Text: Commerce Secretary Daley Takes China NTR Campaign to Chicago
("We are watching old China wanting to become a new China")Commerce Secretary William Daley took the campaign to get Congress to grant permanent Normal Trade Relations (NTR) status to his hometown -- Chicago -- March 28.
Speaking before the Chicago Council on Foreign Relations, Daley said the debate over granting China permanent NTR status is challenging as lawmakers weigh issues of economic advantage and human rights in an attempt to come to a decision that is best for America in the broadest sense.
"I want to put the trade debate over China in a broader perspective, because it really is broader than trade," Daley said.
Granting NTR, he said, would lock in the deal struck between China and the United States regarding that country's market opening obligations as part of its accession to the World Trade Organization (WTO). But, Daley stressed that permanent NTR status for China is the best way to help China emerge as a peaceful trading partner of the United States. "It is easy for me to feel confident America in the end will do the right thing, because it all boils down to this: We live in a new economy," Daley said.
"We are watching old China wanting to become a new China," he added.
As the cabinet member designated by the Clinton Administration to be point man in the fight to get Congress to vote permanent NTR status for China, Daley said he hoped that "old trade politics" would give way to "new trade politics that is more than about jobs and economics."
Daley told his Chicago audience that the new way of looking at trade is about creating "a better, and more stable, safer world."
In the new economy emerging in the United States, Daley reminded his audience, "new economy companies will grow by selling abroad."
But, while there are clear benefits to American businesses from gaining greater access to the large China market, Daley acknowledged the difficulties members of Congress face as they wrestle with the conflicting ideas that China can be brought into the rules-based world trading system, as opposed to its record on human rights and threats to Taiwan.
Some members of Congress, Daley said, "face tough choices, as we transition from the old to the new economy. People like Congressman (David) Phelps (Democrat of Illinois). He has half a district of pro-free traders with farmers and Caterpillar workers. And half are worried about trade because there is a depressed coal industry."
It is, Daley conceded, "a complex issue to grapple with."
Daley also cited Congressman (Dave) Weldon (Republican of Florida), "whose constituents include 12,000 Harris Company workers. The deal would probably create jobs in his district. But he worries it would send the wrong signal, given China's threats against Taiwan and its mixed record on religious rights."
China, Daley said, "offers unions what they need to maintain the momentum: a growing market, with low tariffs." Much of organized labor, however, has come out against permanent NTR status for China.
"The question I get asked most is: is this winnable," Daley told his audience.
"If we had to take the vote today, it would be tough in the House -- even with Speaker Hastert's support," Daley said.
"It is easier in the Senate -- but I don't think we have the votes in the House yet. But the opposition doesn't either," Daley added.
Following is the text of Daley's remarks, as prepared for delivery:
(begin text)
Remarks by Secretary of Commerce William M. Daley
Chicago Council On Foreign Relations
March 28, 2000
Chicago, Illinois
In John Reilly's introduction, he left out one little fact: I am now the longest serving Commerce Secretary in this century -- all of 88 days.
I don't want to brag too much because the longest serving Commerce Secretary in the last century, and the only one who went on to become President, was Herbert Hoover!
I am grateful to serve during the longest economic expansion in our history, when businesses have created 21 million jobs. But as I look at my tenure -- and I have a lot of energy left for these last 10 months -- there is nothing I wish for more than to help open China and bring it into our trading system.
I can't imagine any Commerce Secretary in the next 30 years having the kind of opportunity I have: to help open a market of over a billion consumers to American businesses. This effort fits into the topic of your spring lecture series, projecting American influence in a rapidly changing world.
I know you heard from General Clark last month, on how tough it was to manage a military coalition with some 35 voices in the Kosovo war. At the World Trade Organization, we have 135 countries, and you saw what happened in Seattle. And now as I work with the United States Congress, I have to convince 535 different people.
To be frank with you, General Clark's job, with just 35 opinions -- may have been easier! This afternoon, I want to put the trade debate over China in a broader perspective, because it really is broader than trade.
It is easy for me to feel confident America in the end will do the right thing, because it all boils down to this: We live in a new economy. We are watching old China wanting to become a new China. And I really hope, we are seeing old trade politics give way to new trade politics that is more than about jobs and economics. It is about creating a better, and more stable, safer world. In this new economy, new economy companies will grow by selling abroad.
Next year, the second largest market in the world for personal computers will be China. The Internet is growing faster in China than anywhere in Asia. Think about how important small businesses have been to driving our new economy. Then think about this: the third fastest growing market for American small and medium-sized exporters is China. And who supplies the General Electrics and Boeings of the world who rely so heavily on global commerce -- small companies.
And as old economy industries want to become new economy industries -- they are looking half a world away, also. Right now every man, woman, and child in China consumes less than a dollar's worth of American farm products -- a year. The salad you eat at dinner tonight will be more than the average Chinese consumes from the greatest farmers in the world for the entire year.
But look to the future -- and China will account for nearly 40 percent of the future growth of U.S. agricultural exports. My point is this. In a new economy, where the way we work and live is different, the way we relate to each other across national boundaries also has to be different.
In three decades, trade has grown to nearly a quarter of our economy, from one-tenth. But it would never have happened without a rules-based, world trading system. It would never have happened if governments hadn't torn down trade barriers. As we grow our new economy, China is growing one, too.
In the last 20 years, China lifted more than 200 million people out of poverty. It links so many people through wireless communication, it's like adding a new Baby Bell every year. No question, they still have problems. Their economy is still plagued by corruption. 100 million people in China are looking for work. Economic growth has slowed, just when it needs to be rising. And less than one-third of China's economy is private. Having been in public service for three years, I doubt their bureaucracy is any more efficient than ours!
This was no easy decision for China's leaders to join the world trading system. If we were in their shoes, you could hear the opposition now: the Pat Buchanan's of China telling us this will cost 10 million farmers their jobs. But the Chinese concluded without open markets, they cannot build the world-class industries they need in this century. Buying second-hand steel mills won't work anymore.
So, they have given us what every president since Richard Nixon hoped for: a more open market. For the first time, companies can sell and distribute American made products in China, on their own, without Chinese middlemen. For the first time China will agree to play by the same open trading rules we play by.
Under the agreement, Chinese tariffs in basically every sector will be cut by half or more in five years. Today we have a $69 billion trade deficit with China, because our market is open -- and theirs is not. Last year, Illinois exports to China fell for the second year in row. And since 1993, they rose a scant 4.5 percent.
Under the deal, now we get access to their markets and we give nothing in return. So Illinois farmers will no longer have to compete with export subsidies for China's agricultural products. So Chicagoland's products, many manufactured goods, and financial services, will get the chance to compete.
The only thing Congress must do to cement the deal is grant China normal trading rights on a permanent basis, instead of annual renewals as we've done for 20 years. So far, in this debate, unlike NAFTA, the economics are not really in question. I haven't talked to many people challenging the economics.
Although some members of Congress face tough choices, as we transition from the old to the new economy. People like Congressman Phelps. He has half a district of pro-free traders with farmers and Caterpillar workers. And half are worried about trade because there is a depressed coal industry.
It is a complex issue to grapple with. And there's Congressman Weldon of Florida whose constituents include 12,000 Harris Company workers. The deal would probably create jobs in his district. But he worries it would send the wrong signal, given China's threats against Taiwan and its mixed record on religious rights.
Let me say, so far I haven't seen the opposition coming out with job loss studies, as they did with NAFTA. The fact is, in the last two years union jobs are up by almost 400,000. China offers unions what they need to maintain the momentum: a growing market, with low tariffs.
Jimmy Hoffa just wrote my colleague, Secretary Slater, asking him to grant UPS permission to land planes in China. Let me read you from Mr. Hoffa's letter: "For every 40 additional international packages delivered by UPS each day, a new job is created at UPS -- and that is most likely a Teamster job." Yet, my good friends in the union, are not fans of this deal.
And one reason is the new politics of trade agreements is about more than money. It's much more complicated than that. How you can tell is that in this debate, so far nobody has come up with the great one-liner, like the sucking sound that defined NAFTA. Instead, in the new politics, there are many issues they criticize. All of which are legitimate, because, frankly, the new China still has dark sides to it that no one likes -- and I'm no apologist for them.
But we better weigh the arguments. While some see China as a growing threat to Taiwan, do you know who is ardently supporting China's entry to the WTO? Taiwan's new President-elect Chen. And I think China has so far reacted responsibly to the election news.
Others say China is a drag on labor and environmental rights. If we put China in the WTO, they argue, that will block further progress on these important issues. I was in Seattle. I can tell you, first hand, environmental and labor issues are already a hard sell. And that won't change substantially if China is there.
That is not a valid argument, given where all the other developing countries are on these issues. Others point to human rights. They are concerned about religious freedom, as clearly I am, as a Catholic. I am proud last week Secretary Albright made a special trip from India to Geneva to personally deliver a very strong statement on human rights.
She stood up to China, because China's record on human rights has significantly gone backwards in the last year. But the fact is the groups involved in missionary work in China for years are overwhelmingly in favor of this. So are people who have paid the greatest price under Chinese repression -- those who helped lead the demonstrations at Tiananmen Square.
Those who oppose this have not been in China, seeing how society works. Any vote against this won't free a single prisoner in China. And I don't think lecturing them or threatening them works either. Every time I visit a country -- any country -- and suggest publicly the government needs to change its ways, do you know what happens? Somebody looks me in the eye and says: Who do you think you are, lecturing us?
A vote against this would leave China with less access to information, and new ideas, democratic ideas. Ironically, it would do it as the cyberworld is bringing great change to our society, and could do the same for China. The leaders of China are smart people. They know if our high-tech industry goes in and wires China, and everybody is connected to the Internet, that change will come more rapidly in ways they cannot control. They have made the decision to let it happen. We should not let our disagreements get in the way.
Let me just add, it would be a very negative message, especially after Seattle, for America to turn this down. Here we are, an economy 10 times larger than China's, here we are, with exports to the world four times greater than China's -- and we are thinking about turning China down?
We're afraid to secure normal trade ties after a two-decade trial? If this fails, it would send, at the start of the 21st century, the wrong signal to the world of America's leadership. Obviously, the question I get asked most is: is this winnable?
It's mushy to predict.
If we had to take the vote today, it would be tough in the House -- even with Speaker Hastert's support. It is easier in the Senate -- but I don't think we have the votes in the House yet. But the opposition doesn't either. Passage is always tough for every big trade agreement we've ever voted on. At this point of the game in NAFTA, we faced the same situation.
People who are against the deal are far clearer about their opposition than people who support it, this far in advance of a vote. But I am encouraged. House Majority Leader Armey said last week the House would announce soon when the vote will be scheduled. He indicated the vote will come before the end of May, as the President has asked. That is a very positive development. It has already been introduced in the Senate, and the Finance Committee is deliberating on it.
Timing is key. The longer we wait, the harder it is. A vote in April is better than May. May is better than June. After that you run into conventions, and campaigns for the November elections. After that, we would be back to old politics.
Next month, Secretary Glickman and I will lead congressional delegations to China. We want members, especially those uncertain, to see it all: local factories and U.S. facilities. We want them to talk with dissidents and Chinese officials.
We want them to see how China has changed, and where it needs improving -- you can't do that sitting in Washington. I hope every member goes back to their districts, and talks with normal Americans about this -- people outside of Washington. There was a recent poll showing Americans favor this 48 percent to 36 percent. I wish we had a bigger majority, but a 12 point spread isn't bad, and we're gaining ground.
The fact is, the new China wants this deal very much. The signs are there. China reversed itself recently on imports of computer encryption technology. Last week it reopened its borders to American citrus, meat and wheat exports.
Next week I'll be in Beijing for meetings on improving the nuts and bolts of doing business between our countries. We regularly hold these meetings of the U.S. China Joint Commission on Commerce and Trade. China has launched a major effort to conform its laws and regulations to its WTO obligations. We are prepared to offer assistance.
Given the huge volume of trade, and likely increases after China joins the WTO, we will be seeking to develop an effective process for quickly settling trade disputes when they arise. More than anything, such a process would allay fears that China will honor its international agreements. Even so, our motto is: trust but verify. So we are asking Congress for $22 million to beef up our own compliance monitoring.
Of course, I am not the only one going to China. I am delighted that the Chicago Sister Cities program will sponsor our city's first trade mission to China in June. The timing is perfect -- right after we win the China vote in Congress! Some 60 companies, large and small, have signed up so far. And I hope more will join them.
You know, when Richard Nixon first went to China, more people saw the pictures and heard his words than on any occasion in the history of the world. And he paraphrased Lincoln: He said: "what we say here, would not long be remembered. What we do here can change the world."
Thirty years later, after 30 years of peace between China and America -- we now have another foreign policy choice, what President Clinton calls his top remaining foreign policy goal. After all the speeches, after all the arguments, after all the voices on both sides of the debate, what we say isn't as important as what we do.
We cannot predict what China will do. We don't know what choices China will make. But we do control the choices we make. We can work to move China in the right direction, and offer the promise of the new economy to a new China. That is the choice America must make and will make
Thank you very much.
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