TEXT: DALEY 4/1 AT AMERICAN CHAMBER OF COMMERCE GUANGDONG
(Commercial agreements can foster long-term relationships)Guangdong, China -- Businesses must look beyond one-time commercial deals to long-term relationships, Secretary of Commerce William Daley said in April 1 remarks to the American Chamber of Commerce in Guangdong.
Daley cited infrastructure deals -- the focus of his current trip to China -- as an example of how commercial agreements can foster lasting relationships.
"There is no better focus to make that case than with infrastructure," he said. "What China buys today in aviation, in telecommunications, in power generation should pave the way for more purchases later."
Market access is also critical to long-term relationships, according to Daley.
"We need greater access across the board -- for industrial and agricultural goods and services. That is the only real solution," he said.
Daley stressed the importance of remaining engaged with China.
"There is more to business than exchanging goods and services. We also exchange ideas. Ideas about labor, human rights, the environment, and corporate citizenship," he said.
"Were it not for commercial engagement, China today would be less likely to advance the best practices that American firms are known for around the world," Daley said.
Following is the text of Daley's remarks:
(begin text)
Remarks by U.S. Secretary of Commerce William M. Daley
American Chamber of Commerce of Guangdong
April 1, 1999
Guangdong, ChinaI am glad to be here, first, to be in your very lively city, and second, to be as far away from Washington as you can get -- to be with what I call normal people.
I brought along with me 18 American companies that want to do more business in China. They see China as a huge potential market -- just as we see China as a huge potential player in the world economy.
As China's role grows bigger -- and there is no doubt it will -- these companies want to be involved at every step. They want the potential to become reality.
So today I want to discuss our trade mission and some of the things I'm doing in Guangzhou. This is the last day of what has been a productive and packed trip. And then I want to address aspects of our relationship with China that have come under great scrutiny recently.
As to our trade mission, it focuses only on one area -- be it one very broad area -- infrastructure.
Last year when President Clinton came to China, he was on a radio call-in show with the Mayor of Shanghai. Here was the leader of the free world, ready to talk about human rights, and the caller asked the Mayor about a little infrastructure problem -- traffic!
That is how I think the President got the idea we need to do an infrastructure trade mission.
Obviously infrastructure improves lives. But the point I want to make is infrastructure also grows the economy.
We have seen that in America. In the '50s and '60s when every American wanted to own a home, it created an entire mortgage financing industry that brought dollars into local development. When we started building our Interstate system that connected our nation, those highways increased productivity 30 percent.
Today, as we build the information superhighway, technologies are responsible for half our economy's growth -- in a very remarkable economy.
We all know China's plans for infrastructure investments are enormous. And I was very pleased to hear Premier Zhu tell our delegation he wants more foreign companies working on the projects. He thought we were coming at the right time, and with the right firms. What I appreciated was that I had the opportunity to introduce the Premier to all 18 business leaders -- in other countries we do not always get that kind of treatment.
This week, our companies had a number of successes.
Yesterday, I visited a new neighborhood in Shanghai, where Dessen International, plans to build 100 houses exported from the United States. That is right you can now buy an American-made house that looks like it belongs in San Francisco, in China. They call it California Gardens.
Yesterday, I also broke ground for a Corning plant that will make ceramic parts for catalytic converters. These will become mandatory by the year 2000, as part of China's efforts to clean up the air.
Later today, I will celebrate with Parsons its new contract to help design the new airport here.
And with ARCO and Raytheon, I will meet with officials to discuss the great opportunities coming from China's decision to import liquefied natural gas. By the way, it took ARCO 17 years from the time it signed up to explore for gas until gas flowed in China. Patience is not one of my virtues. So, I hope we can move quicker after this meeting!
This week, I participated in several signing ceremonies.
Dasibi Environmental Corporation, will be installing air quality monitoring equipment in several cities -- and these projects will allow the company to double in size.
And Ellicott Machine Corporation does 80 percent of its business outside America, but never penetrated the Chinese market until this week. Now, they are selling more than 20 dredges here to prevent flooding.
This morning I participated in a telecommunications summit with a number of American companies. During our meetings, Minister Wu confirmed the news of what we heard from Premier Zhu and State Councilor Wu regarding CDMA.
China will allow companies to introduce CDMA networks across China. As you know, U.S. companies are market leaders in the development of this field, in which they see great opportunities. And yesterday we announced a significant development in China's telecom services. AT&T and the Shanghai government signed a framework agreement that will enable for the first time a foreign partner to provide telecom services in China. That is a real breakthrough, and we hope it sets a trend.
All of the signings, and ground breakings, and ribbon cuttings mean that even in some tough times in our relationship with China -- we can still celebrate what we share in common.
This week, I have talked about what we disagree on, but I have been at work finding what we can agree on. That shows, I think, a certain maturity in our relationship. That is important, because to use an infrastructure analogy, there are a lot of bumps on the road right now.
Revelations of possible transfer of technology capable of enhancing China's military capabilities are troubling. President Clinton has been unequivocal on this point. We take this issue seriously and are pursuing the appropriate course of action to protect against any possible transfer.
There is growing skepticism in the Congress and with some of the American people about whether our national security and other interests -- including human rights and non-proliferation -- are being advanced successfully in this increasingly complex relationship. Some believe that we should redefine our approach and work to contain China before it becomes stronger. I believe the American people want to see us remain engaged.
I look around this room -- and obviously, the business community has not turned its back. You are engaged. In fact, I hope my mission provides an important opportunity to restore some lost momentum.
The prudent course is to keep the dialogue open and expand cooperation, where possible. And the prudent course is to work seriously where we disagree.
Let me address some of these issues.
First, because of the possible illicit transfer of technology many Washington veterans have told me this is the worst climate for high-tech trade with China in 20 years.
Our export controls are a challenge in doing business here, and the debate in Washington does not make it any simpler. So far, the rate of denials of export licenses for China has not increased. But the Cox report, to be released by Congress soon, will no doubt be used by some as an excuse for tightening controls.
Some export licenses may be more difficult to obtain -- especially if an organization had even minor involvement with the military. But that still leaves a huge commercial market open to U.S. exports -- in the financial sector... and in infrastructure, like telecommunications and energy.
My message to you is: now is not the time for American business to give in to those who would turn China into the enemy. Now is not the time to give up this market. American companies need to remind the American people and the Congress of the benefits of enhanced trade with China. And American companies need to get to know their potential Chinese customers better.
You need to make it clear to those customers that involvement with the military will make business more difficult. You need to concentrate on those many Chinese customers who have no such involvement.
I can assure you Commerce will continue to support your export licenses for such business vigorously and, in most cases, successfully.
Second, I am very concerned about our trade deficit. It is not enjoyable for me every month to hold a press conference announcing it continues to soar -- $57 billion in 1998.
That is nearly double what it was five years ago. Imports outpace exports an incredible five to one. And whittling away at our $1 billion a week deficit is not solved by signing ceremonies or buying missions.
I asked the companies with me -- how many believe our exports in the next few years will grow faster than they have been growing. Only 40 percent thought they would grow faster. You expect to hear a Commerce Secretary complain about the deficit. My predecessors did.
But now I think you will start hearing it even more from every quarter of Congress, because patience on this is wearing very, very thin.
I believe Premier Zhu appreciates this issue more now than in the past. We differ on the actual amount of the deficit, that is no secret. But there is no denying the trend: the deficit is growing.
What I made clear in pressing the case is we need to look for lasting relationships. The conclusion of a commercial agreement should be the start of a long-term relationship, not the end of a one-time deal.
There is no better focus to make that case than with infrastructure. What China buys today in aviation, in telecommunications, in power generation should pave the way for more purchases later.
A third issue that concerns me is another matter we have talked about repeatedly: access to this market. We need greater access across the board -- for industrial and agricultural goods and services. That is the only real solution.
Earlier this week, my colleague Ambassador Barshefsky was held up in a hotel room in Beijing, negotiating China's entry into the World Trade Organization. She reported that some important progress was made in narrowing the issues. We are getting closer, but substantial gaps remain. There are complex issues in front of us.
But what better way could there be to end a century, than for China to join a system that in the last half century cut tariffs by 90 percent and helped world trade grow 15-fold?
Our trade with China rose after we established diplomatic relations, and I hope this, too, would open China's markets and increase our exports.
Will there be a deal? My answer since Sunday has been the same: I am cautiously optimistic.
Ambassador Barshefsky has returned to the states, but is leaving behind her team for further talks. There is a window open before Premier Zhu's visit to Washington to get a deal.
But let me be clear: this is not a political decision, it is a commercial decision. It is up to China to come up with something commercially attractive.
Premier Zhu told me on Monday that he was concerned the bar was being raised too high for entry. I think it has to be high, because this has to be good for businesses around the world, and good for the world trading system.
Let me end by saying, there is more to business than exchanging goods and services. We also exchange ideas. Ideas about labor, human rights, the environment, and corporate citizenship.
Were it not for commercial engagement, China today would be less likely to advance the best practices that American firms are known for around the world.
Are there problems? Absolutely. There always have been between Beijing and Washington. Before President Clinton came here, more than 150 Congressman told him not to go -- yet look how valuable that trip was to many of you.
Personally, I think Premier Zhu's visit next week -- when he criss-crosses America -- will be positive.
I see wonderful trading partnerships developing. They are providing jobs and opportunities for people on both sides of the Pacific.
I know what President Clinton would say: as we help you get opportunities to build bridges in China, help us build more bridges between these two great nations.
Thank you.
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