[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.