Text: Senators Baucus and Akaka Feb. 29 Remarks on China/WTO Act
(S 2115 to ensure China adheres to its trade commitments)The United States should make sure that China lives up to the trade agreement negotiated between the two countries in November 1999 covering Beijing's accession to the World Trade Organization (WTO), according to seven U.S. Senators.
To help make that happen, the one Republican and six Democratic lawmakers introduced the "China WTO Compliance Act" (S 2115) February 29.
Senator Max Baucus, Democrat from Montana, in a press statement the same day, said the bill "is designed to ensure continuous and rigorous monitoring of China's WTO commitments."
The Montana lawmaker, a supporter of China's WTO bid, said his bill would "provide new means for Congress and the President to make sure that China complies with those commitments."
The bill, the press statement said, addresses "one of the major concerns with China's entry into the WTO -- how we can be confident that China will fully comply with this agreement."
Enactment of the bill, Baucus said, "will provide some reassurance to Senators and House members, business, and workers that China will act on its trade commitments.
The China WTO Compliance Act would require the President to submit a detailed plan to Congress for monitoring Chinese compliance that would be updated annually, according to a fact sheet from Baucus' office.
It would require the General Accounting Office (GAO) to survey annually 50 "top" American firms that export non-agricultural products to China, that export agricultural products to China, that provide services in China, and that invest or import goods from China "to determine if China is abiding by its WTO commitments.
The United States Trade Representative would then be required to submit an annual report to Congress on China's compliance with its WTO commitments.
The bill would require either the Senate Finance Committee or the House Ways and Means Committee to initiate a Section 301 investigation of Chinese practices "that do not abide with China's WTO commitments," the fact sheet said.
The bill also would amend Section 301 "to authorize USTR to draw a negative inference if a country being investigated does not cooperate in providing information."
The China WTO Compliance Act also calls for a Sense of the Congress resolution that "there should be a special multilateral process at the WTO for an annual review of Chinese compliance."
The USTR would be instructed to propose that the WTO's Trade Policy Review Mechanism (TPRM) conduct "a thorough review of China's trade policies every year."
While the Act's language expresses caution about China's intent or ability to comply with its promises, it also calls for the President to "submit a plan to provide assistance to China to build the institutions necessary to carry out the obligations China has made as part of its accession to the WTO."
Other senators supporting the legislation included Democrats Daniel Akaka of Hawaii, Jeff Bingaman of New Mexico, Kent Conrad and Byron Dorgan, both of North Dakota, and Ron Wyden of Oregon. Senator Frank Murkowski of Alaska was the Republican lawmaker signing on to the bill.
In addressing the Senate on S 2115, Senator Akaka said he did not know how a vote to grant China Permanent Normal Trade Relations (PNTR) would turn out.
PNTR would be necessary if the United States were to enjoy the benefits of the market opening agreement it negotiated with China as part of that country's accession to the WTO.
"I think it is reasonable to assume that later this year China will join the WTO whether or not the United States grants permanent NTR," Akaka said.
"In light of this possibility, the legislation proposed today by my colleagues, and which I am pleased to cosponsor, is a reasonable and prudent step to take in order to ensure that the agreements which China commits to in joining the WTO are ones which China will fulfill," the Hawaiian lawmaker said.
The history of Chinese compliance with international agreements, Akaka said, "has not been as good as it should be," citing intellectual property rights as one area where its deeds did not match its promises.
Following is the text of statements by Baucus and Akaka from the Congressional Record:
(begin text)
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
Senate February 29, 2000
CHINA-WORLD TRADE ORGANIZATION COMPLIANCE ACTMr. BAUCUS.
Mr. President, today, I am introducing the China WTO Compliance Act, along with Senators Murkowski, Bingaman, Akaka, Wyden, and Dorgan.
This bill is designed to ensure continuous and rigorous monitoring of China's WTO commitments. It also provides new mechanisms in the Congress and in the Executive Branch to make sure that China complies with those commitments.
Twenty years of negotiations with our Asian partners have demonstrated that trade agreements are often not self-executing. This is just as true with China today as it has been with Japan over these last two decades. The Congress and the Administration must both be resolutely committed to monitoring and enforcement. Only then do our trade agreements succeed and bring the desired results. Inattention by the United States leads to inaction by our trading partners. It leads to failure to achieve market opening objectives.
This bill will make sure that future Congresses and future Administrations, whether they are Democratic or Republican, will keep trade agreement compliance permanently at the top of the agenda with China. We must ensure that inattention never sets in. We must also ensure that other elements in the bilateral relationship not be allowed to prevent the United States from gaining the maximum trade and economic benefit from China's WTO promises.
Let me be clear that this bill is not designed to set conditions for the Congressional vote on granting China Permanent Normal Trade Relations status, PNTR. Rather, this bill addresses one of the major concerns that many in the Congress have. That is, China historical record in complying with bilateral trade agreements has been spotty. So, how can we be confident that compliance with this agreement will be any better? I hope that enactment of this bill will provide some reassurance to Senators and House members in this regard. I urge my Senate colleagues to join me in approving this legislation.
Let me outline the main provisions of the China WTO Compliance Act.
First, monitoring. The President must submit a detailed plan to Congress for monitoring Chinese compliance three months after China accedes to the WTO. The plan must be updated yearly and include detailed tasking responsibilities for each agency.
The General Accounting Office will be required annually to survey the top 50 American firms in each of five different categories. Companies that export non-agricultural goods to China. That export agricultural goods to China. That provide services in China. That invest in China. And that import goods from China. The purpose of the survey is to determine if China is abiding by its WTO commitments. The survey will also provide information about any problems confronted by those firms.
The International Trade Commission will report annually on United States-China bilateral export and import statistics. They will also, as best they can, seek to reconcile the different United States-source and China-source statistics.
The second element in the bill deals with compliance. USTR must submit an annual report to Congress on China's compliance with its WTO commitments. After analyzing this report, a majority vote of either the Finance Committee or the Ways and Means Committee would require USTR to initiate a Section 301 investigation of Chinese practices that do not abide by China's WTO commitments. If USTR then determines that China is violating any of those commitments, USTR shall initiate dispute settlement action at the WTO, unless there exists another more effective action. USTR shall consult with the Congress and provide an explanation of its action.
Going further, a majority vote of both the Finance Committee and the Ways and Means Committee will require USTR to initiate immediately a case under the dispute settlement mechanism of the WTO. The bill also amends Section 301. It authorizes USTR to draw a negative inference if a country being investigated does not cooperate in providing information. This has become a serious problem with some of our trading partners. A 301 investigation can bog down when a country with a non-transparent trading regime refuses to provide detailed information. This provision provides an incentive for cooperation.
Third, the bill calls for a special WTO review of China. It is the Sense of the Congress that there should be a special multilateral process at the WTO for a thorough and comprehensive annual review of Chinese compliance. The bill directs USTR to propose that the Trade Policy Review Mechanism, the TPRM, at the WTO execute such a review of China's trade policies every year. It also directs USTR to take measures to improve the TPRM process.
Finally, institution-building in China. Coming out of half a century of communism, China does not have the institutions necessary to carry out fully its WTO obligations. This bill requires the President to submit a plan to provide assistance to China to build those institutions necessary to fulfill the obligations China has made as part of its accession to the WTO. The bill expresses the sense of the Congress that the United States should provide such assistance through bilateral mechanisms, in particular, through appropriate non-governmental organizations. It also provides for the possibility of some multilateral assistance under the auspices of the WTO.
Finally, because a primary beneficiary of the results of successful institution-building in China would be American business, efforts shall be made to develop cost-sharing with the private sector.
There has been a lot of talk about the need to ensure full Chinese compliance with its WTO commitments. This bill is an attempt to establish a system that will do just that. We need this legislation. And we need to pass PNTR as soon as possible.
Let me conclude with a few remarks about Chinese compliance with the Agricultural Cooperation Agreement, which went into effect in December. Three weeks ago, I initiated a letter signed by 53 Senators to Chinese President Jiang Zemin. In the letter, we insisted that China proceed with full and immediate implementation of that agreement. I was pleased to announce on Monday the first purchase by China under this agreement. 50,000 metric tons of Pacific Northwest wheat. This is an important step that should be followed by other agricultural purchases.
Mr. AKAKA. Mr. President, I rise in support of the legislation introduced today by the distinguished Senators from Montana (Mr. Baucus) and Alaska (Mr. Murkowski) entitled the `China-World Trade Organization Compliance Act.'
Last November, the United States and China announced that a bilateral agreement had been reached on China's accession to the World Trade Organization (WTO). The agreement covers all agricultural products, industrial goods, and service areas. It promises to open up the Chinese market to American exports and American investment.
Nevertheless, many Americans are hesitant at embracing this accord. Part of their concern is over the requirement that in order for the United States to benefit fully from this agreement. Congress will have to pass legislation granting permanent Normal Trade Relations (NTR) status to China. Previously known as Most-Favored-Nation (MFN) trading status, NTR has been subject to an annual renewal vote each year in the Congress. This yearly vote has allowed for a full airing of American concerns over relations with China--relations which remain contentious to this day because of the Chinese government's human rights behavior, proliferation activities, trade policy, and relations with its neighbors, most especially Taiwan.
I cannot predict the result of the vote later this year on granting China permanent NTR.
I do know that a Congressional vote against China will not necessarily prevent China from joining the WTO if it concludes successfully its accession agreements with other WTO members. China still has to resolve issues with the European Union and then have its accession approved by the WTO General Council/Ministerial Conference. But I think it is reasonable to assume that later this year China will join the WTO whether or not the United States grants permanent NTR. In light of this possibility, the legislation proposed today by my colleagues, and which I am pleased to cosponsor, is a reasonable and prudent step to take in order to ensure that the agreements which China commits to in joining the WTO are ones which China will fulfill.
The history of Chinese compliance with international agreements has not been as good as it should be. In particular, China has not successfully implemented the commitments it made in March 1995 to protect American intellectual property rights. Intellectual piracy remains a major threat to the American music, cinema, and computer software industries. The Chinese government has demonstrated an impressive ability to arrest and intimidate massive numbers of Falun Gong followers but seems unable to locate factories mass producing thousands of counterfeit CDs, videos, and computer software. Clearly, where there is a will, there is a way for the Chinese government.
In addition, the Chinese government has proven itself very adept at protecting its domestic market from foreign goods and investment, devising formal and informal barriers to trade. The concept of transparency in Chinese trade law leaves much to be desired. An October 1992 market access agreement between the United States and China has yet to be fully implemented with China eliminating some barriers while imposing new ones.
The pattern of past Chinese behavior to international trading agreements suggest that we must be vigilant in ensuring compliance with the WTO accession agreement.
The legislation we offer today is a significant step towards ensuring that China's promises are fulfilled. The bill establishes a process within the United States government for monitoring Chinese compliance with its WTO commitments. The monitoring would occur regardless of whether or not the United States grants permanent NTR to China, although surely it would have more effect if we do grant this to China.
We have lacked a process, and an agency, within the United States government with the mandate, the expertise, institutional memory, and the resources to ensure that the promise of bilateral and multilateral trade agreements are fulfilled. This legislation is a major step in starting the debate on how to ensure that promises made are promises kept.
As ranking member of the International Security, Proliferation And Federal Services Subcommittee of the Governmental Affairs Committee, I am keenly interested in the implications of the legislation for the organization of our government's trade agencies. There are several areas where I would like to work with the legislation's authors to refine their proposal. I believe that it might be appropriate to designate the United States Trade Representative's Office as the lead agency working with other agencies to monitor compliance. I intend to study further the best means for ensuring the effectiveness of this legislation.
I believe it also important that public participation in commenting on China's compliance should not be limited to business groups but include environmental, labor, and human rights organizations. The climate affecting the world economy is not solely determined by the financial bottom line.
This legislation is an important step towards a trade environment which benefits the many, not the few, and I am pleased to cosponsor it.
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