Transcript: USTR's Bader on Accession to WTO by China, Taiwan
(Implementing commitments requires great effort, he says)A U.S. trade official says China will need to exert great effort to fulfill the commitments it has made to join the World Trade Organization (WTO).
In a November 10 press conference in Doha, Qatar, just after WTO ministers formally approved China's accession, Assistant U.S. Trade Representative Jeffrey Bader cited Chinese leaders' statements about their intent to implement WTO obligations.
"But there are, of course, forces of protection in China, as there are elsewhere ... who can be expected to create difficulties in the implementation process," Bader said.
He made clear U.S. approval for China's accession and Taiwan's pending accession, which WTO ministers were expected to approve November 11.
China's accession will open markets for the United States and promote further benefits from economic reform for China, he said.
Bader said that he expected trade issues between China and Taiwan would still be resolved mostly outside the WTO but that they could use the WTO to their advantage if they chose to do so.
Following is the transcript of the press conference:
(begin transcript)
Press Conference, On the Record
Assistant U.S. Trade Representative Jeffrey Bader
Doha, Qatar
Saturday, November 10Here I have the Assistant U.S. Trade Representative Jeffrey Bader, our Assistant U.S. Trade Representative for China, Taiwan, Mongolia, so without further ado, Mr. Ambassador.
Bader: Thanks Rich, and let me echo what Rich said about appreciating your patience through the delays. I thought I would begin with a few brief remarks at the outset and then take your questions.
The United States is very pleased that a 15-year process of negotiation has culminated in today's decision by the World Trade Organization to admit the Peoples Republic of China. We are also pleased that tomorrow we expect that the Ministers will decide as well to admit Taiwan to the World Trade Organization. The terms of admission to the World Trade Organization is the logical culmination of 23 years of reform in China, reforms characterized by introduction of market phase reforms at home and opening of markets to foreign competition.
The decision to admit China to the WTO is in the interest of China and the United States and the world trade system. For China, this admission to the world's most important multilateral trading institution will allow it to help write and make the rules of trade. It also will further the cause of economic reform that has already paid such dividends to China. For the United States, it means principally opening of markets. Considerable tariff cuts on industrial and agricultural products; tariff rate quotas which will grow sharply each year on a number of agricultural products; quotas on automobiles, that also will grow each year, and eventually there will be no numerical limitations on automobile exports in China. In the area of distribution which is of great interest to American companies, American companies will be able within three years to have wholly owned distribution outlets for their products in China both in wholesale and retail side. Since distribution has been one of the obstacles to penetration to the China market, that's a very important step.
Other trading rights include: the right to export to China whether or not you have investments presence in China on a non-discriminatory basis; China's adherence to the Information Technology Agreement -- which means within 5 years China will eliminate all tariffs on information technology products. Improvements in the areas of services, insurance, banking, securities, which will mean that foreign companies, U.S. companies in particular, will have the right to have equity shares in all these areas. The elimination of export subsidies, both industrial and agricultural. The requirement that state-owned enterprises make decisions on a commercial basis rather than on a preferential basis. These are a few of the thousand pages of commitments that China has undertaken on its schedules and multi-party report.
For the world, this is also an important step in the world trading system because of a few things I will mention. China, as you have heard Minister Shi Guangsheng say in his plenary statement a few minutes ago, China supports new global negotiations to liberalize market access. China's voice on this will be an important one. China also provides a superb example of what opening markets do for a country's economy, and this will be a salutary example for developing countries. And in addition, China's accession represents a huge step in China's integration into the world. The cause of openness in China and this for a country that has had stretches in the past where it was closed to the world with highly negative effects both at home and abroad.
Finally, underlying three points in closing these opening remarks:
First of all, the overarching significance of China joining a rules-based system, which is what the WTO is, with transparency and accountability. This for a country, which only recently began moving towards understanding and putting in place a system of rule of law.
Secondly, the issue of implementation on China's commitments. China has undertaken a massive set of commitments. These are not self-implementing. It is going to take a great effort to assure that these commitments become a reality. China's leaders have been clear in their intent to implement them. But there are, of course, forces of protection in China, as there are elsewhere, and there are institutions whose previous positions will be affected by these commitments, who can be expected to create difficulties in the implementation process.
And finally, I would just mention that yesterday the White House announced that the President has certified China's status for permanent normal trade relations. As those of you who follow U.S.-China relations know, since the late 1970s, there has been a requirement for annual Jackson/Vanik waiver in order to provide Most Favored Nation status to China. With the President's certification on the legislation passed by the Congress in the year 2000, that the final package approved by the WTO is at least equivalent to a 1999 U.S.-China bilateral agreement, China will now, once it joins WTO, enjoy permanent normal trade relations' status. This would provide predictability to an economic relationship that has occasionally suffered from uncertainties in the past. And this will be most welcome both in China and by U.S. exporters and investors.
That's all I have planned to say at the outset. I'll be happy to take your questions.
Question: As you know, the United States has already made some complaints to China regarding its commitments on opening its market for some agricultural products. Is this a bad omen for China's accession to the WTO?
Answer: Your question probably relates most recently, I think, to difficulties in exporting soybeans to China, I suspect. Since China announced a biotechnology regulation in June, there were delays and difficulties in exporting soybeans to China. In addition, there were not contracts signed for a number of months. I have, however, seen in the last few days, soybeans have been getting into China. There has been, as you say, a history of some difficulty getting U.S. agricultural products into China. And it's been a gradual process overcoming those difficulties since the 1999 agreement. U.S. citrus, beef, and pork and poultry products have been getting into China in the last year. It takes awhile to change entrenched habits by Customs and Quarantine people. Those habits are changing, and under the WTO agreement China is obligated to use scientifically sound standards in making decisions on import of agricultural products. So that will help encourage Customs and Quarantine officials to make a right decision.
Question: It seems there could be a strange situation if Taiwan were to challenge China regulations. Is China committed to treat Taiwan as a full member?
Answer: As of tomorrow, both of them will have been endorsed for membership, and they will both be members before long. I mean each one enjoys the full privileges of membership unless someone invokes non-application. As a member, they are obligated to accept this huge settlement process, so that is within the WTO rules. Whether China or Taiwan would choose to exercise that is a different matter, and they would have to be the ones to answer that. But certainly, they are both obligated to accept the dispute-settlement mechanism of the WTO unless someone invokes non-application. I have not heard suggestions that will happen.
Question: How would characterizing the negotiating process lead up to China's accession? What have you learned during that process about how you deal with China?
Answer: Well, as you know it has been a 15-year process, which I imagine is the longest of any accession in GATT [General Agreement on Tariffs and Trade]/WTO history, which gives you some sense of the magnitude of difficulty of the undertaking. China was, as you know, a command economy, essentially, a planned economy, and the WTO is an institution most of whose disciplines are based on market principles, so the negotiation has been interesting in the sense that reformers within China who have sought to increase the pace of economic reform in China have seen the WTO negotiations as not as a zero-sum game but rather as an opportunity to further their own cause, to further the cause of economic reform in China. So that's been a positive factor that has helped negotiations.
On the other side, it's an immense country and a very bureaucratic country with state-owned enterprises that have ministries as their patrons. You have a lot of powerful players, who saw the WTO as a threat to their privileged position. And so it has required strong leadership in people committed to market process, like the Premier, for example, to see this process through to a successful conclusion. The bureaucrats of China are immensely complicated. Some ministries are enthusiastically committed to market opening and others are not. And so, it's been a difficult process.
Question: Refresh my memory, in terms of market access, tariff cuts are phased in over a number of years. Since it has taken so long to negotiate accession, when do the tariff cuts take effect, and are they entering on a second tier?
Answer: Basically, the United States negotiated the tariff cuts differently from other countries. We insisted that they begin on specific dates rather than upon accession. And in the final round of reconciliation of U.S. and other countries' offers, the U.S. position prevailed because ours is the most market opening. So what that meant was that the tariffs cuts, which as you say are phased in, and the tariff rate quotas which are phased in began in 2001, rather than upon accession. So basically we have a one-year head start on the tariff cuts.
Question: (Inaudible) What is the U.S. estimation of Taiwan's down payment on its implementation commitments?
Answer: On the first question, and it's a hard one for an American to answer as it's hard to read the mind of Beijing or Taipei; they will have to ultimately make the decisions. I think that the major decisions in commercial relations between the two will continue to be made between two capitals in the broader context of the relationship would be my guess. That said, I think that having an institution where both are members on an equal footing and an equal basis provides opportunities for them to meet and discuss issues authoritatively without having to go through the difficult dance that they go through whenever they are looking to get together bilaterally. Now whether they will choose to take advantage of that opportunity depends on the overall state of relations across the Strait. But it creates a means; political will will determine what that means is utilized.
On the down payment, I think that Taiwan has generally done well. Taiwan has just passed a series of laws in the legislature on things like intellectual property, on telecommunications, that were necessary to clear the way for their accession. There are a few hiccups on some agricultural commitments, but by and large I think the implementation has been good, and we particularly welcome the intellectual property laws that have been passed in recent days and weeks.
Question: In the final negotiations on China in Geneva, the access issue on insurance was fudged, or at least that is how it seemed to many observers. Has there been a non-aggression pact, or is this something that still needs to be worked out?
Answer: The commitments that were made in 1999 in the U.S.-China bilateral agreements are allowed -- well, first of all they specify that whatever conditions of managements' scope of operation a company had before accession could not be diminished after accession, and the ... agreement also specified that companies like insurance companies could create internal branches. Those commitments are fully intact in the final package. As you've alluded to by the European Union have language in a footnote that any authorizations above the schedule limits will be available to any company until request. That's the gist of it.
We do not read that as a restriction on the privileges and rights of existing companies that currently have privileges that exceed the scheduled amount. We see that as a floor and not a ceiling. So we consider the '99 commitments to be intact, and we will look to them to be implemented.
Question: I wonder if you can tell me where China will line up on the launch of a new round, and do you see China as a strong advocate of tightening up rules on anti-dumping given that they are a big target of those measures?
Answer: In general, they have made statements in favor of new negotiations going back to APEC [Asia-Pacific Economic Cooperation forum] in June, the APEC Ministers meeting and the Chinese were quite helpful in crafting a statement by the APEC Ministers support of new negotiations on market access. And that has remained a consistent position of the Chinese since then. I believe that that position given China's weight particularly in Asia has helped sway countries that were uncertain about the new negotiations towards a more positive position.
Now, given the breadth of the commitments that China has undertaken as you know, the question of a developing country was put aside in the negotiation process. But the commitments China has undertaken go beyond those of a developing country in many respects. China having accepted disciplines that go beyond those of developing countries, it should be in China's interest to see other countries, other comparably placed countries, be subject to similar discipline so that they are not put at a disadvantage. The differences between China and the U.S., of course, remain substantial, and I don't mean to underestimate them in any way. But, they should be supportive of a greater opening on a lot of issues.
Specifically, on anti-dumping, there are a number of countries that have been less than satisfied with our anti-dumping laws, but, look, China has it's own anti-dumping laws, and they have used them against other countries including against the United States. So this is not just a one-way issue.
Thank you very much everyone.
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