[Congressional Record Volume 143, Number 108 (Monday, July 28, 1997)]
[Senate]
[Pages S8171-S8172]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TRADE WITH CHINA

  Mr. BAUCUS. Madam President, this week the United States Trade 
Representative will conduct a set of talks on China's accession to the 
World Trade Organization. Their results will have a great effect on our 
trade policy for years to come. So this afternoon I want to take a few 
minutes to discuss the reason these talks are important, the state of 
United States-China trade, and a strategy that can help improve the 
situation.
  The reason these talks are important is simple. China is a big 
market, a big exporter, and a country with which we have a large and 
difficult trade agenda. By virtue of population, only India equals 
China as a potential export market. And China's economic growth, at 
nearly 10 percent a year throughout this decade, is unmatched in the 
world.
  Much of this growth has come from trade. Twenty years ago, China 
barely participated in world trade. It is now the world's sixth largest 
trader and is now our third largest source of imports after Canada and 
Japan. If you count Hong Kong together with China, the figures are even 
more impressive.
  But our American export performance to China is very poor. The 
Commerce Department reports $11.7 billion in goods exported in 1995, 
$12 billion in 1996, and on track for the same level this year. Adding 
exports of services, the total is about $2 billion larger, but the 
trends are no better.
  By contrast, our exports to the rest of the world have grown by 18 
percent since 1995. So despite China's size, despite China's economic 
growth, our export performance is weak and China's importance as an 
export market relative to other countries is rapidly declining.
  We should be doing much better than this. There are two reasons for 
our weak performance. The first is that many of our own policies appear 
designed to cut our exports to China. And the second, larger problem, 
is Chinese protectionism.
  We will start with the first point. Because while bringing down trade 
barriers takes a lot of work and hard negotiations, we can fix our own 
mistakes pretty easily. And let me offer three examples.
  First, we bar trade promotion programs like the Trade Development 
Agency, OPIC, and sometimes the Eximbank from operating in China. The 
Senate took a good step forward by passing my amendment last week 
showing the Asian Environmental Partnership to work in China, but we 
have a very, very long way to go.
  We refuse to sell nuclear powerplants to China. This is foolish 
enough when we see that France and Japan are pushing nuclear powerplant 
exports in our absence. And it is almost surreal when you consider that 
we are actually giving nuclear powerplants to North Korea.
  We have an antiproliferation law that embargoes electronics exports 
if China sells missiles. That is, if China misbehaves, we sanction 
ourselves. This will not work. If we are serious about reducing the 
trade deficit, if we want a trade policy that creates jobs in America, 
we cannot routinely prevent ourselves from exporting.
  That is part of the solution, but not the whole solution. Because 
while fixing our mistakes are important, structural economic issues and 
Chinese trade barriers do much more to cut our exports.
  To date, we have used our own domestic trade law to solve our 
problems, section 301 and Special 301, to bring down trade barriers, 
the antidumping and countervailing duty laws to fight dumping and 
subsidies. This policy won some results, and if necessary we should 
continue using it into the future. But it is a slow and frustrating 
policy which addresses individual, specific problems rather than the 
full spectrum of trade barriers. We need a more comprehensive approach. 
And we have it in China's application to enter the World Trade 
Organization.
  WTO rules address most of our China trade problems, from tariffs and 
quotas

[[Page S8172]]

to subsidies and distribution. If China accepts these rules, our trade 
future may be much brighter than the present. So I regard these 
discussions in Geneva as critically important and view China's entry to 
the WTO on commercially acceptable grounds as very much in our national 
interest.
  But these talks come with risks. If we sign a bad agreement, whatever 
we miss will stay there a long time. In that case, we should never 
expect much from the China market. And we would set a dangerous 
precedent for other reforming communist countries from Russia to 
Ukraine to Vietnam which hope to enter the WTO.
  To this point, China has not made acceptable offers. And if they will 
not do it this week, we need to be patient. We need to hold out for a 
good deal. And a good deal basically means four things.
  First, it means market access. Today, Chinese tariffs rise to 120 
percent for cars and 80 percent on beef. They must go down, way down. 
We need much less restrictive quotas, abolition of unscientific 
barriers to agricultural products, like the unfounded claims about 
``TCK smut'' on our wheat, an end to unpublished quotas and 
regulations, no more unfair inspection rules, and an open market for 
services.
  Second, we need an agreement by China to accept basic standards of 
trading behavior. Trade regulations must be the same in every port and 
province all across China. Intellectual property must be protected and 
technology transfer requirements outlawed. Restrictions on national 
treatment must go. The government must abandon policies requiring 
investors to export all or part of their product rather than selling it 
to the Chinese. And restrictions on trading rights must end.
  Third, there are subsidies. We need clear and visible separation 
between ministries, officials, and public taxes on the one hand and 
private business on the other. And we need to preserve our safeguards 
against export subsidies and dumping. Our antidumping law has special 
rules that calculate dumping from noncompetitive economies. This is the 
right policy, given the present state of economic reform in China, and 
we need to keep it in place.

  Fourth, results and enforcement. China, as a large partially reformed 
economy, presents questions the GATT and WTO have never encountered. So 
we ought to have some benchmarks to measure success, including 
objective measures of Chinese imports, and a prearranged system of 
consultation if we see things going wrong. And when problems arise, if 
they do, we must be ready to enforce our rights.
  Of course, a good WTO accession works in both directions. And that 
brings me to the third part of a better China trade strategy.
  As GATT and WTO members, we have always, as Americans, accepted one 
basic commitment; that is, MFN for all members, permanently and without 
conditions. If China agrees to a good WTO deal, the Chinese have the 
right to expect us to fulfill this commitment to them. It is good 
policy on the merits. It is also the fair and honorable thing to do.
  The right trade policy toward China is clear. We must end 
restrictions on export promotion. We should bring down China's trade 
barriers through a fair WTO accession agreement, if we can, and through 
laws like Section 301, if China is not ready to make a good offer. When 
China does make a good offer, we should live up to our own 
responsibilities by making MFN status permanent. It can begin this 
week.
  Thank you, Madam President.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Madam President, I ask unanimous consent that I be 
allowed to speak for as much time as I consume as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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