    [Weekly Compilation of Presidential Documents Volume 36, Number 4 (Monday, January 31, 2000)]
    [Pages 143-145]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Letter to Congressional Leaders on Permanent Normal Trade Relations
    Status 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.
        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.

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        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.

    [[Page 145]]

        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 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.