[Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (2000, Book I)]
[January 24, 2000]
[Pages 113-115]
[From the U.S. Government Publishing Office www.gpo.gov]
Letter to Congressional Leaders on Permanent Normal Trade Relations With
China
January 24, 2000
Dear Mr. Speaker: (Dear Mr. President:)
On November 15th of last year, my Administration signed an historic
trade agreement with the People's Republic of China. Bringing China into
the World Trade Organization (WTO) on the strong terms we negotiated
will advance critical economic and national security goals. It will open
a growing market to American workers, farmers, and businesses. And more
than any other step we can take right now, it will draw China into a
system of international rules and thereby encourage the Chinese to
choose reform at home and integration with the world. For these reasons,
I will make it a top priority in the new year to seek congressional
support for permanent Normal Trade Relations (NTR) with China.
A Good Deal for America
This agreement is good for America. It is important to understand
the one-way nature of the concessions in this agreement. China has
agreed to grant the United States significant new access to its market,
while we have agreed simply to maintain the market access policies we
already apply to China by granting it permanent NTR. China's commitments
are enforceable in the WTO and include specially negotiated rules. In
the event of a violation, the U.S. will have the right to trade
retaliation against China.
China's comprehensive market-opening concessions will benefit U.S.
workers, farmers and businesses. On U.S. priority agricultural products,
tariffs will drop from an average of 31% to 14% in January 2004. China
will expand access for bulk agricultural products, permit private trade
in these products, and eliminate export subsidies. Industrial tariffs on
U.S. products will fall from an average of 25% in 1997 to an average of
9.4% by 2005. In information technology, tariffs on products such as
computers, semiconductors, and all Internet related equipment will
decrease from an average of 13% to zero by 2005. The agreement also
opens China's market for services, including distribution, insurance,
telecommunications, banking, professional and environmental services.
Considering that our farmers and workers are the most productive in the
world, this agreement promises vast opportunities for American exports.
Prior to the final negotiations, Democrats and Republicans in
Congress raised legitimate concerns about the importance of safeguards
against unfair competition. This agreement effectively addresses those
concerns. No agreement on WTO accession has ever contained stronger
measures against unfair trade, notably a ``product-specific'' safeguard
that allows us to take measures focused directly on China in case of an
import surge that threatens a particular industry. This protection
remains in effect a full 12 years after China enters the WTO and is
stronger and more targeted relief than that provided under our current
Section 201 law.
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The agreement also protects against dumping. China agreed that for
15 years after its accession to the WTO, the United States may employ
special methods, designed for nonmarket economies, to counteract
dumping.
Moreover, Americans will, for the first time, have a means, accepted
under the WTO, to combat such measures as forced technology transfer,
mandated offsets, local content requirements and other practices
intended to drain jobs and technology away from the U.S. As a result, we
will be able to export to China from home, rather than seeing companies
forced to set up factories in China in order to sell products there. The
agreement also increases our leverage with the Chinese in the event of a
future trade dispute. As a member of the WTO, China must agree to submit
disputes to that body for adjudication and would be much less likely to
thwart the will of the WTO's 135 members than that of the United States
acting alone.
Under WTO rules, we may--even when dealing with a country enjoying
permanent NTR status--continue to block imports of goods made with
prison labor, maintain our export control policies, use our trade laws,
and withdraw benefits including NTR itself in a national security
emergency.
Promoting Reform in China and Creating a Safer World
Of course, this trade agreement alone cannot bring all the change in
China we seek, including greater respect for human rights. We must and
will continue to speak out on behalf of people in China who are
persecuted for their political and religious beliefs; to press China to
respect global norms on non-proliferation; to encourage a peaceful
resolution of issues with Taiwan; to urge China to be part of the
solution to the problem of global climate change. And we will hold China
to the obligations it is accepting by joining the WTO.
We will continue to protect our interests with firmness and candor.
But we must do so without isolating China from the global forces
empowering its people to build a better future. For that would leave the
Chinese people with less access to information, less contact with the
democratic world, and more resistance from their government to outside
influence and ideas. No one could possibly benefit from that except for
the most rigid, anti-democratic elements in China itself. Let's not give
them a victory by locking China out of the WTO. The question is not
whether or not this trade agreement will cure serious and disturbing
issues of economic and political freedom in China; the issue is whether
it will push things in the right direction. I believe it will.
WTO membership will strengthen the forces of reform inside China and
thereby improve the odds that China will continue and even accelerate
its gradual progress toward joining the rules-based community of
nations. In the last 20 years, the Chinese have made giant strides in
building a new economy, lifting more than 200 million people out of
absolute poverty and creating the basis for more profound reform of
Chinese society. But tens of millions of peasants continue to migrate
from the countryside, where they see no future, to the city, where not
all find work. China's economic growth has slowed just when it needs to
be rising to create jobs for the unemployed. That is one reason the WTO
agreement is a win-win for both nations. China faces critical social and
economic challenges in the next few years; WTO membership will spur the
economy and, over time, will help establish the conditions to sustain
and deepen economic reform in China.
In the past, the Chinese state was employer, landlord, shopkeeper
and news-provider all rolled into one. This agreement obligates China to
deepen its market reforms, empowering leaders who want their country to
move further and faster toward economic freedom. It will expose China to
global economic competition and thereby bring China under ever more
pressure to privatize its state-owned industry and accelerate a process
that is removing the government from vast areas of China's economic
life. The agreement will also give Chinese as well as foreign businesses
freedom to import and export on their own and sell products without
going through government middlemen. And in opening China's
telecommunications market, including to Internet and satellite services,
the agreement will expose the Chinese people to information, ideas and
debate from around the world. As China's people become more mobile,
prosperous, and aware of alternative ways of life, they will seek
greater say in the decisions that affect their lives.
The agreement obliges the Chinese government to publish laws and
regulations and subjects pertinent decisions to review of an
international body. That will strengthen the rule of
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law in China and increase the likelihood that it will play by global
rules as well. It will advance our larger interest in bringing China
into international agreements and institutions that can make it a more
constructive player in the world, with a stake in preserving peace and
stability, instead of reverting to the status of a brooding giant at the
edge of the community of nations.
Many courageous proponents of change in China agree. Martin
Lee, the leader of Hong Kong's Democratic Party,
says that ``the participation of China in the WTO would . . . serve to
bolster those in China who understand that the country must embrace the
rule of law.'' Chinese dissident Ren Wanding
said upon the agreement's completion: ``Before, the sky was black; now
it is light. This can be a new beginning.''
As I have argued to China's leaders many times, China will be less
likely to succeed if its people cannot exchange information freely; if
it does not build the legal and political foundation to compete for
global capital; if its political system does not gain the legitimacy
that comes from democratic choice. This agreement will encourage the
Chinese to move in the right direction.
The Importance of Permanent Normal Trade Relations
In order to accede to the WTO, China must still complete a number of
bilateral negotiations, notably with the EU and others, and also
conclude multilateral negotiations in the WTO Working Party. These
negotiations are proceeding.
The United States must grant China permanent NTR or risk losing the
full benefits of the agreement we negotiated, including special import
protections, and rights to enforce China's commitments through WTO
dispute settlement. If Congress were to refuse to grant permanent NTR,
our Asian and European competitors will reap these benefits but American
farmers and businesses may well be left behind.
In sum, it lies not only in our economic interest to grant China
permanent NTR status. We must do it to encourage China along the path of
domestic reform, human rights, the rule of law and international
cooperation. In the months ahead, I look forward to working with
Congress to pass this historic legislation.
Sincerely,
William J. Clinton
Note: Letters were sent to J. Dennis Hastert, Speaker of the House of
Representatives, and Albert Gore, Jr., President of the Senate. An
original was not available for verification of the content of this
letter.