the President, looking at, as we 
all know, an enormous number of competing demands for limited 
tax dollars. Frankly, there is not much more that I could say. 
At my level, and generally in the Commerce Department, we work 
within the framework provided both by the White House budget, 
and then the money that is appropriated by the Congress.
    Ms. Griffin. Well, my understanding, too, is that I think 
there are some reasons why AID is not operating in China now, 
much like the Overseas Private Investment Corporation [OPIC] is 
not operating in China now. We would like to see these programs 
opened in China. I think that OPIC, just for example, is 
something that could be a valuable resource for American 
companies there. So, there are legacies of some past sanctions, 
I think, that have prevented some of these organizations from 
extending money for programs in China. We think it would be 
helpful to see us be able to take advantage of those.
    Ms. Ko. Thank you.
    Mr. Foarde. Let me recognize Carl Minzner, who is a senior 
counsel on the Commission staff as well.
    Mr. Minzner. Thank you very much for coming here today. I 
quite appreciate the opportunity to hear your opinions about 
the CLDP program that I think many people would like to 
undertake. I want to return to something that you all touched 
on a little bit earlier. I think all of you talked, 
particularly you, Ms. Griffin, about types of projects and 
issues that the CLDP could be used to address. For the moment, 
I think I would also like to get more of your input on the 
format of particular projects, the particular way in which 
projects might be able to be carried out. All of you touched on 
this a little bit earlier. For example, we talked about having 
full-time staff members in other countries, notably in Albania. 
Ms. Griffin raised funding possibilities such as the U.S.-China 
Legal Cooperation Fund.
    Could you all talk about programs in a little bit more 
detail? Speculate. It does not have to be a promise to 
undertake a particular program. Speculate on particular formats 
of programs that might be useful to undertake in China.
    I appreciated something that Ms. Wells mentioned, that you 
noted that one of the things that is important in the Chinese 
context is establishing long-term relationships. I think you 
also said that with regard to many other countries. How could 
some of these issues be addressed through particular types of 
formats that programs might take if a CLDP China program were 
to be initiated?
    Ms. Wells. I do think, based on what I know about China, 
that the long-term issue is going to be particularly 
significant. I think, if we were in China, we would probably 
want to focus on that in structuring things. That insight would 
lead me to think that we would probably place a higher emphasis 
on having people resident in China. Given the problems that we 
see in national versus 
sub-national, central versus sub-central, implementation of WTO 
commitments, that probably also means putting people outside 
Beijing. I think that one of the strategies we would want to 
employ in the sector-specific work that we might do would be to 
establish working groups that would meet on a regular basis. We 
have done this, for example, in Eastern Europe.
    In Southeast Europe, we have, through the Stability Pact, 
some trade working groups that meet a couple of times a year. 
It is the same people. Simply getting those people together in 
one room has provided some continuity and some results that I 
think have been really significant, and might be a model to 
replicate in China.
    Mr. Levine. I would just add for the record that I guess 
there have been a couple of references to the fact that some of 
the ongoing programs are undertaken by folks who do not have an 
enormous amount of background in doing programs. I think our 
folks who have been working on the current programs really are 
doing a superb job, with the resources and under the 
circumstances that they have been working.
    Having said that, clearly, one of the limitations that we 
face in our current work is the constraints on our ability to 
have the more sustained type of effort, I think, that you are 
talking about. We do try to build in continuity to the extent 
that we can, so we might go out one year and have a seminar on 
IPR enforcement, and the next year try to build on that and 
follow up, and so forth. But in terms of the types of things 
that Linda is talking about that a CLDP is capable of mounting 
with a more sustained presence on the ground, that type of 
sustained and deep continuity is beyond our abilities at the 
    Ms. Wells. Could I just second what Hank is saying? A lot 
of the people who are doing the ad hoc work that the Commerce 
Department has been doing are the same people that we would 
use. It is not that those individuals are not good at what they 
are doing, it is simply that, when they come home, they have a 
primary responsibility to do something else. Their availability 
for designing and implementing follow-up work is just not the 
same as somebody whose purpose in life is to try to do that.
    Ms. Griffin. I do not really have a lot to add, other than 
if you look at the U.S.-China Legal Cooperation Fund's website 
and see the fund that they established, the types of grants 
that they have given, there are many different things you can 
do, whether it is an interdisciplinary seminar on WTO standards 
issues, or best practices manuals in Chinese, or training 
seminars for judges. There is just a whole series of things 
that can be helpful to us.
    Mr. Foarde. I would now recognize our friend and colleague 
Keith Hand, who is also a senior counsel on the Commission 
    Mr. Hand. Thank you all very much for your comments. A 
number of you raised the issue of local inaction versus lack of 
capacity. I am wondering if you could tell us what areas fall 
under the willful inaction category as opposed to lack of 
capacity. In the areas where the problems are primarily 
political, do you see CLDP playing a role or is CLDP only 
useful in the capacity building context?
    Ms. Griffin. It is funny. When I put that in my remarks, I 
feared I would get that question. There are far more baskets 
you could create. I mean, there are examples where there are 
legitimate, if unwelcome, interpretations of ambiguous 
commitments that they made. At times there are aggressive 
interpretations of things that could be reasonably interpreted 
either way. There are cases where there is a blatant disregard 
for a commitment, cases where it is a technical capacity issue, 
and cases where they are just not putting enough resources into 
the problem, into addressing a problem. I would not try to 
assign a particular commitment to a particular category. When 
we entered into this process, we knew certain areas were going 
to be particularly politically sensitive, in agriculture and in 
other areas, where we knew the challenges would be particularly 
    But I do think that, in those cases where it is a case of 
technical ability and training that is keeping China from being 
able to carry out its commitments, that a CLDP program could be 
beneficial. There is one example that I think is really 
telling. If you look at, say, in the insurance sector and the 
kinds of changes China needs to make; in the case of the China 
Insurance Regulatory Commission [CIRC], is, at the same time, 
trying to create a regulatory regime for the insurance industry 
that is compliant with WTO; it is trying to review about 100 
pending license applications; it is trying to train and deploy 
new officials in the new cities that are opening up as 
geographic restrictions come off; and it is trying to approve 
new insurance product offerings. All of this, for the entire 
country of China, with 600 officials at CIRC.
    Now, by comparison, New York State's Insurance Commission 
has 900 people just working on that one state. So, it gives you 
a sense of the scope of the training effort that is needed and 
the technical capacity that is needed to be able to fulfill 
some of these commitments.
    Mr. Levine. I think it was Albert Einstein who once said, 
``Things should be made as simple as possible, but no 
simpler.'' The fact is, in looking at China, this is an 
enormously complex problem. Like Leslie, I would hesitate to 
draw any percentages as to what percent is due to the lack of 
skills and what is due to lack of political will, or to assign 
particular topics to baskets. The simple fact of the matter is 
that there is no magic bullet here. In promoting U.S. interests 
in our relationship with China, we need to be making maximum 
efforts in every one of the areas. That is, on the policy side, 
we and USTR, by negotiating, and pressing and bringing WTO 
cases where we need to do that. But also on the development 
side, pursuing the maximum amount of capacity building and 
technical assistance that we can provide. Without assigning 
particular percentages or areas here, in fact both sides of the 
coin are enormously important and we really need to do as much 
as we can.
    Ms. Wells. If I can just add one technical point. There are 
ways that technical assistance programs can be used to help 
overcome policy resistance. I am thinking, for example, in the 
area of intellectual property. The people who are pirating 
products are very vocal and will make it clear that clamping 
down on them is going to cause problems for them. The rights 
holders whose product is being stolen, the local rights 
holders, and the people from the 
community who are being disadvantaged because they do not have 
access to products because companies will not sell into an 
environment where there is so much piracy, tend not to be 
vocal. One of the things that assistance can do is to help them 
mobilize and more effectively articulate that they are an 
interest group, that they want their government to provide the 
sort of protection that the pirates may not want provided. It 
gives a different constituency a voice, and that can help 
overcome the policy issue.
    Mr. Foarde. Let me pick up the next round by trying to 
clarify a couple of things.
    Linda, who are the experts that work for you? I know that 
CLDP here in Washington is a lean and hardworking group. So, 
clearly, with the level of effort that you have in the 
countries that you are operating in, you cannot do it all out 
of your office. Where do you get the people that work on 
programs in individual countries?
    Ms. Wells. From other parts of the Department, other 
government agencies, the private bar, the judiciary, 
educational organizations, people who are retired government 
officials. It is a wide mix. What we try to do is to identify 
who is going to have the best expertise, and then go after 
them. Who is going to be able to best communicate the issue to 
their counterpart?
    Mr. Foarde. So not just people from Commerce, but it could 
be from any part of the U.S. Government or educational 
institutions in the United States.
    Ms. Wells. Or law firms.
    Mr. Foarde. Law firms. Everything.
    Ms. Wells. Or other technical assistance providers. There 
are times we will hire someone else to do something. We have 
worked with CIPE, we have worked with CIME, we have worked with 
the International Law Institute [ILI], and a number of other 
not-for-profit organizations. We will also bring in consultants 
who will work for us for a daily fee.
    Mr. Foarde. So, without trying to get into too much of a 
hypothetical, in principle, if you had CLDP in China, you would 
draw on this same universe of experts to do the type of work 
that you might be able to do, if there were a program.
    Ms. Wells. That would be my expectation.
    Mr. Foarde. Right.
    Another question for you that is related, and also comes 
from a comment that Leslie made in her remarks, about the 
capacity of CLDP to serve as a coordinator of U.S. NGO efforts 
and a clearinghouse, if I understood correctly. Is this 
happening already in the places elsewhere in the world where 
you work? If so, how does it work, exactly?
    Ms. Wells. It is happening. How it works in any given place 
may vary. In Russia, for example, where we have been working 
with them on their WTO accession for several years, we actually 
sit down a couple of times a year with the European Union and 
the British to talk about what their resources are, what issues 
they may address, what we might address, what things we want to 
do together and separately, so that we get the maximum bang for 
our buck.
    Just for example, I mentioned earlier the Southeast Europe 
program. We are working there, among other things, on customs 
implementation for the regional free trade agreements that they 
are entering into. So we have got the World Customs Union, as 
well as the U.S. Customs Service, involved. We are also doing a 
program with the American Chambers of Commerce [AmChams] 
throughout the region, so we have got the AmChams involved in 
    In other cases, one of the things that we have done with 
them is actually work on negotiation skills. So, we have 
brought in ILI, which does a very good negotiation training 
program, to essentially serve as a subcontractor to us. So what 
we are trying to do in all cases is identify what the obstacles 
are and figure out which resources should best be applied to 
get the results we are looking for.
    Mr. Foarde. While at the same time you are trying to avoid 
duplication. In other words, your own program is not doing 
something that a U.S. NGO is already doing.
    Ms. Wells. Right.
    Mr. Foarde. Or another country is already doing.
    Ms. Wells. Right. In fact, one of the things we sometimes 
do is offer to co-sponsor something that someone else was 
already doing, or to send people that we are working with to 
somebody else's 
program. In West Africa, for example, we have been doing some 
work in public procurement. We actually sent some people to 
another organization's conference because we thought it would 
be a good opportunity for them to meet with some international 
    I should mention that one of the things that we do, 
particularly in our regional programs, that might have some 
applicability in China, in Western Africa, for example, sub-
Saharan West Africa, we are helping them to establish and to 
strengthen the capacity of alternative dispute resolution and 
mediation centers. There may be some applicability in China. 
And in addition to connecting them to centers here in the 
United States and to some Internet-based mediation services, we 
have also got them working together so that they are helping 
each other figure out how to select and train mediators. We 
have helped them put out a brochure about the resources 
available in the region. So, we are also working with our local 
counterparts to help them network.
    Mr. Foarde. Let me go on and recognize Dave Dorman for 
another question.
    Mr. Dorman. Yes. I think we have come to conclusion on the 
difficult question of whether everyone here would support a 
CLDP program for China. But let me turn it around. Have the 
Chinese indicated in any way that they would be receptive to 
such a program? I know in your written statement, Linda, you 
mentioned you went to a seminar some years ago, and part of the 
purpose of that seminar was to gauge the receptiveness of the 
Chinese to a program like this. Do we know that there are open 
arms in China waiting for something like this to happen?
    Ms. Wells. Well, I will start, but I think Hank probably 
has more recent information. My experience with them personally 
has been that they were very receptive, that they are really 
very interested in hearing what we have to say. Whether they do 
something with it, I am not going to judge at this point, but 
they were extremely willing to talk. We spent hours over 
scheduled time going through issues and discussing the 
consequences of some of the things that we were talking about.
    The rest of the General Counsel's office, as I mentioned, 
has been doing this legal exchange program. They have had the 
same experience: the program has been very much in demand on 
the part of the Chinese, and the information has been very well 
received and the follow-up communication quite steady. But you 
may have better information, Hank.
    Mr. Levine. No. I think that, as a general matter, there is 
enormous hunger in China for the types of information, the 
types of activities that a CLDP undertakes. Again, we see it. 
Our problem, typically, is not being able to do enough, really, 
to meet the demand on the Chinese side for seminars, for 
information in many of the areas that are so critical to our 
interests. As a general matter, then, I think there is 
absolutely no doubt that China would welcome enhanced 
cooperation and activities in these areas. Now, I do not know 
enough about CLDP to know whether there are any specific 
elements or ways of cooperation and so on that would be 
particular problems in China.
    If we talk about issues, as I understand it, CLDP is quite 
flexible in how it pursues its cooperation and, I would assume, 
would adapt itself to the Chinese system. For example, Linda 
mentioned that in some countries you might have someone who was 
actually assigned to a host government ministry. Again, at this 
stage, whether that type of an arrangement could work in China 
as a particular method, I do not know. The program would have 
to adapt itself. But there is absolutely no doubt in my mind 
that, in terms of the content, the types of activities, the 
Chinese would be very receptive, indeed.
    Ms. Griffin. I cannot speak to their views on accepting 
government-to-government assistance, but just in terms of 
business input, we have definitely seen a willingness of the 
Chinese to ask for our companies' input in a few different 
sectors. In particular, I know in direct selling and insurance 
there has been some good dialog going on. Typically, I found 
that they like to do it outside, in a low-key fashion, not with 
cameras flashing in a U.S.-China business negotiation of some 
kind. But, in a private way, they have reached out to us to 
have us bring some companies together to talk about an issue.
    I think it speaks to the point each of us made earlier, 
which is that it is helpful to have a program like this outside 
of a formal decision that needs to be made, or a negotiation 
that is going on, and they are perfectly willing to hear what 
our companies have to say. It is in their interests to hear 
about the experiences our companies have had in other 
    Mr. Dorman. One of the things that always comes up in 
discussions that I have been involved with concerning CLDP--and 
you have already touched on it, Linda--is that our European 
friends and allies are much more involved in providing 
technical assistance of the type that we are talking about here 
than the United States has been engaged in. The underlying 
piece of this issue that always seems to be just there, is that 
the sorts of technical assistance that the Europeans are 
providing are beneficial to China, are beneficial to European 
countries, but somehow are against our interests. Is this true? 
Now, what I suspect, and maybe what you can help me with, is 
the answer to this question is far more complex.
    But beyond that, this question plays into something that 
you said, Linda. Do our CLDP programs interact with other 
countries that are providing similar sorts of assistance, and 
coordinate those activities? Are programs like this reinforcing 
across the board?
    So if you could all comment just briefly on these questions 
I would appreciate it. Thanks.
    Mr. Levine. I am happy to start, and then Linda can talk in 
more detail about CLDP.
    What you said is absolutely right. There are obviously 
elements of the programs that the EU or Japan, for example, or 
Australia, Canada, and others are running in China that are 
entirely consistent with the kinds of programs we would run if 
we had the 
resources and we were running them, and they contribute to 
transparency. They contribute to the rule of law, et cetera, 
and there is no issue.
    On the other hand, clearly there are also areas in which 
some of the ideas that are being presented, to the extent they 
are accepted by the Chinese, would give companies from the EU, 
for example, or from Japan an edge in the market. One of the 
obvious outstanding areas is the area of technical standards. 
In fact, what we have seen in any number of areas is China 
adopting standards that are based on European standards, for 
example, in many cases to the detriment of our companies.
    Interestingly, what you find is that very often the 
companies in the United States that would have the greatest 
problems as a result of that type of standard-setting process 
tend to be the smaller companies.
    The big multinational company that is already operating 
globally, they are operating in Europe, they are operating in 
Japan, and so forth, might find it easier to accommodate itself 
to a European-type standard, for example, for a product that 
could be sold in China. On the other hand, our smaller U.S. 
companies would be the ones who would have a much harder time 
with that, and that is why with the resources that we currently 
have, we have put a relatively large amount of effort into the 
standards area. We really do see it as a priority.
    So I think that standard setting is a classic example of 
where the agendas are slightly different, but there are going 
to be many other areas where they are quite similar, with no 
problem at all.
    Ms. Wells. Just to reinforce what Hank said, standards, I 
think, is the key area where we find that there is some 
difference. Particularly since so many of CLDP's clients are 
countries that are in the process of acceding to the European 
Union and are very Europe-oriented, standards is a special 
issue in a lot of our programs. We can provide a balance. We 
can explain that you can set up standards that provide you with 
safe, quality products without excluding anybody's products. 
Just that added perspective, I think, sometimes is very 
beneficial to U.S. exporters.
    The other area you mentioned has about reinforcing 
messaging. One of the reasons that we like working with other 
assistance providers is that if the United States goes in and 
says, this is a good idea, it is the United States saying it is 
a good idea. But if the United States, and the Europeans, and 
the Japanese, and some other countries come in and say, ``We 
all do the same thing, or some version of the same thing,'' it 
is not a policy push, it is just the way the international 
market works, and it makes some of those reforms that we are 
suggesting a lot more palatable.
    Mr. Levine. Maybe I would add just two further thoughts. 
There is one other area that comes to mind, for example, at 
least potentially. I do not think it has been that much of an 
issue, but an area such as competition policy, for example, 
where there could well be some differences in the way that the 
United States and the European Union look at the issue of 
competition policy. So, there are some other issues that would 
come to mind. But reflecting on it here, beyond that there is 
another point in all of this. Even in areas where the ideas 
that we would be presenting would be identical, or quite 
similar to the ideas that other countries were presenting, in 
the process of running the program you are developing 
relationships. In many of these programs, in fact, the audience 
is not just government officials. The government that is 
funding the program will bring in representatives of their 
companies to participate. So even where the fundamental content 
and the ideas of the third country's program are identical to 
something we might do, there is a relationship building in a 
U.S. program. I do not want to say a marketing effort, but 
there can be some significance. So just to flag that when we 
are thinking about the competitive aspect here. It is a 
significant issue and leads us in the direction of concluding 
that the United States should be doing the maximum that we are 
able to do in undertaking these types of programs.
    Ms. Griffin. There is nothing I can really add to what has 
been said on the subject, other than the point that Hank 
brought up about small business. Just to put on the table that, 
yes, small business has a real stake in these programs and 
their success, whether it is in standards or whether it is in, 
for example, transparency. I think more small businesses would 
be looking at China if it did not seem like such a morass of 
regulations that they do not understand. With respect to IP 
protection, these companies do not have armies of lawyers to go 
out and file patent cases and things like that. So, I think 
that these programs could be really beneficial for small 
    Mr. Foarde. Susan Weld, another question?
    Ms. Weld. I would love to ask about your programs to 
encourage implementation, especially in the IP area. How do you 
go about that? I am thinking of a seminar out of one of the 
Asian conferences about implementation of the laws against 
piracy. One 
presenter said foreign firms go in and do implementation work 
on behalf of the Chinese Government, whose efforts had not been 
effective. I wonder, what are your views?
    Ms. Wells. We are the slow and steady type rather than 
fixing a problem quickly, which some people find frustrating, 
but in our view it has a more beneficial long-term effect. Our 
objective is to put ourselves out of business, essentially. Our 
strategies are designed to make it possible for our host to do 
whatever it is that needs to be done themselves. So what we 
would do on focusing on any sort of implementation issues, is 
to figure out why it is not already being implemented. So 
whether it is a policy matter; whether the senior management 
did not really buy into the commitment that somebody else made 
on their behalf; whether it is a knowledge issue--they do not 
know how to do what they have committed to do; whether it is a 
resources issue; we are a lot more limited in what we can do to 
solve that sort of thing, except that we can bring attention to 
the fact that there is a resources issue. Sometimes it is a 
communication issue. We can help with that. So, we will try to 
figure out what is missing in the implementation chain and see 
if we can focus on that. Is that responsive to what you were 
trying to get to?
    Ms. Weld. More or less. I wanted to follow-up, to ask about 
the idea of placing someone inside of a Chinese Government 
agency. Do you think that is something that would be possible? 
I know, with respect to some of our assistance on HIV-AIDS, it 
has been effective to put people inside of the Ministry of 
Health. So, I wonder if that is something which could be done 
as you do your work in China.
    Ms. Wells. I do not think there is a single answer to that. 
I think that, in some places, it might be possible and welcome. 
In other places, even if it were welcome, it might not be 
    My experience is similar, I think, to what Leslie was 
saying, that while people were eager to talk with us, sometimes 
they did not want to talk to us in their office. So, it might 
be more effective to have some off-site place. In our other 
programs, we have found that the utility of having somebody 
inside the government has evolved. In Russia, for example, we 
had somebody inside the Ministry of Trade for a long time. Then 
we got to a certain point in the relationship where that really 
was not the practical way to do things, and we moved them 
offsite. In fact, at this point our Russia office is staffed by 
Russians rather than being staffed by Americans.
    So things evolve. I think we just have to figure out, with 
respect to the particular agency that we wanted to work with, 
what the best way of doing it would be.
    Ms. Griffin. Correct me if I am wrong, but the Quality 
Brand Protection Committee in China [QBPC], which is bringing 
together U.S. entities, Japanese entities, EU entities to try 
to make progress on IP enforcement is, if I am not mistaken, 
actually housed within a government entity. It is within an 
association for enterprises with foreign investment that falls 
within the Ministry of Commerce. I think they have found that 
to be an effective means to develop a comfort level within the 
government about their activities.
    Mr. Levine. I would just add that I think the answer is, as 
Linda also was suggesting, that it depends. It would be 
something that would have to be approached on a case-by-case 
basis, thinking through--again, as Linda said--whether this 
approach is the best way forward on this particular issue. In 
fact, my understanding is that the U.S. Centers for Disease 
Control has someone in Beijing who is co-located basically with 
the Ministry of Health.
    Ms. Weld. That is right.
    Mr. Levine. So on that issue, CDC does have someone. Now, 
whether that is something that could be automatically or easily 
replicated across the board with all ministries on all issues 
would remain to be seen. But certainly that, as one tool would 
be one of the things that people would want to look at and see. 
If it turns out in a particular case that that is not possible 
or not the most effective method, then I know CLDP has lots of 
other arrows in its quiver.
    Mr. Foarde. It is fitting that, as we are coming up on the 
end of our time this morning, that I would offer the last set 
of questions to Selene Ko.
    So, Selene, please go ahead.
    Ms. Ko. This is a question for Leslie and Hank. When you 
talk to people in China who participate in technical assistance 
programs, what kind of feedback do you get from them with 
respect to U.S.-sponsored technical assistance as compared with 
the kinds of programs that are offered by China's other trading 
partners? Beyond substantive differences, do they find there to 
be any other differences in terms of quality or the way 
information is presented that could inform how a U.S. 
Government-sponsored CLDP program might be able to operate in 
    Ms. Griffin. I have not talked to folks who have compared 
for me.
    Mr. Levine. I do not have a detailed response, but it is a 
very good question. I have not had occasion, ever, to get into 
a detailed discussion and hone in on the topic of discussion. 
It would be interesting for me to ask my colleagues out at our 
embassy. What we do hear frequently is that, quality aside, we 
hear the issue of quantity. Chinese officials note the very 
extensive efforts that the EU, in particular, is undertaking.
    We often hear that comparison, that the U.S. Government 
seems to be doing a lot less than, for example, the EU is 
doing. So, in terms of quantity, we hear that. With regard to 
quality, that is something to look into.
    Ms. Griffin. Actually, the only thing related to your 
question is, first of all, our companies say that they want to 
make sure that, with these CLDP programs, that the private 
sector has an adequate opportunity to contribute to the shaping 
of the training programs. So, that is one point.
    The second thing I would say with respect to transparency 
in our own system, is that I think people need to get a better 
understanding of where exactly funds for this type of effort 
reside throughout the U.S. Government. It seems like there will 
be a Patent and Trademark Office [PTO] delegation out in China, 
and then they will learn that there is a State Department 
delegation in a neighboring province. I just think it would be 
helpful if someone could somehow put in one place all of these 
activities and all of the sources of funding that exist for 
    Ms. Ko. Thank you very much.
    Mr. Foarde. We are close to the end of our time. So, on 
behalf of Congressman Jim Leach, our Chairman, and Senator 
Chuck Hagel, our Co-chairman, and the other members of the 
Congressional-Executive Commission on China, thanks to Hank 
Levine, Leslie Griffin, and Linda Wells for being so generous 
with your time this morning on this gray, rainy Friday, and for 
sharing your views and your insights with us.
    Again, the Commission staff will hold another staff-led 
issues roundtable on Monday, April 19 at 2 p.m. here in this 
room on North Korean refugees in China.
    Thanks to our panelists and to all who attended. We will 
bring this one to a close for today. Thank you all.
    [Whereupon, at 12 p.m. the roundtable was concluded.]
                            A P P E N D I X


                          Prepared Statements


                Prepared Statement of Leslie C. Griffin

                             april 2, 2004
                            i. introduction
    Thank you for inviting me here this morning to share the U.S. 
Chamber's views on establishing a program to support commercial rule of 
law development in China. As the largest business federation in the 
world, with member companies of every size, sector, and region, the 
U.S. Chamber is well placed to offer its views on issues of commercial 
significance in the U.S.-China relationship.
    The U.S. Chamber believes that there would be great value in 
establishing a Commercial Law Development Program (CLDP) in China 
consistent with Section 511 of U.S.-China Relations Act of 2000. New 
initiatives and technical assistance provided under such a program 
would help China strengthen its capacity to more fully implement its 
WTO commitments and to create a more predictable and transparent 
business environment for U.S. companies.
           ii. u.s. chamber support for china's wto accession
    The U.S. Chamber strongly supported China's accession to the World 
Trade Organization.
    It did so because of its belief that China's entry into the global 
trading body would encourage the growth of private enterprises in 
China, foster greater openness, deepen the country's reform efforts, 
and help to create a sound business and legal framework.
    The trade and investment liberalization measures to which the 
Chinese government has committed itself are impressive and the steps 
required to implement them are enormous. Well over 1,000 Chinese trade 
laws, rulings, and regulations have been reviewed for WTO consistency, 
and many new laws and regulations are being written to cover industries 
previously off-limits to foreign participants.
    Throughout the Chinese government, major departments have set up 
WTO committees to review industry-specific laws. Meanwhile, millions of 
officials, legislators and judges are being trained to regulate a 
market economy. The challenge is particularly difficult in China's 
interior, where few officials are familiar with the WTO's mandates. 
Hundreds of WTO case studies are being translated into Chinese and WTO 
training centers have been established in a number of cities.
    Implementation of obligations as broad as China's was always 
understood to be difficult, and American businesses have never assumed 
that it would be a short or easy ride. In some respects, China's 
implementation efforts have been impressive, and the rapid growth in 
two-way trade and investment into China reflects this. But in other 
areas, including intellectual property rights protection, transparency, 
standards, and government procurement, among others, additional 
progress is needed and a CLDP in China could be very beneficial.
    China's leaders have made a serious commitment to WTO compliance 
and to more transparent decisionmaking. But these same leaders 
acknowledge that they don't have the depth of experience or trained 
personnel on hand in many areas to carry through with the major 
commitments the country has made in such areas as financial services or 
the expansion of distribution rights. Having the opportunity to work 
with Chinese officials outside the framework of a specific negotiation 
or decision will allow U.S. officials to share expertise and best 
practices, frame issues in a broader context, and generally encourage 
greater cooperation in the future.
                 iii. continuing compliance challenges
    Over the first 2 years of China's WTO membership, the U.S. Chamber 
has undertaken to observe and encourage the country's progress with 
implementing its WTO commitments through its China WTO Implementation 
Working Group chaired by corporate leaders in a range of industries. In 
its 2002 and 2003 reports, the Chamber highlighted both China's areas 
of progress and its shortcomings. Without going into a long list of 
sector-specific issues, let me highlight a small number of the broad 
challenges faced by our member companies in China and the changes that 
we hope to see before offering some thoughts on the potential benefits 
of a commercial rule of law program in addressing these issues.
    Transparency in the legal and regulatory environment remains a key 
concern for U.S. Chamber members operating in China. Improvements in 
regulatory clarity and the consistent use of advance consultations 
would do much to advance the prospects for success in industries 
ranging from autos to direct selling to insurance to telecom.
    In line with its WTO commitments, as well as internationally 
accepted standards and good business practices, China should give both 
local and foreign professionals a reasonable period of time to review 
and comment on proposed new measures. The international experience that 
many foreign professionals bring to China can be of great assistance in 
the development and acceptance of market-oriented and economically 
sound policies. Ministries should establish and maintain a regular 
dialog with industry experts to address the needs of various sectors.
    Regulators must not also be competitors in the marketplace. In the 
area of 
express delivery services, for example, China Post's regulatory 
functions must be separated from its business functions. Similarly, in 
the telecommunications sector, additional measures are necessary to 
increase the independence of the regulator, the Ministry of Information 
Industries, from the major state-owned operators in the telecom 
    China's transparency obligations will make its governing 
institutions more accountable, thus limiting opportunities for 
corruption. Government procurement transparency, for example, will help 
stimulate competition and reduce the likelihood that business 
opportunities will be directed to well-connected enterprises.
Intellectual property rights
    After nearly 2 years of membership in the WTO, it is clear that the 
China's intellectual property rights (IPR) enforcement system still has 
significant weaknesses and is far from effective. Foreign investors in 
China lose billions of dollars each year due to piracy and 
    Enforcement of IPR will not be effective until civil, 
administrative, and criminal penalties are routinely applied to 
infringers of IPR. While China's government at the central and 
provincial levels carries out raids and other enforcement actions, 
administrative penalties are small or nonexistent and there is no 
commitment to pursue criminal prosecutions with deterrent penalties.
    Counterfeit pharmaceuticals are a significant problem in China, 
especially in the area of over-the-counter products sold outside of 
hospitals, and the agriculture sector reports evidence of counterfeit 
fertilizer. Pirated music, books, business software, movies, and video 
games are also readily available on the market, and unauthorized use of 
software by businesses is rampant, hindering the ability of both 
indigenous and U.S. creators and rights holders to build successful 
businesses. Newly emerging problems include Internet piracy, such as 
the illegal and unauthorized download of online journals and other 
materials. Moreover, counterfeiting is taking place in industrial 
sectors such as the automobile industry, where there is increasing 
theft of industrial designs.
    The U.S. Chamber would like to see China undertake a coordinated 
nationwide IPR enforcement campaign. The government should make 
revisions to the penal code such that it fully applies to all rights 
under copyright as well as all other piracy-related crimes. At the same 
time, China should take more effective customs and border measures to 
curtail the massive importation of pirated materials into the country. 
To support these efforts, China should continue with its efforts to 
train judges in IPR laws; provide adequate resources to relevant 
police, prosecutors, and administrative agencies; and ensure that 
penalties for intellectual property violations are sufficiently strong 
to serve as a deterrent.
    The U.S. Chamber is concerned about China's use of discriminatory 
standards to erect barriers to fair competition. For example, China's 
adoption of mandatory national technology standards that are out of 
step with international standards efforts and that don't consistently 
respect intellectual property rights are troubling to the U.S. IT 
industry, many members of which have made significant investments in 
China. With its strong manufacturing capabilities and rapidly growing 
consumer base, China will play an increasingly important role in the 
development of the Asian and global IT industry.
    The U.S. Chamber would like to see the Chinese government 
participate more actively in international standard setting bodies and 
align China's national standard development efforts with 
internationally recognized and developed standards and practices. In 
addition, we hope to see the government foster respect for intellectual 
property rights embodied in standards, including through the adoption 
of rules that are consistent with international practice for the 
treatment of intellectual property in standards negotiations. For 
China, these steps will ensure the interoperability of products used 
and/or produced in China with those in the rest of the world.
Government procurement
    The U.S. Chamber is also concerned about China's use of the 
government procurement law to protect local industry. The procurement 
law came into force on January 1, 2003, and applies to all goods and 
services procured by government entities. Implementing rules will 
eventually be developed for all sectors, but the government is 
beginning with the software sector. The way in which the law is 
implemented for software will set a precedent for the way the other 
sectors are treated. An open, competitive, transparent, 
nondiscriminatory and technology-neutral government procurement regime 
is in China's interest and in the interest of China's major trading 
    Detailed implementing regulations and a definition of local 
software are expected to be released in May. U.S. industry has proposed 
definitions of ``domestic'' to 
Chinese authorities for their consideration, but it is unclear whether 
this input will utilized. We encourage the Chinese government to make 
the threshold for what constitutes ``domestic'' as low as possible to 
maximize the number of U.S. companies that can participate in the 
government procurement market for software.
       iv. value of a commercial law development program in china
    Since the passage of the U.S.-China Relations Act in 2000, the U.S. 
Department of Commerce has conducted a number of technical assistance 
seminars in China, including valuable training programs focused on 
intellectual property rights, standards, and franchising. Private 
sector commercial rule of law efforts also exist, such as the U.S.-
China Legal Cooperation Fund established by the U.S.-China Business 
Council in 1998. The latter program has extended a number of important 
grants over the years to support the further development of strong, 
transparent, impartial, and equitable legal institutions in both 
    But despite the impressive efforts being undertaken by the U.S. 
government and private sector to address China WTO compliance and 
commercial rule of law issues, significant challenges remain. And in 
the case of intellectual property protection, the challenges seem to be 
expanding, not shrinking, in size and dimension. Beginning a Department 
of Commerce-run Commercial Law Development Program (CLDP) in China 
would make a much-needed contribution to the long-term improvement of 
the business landscape faced by American companies in China.
    CLDP programs operating in other parts of the world are helping 
political, regulatory, judicial, and commercial leaders to make 
important improvements in their policies, laws, and organizational 
structures. Significantly, a major portion of CLDP's efforts support 
WTO accessions and implementation of WTO disciplines, including in 
areas like intellectual property rights, product standards, and market 
access, among other areas. One can quickly see a link between the types 
of challenges encountered by the U.S. business community in China and 
the beneficial role that a CLDP program could play.
    With respect to transparency and the need for a more consistent use 
of advance consultations, for example, CLDP is working with host 
countries to promote more transparent decisionmaking and to involve 
businesses in the development of policies that impact them. CLDP 
efforts resulted in the first-ever public outreach programs conducted 
by the Russian Ministry of the Interior and regular business outreach 
programs by the Albanian Ministry of Trade and Industry, to name but 
two examples. And a CLDP program in Egypt has increased the acceptance 
of U.S. standards by initiating a relationship between ASTM 
International and the Egyptian Organization for Standardization and 
Quality Control.
    The importance of having a sustained U.S. Government program along 
these lines in China becomes more clear when one considers the 
commercial rule of law efforts being undertaken by other Chinese 
trading partners, like the European Union. The EU is investing 
significant efforts into the development of cooperative programs in 
China that are geared toward improving the business prospects for 
European companies in China. Currently, for example, the European Union 
runs a EU-China Legal and Judicial Cooperation Program that helps to 
address the concerns of European companies in China and raises the 
profile of the EU in that market.
    Launched in March of 2000, the program's focus is on reform of laws 
in the criminal, trade/commercial, and administrative areas and on 
capacity building in China's legal and judicial organizations. China's 
Ministry of Commerce is the main executing agency, but other 
implementing agencies include the Ministry of Justice, the Supreme 
People's Court, and the National People's Congress. These are important 
partners for the U.S. government to be engaging in a more sustained 
way, through a program like CLDP, on commercial rule of law issues.
    Standards represent a key issue on which the U.S. Government must 
adopt a more active and strategic approach in China. The EU, the 
Japanese, and others in many instances have a natural advantage on 
standards because of their domestic industrial policies, and they work 
hard to advance their companies' interests. Though in some cases U.S. 
companies are involved in competing standards, which restricts the U.S. 
government's ability to intervene, through a program like CLDP the U.S. 
Government could marshal its advocacy resources for those sectors and 
technologies in which there exists a unified U.S. company position.
                    v. support for other ngo efforts
    Beyond the efforts that Commerce could carry out itself with its 
own internal expertise, a CLDP could make new funds available for other 
business, academic, and other non-governmental efforts focused on 
promoting private sector participation in trade policy formation and 
efforts to strengthen the commercial rule of law.
    As one example, the U.S. Chamber-affiliated Center for 
International Private Enterprise (CIPE) has expressed interest in 
expanding its rule of law programs in China. CIPE's mission is to 
promote democracy through economic reform and 
private-sector development. CIPE would be effective in organizing a 
series of workshops in China to explore mechanisms and policies 
appropriate for the new 
economic and social environment created by China's WTO membership. With 
participation by local government officials, business executives, 
legislators, economists, and lawyers, CIPE programs could, for example, 
focus on the economic impact of China's WTO membership, emphasizing the 
need for specific institutional changes including making the judicial 
system more independent of government and political interests.
    A CLDP also could support such initiatives as the new U.S.-China 
Business Mediation Center, just launched in the fall of 2003. The U.S. 
Chamber serves on an advisory committee to the Center, a commercial 
dispute resolution facility that helps U.S. and Chinese companies 
develop alternatives to adjudication of disputes that may arise between 
them. The greatest obstacle to increased use of mediation between 
Chinese and American businesses is a lack of awareness among companies 
and lawyers of how mediation works and the business benefits that 
mediation can offer. A CLDP could be useful in this regard.
    A CLDP could also play an important role in coordinating these 
various non-governmental efforts by sharing access to relevant players 
and promoting consistent messages in ways that would make each effort 
more effective.
                             vi. conclusion
    The U.S. Chamber believes China has made a sincere commitment and 
effort to comply with WTO obligations. But China does not currently 
have sufficient personnel with the experience or technical background 
and training needed to develop and implement market-oriented laws and 
regulations. As one considers China's WTO shortcomings, it is important 
to distinguish between areas where the country is willfully not 
carrying through with a commitment versus those where there is a 
legitimate effort underway but there is a lack of technical capacity to 
get the job done. A CLDP program could be of great assistance in the 
latter cases.
    CLDP programs have made a meaningful contribution in countries all 
around the globe, from Central and Eastern Europe to the Middle East to 
Africa to the former Soviet Union. They certainly belong in China, a 
country that holds so much opportunity for American companies of all 
sizes and for the global economy. China's WTO compliance and economic 
reform challenges are enormous and the U.S. Government should be 
deploying all available resources and working cooperatively with China 
on these efforts. Clearly the American business community has a strong 
stake in China's success.

                   Prepared Statement of Linda Wells

                             april 2, 2004
    The mission of the US Department of Commerce Commercial Law 
Development Program (CLDP) is to improve the legal environment for 
doing business in developing and transitional countries around the 
globe, and thereby foster greater political stability and economic 
opportunity for local entrepreneurs and U.S. companies alike.
                           methods and issues
    CLDP consultative services and training programs assist political, 
regulatory, judicial and commercial leaders to identify and make needed 
improvements in their policies, laws and organizational structures. 
CLDP activities are designed to meet the evolving needs of its hosts. 
They include, among other things, major conferences that introduce 
large groups to new issues, highly technical skills training for small 
cadres of local experts and resident (or itinerant) consultants who 
spend significant time working in a country executing longer-term 
projects or consulting on issues that benefit from on-going 
cooperation. CLDP activities serve as a catalyst for change, enabling 
leaders to take steps that, while important for the long term economic 
health of their nation, may be difficult in the short term. As a U.S. 
Federal agency, CLDP is particularly strong in providing government-to-
government assistance and in helping governments and their business 
communities to communicate more effectively. Most CLDP activities are 
funded by the US Agency for International Development.
    During fiscal year 2003, CLDP conducted approximately 100 discrete 
technical assistance activities. This is in addition to the daily 
assistance provided by CLDP's overseas offices and resident advisors 
and the information provided by the websites and newsletters CLDP 
    A significant portion of CLDP's activities support WTO accessions 
and implementation of WTO disciplines including laws and procedures 
affecting intellectual 
property rights, customs valuation, market access, trade remedies, and 
product standards, among other things. In addition to its work with 
respect to WTO disciplines, CLDP provides technical assistance with 
respect to mortgage, insurance and other financial service regulatory 
matters, government, judicial and business ethics, public procurement, 
electronic commerce, anti-trust, privatization of state-owned 
enterprises, alternative dispute resolution, investment, judicial case 
management, trade policy analysis, econometric modeling, project 
finance, trade finance, spectrum management, public notice and comment 
processes and negotiation skills.
    CLDP also provides support to local business, research and 
governmental organizations that promote private sector participation in 
trade policy formation and 
regional legal harmonization (merging common law and civil law 
traditions, for example) and regional economic integration (simplifying 
cross-border trade within a region).
    In addition to its policy and skills oriented activities, CLDP 
works with leaders to develop more effective intra-ministerial and 
intra-governmental organizational structures and administrative 
    Since its inception in 1992, CLDP has provided technical assistance 
to more than fifty countries in Central and Eastern Europe, the former 
Soviet Union, the Middle East, Northern and Sub-Saharan Africa and 
South-East Asia. In addition to maintaining full-time advisors and 
assistance support offices in Moscow, Kiev, Chisinau, Riga, Vilnius, 
Tallinn, Bucharest, Sofia and Tirana over the years, CLDP has conducted 
more than 500 separate training and short-term consultation programs 
and provided training to more than 8,000 policymakers, regulators, 
judges, lawyers, teachers and business persons.
    CLDP provided WTO accession technical assistance to six of the 
first eight post-Soviet states to join the WTO (Bulgaria, Estonia, 
Latvia, Lithuania, Albania and Moldova). CLDP also is working with the 
governments of Russia, Ukraine and Algeria to facilitate their WTO 
accessions. CLDP continues to provide assistance to Moldova, Albania, 
Egypt and other nations struggling to implement their WTO commitments.
    CLDP assistance has been instrumental in public procurement reform, 
adoption of investment, intellectual property, insurance, mortgage, and 
a wide range of other legislative and regulatory reforms in many of its 
host countries. CLDP has assisted with the creation or reorganization 
of trade policy agencies in Eastern Europe, the Middle East and 
Northern Africa, anti-monopoly offices in Northern Africa and Eastern 
Europe, and intellectual property regulatory and business organizations 
in Nigeria, to name a few.
    CLDP also has served as a catalyst for regional economic 
integration in Eastern Europe, Sub-Saharan Africa and Western Africa 
through facilitation of the negotiation and implementation of free 
trade agreements and the creation or strengthening of regional 
organizations working to promote harmonization of laws, regulatory 
procedures and dispute resolution mechanisms of importance to business.
    CLDP is working with all of its host countries to promote more 
transparent decisionmaking and, in particular, to involve businesses in 
the formation of policies that affect them. These efforts have resulted 
in the first-ever public outreach programs conducted by the Russian 
Ministry of the Interior and regular business outreach programs by the 
Albanian Ministry of Trade and Industry, to cite but two examples.
    In addition to the direct results of its technical assistance, CLDP 
has found that its activities have equally important indirect benefits.
    First, the exposure to new, market-oriented ideas helps host 
country participants to explore concepts that may be totally unfamiliar 
to them or with which they may have only enough familiarity to feel 
uncomfortable, and therefore resistant, when expected to incorporate 
the concepts into their daily work. Having the opportunity to discuss 
the concepts with knowledgeable parties outside the context of a 
specific negotiation or decision enables them to become comfortable 
with the issue, to understand its broader significance and to 
understand how it affects their role and the concerns of their 
constituencies. This, in turn, results in more effective participation 
in future negotiations and better decisionmaking when presented with 
these issues in the course of their work.
    Second, experience has shown that principles shared during the 
course of technical assistance activities blend into other aspects of 
the participants' lives. An official who grasps the benefits of 
transparency and has learned to incorporate transparent procedures in 
one aspect of his work, for example, is more likely to incorporate such 
procedures in additional aspects of his work, and to demand that others 
do the same.
    Third, the opportunity to discuss issues of common interest outside 
the demands of our official relationships has enabled all participants, 
whether from the US or abroad, to develop a better understanding of the 
challenges we all face, the special obstacles that each country must 
grapple with and the values and processes we are applying when making 
decisions. Counterparts from both countries also have an opportunity to 
spend time working together toward a common objective. All of this 
leads to better communication and generally better cooperation in the 
future; we and our overseas partners know who to call if a question or 
a problem arises and what each of us is likely to consider in trying to 
address the matter.
                       synopsis of cldp programs
    CLDP has conducted too many assistance activities to note here with 
any completeness, but the following provides a brief synopsis of its 
Central and Eastern Europe
    CLDP assistance in Estonia, Latvia, Lithuania, Poland, the Czech 
Republic, Slovakia, Romania and Bulgaria and Albania concentrated on 
WTO accession, public procurement, government ethics, intellectual 
property rights, foreign investment, project and trade finance, 
customs, export controls and product standards matters. The countries 
with which CLDP worked on WTO accession and export control matters all 
succeeded in joining the WTO in relatively short order after CLDP began 
working with them and all became founding members of the Wassenauer 
Arrangement. These CLDP programs (other than in Albania) ended in the 
mid-1990s when AID closed or curtailed its funding for work in those 
    In 2000, CLDP returned to the region as part of the USG's Stability 
Pact activities with the twin objectives of promoting trade 
liberalization in each of the countries in the region and promoting 
greater trade and economic integration within the region. CLDP and 
other donors are working with Albania, Bosnia and Herzegovina, 
Bulgaria, Croatia, Macedonia, Romania and Yugoslavia on this project.
    In addition to these regional efforts, CLDP has been working with 
Albania continuously since 1992, first to help with the creation of key 
commercial laws and the introduction of market-oriented policies, then 
to support Albania's WTO accession and now to aid implementation of its 
obligations as a new member and to strengthen its technical capacity to 
make sound trade policy decisions.
New Independent States
    CLDP began working with Russia, Ukraine and Moldova in the mid-
1990s to 
facilitate their accessions to the WTO, including the policy, 
legislative, regulatory, negotiation, communication and other skills 
development work inherent in those countries' transition to market 
economies and to WTO compliance. The focus of CLDP's work in Moldova 
shifted to implementation with their recent accession. CLDP's Ukrainian 
program continues to support the working party process, but has a 
particular emphasis on improving intellectual property rights 
protection. In addition to ongoing efforts to support the working party 
process and legislative reform, CLDP's activities in Russia have added 
significant efforts to encourage public outreach and to assist with 
sub-national implementation of WTO commitments that Russia will be 
making. CLDP also conducted a limited program in Russia with the 
objective of improving communication among Russian law enforcement 
bodies and between them and the Russian business community, 
particularly US businesses operating in Russia.
Middle East and North Africa
    CLDP's Egypt program is quite eclectic, incorporating work in 
intellectual property rights, trade policy, anti-trust, trade remedies, 
alternative dispute resolution, mortgage and insurance regulation, e-
commerce-related spectrum management issues, and training of diplomats 
in economic policy and international commerce issues, among other 
things. CLDP, which was a relative late-comer to the Egyptian 
assistance provider community, has been able to work very successfully 
with other assistance providers to complement their work by providing 
information or advisors to which they did not have the same level of 
access as CLDP or by being able to fill specific assistance requests on 
very short notice.
    CLDP's work in Northern Africa (Tunisia, Algeria and Morocco) has 
concentrated primarily on electronic commerce, public procurement, 
anti-trust, insurance regulation, technology sector development and WTO 
accession/compliance issues. In 2003, CLDP also launched a program to 
support negotiation and implementation of the Moroccan Free Trade 
    We expect to launch a regional commercial law and financial 
services reform program that will involve most of the countries of 
North Africa, the Middle East and the Gulf as part of the Middle East 
Partnership Initiative during 2004.
Sub-Saharan Africa
    In West Africa, CLDP has focused on alternative dispute resolution, 
judicial case management, intellectual property rights, judicial ethics 
and investment codes and has fostered creation of several international 
committees, all with the overall objective of increasing regional legal 
integration. Countries participating in the West Africa program include 
Benin, Burkina Faso, Cameroon, Chad, Congo, Cote d'Ivoire, Equatorial 
Guinea, Gabon, Guinea, Guinea Bissau, Mali, Niger, Nigeria, Senegal and 
    In Nigeria, CLDP's work has concentrated on improving the 
protection of intellectual property rights through strengthening the 
public and private stakeholder organizations, fostering dialog between 
them modernizing the legislative and regulatory framework for 
protection of patents, trademarks and copyrights and increasing public 
appreciation of the value of (and need to respect) intellectual 
property rights.
    CLDP worked with the Southern African Development Community (SADC) 
to help its members self-diagnose compliance with their TRIPs 
obligations and to develop strategies for bringing themselves into 
compliance and for using the SADC administrative structures to 
facilitate that result. Countries participating in the SADC program, 
which has now concluded, were Angola, Botswana, Lesotho, Malawi, 
Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, 
Tanzania, Zambia and Zimbabwe.
    CLDP has been working with Angola to introduce modern judicial case 
management techniques into the Angolan courts to support their efforts 
to improve both the speed and transparency with which matters are 
handled by the court.
    CLDP also conducted four programs to introduce sub-Saharan business 
persons to the African Growth and Opportunity Act (AGOA) and to 
demonstrate how to take advantage of its incentives. Business and 
government representatives from Benin, Botswana, Burkina Faso, Burundi, 
Cameroon, Cape Verde, Central African Republic, Chad, Congo, Cote 
d'Ivoire, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Ghana, Kenya, 
Lesotho, Malawi, Mali, Mauritania, Mauritius, Namibia, Niger, Nigeria, 
Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, 
Tanzania, Uganda, Zambia and Zimbabwe attended the AGOA programs.
    Ad hoc funding arrangements have enabled CLDP to conduct a limited 
amount of work in Asia.
    A CLDP-sponsored consultant worked with Vietnamese officials to 
draft Viet Nam's first commercial code and CLDP staff members have 
provided support on WTO and trade policymaking concepts.
    In April of 2000, CLDP Chief Counsel Linda Wells participated in a 
two-week State Department Rule of Law program designed to share WTO-
related information with the Chinese and to gauge their knowledge of 
the issues and their receptiveness to potential technical assistance on 
WTO and other commercial law matters. The 2002 and 2003 annual reports 
of the Congressional-Executive Commission on China included 
recommendations that Congress appropriate funds to establish a CLDP 
commercial rule of law program with China. CLDP is working with the 
Department and others to endeavor to secure funding that would enable 
it to engage in a more comprehensive cooperative program with China.
Latin America
    CLDP has been asked on a number of occasions to provide technical 
assistance to nations in the Western Hemisphere, particularly with 
respect to transparency and trade issues. Several states have indicated 
that they would like CLDP support as they prepare to enter into the 
Free Trade Agreement of the Americas and the intermediate agreements 
that will lead to it. CLDP is seeking the funding needed to fulfill 
such requests.
    For additional information, please contact the CLDP office in 
Washington, DC.
    Commercial Law Development Program, Office of General Counsel, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230 USA. Telephone: 202-482-2400; facsimile at 202-
482-0006; e-mail: [email protected]