*EPF411 09/25/2003
Text: Commission Vice Chairman Criticizes China's Trade Policies
(D'Amato says China promotes permanent unfair subsidies) (710)

U.S.-China Economic and Security Review Commission Vice Chairman C. Richard D'Amato opened a hearing in Washington September 25 by noting that Congress had tasked the commission with investigating the "distorted transfer of U.S. economic treasure to Beijing" that has resulted from China's unfair trade practices.

D'Amato said the United States once believed that "China would play by the rules of the international trade game, certainly not promote permanent unfair subsidies or mercantilist practices," when the Beijing government secured membership in the World Trade Organization (WTO).

"So far, these assertions do not appear to be playing themselves out," he added.

"China still has a poor record of honoring its promises and agreements," D'Amato continued, with "one of the most important and glaring" unfair trade practices being Beijing's policy of promulgating "artificially pegged exchange rates calculated to give China across the board highly unfair advantages vis-��-vis its so-called trading 'partners.'"

The U.S.-China Economic and Security Review Commission's mission is to monitor, investigate, and report to Congress on the national security implications of the bilateral trade and economic relationship between the United States and China. It was created on October 30, 2000 and consists of 12 members appointed to the Commission based on recommendations by leadership of the House of Representatives and the Senate.

Following is the text of D'Amato's remarks:

(begin text)

Opening Statement of Vice Chairman C. Richard D'Amato

Chinese Exchange Rate Policies and Implications for the U.S.

September 25, 2003

Thank you, Mr. Chairman and I thank Commissioners Mulloy and Dreyer for organizing this important hearing today. I welcome Congressman English, Senators Schumer, Dorgan, and Graham, Congressmen Manzullo, Stenholm and Levin, other members, and commend you for the legislative actions you are taking to address modern Chinese mercantilism, now pouring ten's of billions of U.S. investment, technology and manufacturing resources unfairly into China. This distorted transfer of U.S. economic treasure to Beijing is now so big that Congress has told this commission to evaluate the implications for U.S. national security, and identify what tools we have to put the brakes on it. We look forward your thoughts on actions that are now necessary, and explore the options that are available to us.

The creation of this Commission in the winter of 2000, during the debate over giving China most favored trade status on a permanent basis was predicated on several important assertions. First, the Clinton Administration stated that granting such status and admission to the WTO was predicted on the assumption that China would play by the rules of the international trade game, certainly not promote permanent unfair subsidies or mercantilist practices. Second, the National Security advisor, Sandy Berger, stated repeatedly that it was in America's "vital national security interests" for China to be granted these important trade concessions. A third assertion was that increased economic growth and higher standards of living in China would lead to democratic reforms, and the eventual extinction of widespread tyranny practiced at home by the Communist rulers.

So far, these assertions do not appear to be playing themselves out. China still has a poor record of honoring its promises and agreements, and this hearing focuses on one of the most important and glaring: artificially pegged exchange rates calculated to give China across the board highly unfair advantages vis-��-vis its so-called trading "partners." Second, this Commission has been created to examine the questions of the national security implications of the policies practices by both the Clinton and Bush Administrations vis-��-vis China on trade. The large scale and increasing sophistication of U.S. resources being transferred, with increasingly important high technology components, is adversely effecting our basic economic foundations from a strategic perspective. Third, democratic reforms have been squelched in china, after some brief flicker of hope in connection with the SARS health crisis. Openness is still treated as an enemy of the governing regime. The regime maintains tyrannical practices in a widespread gulag against its own people.

Given these realities, the question today is what actions Congress should promote to push these trends in healthier directions for our own national interest.

(end text)

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

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