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

Transcript: Senator Grams Remarks Supporting China PNTR
(Minnesota Republican calls granting PNTR "a no brainer")

Senator Rod Grams (Republican of Minnesota) told his colleagues in the Senate September 6 that granting China Permanent Normal Trade Relations (PNTR) status was "a no brainer" and "should be one of the easiest trade votes we will ever take."

"We should have passed this [legislation] in early June," he added, "and I deeply regret the delay and hope we can expedite the House bill without amendments."

"Let's vote on H.R. 4444 without amendment now -- this week -- not 2 weeks from now," Grams concluded. Following is a transcript of Grams' remarks from the September 6 Congressional Record:

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

Mr. GRAMS. Mr. President, I rise in strong support of H.R. 4444, which grants permanent normal trade relations--PNTR--to China. We should have passed this in early June, and I deeply regret the delay and hope we can expedite the House bill without amendments.

I believe this is a no brainer. China negotiated a WTO accession agreement with the United States--an agreement in which China has committed to improve market access for most U.S. products and services to China. In exchange, the one thing we are required to grant them is PNTR--the same treatment all WTO members afford each other.

The U.S.-China WTO agreement is a good one. China has made commitments in nearly every sector of our economy--agriculture, goods and services. Strong enforcement measures were included which allow us to not only continue use of our strong trade remedy laws, but China has agreed to allow us to use a tougher safeguard standard than our current `201' law and continued use of tougher antidumping laws. This will help us enforce the agreement and generally allow us to use very tough trade remedy laws to address dumping and import surges.

U.S. competitiveness will also be protected since China has dropped its requirement that U.S. companies transfer technology in order to export or invest in China. Exports to China will no longer require Chinese components or performance requirements. China will allow competition through imports for the first time. U.S. exporters can sell directly rather than using a government distribution system. It has made commitments on intellectual property enforcement as well.

For the first time, China will be subject to the multilateral trade disciplines of the WTO.

Any WTO member can enter into the dispute settlement process with China if China does not live up to any of its bilateral commitments. We can still use our trade remedy laws against China if necessary, and the Administration has tripled resources to monitor and enforce the U.S.-China WTO accession agreement.

Some may say this week that we can continue our annual Jackson-Vanik review of China and still receive the benefits of the U.S.-China agreement--or they will say the 1979 U.S.-China Bilateral Agreement will provide the same benefits as the 1999 agreement. They will claim we need the annual review to achieve progress on human rights, nuclear proliferation and other areas of differences we have with China. However, virtually none of the concessions achieved in the 1999 agreement are covered in the 1979 agreement. And we will not receive the benefits under the 1999 agreement if we do not grant China PNTR. The annual review is not responsible for the progress we have made in China--so it is time to end it.

Let's examine what PNTR will mean to U.S. farmers and workers. A Goldman Sachs estimate indicates U.S. exports to China will increase by $14 billion per year by 2005. In 1998, U.S. exports to China exceeded $14 billion, which supported over 200,000 high-wage American jobs. Therefore, exports will more than quadruple by 2005--and the potential is enormous as China continues to grow in the future. USDA projects China will account for over one-third of the growth in U.S. ag exports in the next ten years. It will spend over $750 billion for new infrastructure projects.

Since the benefits for Minnesota my home state are particularly important to me, I want to use that as a reference, but I think it represents other States and their opportunities as well. Minnesota's exports to China in 1998 tripled the 1996 volume. China is now Minnesota's 12th largest export destination, up from 22nd in 1993. We are now exporting 25 product groups compared to 21 in 1993. There are many farmers and workers who will benefit from the projected growth in agriculture and infrastructure project sales in China.

Overall, America's farmers will prosper with an end to corn export subsidies, increased corn and wheat quotas, reduced tariffs from an average of 31 percent to 14 percent with greater decreases on soybeans, beef, pork, poultry, cheese, and ice cream. For example, my home State of Minnesota is the third largest soybean producer in the country, and China is the largest growth market for soybean products. Minnesota is the fourth largest feed corn producer, and the tariff-rate quota for corn will expand by 2004. China consumes more pork than any other country and will lower its pork tariffs and accept USDA certification. This is a huge boon for Minnesota pork producers. Cheese tariffs will be reduced from 50 percent to 12 percent, which will benefit Minnesota dairy farmers. Potato product tariffs will also be cut in half benefiting Minnesota's potato farmers and processors. Vegetable producers will see their tariffs drop up to 60 percent by 2004. And fertilizer and all ag products can now be distributed without going through a Chinese middleman.

Tariff reductions will help other Minnesota workers export more in the areas of ag equipment, forest products, medical equipment, scientific, and measuring instruments, computers, pumps, machinery of all kinds and environmental technology equipment. PNTR will open markets for our banking, insurance, telecommunications and software services. In fact, the Coalition of Service Industries states:

It will enable U.S. service industries to begin to operate in one of the world's most important--and until now, most restricted--markets in the world.

Minnesota's largest exports to China now are industrial machinery, computers, and food products. And exports from small- and medium-sized businesses will expand. Right now Minnesota exports 55 percent of its total exports to China from small and medium businesses. Crystal Fresh, American Medical Systems, Inc., Image Sensing Systems, Inc., Minnesota Wire & Cable, ADC Telecommunications, Brustuen International, and Auto Tech International are among Minnesota's smaller companies with success stories to tell. Their China markets are expanding, and the 1999 agreement will only increase their potential. Of course we have long-time exporters such as Honeywell, 3M, Cargill, Pillsbury, Land O'Lakes, and many others who will be able to expand their exports to China as well.

You have heard that the 1999 agreement will not produce overnight results, but I believe it will produce some short-term positive results. And the best benefit will be the longer term prospects. It is important to continue building commercial relationships for the future in order to reap those longer-term benefits. If we are not there early on, we may miss out on important future gains. As China develops and more of its citizens improve their earning power, they will demand more food products, goods and services. PNTR will allow U.S. firms the opportunity to compete for their business.

I would now like to address some of the concerns of our labor union friends who believe PNTR will result in huge job losses in the U.S. That is curious to me since the U.S.-China WTO accession agreement is one sided. Union leaders cite an Economic Policy Institute--EPI--study alleging at least 872,091 jobs will be lost between 1999 and 2010, but the EPI study assumes every Chinese import displaces domestic production. However, a CATO analysis shows most of our imports from China substitute for imports from other countries or are inputs used in the U.S. to produce final

U.S. products. If a rising trade deficit causes job losses, why are our unemployment rates the lowest they have been in 30 years?

The Institute for International Economics also indicates that most of the growth of the U.S.-China trade imbalance is due to China taking market share from other East Asian economies rather than from U.S. producers.

The bilateral agreement includes greater protections against unfair imports than we currently have and it will eliminate many Chinese practices that have helped it stimulate its own exports as well as forcing many U.S. companies to invest in China. Any `giant sucking sound' we may have seen in the past will be reversed under the U.S.-China WTO agreement. China will be forced to abandon many of its policies which did force or encourage U.S. companies to invest there. The agreement will grow U.S. jobs by allowing us to export more of our products from the U.S. rather than selling through U.S. investments in China.

Union leaders also speculate that U.S. companies want to shift production to China to take advantage of labor rates `as low as 13 cents an hour.' The average production worker wage at U.S. companies in China is $4 an hour and $9.25 for higher skilled workers. The World Bank indicates average Chinese wages grew by 343 percent between 1987 and 1997, mainly due to China's engagement with other countries. I believe approving PNTR and allowing more trade with China would continue the trend toward higher wages for Chinese workers.

A group of 12 academicians recently commented on China's low wages and stated that PNTR would help improve China's labor standards. They discussed China's poverty as the main reason for low wages and often poor working conditions. They concluded child labor often is necessary to help families survive. They believe China's entry into the WTO will help it enforce and improve its own laws, and that opposing PNTR undermines China's efforts to improve its labor rights. They concluded by stating:

Whoever may benefit from a sanctions approach to trade with China, it will certainly not be Chinese workers or their children.

You will also hear claims that the U.S. is being flooded with products made by Chinese forced labor. Both our trade laws and the WTO prohibit forced-labor imports, and the U.S. Customs Service vigorously enforces our law.

Union leaders also talk about PNTR as a reward to China, yet it is hard to see how the bilateral agreements negotiated by China to enter the WTO are a reward. Many, many concessions were made, and those commitments are binding and will be vigorously enforced bilaterally and through the WTO.

I hope union members, who will benefit from the U.S.-China WTO agreement, will listen to their elder statesman Leonard Woodcock, who stated recently:

I have been startled by organized labor's vociferous negative reaction to this agreement . . . in this instance, I think our labor leaders have got it wrong. . . . American labor has a tremendous interest in China's trading on fair terms with the U.S. The agreement we signed with China this past November marks the largest single step ever taken toward achieving that goal.

In my State of Minnesota, Governor Jesse Ventura, in his March testimony before the Ways and Means Committee, also sent union leaders a message. The Governor said:

They (unions) better modernize themselves and realize that opening up China to our trade is going to create more jobs here. . . .

I have spoken to union members and others who are also concerned about labor and environmental practices in China. While China, as a developing country, has a way to go on these issues, they certainly have

made some progress as well. And I am proud that American companies investing in China have created better jobs, higher wages and better working conditions and have begun to serve as a model for their Chinese counterparts. Many U.S. companies have `best practices' of environmental, health, and safety standards which provide good job opportunities for many Chinese citizens. Housing, meals, insurance, and medical care are often included in their employment.

I, a common girl, with no power and no money, could hardly imagine all these things could be done several years ago . . . don't let the friendship become cool (U.S.-China). Many of the Chinese people are longing for knowledge, techniques and culture from western countries, especially U.S.

. . . when our local company merged two years ago, my salary was increased five or six times . . .

After I joined the company, my family's life and living standard improved, I have some deposit in the bank and bought a new apartment which is big enough for my family.

You will hear a lot during this debate about how we are pandering to U.S. companies who want to trade with China, ignoring all of our concerns with China. However, as noted previously, there are many examples of how American companies are helping Chinese citizens improve their lives, and as China privatizes more of its state-owned industries, the new owners will look to our companies as an example of how to succeed. I strongly believe American companies care about their employees and that they do not invest abroad to exploit local workers and ruin the environment. I believe American companies help bring about positive changes in China and other nations, and the exposure to Western ideals and values they bring to China includes a better work experience for those they hire. In fact, American companies are taking their responsibility seriously by setting up programs in their Chinese subsidiaries addressing issues from fair labor practices and environmental standards to community involvement.

For those concerned about human rights, I again ask why they believe human rights would be aided by isolating ourselves from China. Maintaining relationships with the Chinese people through trade and other contact I believe is the best way to help the Chinese people help themselves. They are the ones who will promote changes from within that will improve their lives. Even Martin Lee, the Chairman of the Democratic Party of Hong Kong, who has long fought for human rights in China, recently stated:

The participation of China in the WTO would not only have economic and political benefits, but would also serve to bolster those in China who understand that the country must embrace the rule of law.

The Dalai Lama, also long critical of China's human rights practices, especially in Tibet, states:

Joining the World Trade Organization, I think, is one way (for China) to change in the right direction . . . I think it is a positive development.

Some believe granting PNTR will help promote hardliners in China's leadership. However, a Washington Post story earlier this year noted that China analysts have found hardliners, including PLA officials, worrying that WTO membership will privatize more of China's economy and import more western ideas about management and civil society which they see as a threat to those who want to ensure the longevity of the one-party Communist state.

The U.S. should be part of this, through the granting of PNTR. While China will become a member of the WTO with or without us, I would certainly prefer the U.S. have a part in using our improved trade relationship as a way to make progress on our differences with China.

Many human rights activists support China PNTR. Former political prisoner Fu Shenqi says:

I unquestionably support the (view that NTR and the human rights question be separated because) the annual argument over NTR renewal exerts no genuine pressure on the Chinese communists and performs absolutely no role in compelling them to improve the human rights situation . . .

. . . We declare hereby to support the Unconditional PNTR to China by the U.S. government.

Zhou Yang, Executive director of the China Democracy and Freedom Alliance, states:

Granting PNTR to China is a positive force in promoting China's recognition of world human rights and in improving the human rights situation of the Chinese people.

Noted Chinese human rights activist Bao Tong was more direct, saying: `Pass permanent normal trade relations with China . . .' and adding, `But in the U.S., the `Seattle coalition . . . have combined their lobbying firepower to oppose the move (PNTR). From here in China, their intellectual counterparts are looking on in dismay . . . it doesn't make sense to use trade as a lever. It just doesn't work.' There are many others with similar advice.

Included in the definition of human rights is religious persecution. While religious leaders remain concerned about the recent report from the U.S. International Religious Freedom Commission, which points out China has a long way to go toward religious freedom, they point to progress as well. A letter signed by 13 religious organizations concluded:

Change will not occur overnight in China. Nor can it be imposed from outside. Rather, change will occur gradually, and it will be inspired and shaped by the aspirations, culture and history of the Chinese people. We on the outside can help advance religious freedom and human rights best through policies of normal trade, exchange and engagement for the mutual benefit of peoples of faith, scholars, workers and businesses. Enacting permanent normal trade relations with China is the next, most important legislative step that Congress can take to help in this process.

As you know, the House has attached a Commission on China to PNTR, which would monitor human rights progress with an annual report. It would set a U.S. objective to work to create a WTO mechanism to measure compliance, and requires an annual USTR report on the PRC's compliance with the 1999 agreement and also authorizes additional staff to monitor China's compliance. It also includes sense-of-the-Congress language that China and Taiwan should enter the WTO at the same time.

The bottom line is PNTR is easy. China had to do all the heavy lifting. We gave up noting in these negotiations, and PNTR doesn't force us to give up anything. I urge my colleagues to oppose all amendments offered in an attempt to either slow down or kill PNTR. While the amendments point out problem areas we have with China, these matters should be, and are, addressed separately in high-level contact between our two countries. I address them as well in contact I have with Chinese officials.

Particularly, I urge you to oppose the Thompson-Torricelli amendment. While I will have a much longer statement once that amendment is offered, I will only say now that this amendment in any form will drive a wedge through our efforts to improve our relationship with China. It will foster a relationship of mistrust that will not help us improve China's proliferation record or its record on any other differences. The amendment is counterproductive. The amendment will not accomplish its goal of reducing proliferation, and it will create hostility between our countries. As Henry Kissinger stated:

If hostility to China were to become a permanent aspect of our foreign policy, we would find no allies. Nationalism would accelerate throughout the region. Just as American prestige grew with the opening to China, most Asian nations would blame America for generating an unwanted cold war with Beijing.

This amendment will force us on the path of a cold war most of us never want to see again. Also, there have been so many drafts of this amendment, I am not sure any of us will really know what we are voting on. An amendment as controversial as this one deserves to go through the usual congressional committee process, and not be offered in a highly politicized matter on the Senate floor.

There has been progress with China and proliferation, human rights and other issues. Let's work with China toward further progress--and use the laws we already have, if necessary, to address lack of progress. Above all, let's not use trade as a weapon. Let's pass PNTR to provide our workers and farmers the benefits of the U.S.-China WTO agreement. This should be one of the easiest trade votes we will ever take. Let's vote on H.R. 4444 without amendment now--this week--not 2 weeks from now.

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