[Congressional Record Volume 141, Number 23 (Monday, February 6, 1995)]
[Senate]
[Pages S2149-S2150]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


    UNITED STATES TRADE SANCTIONS ON THE PEOPLE'S REPUBLIC OF CHINA

  Mr. THOMAS. Mr. President, over the weekend the administration 
announced its decision to impose trade sanctions beginning on February 
26 on the People's Republic of China in retaliation for the latter's 
dismal failure in safeguarding U.S. intellectual property rights. As 
the chairman of the Subcommittee on East Asian and Pacific Affairs, I 
fully support that decision.
  Since 1992, the PRC has failed to live up to its obligations under 
the Memorandum of Understanding on Intellectual Property Rights. 
Factories throughout China, especially in the southern and eastern 
provinces, continue to mass-produce pirated versions of American 
computer software, compact discs, CD-ROM's, and video and audio 
cassettes mostly for sale abroad. The USTR estimates that piracy of 
audio-visual works runs close to 100 percent, while piracy of other 
technological items such as computer software runs around 94 to 100 
percent. In addition, piracy of trademarks is rampant.
  This piracy is much more than a minor nuisance. The sale of these 
pirated items has cost U.S. businesses more than $1 billion, a sum 
which threatens to increase exponentially as the number of pirated 
products swells. It endangers American jobs, as well as our primacy in 
software innovation.
  What makes the manufacture of these illegal goods even more galling, 
however, is the fact that their production is tolerated, if not 
actively encouraged in some instances, by Chinese municipal and 
provincial governments as well as the central authorities in Beijing. 
The USTR has complained repeatedly about the problem and United States-
China negotiators have been meeting for more than a year and a half in 
an effort to resolve it. Still, the Chinese refuse to stem the flow of 
these goods out of the PRC.
  Certainly, the Government cannot claim ignorance of the problem. Even 
if the USTR had not been so thorough in documenting the problem, this 
is hardly a case of a few small ``mom-and-pop'' concerns operating 
covertly in an open, unregulated economy. Rather, these are large 
factories--some, enterprises run by governmental entities such as the 
People's Liberation Army--operating in a Communist country with an 
economy that is still largely command-based. The likelihood that, for 
example, the estimated 75 million compact discs produced illegally in 
China each year--of which 70 million are exported--could escape the 
attention of the government is about nil.
  [[Page S2150]] Mr. President, I realize that this is an especially 
sensitive time in Sino-American relations, and that this is not the 
only thorny issue with which we are presently grappling. Human rights 
issues, trade barriers, Taiwan, the proliferation of weapons to such 
rogue nations as Iran all complicate our relationship. What's more, 
with an ailing Deng Xiaoping apparently no longer in complete control 
of the party or the government, and the hold of Jiang Zemin and Li Peng 
on the reins of power less than firm, we face a possibility that taking 
a strong stand on any of these issues with the Chinese could aid in 
bringing in power reactionary hardliners inimical to a beneficial 
relationship between our two countries.
  Despite this concern, I believe that the time has come to take a firm 
stand with the PRC on this issue. In the 1960's, Mao Zedong was fond of 
referring to the United States as a ``paper tiger,'' a fierce 
countenance but no substance to back it up. In Wyoming we'd say ``all 
bark and no bite.'' In my view we have, unfortunately, all too often 
lived up to that assessment. It is hardly in our own interest to be 
perceived as a paper tiger on this issue. Intellectual property is one 
of the fastest growing areas of the world economy. The PRC is not the 
only country we are having this problem with: Brazil, India, and others 
are sources for concern with the USTR. By taking a firm position now 
with the Chinese, I believe we help head off similar problems elsewhere 
in the future.
  While I will be the first to acknowledge the importance and 
desirability of a strong relationship--both diplomatically and 
economically--with the PRC, such a relationship should not be built at 
the expense of America's businesses, or America's reputation for 
resolve. This administration, I believe, has been too quick to hold us 
hostage in the present in favor of the mere expectancy of an economic 
benefit in the future.
  Later this week, I will be meeting with Ambassador Li Daoyu. While I 
intend to reaffirm with him our desire to maintain a strong 
relationship with Beijing, I also hope to discuss the importance of 
resolving this issue before advances can be made on other fronts. I 
support free trade, as long as it is fair trade. In my view, a failure 
on the part of the PRC to do so would indicate to me they do not desire 
a level playing field. Consequently, I would be hard pressed to 
continue to support the present trade relationship with the PRC.
  Mr. President, the Chinese have a saying: ``Either the East Wind 
prevails over the West Wind, or the West Wind prevails over the East 
Wind.'' It seems to me, though, that we should both strive for that 
preferred state where neither wind blows: Calm.
  Mr. President, I yield the floor.
  

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