U.S. Dept. of State - IIP: The United States and China

Transcript: Senator Craig Urges Passage of China PNTR Bill
("Full engagement is the only way" U.S. can deal with China)

Senator Larry Craig (Republican from Idaho) spoke before the Senate September 6 to urge his colleagues to move to a vote on legislation granting China Permanent Normal Trade Relations (PNTR) status, and then to "pass it, pass it as cleanly as possible, and get it to the President for his signature."

"Full engagement economically, full engagement in trade, dealing with defense matters, openly stating our positions in unequivocal ways as to how we will deal with our friends, neighbors, and potential adversaries around the world," he said.

Following is a transcript of Craig's remarks from the September 6 Congressional Record:

TO AUTHORIZE EXTENSION OF NONDISCRIMINATORY TREATMENT
TO THE PEOPLE'S REPUBLIC OF CHINA--MOTION TO PROCEED-CONTINUED
(Senate - September 06, 2000)

Mr. CRAIG. Mr. President, I come to the floor of the Senate this afternoon to discuss a motion to proceed on what many of us believe to be a very important issue, and that is Permanent Normal Trade Relations (PNTR) for China.

While this issue has been a long time in coming to the floor of the Senate, its time has come. Our Nation, for a good number of years, has pursued a relationship with mainland China to improve the trade and commerce flows that are critical to this country. The agreement that we are here to ultimately get to final debate and passage on, is an agreement that allows an unprecedented access to the China market.

I support PNTR for China because it will seal the deal on the U.S.-China Bilateral Agreement and finally allow U.S. business and farmers the access to Chinese markets that the Chinese have to our market. In other words, America has had a relatively open market to China while China's market has been, for all intents and purposes, closed--except by category and by definition. Passage of PNTR will help pave the way for China's eventual membership in the World Trade Organization.

I think, as you would probably agree, all of these are critical in our relationship to this very large country and the role that it will inevitably play in our future world. This deal cuts the barriers to trade that U.S. farmers and businesses have unfairly encountered for decades. It serves Idaho because it slashes tariffs on exports critical to Idaho's economy.

Let me give a couple of examples. On U.S. priority industry products, tariffs will fall to 7.1 percent. Tariffs will fall on several products that are critical to my State, including wood and paper, which are critical to my State; chemicals, a growing industry in my State; and capital and medical equipment. In information technology--now a very important part of Idaho's economy--the tariff on products, such as computers, semiconductors, and all Internet-related equipment will fall from an average of 13 percent to zero by the year 2005.

On U.S. priority agricultural products, tariffs will be reduced from an average of 35.1 percent to 14 percent by January of

2004, at the latest. It will also expand market access for U.S. corn, cotton, wheat, rice, barley, soybeans, meat, and other products.

I think we all know the current state of the agricultural economy, and while we will set policy, to hopefully help production agriculture, we have always known that knocking down trade barriers and expanding the world marketplace for our producers in agricultural products remains critical. We have long since passed the day when we are the consumers of all that we produce. Now, well over 50 percent of everything a farmer or rancher produces on his or her property has to be sold in world markets to maintain current economies and to improve the profitability of those individual operations.

China, without question, is struggling today to determine what it will do in agriculture. Without question, it will want to feed itself and to continue to do so. Any nation worth its own gravity wants to provide food and fiber for its own citizens. But as that economy improves--and it is improving--the ability of disposable income in the hands of the mainland Chinese means that they will want to buy more of a variety of products that our tremendous agricultural economy produces. This is merely a step, and that is why I say dropping tariffs from 31.5 percent to 14.5 percent by the year 2004 is significant. As we work with them, those tariffs could actually drop more rapidly in that area with additional agreements. There is no question that future Administrations in this country will continue to pressure the Chinese to move in the direction of even lower tariffs, but that significant drop of over 15 percent will rapidly enhance agricultural opportunities for sales to China.

The United States needs this deal. We are the strongest economy in the world and, as a Senator, would I stand here and say we need this deal? Yes, because we do. The U.S. trade deficit with China is large and continuing to widen. The deficit surged from $6.2 billion in 1989 to nearly $57 billion in 1998. And it continues to rise.

That statement alone is proof that our economy has been a largely open economy and theirs has been a relatively closed economy. This agreement, however, rapidly moves them toward a much more open economy and, therefore, spells in very simple language an opportunity for American business and industry and America's working men and women to expand the products they produce to sell into the Chinese markets.

In addition to reducing barriers to trade, it will also force China to play by the rules.

There is, I guess, a bit of a saying that when you deal with the Chinese on the mainland, you sign the contract, and then you begin to negotiate. In this country, when you sign the contract, you have made the agreement. The negotiation is complete. That is why bringing them on line with PNTR and into WTO means that not only will they have to ultimately play by the rules, but there will be a learning process for them as well. In working with the dispute mechanisms of the WTO they will obviously learn that as they move more aggressively into world markets, there is a rule of law that we have all trading nations of the world play by; that is, a rule of fair trade based on the standards established and negotiated within the agreements.

Idaho is known for its beautiful orchards. Of course, the State of Washington--our neighbor--is known for more orchards and that fine red apple that many of us see on the shelves of the produce markets and supermarkets of our country. Today, many of those orchards that produce those marvelous apples in Idaho and Washington are being pulled out and replaced by other crops. Why? Because the Chinese have flooded the United States market with concentrated apple juice--that when you buy apple juice in the marketplace, the apple juice could well be produced from a Chinese concentrate shipped into our markets, then processed and bottled and sold into the American market.

The only way we can control the Chinese flow of concentrated apple juice into our market today would be to either openly threaten or close down our markets--close down our borders to the Chinese. That makes very little sense when you are working to expand markets because they then would counter by closing down access to another portion of their markets only to hurt another segment of our agriculture.

If they were in the WTO--if we accept this agreement--then they come under entirely new standards so that they have to regulate the flow of their concentrated apple juice into our markets, and without question, substantially improve the overall economy of the fresh fruit industry of this Nation and of the State of Idaho, and the State of Washington.

PNTR also means better opportunity for Idaho business-people and for the Idaho workforce.

For several years now Idaho has exported to China on a growing basis. We are 1.2 million strong in the State of Idaho. We are not a large State--at least population-wise.

In 1993, my State exported just about $2 million worth of goods and services to China. But by just 2 years ago, in 1998, that number had grown to $25 million. That is a 1,000-percent increase in the flow of goods and services leaving Idaho and going to mainland China, which just shows you the tremendous expansiveness in the marketplace that still remains relatively closed. This agreement rapidly opens that market and allows us greater access.

This last year, in December of 1999, I had the opportunity to lead an Idaho trade mission to China. I asked 13 different businesses and industries to go along with me and my wife, Suzanne, and some of our staff. Representatives from agricultural companies and building material companies and the high-tech community went along with us. We were all united, not only in our recognition of the importance of China's entry into the WTO, but all of these companies that went along went to look for opportunities to expand the marketplace of products built in Idaho for expanding the economy of my State and expanding the workforce and the job opportunities that exist in my State.

While we were there, we had the distinct privilege of meeting with President Jiang Zemin. President Jiang gave us the courtesy of nearly an hour of his time in a direct discussion with myself and the trade delegation. During that time, he talked about China's future and he expressed it this way. He said China is serious about a transition to a more market-based economy, although the President made it very clear that China was not going to fall for the Russian model. In other words, they weren't going to throw out the old and assume that the new would just naturally take its place.

What they recognized and what they are doing at this moment is a progressive step-by-step approach for greater access in the marketplace, greater flexibility in the marketplace, without collapsing their economy, and without destroying the job base they currently have. There is no question that China is eager to gain the economic benefit and the political prestige of a WTO membership.

During that tour, we also went to an area and a province to the coastal city of Xiamen. There you can see firsthand what happens when an economy that was once guarded, protected, and limited by state-owned companies and by political control is turned, relatively, loose to join the world economy. Xiamen is one of six free-trade zones in China that was created by Premier Deng Xiaoping a good number of years ago. Their gross domestic product is phenomenal with average GDP of 20 percent, and job creation of the kind that is tremendously significant in giving the workforce of China the kind of upward mobility that all of us seek for all peoples of the world.

While we were there, we toured a brand new Kodak plant that was built on about 19 acres of ground. It was once a rice paddy for water buffalo and cobra snake. In just 19 months, this rice paddy was transformed into a very modern company that met all of the building codes, standards, and safety requirements as if they were built in my backyard, or in your backyard, or anywhere in this Nation. It was the home of thousands of workers, working for a much higher wage given the kind of power that a higher wage gives, and even given the opportunity to buy and own their own apartment.

If we really want to see China change, we must help give their workforce this kind of an economy, give them more money in their pockets, a chance to own private property, and then we will watch, over the years, a political change that will take place.

PNTR for China will improve the standard of living for many Chinese who have endured very poor standards of living.

PNTR isn't just a good deal for the farmers of Idaho, or the business men and women of Idaho. It is a good deal for the Chinese people who have suffered poverty beyond compare, and who are now beginning to experience through the marketplace, the opportunity of upward mobility, and the opportunity of private property ownership that truly begins to transform the political base and the landscape of a country.

Over the last year, as this issue developed and certainly over the last 6 months as we have known and as the Nation has known that we would ultimately debate the issue of permanent trade status for China and debate their entry into the WTO, I have received a multitude of letters from Idaho from all kinds of constituents who for one reason or another see the issue of permanent trade status the same way I do. While we agree that some of the human rights issues in China, and some of the other kind of concerns that we have are important, we also agree that our Nation must be continually engaged with the Chinese to change the world and to change their role in the world. Building a wall or turning our backs on this huge population base is no way to gain those kinds of ultimate changes or benefits.

These letters, and letters from my Governor, Dirk Kempthorne, I think note, at least for the moment, that I share them with you. Let me give you a couple of examples.

Dear Senator: As a constituent and a member of the agricultural community, I continue to urge your strong support of PNTR legislation with China.

PNTR for China is vital to the farmers and other agricultural interests in our district. Your vote is critical.

Another one is just a simple one-liner from a gentleman in America Falls, when he said:

That is exactly right. If we don't compete effectively, then our producers and our American workforce will be the loser as other economies of the world continue to increasingly engage the Chinese marketplace in their bid for consumer products and a role in the world markets.

Dear Senator: As your constituent, I urge you to vote in favor of Permanent Normal Trade Relations with China. Congress must approve PNTR this year in order to secure unprecedented access to world markets for my company and others across America.

He was talking about a company in American Falls, ID, that is an agriculture-based company.

When the Idaho trade delegation and I met with President Jiang Zemin it was very clear from what he was saying that they believed this time, it was their turn to make the concessions. He openly talked about why they had made these concessions, why they were lowering their trade barriers, why they would phase them in over a period of time, and openly discussed even freer markets than the kind that are proposed in the current agreement Ambassador Charlene Barshefsky negotiated in late October and early November. President Jiang Zemin recognizes that the strength of his country in the future is not going to be based on the strength of a government but the strength of an economy and the right of his people to share in that economy, both individually and collectively as a country. He spoke very openly about that.

It was an amazing experience to visit for well over an hour with a man who had walked behind Mao in the great revolution. He did not mention that once, but instead talked in terms of open and free markets and talked about China's role in a world economy and our role and our companies' roles and our national economy's influence over them and their economy. It was a dialog I would not expect to have. Yet it is a dialog that is now pursued nearly every day of the week in China by U.S. companies who are openly and actively gaining a piece of that market.

Another letter from Marlene Sanderlin of Lewiston, ID, which is a forest products and agricultural town. It is the location of our seaport where ocean-going barges come all the way up the Columbia and Snake Rivers into the heart of Idaho to take out Montana and Idaho grain, forest products, paper, and coal from Montana. All of that is moving out to the Pacific rim and some of it ultimately going to China. The vitality of that seaport, in the heart of Idaho, is in large part connected to the vitality of our trade in the Pacific rim and China. And China's economic growth, without question, is an opportunity for that seaport and for every seaport in the United States and the men and women who work in the maritime industries.

As your constituent, I urge you to support PNTR legislation for China. This legislation benefits real people: Me, my family, and my country. It guarantees economic growth for America and promotes the growth of democracy in China.

She speaks from my experience and my limited exposure in China, and the absolute truth when she says it addresses the growth of the democracy or the democratic actions within China itself.

Potlatch Corporation happens to be a company that is a large paper and fiber producer in Lewiston, ID. They write, asking that we support this. Why? Because of the thousands of workers they have at Potlatch and the products they can supply into the Pacific rim and into the Chinese market.

I have a good many letters from Idaho. We have received thousands. I know that nearly every Senator has received phenomenal communiqu¡¦ from their State in support of this particular issue that is now before the Senate itself. Establishing a permanent trade relationship with China means establishing a permanent, but also growing and developing relationship with the most populated country in the world. Without question, it is a vast opportunity for the sale of our products, and for an ongoing and working relationship with those Chinese people that can do nothing but help improve the ongoing relationship.

We will have some important tests in the coming days as other votes on other issues directly related to China come up. I will take a serious look at some of them because we need to make very clear, straightforward statements to our friends in China as to what we can and will expect and what we don't expect as it relates to their role in the world community and our role along with theirs.

If PNTR were voted down, the real losers would be the American business person, the American farmer, and the American workforce. We have a vibrant economy today, and our economy is vibrant because we can sell in an ever-opening world market. It has not cost us jobs, it has continually improved and built a stronger economic base and a greater job opportunity for nearly every citizen in our country who seeks it. While that economy is strong, in the agricultural communities of Idaho and across the Nation, it is weak. It is weak because nearly 20 percent of the world market is off limits or in some way restricted to direct access for our production agriculture.

This is a quantum leap forward to not only gaining greater access but improving the economy of hometown, smalltown America. Idaho, my State, has a good many of them. PNTR is a critical link in providing that business economy, jobs, and growth relationship with China and China's future. Rejecting permanent normal trade relations would, in my opinion, have a dramatic impact on the economy for all the opposite reasons I have expressed that passage would have a positive impact.

Lastly, if we reject this, we largely freeze our relations with China. We can't afford to do that as a country. We can't afford to do that as a world leader. I, along with a lot of my colleagues, have been very stressed in the last several months with some of the utterances coming from China and some of what appear to be their activities here. Shame on us if we ignore this and if we ignore all of those other utterances. Full engagement is the only way we can deal with the Chinese. Full engagement economically, full engagement in trade, dealing with defense matters, openly stating our positions in unequivocal ways as to how we will deal with our friends, neighbors, and potential adversaries around the world.

It is that kind of leadership that is incumbent upon this country, it is that kind of leadership that is asked for in the Senate now in the passage of a permanent normalizing trade relationship with mainland China. I hope as we move to this vote we can get there, pass it, pass it as cleanly as possible, and get it to the President for his signature.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)