(As Prepared for Delivery)
Good afternoon. We are here today to discuss the best way to
achieve real results in America’s economic relationship with China.
After a decade of vigorous debate in Congress every year over
maintaining normal trade relations with China, in 2000 a bipartisan majority of Republicans
and Democrats agreed to authorize Permanent Normal Trade Relations (PNTR) with China. That
broadly bipartisan, longterm policy rests on the principle that a strong and growing trade
relationship, driven by mutual interests, is the best way to encourage economic, social, and
political reform in China. The Bush Administration remains firmly committed to that policy.
Trade with China brings benefits to American workers, farmers, and
consumers. It supports good-paying jobs in the United States, creates a growing market
for American manufactured goods and farm products, and puts a wide range of affordable
products on American store shelves.
As President Bush often says, America’s workers are the best in
the world and can compete with anyone when we have a level playing field. In working to ensure a
level playing field, this Administration has not hesitated to enforce U.S. trade laws to
make sure that our products and services get a fair shake.
We filed the first-ever WTO enforcement action against China, for
its discriminatory taxation of U.S. semiconductors in a case that could benefit all U.S.
We imposed the first safeguard actions against Chinese textile and
We implemented a safeguard on steel imports, including many from
China, that assisted our steel industry and workers in becoming competitive.
Approximately half of all U.S. antidumping cases accepted by the
Administration in 2003 were against unfair Chinese imports.
In addition, due to our forceful engagement with China and our
vigilance in holding China to its WTO obligations, just last week Secretary Evans and I met with our
Chinese counterparts at the Joint Commission on Commerce and Trade (JCCT) and resolved seven
potential WTO cases with China. These advances dealt with high-technology products,
agriculture, and intellectual property protection – and they bring immediate benefits to
American manufacturers, high-tech workers and farmers. We will continue to follow up on those
While some would prefer to litigate for litigation’s sake, our
Administration is focused on producing real results, in real time. Our willingness to stand up
for American workers and farmers is paying off: U.S. exports to China are growing at record
levels—up 76% in the last three years, including the exports of small and medium sized
businesses. American farmers and manufacturers are seeing tangible results of opening markets
abroad. Last year, we had an agricultural trade surplus of $3.7 billion with China and we had a
services trade surplus of $1.9 billion in 2002. In the first two months of this year, our trade
deficit with China declined by 28 percent.
America’s policy of leveraged engagement gives us constructive new
ways to press for real results in China. For example, in the JCCT meeting last week,
China emphasized that it is deeply interested in being treated as a "market economy" under
U.S. antidumping trade laws. Under U.S. law, the first two criteria that China must meet to be
considered as a "market economy" are:
· The extent to which the
currency of China is convertible; and
· The extent to which wage
rates in the foreign country are determined by free bargaining between labor and management.
Two of the other criteria address the extent of government
ownership and interference in prices and production. These statutory criteria, together with China’s
strong interest in being recognized as a market economy under U.S. laws, provide us with
significant leverage on labor, currency, subsidy and other issues, and we plan to use it.
Secretary Evans will talk in a few minutes about the steps we are
taking on market economy status that will connect our labor and currency concerns to
China’s interests. These discussions offer an effective way to produce real results in these and other
On the issue of currency, my colleague Secretary Snow has been
deeply engaged in bilateral consultations with China, including with China's central bank, for
many months. Later this spring, Vice Premier Huang Ju will come to the United States to
continue those discussions. These consultations, and market forces within China itself, appear
to be moving China's policy in the right direction, as is evidenced by the statements of Chinese
officials. For example, Governor Zhou of China’s central bank said recently that "building
a more market-driven trading system for the renminbi is now a task of top priority." Secretary
Snow has also built multilateral support for our policy by working with the Group of Seven finance
ministers to issue a common view that major economies like China should adopt flexible
exchange rates. In a moment Secretary Snow will give you more details on his program.
In the area of labor, this Administration has done more than any
other to promote better labor conditions through trade. We have now completed six trade
agreements that have groundbreaking provisions on labor rights and environmental standards,
supplemented by cooperative programs and capacity-building that are resulting not only in
better enforcement of labor laws, but in better labor laws. The United States is the only country
pushing for these kinds of labor provisions in its trade agreements.
In the case of China, today we announce that the U.S. and China
are launching a comprehensive joint effort aimed at the effective implementation by China of
International Labor Organization (ILO) core labor standards, in keeping with China’s level of
development and its emergence as one of the world’s leading trading powers.
It is important to recall the progress that has already been made.
Since China began opening its economy to the outside world in 1978, average annual per-person
income has grown five-fold. Adult illiteracy has been cut in half. And nearly 200 million
people have risen out of absolute poverty through economic growth fueled by trade. That is one of
the largest and fastest reductions in poverty in human history.
These changes in China are mostly the result of domestic economic
reforms linked to China’s economic opening to the world. Our policies encourage those
reforms and seek to deepen them. At the same time, we will not shrink from stressing our interests
and ideals when we believe China needs to make more progress. The Administration is pressing
China on its overall human rights record, including worker rights, bilaterally and through
the U.N. Commission on Human Rights in Geneva. We are working in the ILO, where both China and
the United States are members, toward a Chinese labor system that better respects
internationally recognized worker rights. In a moment, Secretary Chao will discuss some of the
cooperative efforts we have under way to address specific problems.
Recently, some have urged that the policy of real results be
abandoned and replaced by a policy of economic isolationism. For example, the AFL-CIO filed a
petition with the Office of the U.S. Trade Representative that calls for ending our economic
relationship with China by slapping 77% tariffs on imports, a move that would jeopardize our own
growing exports to China.
If that were not a big enough wall against trade and development,
the petition goes further and demands new conditions that would halt all progress toward opening
markets for U.S. goods and services in the Doha negotiations at the World Trade
It seems that whether the question is trade with a high-wage
developed nation like Australia, or trade with an emerging economy like China, the solution of
economic isolationists is always the same: to stop trade and put up walls around America.
Now, others are reported to be considering other trade petitions,
focusing on China’s currency valuation, that, while well-meaning, call for similar measures to
raise tariff walls.
We do not need to conduct a year-long investigation to know that
there are serious concerns with labor rights and working conditions in China, as there are in many
other developing countries. We do not need a year-long investigation to know that we have
serious concerns with China’s policies on the value of its currency.
These concerns are valid, and we have been addressing them
continuously in a constructive manner.
The question is not whether we approve or disapprove of China’s
practices. The real question is: how can we best change those practices? This Administration
believes that trade and economic growth -- combined with the use of leverage to pursue mutual
interests under agreed international rules -- will move China faster and further toward
achieving real results than a retreat into economic isolationism and the raising of barriers
that block trade.
The AFL-CIO petition, and the possible petition on currency
issues, both seek remedies that would worsen the very problems they are trying to solve.
To take such isolationist measures would hurt millions of American
workers whose jobs depend on a vibrant and open trading relationship with China and the
world. More broadly, the U.S. and world economies would suffer if trade barriers are raised.
To take such measures would hurt American families by raising the
costs of everyday products they buy.
And to take such measures would worsen the very Chinese working
conditions we are concerned about, because these measures would cut China off from trade that
will help overcome poverty and improve working conditions.
Accepting these petitions would take us down the path of economic
isolationism. That is a path we will not take.
There is a better, more hopeful path. The Administration’s policy
is producing real results, expanded trade, good jobs for Americans, better living conditions
for Chinese, and a relationship of peace and stability in Asia. Our policy offers better, more
targeted tools to address the labor, currency, and other concerns we all want to address. Our policy is
firmly grounded in America’s ideals, was forged from more than a decade of vigorous domestic
debate, and continues the bipartisan internationalist approach reached four years ago by the
U.S. Congress. It is the right policy.