[Weekly Compilation of Presidential Documents Volume 36, Number 8 (Monday, February 28, 2000)]
[Pages 363-367]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the Business Council

February 24, 2000

    Thank you, Ralph, and good morning. I want to begin by asking if the 
microphone's too loud, so--can we turn it down just a little bit? That's 
good. I'm delighted to be here. I know you just had a good panel on the 
economy. And I wanted to talk mostly about China today, but I would like 
to mention just a couple of other matters very briefly.
    First of all, you've already talked in some detail about the 
question of how to keep the economy going. And I don't have much to add 
to what I'm sure Secretary Summers said, except I would like to just 
make three points very briefly. Number one, I think it is terribly 
important that we continue to pay the debt down and for reasons that you 
understand. But it's an enormous hedge against the necessary borrowing 
by business to continue to invest and continue to grow. And whatever the 
Fed does, the interest rate structure will be lower than it otherwise 
would be, not only now but for, perhaps, decades in the future. So I 
think it is a critically important thing. And I think it's important 
that people understand this. I've seen all kinds of articles in the 
papers saying I've adopted Coolidge economics, but I don't think so. 
We're continuing to invest robustly in our people and our future. But I 
think it's important.
    The second point I want to make is, I think it is even more 
important that we continue to invest in the education and skills of our 
people. A lot of you are heavily involved in trying to make our 
elementary and secondary schools better. We have a proposal now before 
the Congress to make college tuition tax deductible, which would 
functionally open the doors of 4 years of college to every American, 
with the other increases we've made in the Pell grants and other things. 
But I think we need to do more on this, particularly with people who are 
already in their young adult years who are out there and not either 
employed or are underemployed. I think that's important.
    And the third thing I would say is, many of you have helped us on 
this new markets initiative, but I hope all of you will. Some of you 
have been involved in our Welfare to Work Partnership, which has 12,000 
companies now and has hired hundreds of thousands of people from welfare 
to work. And reports indicate that they're doing quite well.
    But I think when you consider the fact that telecommunications, 
among other things, enables us to bring economic opportunities to rural 
areas--and in the worse case, some of our Indian reservations still have 
unemployment rates that are around 70 percent--there are real 
opportunities there for noninflationary growth if we can figure out how 
to do it. I don't want to minimize the risk. I'm trying to get Congress 
to pass some legislation that would give significant tax credits to 
minimize the risk of private sector investment in these areas, but I 
think they are profoundly important.
    And as I said, I know a lot of you have been involved in this 
already, but this is the only chance we've had, I think, in my adult 
lifetime to genuinely bring free enterprise to people in places that 
have been left behind.

[[Page 364]]

And it's an opportunity I think we ought to take, and I also think it 
would be good for the overall economy.
    Now, I want to talk a little about China today, because I think it 
is the most important question that the Congress will take up in the 
first half of this year. And I realize that in many ways, I may be 
preaching to the choir, but I think it's important that we all 
understand not that this is a good thing to do but that it is an 
essential thing to do.
    For 30 years now, every single President, without regard to party, 
has worked for the emergence of a China that contributes to the 
stability, not the instability, of Asia; that is open to our products 
and to our businesses; that allows people access to ideas and 
information there; that upholds the rule of law at home and adheres to 
the rule of law around the world.
    We have a big stake in how China evolves. We have, after all, fought 
three wars in Asia in the 20th century. And the path China takes to the 
future will either eliminate or cast a great shadow far beyond its 
borders. I think we all know that. Therefore, it is clear that the more 
we can promote peace and stability in Asia by helping the right kind of 
China to develop, the more America's interests and values will be 
served.
    The WTO agreement with China helps to advance all these goals in 
unprecedented ways. It's the kind of opportunity that comes along once 
in a generation. If we seize it, a generation from now people will 
wonder why the debate was hard at all. If we don't, we'll be regretting 
it for a generation.
    I don't think there's any question that this is in America's 
economic interests. The agreement requires China to open its markets on 
everything from agriculture to manufacturing to high-tech products. All 
we do is simply agree to maintain market access already given to China. 
For the first time, our companies will be able to sell and distribute in 
China products made by American workers here at home. It strengthens our 
response to unfair and market-distorting trade from China, from import 
surges to forced technology transfers to protection of intellectual 
property.
    One of the things I am quite sure that many Members of Congress 
still do not know is that this agreement actually contains bilateral 
protections that we don't now have to deal with problems like import 
surges, and it's important that they know that.
    If you think about what this agreement could mean to our economy, we 
could start with agriculture. From corn to wheat to barley, tariffs are 
cut by two-thirds, and our farmers get full access to a fifth of the 
world's population. It's little wonder that the pay stubs at the 
Farmland Institute read, and I quote, ``China will account for nearly 40 
percent of the future growth of American agricultural products.''
    With regard to our telecommunications industry, those of you in that 
business know that China has the largest potential market in the world, 
and only 5 percent of it has been tapped. This agreement will allow our 
firms, which are already leading the world, access to the other 95 
percent.
    With regard to the auto industry, tariffs will fall by nearly 75 
percent. The requirement that we rely on Chinese distribution is 
eliminated, as is the requirement that we have to transfer our 
technology, I think a very important advance secured by Ambassador 
Barshefsky and Mr. Sperling in this agreement.
    For the first time, American manufacturers will be able to sell 
American-made cars in China, to set up their own distribution centers, 
to run their own service shops, to provide their own financing to 
consumers. That means we'll sell more American cars and auto parts there 
and have more jobs here at home.
    Most Members of Congress don't question the economic benefits. 
Critics are more likely to say things like this: ``China is a growing 
threat to Taiwan and other neighbors. We shouldn't strengthen it.'' 
``China is a drag on labor and environmental market rights, and if you 
put them in the WTO, they will block further progress on those issues.'' 
Or, ``China is an offender of human rights, and we shouldn't reward 
it.'' Or, ``China is a dangerous proliferator. We shouldn't empower 
it.''
    Now, all these concerns, I believe, are legitimate. The question is 
whether they will be advanced or undermined by the decision Congress 
will make and America will make

[[Page 365]]

on letting China into the WTO. I believe to set this up as a choice 
between economic rights and human rights or economic security and 
national security is a false choice. I believe that this agreement is 
vital to our national security and that every single concern we have 
will grow greater and the problems will be worse if we do not bring 
China into the WTO. So I believe this agreement promotes not only the 
economic interests of the United States but progress toward positive 
change in other areas in China.
    For the past 20 years, China has made progress in building a new 
economy. It's lifted more than 200 million people out of absolute 
poverty. It's linking so many people through its wireless communication 
network that it's adding the equivalent of a new Baby Bell every year. 
But the system still is plagued by corruption. Less than one-third of 
the economy is private enterprise. The work force, meanwhile, is 
increasing by about 12 million a year. At least 100 million people in 
China are still looking for work, and economic growth has slowed just 
when it needs to be rising.
    So the leaders of China actually face quite a dilemma in making this 
decision to go for WTO membership. They realize that if they open their 
markets to global competition, they risk unleashing forces that are 
beyond their control: unemployment, social unrest, demands for political 
freedom. This is a big decision in a country that time and again has 
suffered more from internal chaos and disintegration than from external 
threat.
    But they have concluded that without competition from the outside, 
China will simply not be able to attract the investment or build the 
world-class industries they need to thrive in a global economy. So with 
this agreement, Chinese leaders have chosen to embrace change. They are 
highly intelligent people. They know exactly what they're doing, and 
they're prepared to take a risk that will require them to change as 
well.
    So the real question for America is, now that they have decided to 
take their risk, do we want to walk away from our decision? Do we want 
to risk a total rejection of the profound decision and choice they have 
made? I think it would be a terrible mistake. We need to embrace their 
decision, not only for our own interests but for the long-term interests 
of the world.
    The WTO agreement advances our interests by encouraging China to 
meet, not muzzle, the growing demands of people for openness. Rather 
than working from the outside in, it will work from the inside out, as 
all profound change has to do.
    Let me just make a few points about this. First, having China in a 
rule-based system increases the likelihood that China will follow the 
rules of the road in terms of the international economy. Under this 
agreement, for the first time, some of China's most important decisions 
will be subject to the review of an international body. It means China 
is conceding that governments cannot behave arbitrarily at home and 
abroad, that their actions are subject to international rules.
    Opponents say that doesn't matter, because China will just break its 
promises. But if that were to happen, our differences can no longer be 
ascribed to U.S. bullying. This time it will be 135 nations making 
collective judgment. Look, nobody agrees with the WTO all the time. I 
don't agree with their FSC decision. I presume most of you don't. And 
we'll have to work with Congress to try to figure out whether there is a 
WTO-consistent way for us to continue to play on a level playing field. 
But having a system of rules is, nonetheless, profoundly important.
    Second, the agreement will obligate China to deepen its market 
reforms and intensify the process of change. A decade ago, China's best 
and brightest college graduates sought jobs in the Government and large, 
state-owned firms or universities. More and more now, they're starting 
their own companies or choosing to work for foreign-invested companies 
where, generally, they get higher pay, a better work environment, and a 
chance to get ahead based on merit, not politics. That process will also 
accelerate if China joins the WTO.
    Third, this agreement has the potential to help open China's society 
in noneconomic ways. In the past, virtually every Chinese citizen woke 
up in the morning in an apartment or house owned by the Government, went 
to work in a factory or farm run by the Government, read newspapers 
written by the Government. The state-owned workplaces

[[Page 366]]

operated the schools where they sent their children, clinics where they 
got health care, the stores where they bought food. The system was a big 
source of the Communist Party's power. The meager benefits provided were 
a big source of the loyalty it commanded.
    Now, with lower tariffs and greater competition, China's state 
sector will shrink, the private sector will expand. In that way, the WTO 
will speed a process that is removing Government from vast areas of 
people's lives. It will also increase access to communications 
dramatically.
    A year ago, China had 2 million Internet addresses. Now it has 9 
million. The agreement will bring the information revolution to cities 
and towns all across that vast nation it hasn't reached yet. And as the 
Chinese people see how the world lives, they will seek a greater voice 
in shaping their own lives. In the end, China will learn what people all 
over the world are now learning: You can't expect people to be 
innovative economically while being stifled politically.
    Bringing China into the WTO doesn't guarantee, of course, that it 
will choose a path of political reform, but by accelerating the process 
of economic change, it will force China to confront the choice sooner in 
ways that are more powerful, making the imperative, I believe, the right 
decision.
    Of course, bringing China into the WTO is not, by itself, a human 
rights policy or a political rights policy for the United States. The 
reality is that China continues today to suppress voices of those who 
challenge the rule of the Communist Party. It will change only by a 
combination of internal pressure for change and external validation of 
the human rights struggle. So we must maintain our leadership in the 
latter even if the WTO agreement contributes to the former.
    That's why we sanctioned China as a country of particular concern 
under the International Religious Freedom Act last year, why we're once 
again sponsoring a resolution at the U.N. Human Rights Commission 
condemning human rights abuses there. We'll continue to press China to 
respect global norms on nonproliferation, and we'll continue to reject 
the use of force as a means to resolve the Taiwan question. We'll also 
continue to make absolutely clear that the issues between Beijing and 
Taiwan must be resolved peacefully and with the assent of the people of 
Taiwan.
    We must not, and we cannot, rely solely on the invisible hand of the 
market to do all our heavy lifting in China and neither should the 
private sector. For all of us, including the business community, 
permanent NTR must mean a permanent commitment to positive change in 
China.
    But to even get that opportunity, we've first got to sell this 
agreement to the Congress, and we can't underestimate how hard it will 
be. I want you to know that I will push as hard as I can to secure 
agreement as quickly as possible. I made that clear in the State of the 
Union Address, in my press conference at Davos. Last week I started 
meeting with Members of Congress, and those meetings are continuing. You 
will get a full-court press from our administration, ably led by 
Secretary Daley.
    Now, I know you realize the stakes here. If China doesn't approve 
permanent normal trading relations, we risk losing the full benefits of 
China's WTO membership. In a global market economy, your companies would 
be shut off from a fifth of the world, while your European, Japanese, 
and other competitors would take advantage of the benefits we went to 
the trouble to negotiate. Failure would also send a signal to the world 
that America is turning inward. It would be, I believe, a devastating 
setback to our vision for the future.
    Now, I think it's important that we be honest with the Congress and 
the country on one thing. We don't know--you don't know and I don't know 
what choices China will make over the next decade. We can't control the 
choices they make, but we can control the choice we make; that's all we 
can do. And all my experience, not only as President in dealing with 
China, but as a person who has lived more than half a century in dealing 
with human nature, indicates that this is a time for the outstretched 
hand in constructive partnership.
    And I believe--I will say again--if we pass this up, we will regret 
it for a generation. And all of our successors and interests will be 
paying a price far greater than economic,

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because of our rejection. We cannot allow this effort to fail.
    We face a choice between a Chinese market open to American products 
and services or closed to us--and only to us; between speeding the 
opening of China's economy or turning our backs; between a China that is 
on the inside of an international system looking out or on the outside 
looking in.
    Let me just make one other comment about this. Some of our friends 
in the labor community, with whom I have great sympathy, say that, well, 
if you put China in the WTO, it will make it even harder for legitimate 
labor and environmental issues to be raised, because we know where they 
stand. Look, I just went to Seattle and met with the people in the WTO. 
That's a hard sell no matter who's there, and it won't change 
substantially if China's there. That's just not a vital argument, given 
where all the other countries are. That is not accurate.
    A lot of you don't even agree with me on that, but I can just tell 
you, whether you agree or not, the membership of China in or outside the 
WTO, given the perceived interest of the other developing countries that 
are going to be in the WTO on these issues, will not materially change 
what the WTO does on that over the next decade. I feel very strongly 
about that.
    So we've got a simple choice to make. And the first thing we have to 
do is to make it clear that there will be a vote on this, and that we 
want the vote as quickly as possible. And no one should take a pass.
    I know that--I met with a lot of Republican members who were very 
concerned about the religious liberty issue. I can just say--a lot of 
you may know this--but the religious groups with whom I have met, who 
have been involved in China for years, who have been doing their 
missionary work there for years, are overwhelmingly in favor of this. 
The forces that genuinely and sincerely advocate religious freedom and 
then oppose this agreement are overwhelmingly people who have not been 
involved in China, with the Chinese, seeing how the society works.
    So I really believe this is a choice for America between fear and 
hope. They made a decision, and anybody who understands anything about 
Chinese history knows that these people are very deliberate, highly 
intelligent, and aware of the consequences of the decision they have 
made. And they have decided to bear the risks of becoming part of a more 
open society. They know it will require them to change in ways that they 
have not yet come to terms with.
    We have the strongest economy we have ever had. We are the world's 
only superpower, and whenever we walk away from an opportunity to lead 
the world toward greater integration and cooperation, as I believe we 
did with the Comprehensive Test Ban Treaty, we bear a particular 
responsibility for future adverse consequences.
    So I ask you to help me with Members of the Congress, without regard 
to party, based on the national interest, the clear economics, and going 
beyond the economics. This is a profoundly significant decision for the 
United States. It will affect our grandchildren's lives, and we dare not 
make the wrong decision.
    Together, we can make sure it comes out all right. You can help us 
pass this, but it can't be a casual effort. It's not going to be a 
casual effort with me, and it can't be with you. And even if your 
companies don't have any direct stake in this, as an American you have a 
huge stake in it. As a citizen of the world--and most of your companies 
are citizens of the world--you have a huge stake in it. I'll do whatever 
I can. I implore you to do the same. And we'll have a good time at the 
signing ceremony.
    Thank you very much.

Note: The President spoke at 11:45 a.m. at the Park Hyatt. In his 
remarks, he referred to Ralph S. Larsen, chair, Business Council. The 
President also referred to FSC, the foreign sales corporation provision 
of U.S. tax law.