[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Senate]
[Pages 18201-18202]
[From the U.S. Government Publishing Office, www.gpo.gov]



CHINA's ACCESSION TO THE WORLD TRADE ORGANIZATION--ONGOING MULTILATERAL 
                              NEGOTIATIONS

  Mr. BAUCUS. Mr. President, I am very pleased that we are approaching 
the end of our debate on PNTR. This legislation will authorize the 
President to grant permanent Normal Trade Relations status to China 
after he certifies to Congress that the terms of China's accession to 
the WTO are at least equivalent to those agreed in the U.S.-PRC 
bilateral agreement reached last November.
  Before the President can make that certification, the ongoing 
multilateral negotiations in Geneva must be completed, specifically, 
the Protocol of Accession and the Working Party Report to the WTO 
General Council.
  China is a nation where a free market and the rule of law are in the 
earliest stage of development. Accession to the WTO, and our granting 
PNTR, are just the first steps in that process.
  China's integration into the global trade community will not be 
completed overnight. It will take a lot of work by economic reformers 
in China. And it will take a lot of work by leaders in the United 
States and in other WTO members to ensure that China stays on course.
  Over the coming years, we will have to put a lot of effort into 
scrutinizing closely and constantly China's compliance with its 
commitments. That is why earlier this year I introduced the China WTO 
Compliance Act. I was glad that some of the provisions in my proposal 
were adopted by the House. Other issues raised in my bill will be dealt 
with in a three-year investigation that we on the Finance Committee 
have requested that the General Accounting Office carry out. And that 
is why I support the President's request for a significant increase in 
the resources of the Executive Branch to monitor compliance with trade 
agreements.
  Today, I would like to mention several issues in the ongoing 
negotiations in Geneva. In addition to informing my colleagues about 
these issues, I am also using this opportunity to remind our American 
negotiators and the Chinese leadership about the importance of 
resolving these issues properly.
  Section 401 of the bill states that it is the objective of the United 
States to obtain, in China's protocol of accession, an annual review 
within the WTO of China's compliance with its terms of accession. China 
is a nation where a free market and the rule of law are in the earliest 
stage of development. The success of the WTO, by contrast, is premised 
on its members having relatively free markets operating against a 
backdrop of the rule-of-law. For China's transition to membership in 
the world trading community to be smooth, China will have to undertake 
major reforms in many areas, from intellectual property law, to customs 
procedure, to judicial process.
  Some of this is underway. It poses a uniquely massive challenge to 
China and to the world trading community. Some of the issues that come 
up may be handled through dispute settlement. But the WTO's dispute 
settlement mechanism has limited resources, and a flood of China cases 
could overwhelm the system. Rather than deal with all of China's 
transition issues one dispute at a time, it is vital to deal with 
groups of issues as a bloc, through regular annual reviews.
  China has objected to having its implementation of trade obligations 
reviewed every other year, which is the current demand on the table in 
the protocol negotiations. They want to be treated as a developing 
country, which means a review every four years. China has also proposed 
that the focus of such reviews be shifted away from

[[Page 18202]]

China and instead look at ``abuse by any Member of any specific 
provisions imposed especially on China in this Protocol.''
  This is absolutely unacceptable. The issue is China's implementation. 
If China believes that other members are abusing China-specific 
measures in the protocol of accession, it should challenge those 
practices in the dispute settlement mechanism. We cannot allow 
attention to be deflected from China's record.
  In June, Canada offered an intriguing proposal, whereby each 
``subsidiary body'' of the WTO, that is, the councils and committees 
that have responsibility for particular subject matters, would meet in 
special session at least once a year to review China's implementation 
of its trade obligations. We should support the Canadian proposal, 
which is a common-sense approach.
  China has insisted for years that it should enjoy the rights and 
special treatment accorded to developing country members. We must 
continue to reject China's position on this point. China is unique. It 
is not simply another developing country, and it should not 
automatically be allowed to avail itself of developing country 
provisions in the WTO. China's size, the extent of state ownership, and 
the transitional nature of its economy and legal institutions, all 
should be taken into account in deciding the developing versus 
developed issue in particular instances. It must be on a case-by-case 
basis.
  For example, if China automatically received developing country 
status for all purposes, it would receive special treatment under the 
subsidies agreement. Then, export subsidies and subsidies in the form 
of operating loss coverage would not be treated as prohibited 
subsidies. The burden of challenging those subsidies in the WTO would 
be much greater than under ordinary rules. This would be particularly 
troublesome, given the level of state ownership in China.
  This bill contains a safeguard provision (sec. 103) that lets U.S. 
industries, workers, and farmers obtain relief from surges of imports 
from China. The provision reflects the terms of the November, 1999, 
U.S.-China bilateral agreement. Among its provisions is a rule that 
will govern the granting of relief when there is ``trade diversion''--
that is, when another country provides safeguard relief from surges of 
Chinese goods, and the goods are then diverted to the United States.
  China has proposed that ``trade diversion'' would only be considered 
to exist when there is clear evidence that imports are increasing 
``significantly and absolutely,'' and are ``a significant cause of 
material injury'' to the domestic industry in the country to which the 
goods have been diverted.
  We must reject this proposal. It is counter to our bilateral 
agreement in November which included none of these limitations on our 
taking action.
  The safeguard provision, including insulation against trade 
diversion, is a very important feature of this bill. It ensures that if 
shifts in trade patterns following China's entry into the world trading 
system cause or threaten dislocations to American workers, businesses, 
and farmers, they will be able to obtain relief quickly. We must reject 
any efforts by China to weaken those commitments.
  Under our bilateral agreement, China agreed to protect all rights 
acquired by American insurance companies prior to China joining the 
WTO. Specifically, China committed to permit existing insurance branch 
operations to sub-branch in the future on a wholly owned basis. I 
understand USTR continues to work with China to correct this situation, 
both bilaterally and multilaterally in Geneva. I have written to 
Ambassador Li to make certain he understands the importance I attach to 
this matter. It is essential that China rectify this situation.

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