FW: US-China Business Council Testimony

[Lisa & Ian Murray]

Watchin' the watchers.....
> 
> 
> From House Ways and Means hearings 6/8/99
> 
> 
> Statement of Robert A. Kapp, President
> United States-China Business Council
> 
> Testimony Before the Subcommittee on Trade
> of the House Committee on Ways and Means
> 
> Hearing on United States-China Trade Relations and the
> Possible Accession of China to the World Trade Organization
> 
> June 8, 1999
> 
> Mr. Chairman, members of the Subcommittee:
> 
> Thank you for permitting me to offer testimony before this 
> hearing on US-China Trade Relations and the Possible Accession of 
> China to the World Trade Organization.
> 
> I am Robert Kapp, President of the United States - China Business 
> Council. The Council is a private, nonprofit and nonpartisan 
> business association headquartered in Washington. We support the 
> business development efforts of more than 250 leading American 
> companies in a broad range of commercial fields. Founded in 1973, 
> the Council is the principal organization of US firms engaged in 
> trade and investment with China. Many of our member companies 
> have been working hard on their businesses in China for two 
> decades; others are newer to the field, and approach 
> opportunities for productive commerce with China with the 
> innovativeness and energy that characterizes America's young, 
> creative, and rapidly internationalizing business sectors.
> 
> I. U.S.-China Relations: The River and the Rapids
> 
> Mr. Chairman, we have had difficult moments over the past year on 
> the China front, particularly in the very recent past. Both the 
> United States and China have found, especially in the past few 
> months, occasions to doubt each other's intentions, to wonder 
> about the other's motivations, and above all to criticize the 
> other's actions harshly and publicly. 
> 
> Two months ago, the intense US-China effort to reach a decisive 
> WTO package by the time of Premier Zhu Rongji's visit to the 
> United States came tantalizingly close, but fell short; the past 
> two months have apparently been unproductive. The shocking 
> bombing of China's embassy in Yugoslavia took place a month ago; 
> events within China in supposed response to the bombing have, not 
> been helpful, to say the least. Two weeks ago came full 
> publication of the Report of the Select Committee on U.S. 
> National Security and Military/Commercial Concerns with the 
> People's Republic of China, and with it not only renewed 
> attention to the apparent chronic failings of American management 
> of national secrets but also another ear-splitting exchange of 
> media and political salvoes, some with truly apocalyptic 
> overtones and some -- in both countries -- with gritty racial 
> insinuation. Last week came the tenth anniversary of the 
> Tiananmen violence, whose date happens to fall only one day after 
> the legally-mandated deadline for presidential renewal of 
> standing U.S. tariff policy toward China, and which continues to 
> galvanize both public memory and media attention.
> 
> And yet, as I write this testimony on Sunday, June 6, momentary 
> silence reigns. There appears not a single news report, feature 
> article, opinion essay or editorial relating to China in those 
> three news organs that sometimes seem to define the attention of 
> the nation's policy-makers -- the Los Angeles Times, the 
> Washington Post, and the New York Times. The Sunday TV talk 
> shows, too, have moved on to other topics. For the moment, China 
> is "off;" other stories are "on." 
> 
> Mr. Chairman, U.S.-China relations are volatile, and they are 
> spasmodic. On the surface, they are characterized by sudden 
> eruptions of public, media, and political attention. They are, as 
> people say, "event-driven." Time and again, the U.S. and China 
> remind me of two people stuffed into a single kayak, running the 
> rapids of a turbulent stream.
> 
> But the U.S. and China are heavyweight players in a very big game 
> that does not live by news cycles, legislative calendars, Central 
> Committee schedules, or other domestic rhythms alone. The task of 
> policy makers in both countries, who do live in a world of such 
> pulsing rhythms, is to build structures and forge enduring 
> policies aimed at advancing national and shared interests over 
> the long term. They must navigate a broader, and longer, river. 
> 
> The U.S. and China have a big and growing relationship -- 
> bilaterally, in the Asia-Pacific Region, and globally; 
> economically, politically, culturally, and even ecologically. 
> Beneath the jagged, seismograph-like lines of day-do-day events 
> in the US-China relationship, there is and must be a quieter flow 
> of longer-term involvement between the world's most powerful 
> nation and largest economy on the one hand and the world's most 
> populous and most rapidly-developing society on the other. 
> Sustained, stable, and growing economic relations are a key 
> element in this deeper process.
> 
> This hearing by the Trade Subcommittee of the House Ways & Means 
> Committee provides a crucial opportunity, on Capitol Hill, for us 
> all to remember the longer-term flow of U.S.-China involvement 
> from which neither country can, or should in its own national 
> interest, turn away.
> 
> II. NTR Renewal and China's Prospective WTO membership.
> 
> Mr. Chairman, I appear before the Subcommittee this year for the 
> sixth time. In past years, the Trade Subcommittee hearing has 
> been built around one thing: the Resolution of Disapproval 
> offered annually in the House with the stated intention of 
> overturning the action of the president in retaining for one 
> extra year the ordinary tariffs (so-called "NTR," or "Normal 
> Trade Relations" levies) on Chinese imports. Current U.S. law 
> leaves these tariffs open to cancellation every summer. Passage 
> of the Resolution would rupture U.S.-China economic relations and 
> much, much more.
> 
> Members of this Committee need no reminders of the intensity of 
> views that has usually accompanied this annual exercise; or of 
> the intensity of the legislative and political maneuvering 
> occasioned by the yearly NTR campaign; or of the ensuing feelings 
> of resignation and futility that many Members of Congress have 
> expressed as the annual NTR mini-drama has played itself out. 
> 
> The U.S.-China Business Council has never, and will never, take 
> for granted the renewal of these plain-vanilla tariffs on Chinese 
> imports; we will never assume that this lowest-common-denominator 
> baseline for the continuation of normal trade with our country's 
> fourth-ranked trade partner, is immune to derailment, so long as 
> the annual review mandated by a 1974 law written to force a 
> now-defunct Soviet Union to permit the free emigration of Soviet 
> Jews remains pointed at the heart of nearly $100 billion in 
> legitimate US-China merchandise trade and more than $20 billion 
> in legitimate American investment in China.
> 
> And yet, Mr. Chairman, as you have pointed out in calling this 
> hearing, and as the comments by leaders of a set of key U.S. 
> corporations (several of them members of the Board of Directors 
> of the U.S.-China Business Council) have suggested today, this 
> Annual NTR Renewal hearing of the Ways & Means Trade Subcommittee 
> might -- just might -- turn out to be the last hearing of its kind.
> 
> With luck, with perseverance, and above all with a clear-eyed 
> rededication to the stabilization and development of US-China 
> relations by leaders and policy makers in both nations, the 
> Congress may in coming months face the opportunity -- and the 
> challenge -- of bringing home to America a majestic array of 
> economic and commercial benefits achieved by U.S. negotiators 
> after nearly thirteen years of tough engagement with China. 
> 
> That opportunity, of course, will lie in the Congressional 
> decision on whether to provide full WTO-member treatment to the 
> People's Republic of China, and thus ensure for the United States 
> full WTO-member treatment from China, as the PRC accedes to the 
> global trading system's rules and obligations embodied in the 
> World Trade Organization. 
> 
> From evidence already in hand, it is apparent that the United 
> States and China have made massive progress, much of it in the 
> weeks and days preceding the visit of Premier Zhu Rongji to the 
> United States in April, on a package of market-opening provisions 
> that add up to the biggest advancement of U.S. commercial 
> interests with China since the dawn of U.S. trade with the PRC in 
> the 1970s. The remarks of business leaders earlier in today's 
> hearing, and the numerous written statements addressed to 
> Congress and the president in recent weeks from Members of the 
> House and Senate as well as from dozens and dozens of companies 
> and associations in agriculture, manufacturing, services, and 
> consumer business, attest to the breadth of economic benefits to 
> our country expected to flow from successful conclusion of 
> negotiations over China's entry into the WTO.
> 
> Should the United States and China together rally the wisdom and 
> the far-sightedness needed to return to the table, resolve 
> outstanding issues, and complete the U.S.-China bilateral 
> agreement on PRC accession to the World Trade Organization, it 
> will fall to Congress to answer the question: 
> 
> Having secured China's agreement to the broad menu of 
> market-opening and other measures that we have fought for in the 
> name of a "commercially viable" agreement for so many years, will 
> the U.S. act to bring those benefits home to our companies, our 
> manufacturing producers, our farmers, our consumers, and our 
> communities? Or will we, instead, turn inexplicably away, 
> spurning the very commercial and economic concessions that we 
> have fought successfully to achieve, while those benefits flow to 
> every other WTO member -- including our bitter competitors in 
> Europe, Japan, and elsewhere?
> 
> We hope, Mr. Chairman, that if this historic opportunity does 
> materialize this year, Congress will decisively choose the first 
> of those two options.
> 
> Mr. Chairman, in the Annual MFN/NTR review process over the 
> years, this hearing of the Trade Subcommittee has heard 
> thoughtful comments from witnesses within and outside the 
> Congress, not only about the specifics of U.S.-China commercial 
> relations but about almost every aspect of U.S.-China relations 
> and about many aspects of China's domestic affairs. The hearing 
> has served as a useful opportunity each year to put both 
> immediately-related and more broadly relevant issues on the table 
> for Members, in the weeks preceding the annual vote on 
> elimination of ordinary U.S. tariffs on Chinese imports.
> 
> Each year, for nearly a decade, Members of the House have 
> listened, read, discussed, and sometimes argued these issues with 
> all parties willing to engage them. I know personally how much 
> time Members of Congress and their staffs have been willing to 
> make available to me and others from the US-China Business 
> Council, and to my colleagues from other associations and 
> companies as well, under the broad rubric of the Business Council 
> for U.S.-China Trade, whether each Member has been entirely to 
> our views or not. We know that Members have listened with equal 
> courtesy to other views on NTR renewal and on U.S.-China 
> relations, sometimes expressed with great intensity of feeling. 
> Each time we meet and engage on these questions, I feel a sense 
> of excitement and pride at the unique openness of our system of 
> government and the good will of those elected to make our laws. 
> 
> And each year, the House has ultimately chosen to maintain the 
> simple baseline of a normal economic relationship between 
> ourselves and China -- not a favor to China, not the preferential 
> tariff treatment we grant to several dozen other nations, but 
> simply standard tariffs. The House's decision has not been 
> unanimous, but it has been commanding; it has been thoughtful, 
> and it has been bipartisan.
> 
> That decision to sustain -- or perhaps better, not to rupture -- 
> our country's massive economic interaction with China, has been a 
> critical prerequisite to the powerful progress that the U.S. has 
> managed to achieve this year on the hundreds of issues 
> surrounding China's admission to the WTO; without NTR over the 
> years, it is impossible to imagine the two countries moving as 
> far as they apparently now have done on the bigger, more 
> structural changes that WTO imposes on China.
> 
> Conclusion
> 
> Thus, Mr. Chairman and Members of the Subcommittee, the decision 
> to maintain NTR tariffs for the coming year is as fully justified 
> as it has been in the past: it is the cornerstone of a normal 
> bilateral trade and economic relationship and the precondition 
> for gradual expansion of the broad stream of positive U.S.-China 
> contacts. Make no mistake: the continuation of normal economic 
> intercourse between China and the U.S. augurs well for China's 
> continued movement in directions that virtually all Americans 
> would applaud, while the rupturing of economic ties as a result 
> of NTR elimination would, in our view, contribute nothing to the 
> elimination of conditions within China to which many Americans 
> take exception.
> 
> Beyond that, though, NTR renewal is a humble but critical 
> prerequisite for something far bigger, and something far more 
> promising for the long-term interests of the United States: 
> conclusion of US-China bilateral negotiations on the terms of 
> China's accession to the rights, rules, and obligations embodied 
> in the World Trade Organization. We urge the Subcommittee, the 
> House Ways & Means Committee, and the Congress to support 
> vigorously annual NTR extension by defeating the Resolution of 
> Disapproval. The US-China Business Council urges the Congress to 
> support with equal vigor, when presented with the opportunity, 
> the extension of full WTO-member status to China, so that we can 
> enjoy the fruits of what promises to be a very significant 
> victory for the American economy and for global economic progress. 
> 
> Thank you for including these remarks in the record. I have 
> attached a few additional items, by way of illustrating the 
> dimensions of current US-China commercial relations and by way of 
> illustrating an example of what we believe is the constructive 
> role American business plays in the broader US-China 
> Relationship. The recent announcement of grants from the 
> U.S.-China Legal Cooperation Fund is a small but promising 
> example of support -- in this case by member companies in the 
> US-China Business Council -- for the kind of long-term 
> building-block work that US-China relations require. To date, the 
> Congress has declined to provide any support for similar work at 
> the government-to-government level, in spite of repeated annual 
> requests. We hope that the Congress might in the future be 
> willing to do its part to help with this and other positive 
> programs of US-China cooperation in areas of truly shared interest.
> 
> [THE OFFICIAL COMMITTEE RECORD CONTAINS ADDITIONAL MATERIAL HERE.]
> 
> ------------------------------------------------------------------
> --------------