TEXT: COMMERCE SECRETARY 10/8 REMARKS TO AMCHAM BEIJING
(U.S. seeks open, stable, responsible China)

Washington -- The United States wants to see China's integration as "a fully responsible member" of the global economic system, according to Secretary of Commerce William Daley.

"China's emergence as a strong power is one of the defining historical events of our time. It is clear that China will play an enormous role both in shaping the course of 21st century Asia and the world. The United States has a huge stake in the continued emergence of China in a way that is open economically, stable politically, and responsible internationally," Daley said in October 8 remarks to the American Chamber of Commerce in Beijing.

Groups such as the U.S.-China Joint Commission on Commerce and Trade (JCCT) focus on "the practical construction of the business and commercial environment in a way that enables commerce to grow," Daley said.

"We are committed to working on the nuts and bolts of building a healthy business environment -- helping to increase company-to-company contacts and solving problems to pave the way for each of you, as business representatives, to succeed in this most dynamic marketplace," he said.

Daley added that the JCCT is discussing "programs and initiatives to help U.S. companies cope with the ever present challenges of doing business here in China." Some of the areas under discussion include advocacy, financing, small business, standards, intellectual property, and commercial law.

According to Daley, the United States wants to see the reduction of tariff and non-tariff barriers across the board, including services access, standards, distribution, and licensing. He added that the United States supports China's accession to the World Trade Organization (WTO), but stressed that such an accession must be under commercially viable terms.

"When China enters the WTO, it will receive the benefit of 50 years of global trade negotiations. It must make a commensurate balance of concessions and obligations to us and the other members of the WTO," he said.

Daley pointed out that a more open trade and investment regime "would have multiple benefits for China and its trading partners and for the lives of millions of people."

"By necessity, it would speed the pace of economic reforms in China and spread even more widely the gains to the Chinese population," he said.

Following is the text of Daley's remarks, as delivered:

(begin text)

REMARKS OF

U.S. SECRETARY OF COMMERCE WILLIAM M. DALEY

BEFORE THE AMERICAN CHAMBER OF COMMERCE

BEIJING, CHINA

OCTOBER 8, 1997

Thank you very much. It is indeed a great pleasure to be here. I want to thank the Chamber and its two thousand or so members in China for their hospitality and forum. You have given five of my predecessors and countless U.S. government officials an opportunity to enjoy a dialogue of immense commercial importance.

I want to thank the Chairmen of the Chamber, John Holden of Cargill, of the U.S.-China Business Council, George Fisher of Kodak, and the management and boards of each organization for providing extensive and insightful input for this visit and for the eleventh session of the U.S.-China Joint Commission on Commerce and Trade (JCCT).

I also want to recognize Governor Locke of Washington State, the first American Governor of Chinese descent, and Vice Chairman of the Eximbank, Jackie Clegg, General Counsel of the Commerce Department Andy Pincus, and acting Under Secretary of Commerce Tim Hauser, who are part of the official delegation for the JCCT.

Governor Locke's presence here today exemplifies the great diversity that makes up America and the ties that bind the American and Chinese culture and its people. Two million Americans trace their heritage to China, which is a living bridge between our two great nations.

This is my first visit to this fascinating and ancient country.

China has had an historic role in global economic integration that dates to the Silk Route in 200 B.C. In the 14th century, the voyages of Admiral Zengo Ho to Southeast Asia, India and East Africa, where he brought giraffes back to the emperor's court, were closely followed by Chinese traders.

I have come here to talk about expanding the frontiers of free trade between us. As we speak, the leaders of China and the United States prepare for their Summit as they seek further progress in this most important relationship.

Today China has become America's fourth largest trading partner. It is among the world's largest destinations for direct foreign investment. Its exports to the world have grown dramatically, up five-fold in only the last twelve years. The reforms China began in the late 1970s have created economic growth averaging over 10% over the past several years and this has astonished the world.

China's emergence as a strong power is one of the defining historical events of our time. It is clear that China will play an enormous role both in shaping the course of 21st century Asia and the world. The United States has a huge stake in the continued emergence of China in a way that is open economically, stable politically, and responsible internationally.

As President Clinton said, "China is home to a quarter of the world's people. In less than two decades, its economy may be the largest on earth. America has a profound interest in seeing that China is stable, open, at peace with its neighbors."

One of the Administration's top goals is to encourage China's integration, as a fully responsible member, into the global system. That is why China has been visited this year by Vice President Gore, Secretary of State Albright, Treasury Secretary Rubin, and National Security Advisor Berger. That is why I am here today, and why we look forward soon to welcoming China's President Jiang Zemin in the United States.

We are focused on building a constructive relationship across the full range of issues. China will choose its own destiny, of course. But, in President Clinton's words, "We want a China that works with us to build a secure and prosperous future."

Only a dozen years ago -- in 1985 -- our trade with China was in balance. Since then, however, our trade relationship has been dramatically imbalanced, with the growth of China's exports to the United States far out pacing the growth of China's imports from America.

China's exports to the United States have grown at a compound annual rate of 25 percent since 1985. During that time the compound annual growth rate of China's imports from the United States has been 11 percent -- barely more than the 10 percent annual growth of America's exports to the world during that time. Thus, despite China being the world's fastest-growing economy, American exports to China have remained only a small percentage of our total exports -- 1.8 percent of U.S. global exports in 1985 compared to only a little over 1.9 percent today.

Let me make it clear that our export performance in China is not due to any loss of competitiveness to the other industrial nations. Since 1985, China's imports from the other industrial nations as a group have actually grown more slowly than China's imports from America.

Now, I know that Chinese and American statistics on trade differ; but the growth rates I have just quoted to you are not U.S. statistics -- they are official Chinese statistics as reported to the International Monetary Fund.

What these figures say is that the Chinese market has yet to open. China is in the throes of an unprecedented reform of its internal economy, dealing with the transformation of largely unproductive state enterprises.

However, the pursuit of internal reform and economic dynamism has preceded decisions to open the economy to international competition. The result is the huge trade imbalance that China is running not only with the United States, but with the world.

Our reaction to this imbalanced trade growth has not been to pull back, but to engage. There has been some Chinese response: an unprecedented textiles agreement allowing for greater market access for U.S. firms, and enforcement efforts on intellectual property rights that are among the most ambitious in the world, and a renewed interest in WTO accession. China has shown when it wants to engage commercially, it can do so.

I am here seeking further commercial engagement, focusing on areas that affect you most -- market access, transparency, uniformity in the application of laws and regulations, consistent and predictable tax policies, and the ability of U.S. companies to be able to participate in China's distribution system -- to name a few.

Our approach is two-fold. The first is pursuing China's accession to the WTO in a way that generates firm commitment to the principles and practices of the WTO and that genuinely opens the Chinese market.

I am working closely with Ambassador Barshefsky to seek a strong and effective market-opening package from China.

Our main priorities are reduction of tariff and non-tariff barriers across the board, including services access, standards, distribution, licensing, and other major concerns.

When China enters the WTO, it will receive the benefit of 50 years of global trade negotiations. It must make a commensurate balance of concessions and obligations to us and the other members of the WTO.

The second aspect is engagement in the practical construction of the business and commercial environment in a way that enables commerce to grow. That is the function of the JCCT. And we are committed to working on the nuts and bolts of building a healthy business environment -- helping to increase company-to-company contacts and solving problems to pave the way for each of you, as business representatives, to succeed in this most dynamic marketplace.

This is the JCCT goal. And my co-chair Madame Wu Yi, a highly skilled negotiator and a dedicated proponent of trade engagement, and I both want to sharpen our focus on this critical work. We are discussing programs and initiatives to help U.S. companies cope with the ever present challenges of doing business here in China. I'd like to touch on a few of these.

One is Advocacy -- I am promoting American companies' interests in a wide range of projects from aviation, to insurance, to power generation. Tomorrow I hope to be able to join Minister Wu in saying more about this.

Two, Financing -- Exim's Vice Chairman, Ms. Jackie Clegg, who is here with me, and my Commerce colleagues are having productive discussions with their counterparts. And we are discussing the increased role private sector sources of financing can play in China's infrastructure development.

Three, Small Business -- As you know, Fortune 500 companies are not the only ones which do business abroad. Small and medium sized companies are now global players -- frequently with the most cutting edge technologies. Only three percent of America's small and medium-sized exporters do any business in China. This is much too small a number, especially since these companies are among America's fastest-growing and would be perfect partners for China's emerging small companies. Minister Wu and I are exploring how the JCCT can be more helpful to small businesses.

I am proud to say that yesterday I participated in a signing ceremony between a small business from Governor Locke's state, North Creek Analytical International, and CRAES, which is the research arm of China's National Environmental Protection Agency, to recognize the opening of China's first ever officially-sanctioned commercial environmental lab.

This is just one fine example of the opportunities which are available for American small businesses in the Chinese market, and the mutually beneficial partnerships we can form in essential sectors, such as environmental technology.

Four, Standards -- China has thousands of standards, many of which are different from global standards and represent a sharp increase in the cost and difficulties of doing business in China. We have been working with Chinese standards organizations and the JCCT in an effort to make progress towards confidence-building and cooperation with the U.S. testing and certification sector, and to encourage greater use of voluntary standards and manufacturer's self-certification.

Five, Intellectual Property -- In April, the JCCT established a title verification office that is now handling dozens of requests weekly. We also have graduated thousands of managers from software manager IPR training courses. We have been discussing expanding these courses to additional cities in China. Also, we are discussing a cooperative approach in which the Commerce Department's Patent and Trademark Office will train Chinese patent officials in an intensive multi-week visiting scholars program.

Six is Commercial law -- Perhaps no other area is of more concern to American companies which operate today in China.

We are discussing within the JCCT the possibility of a regular dialogue and timely exchanges on the rule of law and enhancing the effectiveness of China's arbitration system, in addition to addressing some of the specific disputes.

Seven, the JCCT itself -- We are looking at how the JCCT can be made even more effective and how it might be utilized to broaden the commercial dialogue and involve business interests more fully throughout the year.

Beyond the JCCT, I am also discussing other important issues during my visit to Beijing, including human rights and the future of Hong Kong. One of my priorities as Secretary of Commerce is to align our trade policy with foreign policy as a force for more open societies. Absent economic engagement, it is unlikely that any of the changes taking place in China would have occurred. Our economic presence, in all of its manifestations, hastens China's need to universally recognize principles of civil liberties and human rights and the norms and obligations which they do entail.

With regard to Hong Kong, Beijing's commitment to maintain the Special Administrative Region's open economy, democratic institutions, distinct legal system, and civil liberties is crucial to Hong Kong's future prosperity. It is critical to China's future prosperity, as well, because the governance of Hong Kong will be a demonstration of how well China will keep its commitments. In the first one hundred days since the handover, all indications are that things are moving along as planned. This miracle of Asia -- a place in which civil liberties and individual political, cultural, and academic freedoms have been respected assiduously in a tried and true framework of law and justice -- provides the best hope of drawing China into the norms and behavior that guide and govern modern societies and modern economies. Its continued existence, unblemished by whims of ideology, must prevail.

At the risk of preaching to the choir, I would like to conclude with a few words about the benefits of trade. I have discovered during the fast track debate in Washington that there is considerable cynicism about trade and the benefits of open and free trade. I have not come to China to engage in polemics over the trade deficit, but I've come to help open markets. U.S. exports to China not only benefit the United States, but China as well. It is a fundamental tenet of economics that trade is about comparative advantage, and is a win-win situation.

Ignoring reality by retreating from the global economy and China's expanding role is not an option for the United States. I quote the words of Anson Burlingame, China's first Ambassador to the United States, when he led China's first diplomatic mission to our country in 1868, "We are not too proud to learn, nor too afraid to teach."

We believe that a more open trade and investment regime would have multiple benefits for China and its trading partners and for the lives of millions of people. By necessity, it would speed the pace of economic reforms in China and spread even more widely the gains to the Chinese population. And, as the pace of reform accelerated, expanded trade and investment would bring opportunity and prosperity to the rest of Asia, and the truth of the matter is, and to the world.

There is a Chinese saying which reads:

A tree of many arm spans is produced from a tiny sprout A tower of nine stories is raised from a pile of earth And a journey of a thousand miles begins with a single step

The first step has been taken, but there is much work to be done. And I look forward to working with all of you as we shoulder this enormous task that is ahead of us. Thank you very much.

(end text)

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