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China PNTR – Levin – Bereuter Discussions [10]
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China PNTR – Levin – Bereuter Discussions [10]
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Case Number: 2010-1024-F
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This is not a textual record. This is used as an
administrative marker by the Clinton Presidential
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Folder Title:
China PNTR - Levin-Bereuter Discussions [10]
Staff Office-Individual:
National Economic Council-Lee, Malcolm
Original OA/ID Number:
CF 1177
Row:
Section:
Shelf:
Position:
Stack:
23
5
6
1
V
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state Analysis of NTR
CHINA MFN DETERMINATION--TIMING CONSIDERATIONS
SUMMARY
The President's Jackson-Vanik/MEN waiver authority under
section 402 of the Trade Act on 1974 (Pub. L. No. 93-618),
as amended (hereinafter "Act"), expires at midnight
of July 2 each year, Such authority may be extended
annually if the President determines and reports to
Congress that extension of the waiver will substantially
promote the freedom-of-emigration objectives of section
402. If such a report is made, the waiver authority
continues in effect unless disapproved by Congress--either
generally or with respect to a particular country--within
" 60 calendar days after the date the authority would expire
but for the extension". H.R. Rep. No. 103-575, 103d Cong.,
2nd Sess., P. 2 (June 30, 1994). Under amendments to title
IV adopted as part of the Customs and Trade Act of 1990
(Pub. L. No. 101-382), disapproval shall take the form of a
joint resolution disapproving the extension of the
President's authority to waive the Act's freedom of
emigration requirements. If the joint resolution is
vetoed, Congress has until the later of 15 "legislative
days" (as defined in section 154(b) of the Act) after
receipt of the veto message or 60 calendar days after
expiration of the existing authority to vote to override
the veto.
DISCUSSION
o Under section 402 (c) (2) of the Trade Act of 1974, 19 U.S.C.
2432 (c) (2), the President may [during any period subsequent
to the 18 month period beginning on the date of enactment
of the Act, i.e., January 3, 1975] waive by executive order
the application of the MFN trade restrictions of
subsections 402(a) and (b) (the Jackson-Vanik provisions),
if he reports to Congress: (1) his determination that the
waiver will substantially promote the freedom of emigration
objectives of section 402; and, (ii) his receipt of
assurances that the emigration practices of the affected
country will henceforth lead substantially to the
achievement of the objectives of section 402. Such a
waiver is in effect for China.
0 Under section 407 (c) (3), 8 waiver with respect to any
country terminates automatically on the day after the
waiver authority COBBUS to be effective, i.e., the waiver
terminates on July 3 of each year.
O However, under section 402(d)(1) of the Act, the President
may recommend to Congress the extension of the waiver
authority, and the extension of waivers currently in force
for specific countries, 11 he determines that this will
"substantially promote the objectives" of section 402. Any
such extension recommendation shall be made "not later than
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- 2 -
30 days before the expiration of such authority," (i,e.,
not later than June 3 of each year) i shall be made in a
document transmitted to both the House and Senate, setting
forth the rationale for recommending extension of the
waiver authority; and, shall include both a determination
that such extension will "substantially promote the
objectives of" section 402 and the rationale for such a
determination.
0
If the President makes such a recommendation, the waiver
shall continue for an additional 12 calendar months, (i.e.,
until midnight of July 2 of the following year), "unless a
joint resolution described in section 153(a) is enacted
into law pursuant to the provisions of paragraph
[402 (d) (2) Under section 402 (d) (2), Congress has 60
days beginning on the date the waiver authority would
expire (1.e., midnight, July 2) to adopt the joint
resolution of disapproval. If the President vetoes the
joint resolution, Congress has until the later of either
the last day of the 60 day period or "the last day of the
15-[legislative] day period beginning on the date
Congress receives the veto message from the President" to
override the veto.
o
If the joint resolution of disapproval is enacted into law,
the waiver authority applicable to any country subject to
the joint resolution ceases to be effective the day after
the 60-day period beginning on the date of enactment of the
joint resolution.
Becap of Relevant Dates
June 3: If the President wishes to extend the waiver of
the Trade Act's Jackson-Vanik provision for another
12-month period, he should do 80 by transmitting the
necessary determination and report to both houses of
Congress on or before Monday, June 3.
July 2: Absent presidential action to extend the waiver,
the extension (and with it, MPN treatment) expires by force
of law on midnight, Tuesday, July 2. In the absence of on
extension of the walver, China would no longer be eligible
for MFN tard treatment for its goods. (Note: this could
result in a suspension, in whole or in part, of the 1979
U.S.-PRC bilateral Agreement on Trade Relatuons, 31 UST
8651, Art, II of which provides for reciprocal MPN
treatment.) If this were to occur, it appears that the
President could only restoro MFN treatment for China
(pursuant 10 sections 404(a) and 405(c) of the Act) by
issuing a proclamation and obtaining congressional approval
in the Corm of a joint resolution as described in section
151(b)(3).
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. 3 -
August 31: If the President timely exercises his 402 (d)
authority to extend the waiver, Congress would have 60 days
from the date the existing authority would have expired
within which to adopt a joint resolution of disapproval,
i.e., until August 31,
Related Timing Issues
O
The time limits for waiver extension under section 402 (d)
are fixed by statute and are, therefore, not variable by
Executive action. The 60-day period is keyed to the date
of expiration of the current waiver authority, and not the
date of submission of a recommendation that the waiver be
extended. The President thus could not legally "advance
the hands of the waiver extension clock" (thereby making
earlier the date by which Congress would have to issue its
joint resolution of disapprovel) by making his extension
recommendation prior to June 3, The point 18 that the
dates when the waiver extension takes effect and when
Congress must act are not variable absent a change in the
law.
o
Because the language of the relevant provisions of the
Trade Act is so clear and unambiguous with respect to the
12-month extension recommendation limitation, it is also
legally impossible for the Executive to move to multi-year
waiver extensions absent a change in the law.
NEC Analysis of NYR
Previous -- NEC Annual NTR (May 2)
Annual NTR Vote
Malcolm chaired a meeting with USTR, WH Leg, and NSC on Friday to discuss options for the
annual NTR vote. This is an issue that the Principals may want to discuss briefly during the
Tuesday Principals Meeting. Daley will likely ask Charlene to discuss this. Because it is highly
unlikely that China will accede to the WTO and get permanent NTR before August 31 (the date
by which Congress must approve a disapproval resolution of the annual renewal), the President
will be forced to notify Congress by June 3 of his intention to renew NTR for another year,
notwithstanding the possibility of passage of PNTR legislation in May (House) and June
(Senate). This means that there will likely be 2 votes on China, one on PNTR, and one an
annual renewal, this summer.
Can we prevent two votes? The feeling among legislative folks was that we shouldn't worry
too much about a second annual renewal vote. Those that supported PNTR will get no credit
for a split vote, and the timing of the PNTR vote in late May (with the PNTR vote first)
works against a split vote scenario. The worst that can happen is the House would deny
renewal, but the Senate would approve. No one believed we should amend the PNTR
legislation the President sent forward to take care of both -- but rather that we should keep it
clean. The disapproval resolution is privileged SO it is unlikely Republican leadership could
prevent a vote. Perhaps if the Senate voted first, rendering the House vote moot, we might
prevent the inconvenience of a House vote on annual renewal.
Background: The President's waiver authority (i.e., his ability to extend NTR to China for
another year) expires at midnight on Sunday, July 2, 2000. To extend the waiver, the
President must transmit the necessary report to Congress by Saturday, June 3. Without
Presidential action, NTR would expire at midnight on July 2. If the President timely
exercises his authority to extend NTR, that extension is automatic unless Congress passes a
joint resolution of disapproval by August 31.
There was a feeling that the NTR vote will not raise problems or be particularly
controversial for most Members. The group's suggestion was that we treat the NTR vote
as a "non-issue" -- a necessary bridge between China's current status and its accession to
the WTO.
Additional Background on NTR
President's Legislation. The legislation we sent to the Hill provides that we will apply PNTR to
China on the date of its accession to the WTO.
When we were drafting the legislation, State had suggested adding a provision that would have
granted both PNTR and annual renewal of NTR. Because we wanted to send up clean
legislation, that proposal was rejected.
China's Accession Process. Once the EU and others complete multilateral negotiations (the EU
and China are scheduled to meet on May 15), the Working Party and China will work to
complete the protocol package. The Working Party Members must approve the protocol package
before sending it forward to the WTO General Council for final approval. Once the General
Council approves the package, China must complete all necessary domestic procedures required
to ratify the WTO Agreement. Once this is done, China can then file its notice of acceptance
with the WTO -- but will not become a WTO member until 30 days later. It is very unlikely that
this process would be completed prior to August 31, 2000.
NTR Process. For a thorough discussion of NTR timing requirements, see attached State Memo.
As you know, the Trade Act of 1974 regulates extension of MFN/NTR treatment to non-market
economies. Section 402 of that Act -- Jackson-Vanik -- allows a non-market economy to receive
NTR status only if the President determines that it permits free and unrestricted emigration of its
citizens. Jackson-Vanik authorizes the President to waive the requirements for full compliance,
however, if he determines that such a waiver will substantially promote the objectives of the
freedom of emigration provisions.
This annual renewal procedure requires the President to submit to Congress a recommendation
for a 12-month extension of the waiver authority at least 30 days prior to its expiration -- i.e., by
June 3 each year. The extension of the waiver authority for an additional 12-month period is
automatic unless a joint resolution disapproving an extension is enacted into law within 60 days
after the expiration of the previous waiver authority. This year, that date falls on August 31.
If a Member of Congress submits a disapproval motion -- which is almost certain to happen --
that motion is privileged, i.e., it must be voted upon. Assuming that we win PNTR, a vote on
annual NTR should not be controversial, and the President's transmittal letter could include
language suggesting that this is merely a bridge until China's accession. If we lose PNTR, a vote
on annual NTR would obviously be more controversial -- likely forcing some Members to make
inconsistent votes.
Options
Option 1: Proceed with annual NTR vote as usual. Assuming PNTR is passed, the President
could submit a transmittal letter to Congress emphasizing the low-key nature of this vote --
noting that we are pleased that this will be the last vote necessary on China's annual NTR
status and that this is effectively a stop-gap measure necessary only until China accedes.
Option 2: Annual renewal but seek Senate vote first. Could forestall messy House vote.
Option 3: Amend our legislation to cover the annual NTR vote as well. Pros: this avoids two
votes on China. Cons: we sent up clean legislation -- but now want to amend it. Too messy.
Malcolm R. Lee
05/04/2000 03:38:58 PM
Record Type:
Record
To:
Richard M. Samans/OPD/EOP@EOP
CC:
timothy e. punke/opd/eop@eop, lael brainard/opd/eop@eop, sharon h. yuan/opd/eop@eop
bcc:
Subject: Re: international labor initiatives --- discussion draft
Rick:
Thanks. This is a strong, useful overview of what we are doing. I'm not sure the public knows we are
doing all this. I'm not even sure U.S. economic officials know we are doing all this.
Need to discuss with Lael and Gene how best to use it in the China PNTR context. Will raise question
why we aren't doing more with China, but we already have a separate paper on labor aspects of PNTR.
Lael: suggest we give this to Gene for review over weekend. We could discuss at Gene's policy group
meeting tomorrow, but may make more sense for Gene to review it first. Also may make sense to
circulate interagency to the China and labor-related folks for a read. Has this been seen interagency yet?
Lael please advise. ML
n ettih forward to Lael and Gene and discussa
Richard M. Samans
Richard M. Samans
05/04/2000 01:09:00 PM
Record Type:
Record
To:
Malcolm R. Lee/OPD/EOP@EOP, Timothy E. Punke/OPD/EOP@EOP, Lael Brainard/OPD/EOP@EOP
CC:
Sharon H. Yuan/OPD/EOP@EOP
Subject: international labor initiatives --- discussion draft
international labor initiatives-05040 Attached is a summary of the Administration's various efforts to
promote core labor standards abroad, per the China effort. Needs a little further work but ready for
discussion in Gene's group if desired.
DRAFT: 5/04/00
LEVELING UP: CLINTON ADMINISTRATION INITIATIVES TO PROMOTE
RESPECT FOR WORKER RIGHTS ABROAD
The Clinton Administration's international economic policy agenda is devoted to raising living
standards and broadening participation in the benefits of global economic integration among and
within nations. As the President has said, "we must put a human face on the global economy,
giving working people everywhere a stake in its success, equipping them all to reap its rewards,
providing for their families the basic conditions of a just society." Expansion of trade and
investment contributes to higher living standards by enhancing economic growth and efficiency.
Implementation of core labor standards helps to translate increased economic growth into broad-
based gains in living standards, which in turn can reinforce growth by strengthening consumer
demand. This virtuous cycle holds the key to leveling up living standards as the world's
industrialized and developing economies become more intertwined.
It is for this reason that, at the same time the Administration is pursuing a wide range of trade
liberalization opportunities, it is engaged in a multi-faceted, global effort to encourage
implementation of core labor standards. Several agencies, including the Department of Labor,
Department of State, Office of the U.S. Trade Representative, and Department of the Treasury,
are actively engaged in a range of bilateral and multilateral activities to promote international
respect for worker rights, seeking to make progress where and when it is feasible. Each is
working to follow up on the President's appeal to the major global economic institutions, made
in a series of speeches during visits to them over the past two years, that they adapt their
activities to help developed and developing countries translate greater trade and investment into
the broadest possible gains in living standards for their citizens. Following is a survey of these
bilateral and multilateral activities and their ongoing progress.
ADVOCACY OF CORE LABOR STANDARDS THROUGH THE ILO
In June 1998, the United States Government led an effort during the annual conference of the
International Labor Organization (ILO) to gain consensus on a set of core labor standards which
all member states could support, regardless of whether they had ratified the relevant ILO
conventions. The Declaration of Fundamental Principles and Rights at Work and Its Follow-Up
was approved unanimously by all member states of the ILO and from the very fact of
membership in the Organization, obligates them to promote and realize in good faith the
following set of principles or core labor standards:
freedom of association and the effective recognition of the right to collective bargaining;
the elimination of all forms of forced or compulsory labor;
the effective abolition of child labor; and
the elimination of discrimination in respect of employment and occupation.
The follow-up mechanism is designed to measure member countries' promotion and
implementation of the fundamental principles, and is focused on technical cooperation as the
means of action. It contains two parts:
An Annual Report is requested from all member countries which have not ratified the
relevant Conventions. A group of Independent Declaration Expert Advisors (IDEA)
reviews the reports and provides a summary and recommendations to the Governing
Body for its consideration at each March meeting. These Governing Body discussions
will help to focus the ILO's promotional activities towards the goal of universal
ratification and implementation of the core Conventions.
In June of each year, the International Labor Conference will consider a Global Report on
one of the four categories of fundamental principles. In June 2000, the Global Report
will consider Freedom of Association. The information for the report is drawn from a
number of sources including the Annual Report and reports from countries which have
ratified the relevant Conventions. The outcome of those discussions will guide the ILO's
technical cooperation program over the next four years aimed at universal application of
the principle of freedom of association.
In recognition of the obligation of the ILO to assist its Members, the Declaration commits the
ILO to offer technical assistance and advisory services to promote and realize the principles
concerning fundamental rights at work, making full use of its constitutional and budgetary
resources, including the mobilization of external resources and support.
In January 1999, President Clinton announced an international labor standards initiative to create
a new arm of the ILO, to work with developing countries to put in place basic labor protections,
including the right to organize, so that workers everywhere can enjoy fundamental principles and
rights at work-rights that are crucial to building a strong and stable global economy.
In Fiscal Year 2000, the Administration requested and received from Congress $20 million to be
provided to the ILO to assist countries in implementing the core labor standards embodied in the
1998 Declaration. The funds are managed by the U.S. Department of Labor, which is working
closely with the ILO to target the monies at countries where there is a clear need for assistance
and a willingness among the government, and employer and worker representatives to adhere to
the principles of the Declaration. On April 12, 2000, the U.S. Department of Labor and the
International Labor Organization signed a cooperative agreement which grants the $20 million to
the ILO, identifies the countries targeted for assistance, and sets forth the operational procedures
and policies of the program. The President's FY 2001 budget also requests $20 million to be
provided to the ILO to continue to assist countries in implementing the core labor standards
embodied in the 1998 Declaration.
ADVOCACY OF CORE LABOR STANDARDS THROUGH TRADE POLICY
The Clinton Administration has worked to promote core labor standards and other critical labor
goals such as safe working conditions through trade policy institutions, international negotiations
and agreements, the use of incentives under U.S. trade law, and bilateral initiatives with specific
countries.
World Trade Organization (WTO): President Clinton made a very well received address to
the WTO Geneva Ministerial meeting and emphasized the need for trade to lead to a leveling
"up" rather than "down" for workers. He proposed a high-level meeting between the Secretariats
of the ILO and WTO to examine ways in which the two organizations can collaborate. The
President also stressed the need for greater transparency and an active role by civil society,
including labor. He also spoke about his strong feelings about the relationship between trade and
labor at the 1999 WTO Ministerial in Seattle and while there also held a meeting with the leaders
of major international economic institutions, including the ILO.
The United States has raised labor standards in country policy reviews under the WTO's Trade
Policy Review Mechanism (TPRM). In these reviews each WTO member's trade regime is
examined, and other members are provided an opportunity to raise questions. For example, in
the recent Swaziland TPRM review, we sought clarifications about labor practices that we
believe are inadequate. Some WTO members claim that these questions are inappropriate in the
context of WTO proceedings.
The United States has urged the WTO to adopt a formal consultative mechanism to allow
regular and continuous contact with the private sector and NGOs, and the Director General has
traveled to the United States to meet with representatives of organized labor and other NGOs.
The United States actively participated in a group of like-minded countries brought together by
Belgium in Geneva to discuss the trade-labor link. Ten countries were involved in this exercise,
which developed a globalization working group proposal which would include issues related to
living standards and labor and was introduced for consideration by Canada at the 1999 WTO
Ministerial meeting in Seattle.
The United States introduced a proposal for consideration by the 1999 WTO Ministerial calling
for the establishment with that organization of a Working Group on Trade and Labor. Foreign
countries were contacted repeatedly to seek their support and officials were demarched at all
levels. This initiative was debated at the Seattle Ministerial, but like the Ministerial itself, no
conclusion was reached.
International Negotiations and Agreements:
FTAA: The Free Trade Area of the Americas (FTAA) Trade Ministers established the
Government Committee on Civil Society (GCCS) to broaden public support for and
understanding of the FTAA. The GCCS received written comments from many sectors
of civil society, including labor, in 1999 and has again this year solicited written
comments. The GCCS presented a report on the views presented by civil society to the
Trade Ministers at the November 1999 Ministerial in Toronto and will report on this
year's comments at the April 2001 Ministerial. The U.S. is working to ensure that civil
society comments are taken into account throughout the FTAA negotiations and to
expand the activities of the GCCS to enhance its role in increasing civil society
participation in the FTAA.
Multilateral Agreement on Investment (MAI): The Administration sought to include
some commitments on labor standards in the MAI at the time it was being negotiated in
the Organization of Economic Cooperation and Development (OECD).
North American Agreement on Labor Cooperation (NAALC): The North American
Agreement on Labor Cooperation (NAALC), the labor supplemental agreement to the
North American Free Trade Agreement (NAFTA), is historic in that it is the first labor
agreement to accompany a trade agreement. Under the NAALC, we have been able to
establish unprecedented transparency with regard to labor law and its administration in
Mexico and Canada. The NAALC has provided increased public scrutiny and dialogue,
particularly through the public submission process, on issues involving freedom of
association and trade union rights, discrimination in employment, health and safety, and
child labor concerns. For example, as a result of the NAALC processes, Mexico has
taken steps to clarify that employment-related pregnancy screening for women is illegal
under Mexican law, and it has set up a unit in the Mexican Labor Ministry to oversee
concerns about women's employment issues. Mexican courts have also issued some
recent decisions that have clarified the right of Mexican workers to have more than one
union in certain workplaces. In addition, we have established cooperative programs and
technical exchanges on health and safety matters and child labor law enforcement.
Effective Use of U.S. Trade Law: U.S. trade law, through the Generalized System of
Preferences (GSP), the Caribbean Basin Initiative, and the Andean Trade Preferences Act, offers
incentives for countries to improve labor practices; beneficiary developing countries can lose GSP
duty-free benefits if they do not respect internationally recognized labor rights. The General
Accounting Office in July 1998 published a report entitled "Caribbean Basin: Worker Rights
Progress Made, but Enforcement Issues Remain" that notes that the Administration has been
effective in using its trade preference programs to motivate improvements in worker rights.
Senator Hollings had requested this report of the apparel industry.
Numerous petitions have been reviewed involving worker rights deficiencies in beneficiary
countries of our GSP program. Improvements were obtained in most of these cases, but we
suspended half of Pakistan's benefits and removed the Maldives from the program when
sufficient progress was not obtained.
Bilateral Incentives: An incentive was included for the first time in a textile trade agreement
aimed at improving the enforcement of labor laws in a textiles-exporting country. Specifically,
the U.S.-Cambodia textile agreement offers increased quotas to Cambodia in return for better
labor law implementation.
ADVOCACY OF CORE LABOR STANDARDS THROUGH THE IFIs
The Administration has promoted core labor standards through its membership and participation
in the International Financial Institutions (IFIs): the International Monetary Fund (IMF), the
World Bank, and the regional multilateral development banks (MDBs) -- the Inter-American
Development Bank (IDB), the Asian Development Bank (ADB), and the African Development
Bank (AfDB).
Consistent with the [Sanders Amendment-need correct title], the Department of the Treasury
on behalf of the United States has used its voice and vote in the IFIs to promote core labor
standards. President Clinton addressed the opening of the 1998 International Monetary
Fund/World Bank Annual meeting, where he stated: "We must put a human face on the global
economy. An international market that fails to work for ordinary citizens will neither earn, nor
deserve their confidence and support."
Secretary of the Treasury Summers called for World Bank support for core labor standards in
statements to the World Bank Development Committee in 1999 and 2000. During the 1999
Annual Meetings Secretary Summers met with the ILO Director General and agreed to support
joint work with IMF and the World Bank, and Treasury supported a meeting of G-7 member
governors with the ILO Director General. Treasury organized two meetings during 1999 that
brought together the U.S. Executive Directors (USEDs) of the IFIs and senior Administration
officials to reinforce the importance of labor issues with the USEDs and as fora to strengthen
interagency cooperation.
The Department of the Treasury regularly raises labor issues in discussions of World Bank
Country Assistance Strategies (CASs), most recently in the cases of Brazil and Honduras, and
reviews all loans of the MDBs for labor issues, including core labor standards. During 1999, the
Administration secured protection for core labor standards in a loan to an export-processing zone
(EPZ) by the private sector lending subsidiary of the IDB, the Inter-American Investment
Corporation (IIC). The IDB also committed to implement a monitoring program to oversee labor
standards in Honduran EPZs.
The U.S. Executive Director consistently raises labor issues during the discussion of IMF
programs and surveillance activities of member countries. The IMF has begun to pay greater
attention to labor issues, including core labor standards, in its country surveillance activities.
During 1999, the United States raised labor rights and standards issues at the IMF in the cases of
Colombia, Indonesia, Korea, Mexico, Morocco, and Thailand, among others. Thus far in 2000,
Treasury has done the same in the cases of Argentina, Bangladesh, Bulgaria, Ecuador, Indonesia,
Mexico, South Africa, and Thailand.
The Administration has also promoted closer relations and collaboration between the IFIs and the
ILO. In 1999, the ILO was granted ongoing observership status to the World Bank/IMF
Development Committee and the IMF International Monetary and Financial Committee. The ILO
and World Bank cooperate regularly on child labor issues and held a high-level meeting during
February 2000 to improve cooperation and joint work. This followed on a meeting among the
ILO, World Bank, and IMF heads in November 1998. The IMF and World Bank cooperated with
the ILO and the AFL-CIO in hosting a high level conference on core labor standards during the
5
Annual Meetings of the two financial institutions in September 1999. With the support of the
United States, the World Bank established a Labor Markets Group within its Social Protection
Department in 1998. The Group is now fully operational, cooperates closely with the ILO, and
focuses on issues of core labor standards, industrial relations, labor markets, employment, and
related matters.
The Department of the Treasury has developed a loan screening procedure for labor standards for
use by the Multilateral Development Banks (MDBs), which it has submitted to the institutions for
comment. Some of the IFIs have taken actions that indicate that core labor standards are being
considered more explicitly in their operations:
The International Finance Corporation (IFC) and Multilateral Investment Guarantee
Agency (MIGA) of the World Bank, and the Inter-American Investment Corporation (IIC)
of the IDB, have adopted contract language prohibiting the use of child labor and forced
labor in projects they support and requiring compliance with all domestic legislation that
enforces core labor standards.
The International Development Association (IDA) of the World Bank has decided that
core labor standards must be analyzed in the preparation of country assistance strategies
(CASs), and is working with the Bank to implement this commitment.
The AfDB has agreed to include core labor standards in its sectoral and cross-sectoral
policy guidelines and in country strategy papers (CSPs).
A Child Labor Program has been established within the World Bank's Human
Development Network. The Program supports various projects on child labor reduction,
including research and analyses, pilot studies, and internal and external dissemination
through training, seminars and via a forthcoming website. The Bank has significantly
expanded its cooperation with the ILO, UNICEF, and NGO's to combat child labor.
The ADB recently implemented a technical assistance project to improve country
performance on child labor, gender discrimination, and safety and health in Bangladesh,
Nepal, the Philippines, and Thailand. The IDB has provided technical assistance to
improve country performance on core labor standards for a number of years through its
Multilateral Investment Fund (MIF). During April the Board approved a project to
support trade union leadership training in Brazil. The IDB recently agreed to constitute a
working group to discuss areas of cooperation, including technical assistance, with the
Inter-American Regional Labor Organization (ORIT).
World Bank Structural Adjustment Loans to Brazil and Indonesia, and an IDB Structural
Adjustment Loan to Brazil, approved in conjunction with the IMF programs for those two
countries, included significant protection for social sector budgets, with provisions for
programs intended to keep children out of the workplace and in school. The World Bank
6
has prepared a major loan in the amount of $250 million for Brazil, which would further
support this program.
ADVOCACY OF CORE LABOR STANDARDS THROUGH OTHER MULTILATERAL
AND PLURILATERAL FORA
UN System: Negotiations are currently underway among United Nations (UN) member states to
agree on further measures to fulfill commitments made by governments at the World Summit on
Social Development in Copenhagen in 1995, including commitments to observe core labor
standards. The United States is pursuing support for a proposal to call upon the ILO and other
UN institutions, including the Bretton Woods institutions, to plan and carry out coherent and
integrated approaches with host countries to promote core labor standards and ensure that
realization of these workers' rights is fully integrated into macroeconomic policies and national
development programs, including poverty reduction strategies. Partly as a result of U.S. efforts,
agreement has already been reached to call on governments of all member states to support the
ILO's program of decent work, which includes core labor standards, and to support and
participate in the global campaign for the immediate elimination of the worst forms of child labor.
The United States raised core labor standards in an address to the Economic and Social Council
High Level Meeting on Market Accèss and emphasized need for the ILO and WTO to collaborate
on joint studies, research, and papers. This also was done at the October 1998 meeting of the
United Nations Commission on Trade and Development.
OECD: The OECD's Guidelines for Multinational Enterprises are currently under review in the
Committee on Investment and Multinational Enterprises (CIME). Agreement has been reached to
revise the Guidelines to explicitly include all of the core labor standards. Discussion continues on
revising implementation procedures, with the U.S. encouraging the committee to consider
revisions that will make the Guidelines a stronger, more effective instrument. The OECD Trade
Committee, partly at U.S. urging, prepared a draft update of its 1996 study Trade, Employment
and Labor Standards: A Study of Core Workers' Rights and International Trade. The draft has
been discussed in the Trade Committee and the Employment, Labor and Social Affairs
Committee and will be reviewed further by the Trade Committee in mid-May. A revised version
of the paper, incorporating comments from the United States and other governments, is expected
later this year.
G-8: At the G-8 Summit in Cologne in June 1999, the United States was instrumental in securing
a commitment by the group to promote the ILO Declaration on Fundamental Principles and
Rights at Work and Its Follow-Up and to urge the World Bank and IMF to incorporate these
standards in their policy dialogue with developing countries.
Summit of the Americas: At the Second Summit of the Americas held in Santiago de Chile in
1998, the leaders of the democratically-elected governments of the Hemisphere agreed to a
political declaration and action plan. This plan provides for a committee of government
7
representatives to hear the views of civil society and provide input to the trade ministers during
the FTAA (Free Trade Agreement of the Americas) negotiations. Also included in the plan are
items dealing with: 1) modernization of labor ministries and 2) basic worker rights.
Transatlantic Economic Partnership (TEP): The declaration launching the TEP included
multilateral actions in support of the observance of core labor standards and reaching agreement
on the ILO declaration and follow-up mechanism. It noted the importance of the social partners
in the process and rejected the use of labor standards for protectionist purposes. The declaration
also calls for advancing our shared values in the areas of labor and the environment. Finally, it
reaffirmed the commitment in the New Transatlantic Agenda to promote dialogue between
representatives of consumer and labor interests "as illustrated by the helpful second meeting of the
Transatlantic Labor Dialogue held in London in April." Several activities relating to labor have
been held under the TEP, the latest being an EU-US seminar on labor and economic integration in
Washington in late 1999. Among the issues we have agreed to discuss are worker rights
provisions in our respective GSP programs and additional support for the ILO International
Program for the Elimination of Child Labor.
BILATERAL ADVOCACY OF CORE LABOR STANDARDS
Bilateral Technical Assistance Program for Core Labor Standards and Social Safety Net
Programs: The link between core labor standards and social safety nets is particularly vital in
developing countries. Where workers have no access to a minimum income and other forms of
social protection, they may be unwilling to take the risks they would face in exercising their rights
to basic standards in the workplace. Developing countries historically have proven unable to
provide viable income maintenance programs such as unemployment insurance, pensions and
social security, disability insurance and workers compensation; as well as other provisions on the
spectrum of social safety net policies, including job placement services for dislocated workers,
skills training for disadvantaged workers, and publicly available labor market information to
support the development of appropriate policies and programs.
In Fiscal Year 2000, the Administration requested and received from Congress $10 million for
bilateral technical assistance to promote the development of market-oriented social safety net
programs that facilitate worker protection and economic growth. The bilateral initiative is being
closely coordinated with the multilateral ILO core labor standards initiative and responsive to
worthy requests for assistance. The funds are managed by the U.S. Department of Labor.
Country selection for the bilateral initiative is made through a consultative process also involving
the U.S. Department of State, USAID, the U.S. Council for International Business, the AFL-CIO,
and other stakeholders as appropriate. Illustrative projects in FY 2000 include a labor market
information and model job bank system for the Anglophone Caribbean region; the establishment
of a regional safety and health institute for Central America; an occupational safety and health
program in Bangladesh; a model veterans' employment training program in South Africa and
Nigeria; a model workplace HIV/AIDS education program in Malawi; a pilot employment and
training center in Africa; and a mine safety and model dislocated worker programs in the Ukraine.
8
The President's FY 2001 request contains an additional $10 million in bilateral technical
assistance. The FY 2001 initiative will allow the Department to respond to numerous requests for
technical assistance based on need and strengthen the ability of Ministries to enforce their local
labor laws and lift up working conditions and create a more stable and secure global environment.
Diplomatic Outreach Capacity and Activities: The Secretary of State has significantly
expanded the Department's capacity to monitor and promote respect for core labor standards
around the world through an increase in the number of Labor Officers both in Washington and at
overseas posts. The Office of International Labor within the Department's Bureau of Democracy,
Human Rights and Labor has been expanded from three to nine positions and the number of
overseas Labor Officers has risen from 35 to 50. The Secretary has also named a "Special
Representative for International Labor Affairs,"a senior policy advisor reporting directly to her on
international labor matters.
In 1999, the Secretary of State named an Advisory Committee on Labor Diplomacy, whose
mandate is to make recommendations regarding the revitalization of U.S. labor diplomacy. The
Committee is composed of prominent leaders in the labor community, including Chairman
Thomas Donahue, former President of the AFL-CIO, John Sweeney, President of the AFL-CIO
and Ray Marshall, former Secretary of Labor. The Committee is preparing recommendations to
improve the effectiveness and efficiency of labor diplomacy programs and to ensure U.S.
leadership in the international community in promoting worker rights in the 21st century. The
Committee expects to send its first set of recommendations to the Secretary this summer.
The State Department's labor diplomacy capability is used regularly to assess needs in host
countries for technical support to improve observance of core labor standards and to facilitate the
delivery of responsive technical assistance programs by the U.S. and international organizations.
Labor Officers provide information necessary to effectively administer labor provisions of a
number of U.S. programs such as the Generalized System of Preferences (GSP) as well as targeted
initiatives such as the President's Executive Order banning procurement by the U.S. of products
made with forced child labor. Labor Officers are also asked to advocate with host governments for
support of measures in international fora to promote core labor standards. A notable example was
a series of demarches to governments around the world in support of the U.S. proposal to the
WTO Ministerial to create a Working Group on Trade and Labor.
Enhanced Reporting Capacity on International Labor Standards: The Administration
proposes to further improve the ability of the U.S. Government to assess the capacity of
developing countries to respect core labor standards and to respond to opportunities and
challenges in those countries with respect to their enforcement of domestic labor laws and
fundamental worker rights. As an important part of this effort, the Administration seeks an
increase of 22 full-time employees with international labor responsibilities in the FY2001 budget.
The proposal envisions twelve additional Labor Officers at overseas missions, five new labor
positions within the Department of State, assigned to regional bureaus, and five new positions in
9
the Department of Labor's International Labor Affairs Bureau. This will significantly increase the
ability to comprehend labor law enforcement problems in developing countries, expand reporting
on worker rights and human rights, improve intra-Department and interagency coordination on
labor matters, and improve U.S. ability to mobilize technical assistance from within the U.S.
Government or from international organizations, such as the ILO, to improve developing
countries' capacity to respect core labor standards. It will also contribute to the scope and
specificity of the worker rights section of the Department of State's annual Human Rights Report.
Implementation of Worker Rights Criteria in OPIC: The Overseas Private Investment
Corporation (OPIC) supports the mobilization of U.S. private investment in 140 emerging
markets and developing countries worldwide. Assistance provided by OPIC includes: (1)
insuring investments against a broad range of political risks; (2) financing businesses overseas
through loans and loan guarantees; and (3) financing private investment funds that provide equity
to businesses overseas.
Since 1986, OPIC statutory authority has required that OPIC may support projects only in
countries that are "taking steps to adopt and implement laws that extend internationally
recognized worker rights," as defined in GSP statutory authority (see previous section on GSP).
OPIC follows a two-tier process for determining country eligibility:
For GSP beneficiaries, OPIC relies upon the interagency GSP eligibility determination.
OPIC automatically suspends eligibility for countries that lose GSP benefits because of
violations of internationally recognized worker rights. For example, OPIC suspended
benefits for Mauritania following its loss of GSP in 1993 on worker rights grounds, and
restored benefits in 1999 following the reinstatement of Mauritania to the GSP program.
For countries that are not GSP beneficiaries, OPIC conducts a separate worker rights
eligibility review pursuant to petitions presented at annual public hearings. Following
these procedures, OPIC suspended Qatar, the United Arab Emirates, and Saudi Arabia
from eligibility in 1995; at the same time, Singapore and Laos were found to be "taking
steps," and their OPIC eligibility was maintained.. Similarly, OPIC suspended South
Korea from eligibility in 1991 because it was not taking steps to provide freedom of
association and the right to organize and bargain collectively. Subsequently, a detailed
review, which included a visit to Korea and consultations with labor officials, determined
that that country had made substantial progress in promoting trade union rights; South
Korea was therefore restored to eligibility for OPIC programs in 1998.
OPIC worker rights monitoring does not stop with the determination of country eligibility.
Under the Jobs for Exports Act of 1992, OPIC is prohibited from supporting any project that
contributes to a violation of one or more of the five internationally recognized worker rights in the
GSP statute. OPIC accordingly conducts a review of worker rights prior to final approval of each
project. By statute, every contract contains standard language mandating adherence to
internationally recognized fundamental worker rights and requiring the investor to obey host
10
country labor laws. Where local law is inconsistent with ILO norms (e.g., a country allows
employment of children at an age lower than the ILO norm), OPIC negotiates supplemental
contract language. The OPIC monitoring program entails site visits to approved projects to ensure
they are conducted in conformity with OPIC requirements, including those related to worker
rights. OPIC also engages with organized labor and industry, as well as with human rights and
labor rights advocacy groups to obtain information and assist in fulfilling the agency's labor rights
protection mandate.
U.S.-China Dialogue: U.S. Secretary of Labor Alexis Herman hosted a visit by the Chinese
Minister of Labor and Social Security, Zhang Zuoji, to Washington on March 30, 1999. The
meeting was the first step taken to follow up the Clinton-Jiang Zemin summit of June 1998,
where the two countries agreed to establish a US-China Labor Dialogue. This called for the
Secretary and Minister of Labor to undertake reciprocal visits, exchange views and information on
policies related to labor markets and core labor standards, and social safety net issues.
The issues discussed at the March 30, 1999, meeting included the U.S. labor market, the U.S.
unemployment insurance system, employment creation policies, training programs, social security
and pension programs, labor legislation and worker rights and core labor standards. Minister
Zhang met with Department of Labor officials as well as with representatives of the AFL-CIO and
the U.S. business community. A joint statement was released in which it was agreed that the
labor dialogue would be continued, and that the Secretary would make a reciprocal visit to China
in the future.
Separately, the State Department is currently involved in negotiations with the Government of
China to revive implementation of a 1992 MOU that allowed U.S. officials to visit prison sites in
China where there is reason to believe that prison labor may be employed to produce goods
destined for the U.S. market.
CHILD LABOR
The International Labor Organization (ILO) estimates that there are at least 250 million working
children between the ages of five and 14 in developing countries -- about half of them work full-
time and do not attend school. Tens of millions of these children work under very hazardous and
abusive conditions.
The overall objective of the President's international child labor initiative is to reduce child labor
by providing working children with educational opportunities and their parents with viable
economic alternatives. Addressing delegates to the International Labor Conference in Geneva in
June 1999, President Clinton called for urgency in addressing the worst forms of child labor:
"[W]e must wipe from the Earth the most vicious forms of abusive child labor.
Every single day tens of millions of children work in conditions that shock the
conscience. There are children.. handling dangerous chemicals; children forced to
11
work when they should be in school, preparing themselves and their countries for a
better tomorrow. Each of our nations must take responsibility."
In June 1999, a milestone in the fight against abusive child labor was reached when Convention
182 on the Worst of Forms of Child Labor was unanimously adopted during the International
Labor Conference. This Convention calls for the immediate elimination of the worst forms of
child labor, including: all forms of slavery and practices similar to slavery; the use of children in
activities such as prostitution, pornography, drug production and drug trafficking; and the
employment of children in work likely to harm their health, safety or moral well being. The treaty
was submitted to the United States Senate in August 1999 and received unanimous bipartisan
advice and consent in November 1999. President Clinton signed the Convention ratification
instrument in December 1999. Convention 182 has provided greater impetus for the global
abolition of the worst forms of child labor and put a strong emphasis on the importance of
education for removing and preventing children from engaging in exploitative work. As
developing countries begin to ratify and implement Convention No. 182, the need and demand for
projects that provide alternatives to child labor will also increase.
Since fiscal year 1995, the United States has contributed some $37 million to the ILO's
International Program on the Elimination of Child Labor (IPEC) for projects that seek to remove
children from exploitative work and provide them with an education and their families with viable
economic alternatives. The United States is also funding child labor surveys that will help us to
more accurately assess the extent and nature of the problem and to measure future progress in
reducing its incidence. In 1999, the United States became the largest contributing country to the
IPEC program.
Projects funded since 1995 provide tens of thousands of children in Africa, Asia and Latin
America with an opportunity to attend school and thousands of families with income-generating
alternatives to child labor. To continue this important work, the Administration requested and the
Congress appropriated an additional $30 million for international child labor activities, including
funding for IPEC, in FY 2000. Significant resources were provided for projects that target
children engaged in hazardous work in commercial agriculture, mining, fishing, the production of
soccer balls, carpets, garments, fireworks, and footwear, as well as children involved in
prostitution and domestic work.
To move us closer to making global abolition of the worst forms of child labor a reality, the
President is calling for a $100 million comprehensive initiative on international child labor in the
FY 2001 budget. This initiative has two inter-related strategies:
Increase the U.S. contribution to IPEC by 50% to $45 million to provide multilateral
assistance to a greater number of children suffering from abusive child labor. This initiative
would support our ongoing work with the IPEC program and fund targeted projects that
remove children from hazardous work, increase the participation of developing countries in
IPEC, develop statistical surveys and baseline information on child labor, and increase
12
awareness and public education about child labor. This multilateral approach will strengthen
our efforts in eliminating the worst forms of child labor -- particularly in hazardous industries
and sectors.
Provide $55 million to establish a new U.S. bilateral assistance program to help developing
countries with high incidence of child labor provide basic quality education which is
meaningful and affordable as an alternative to child labor. It is clear that access to education
is an essential component of every strategy to eliminate child labor. The proposed budget
allocation would expand the resources available for improving and expanding the basic
education infrastructure of countries that have demonstrated a commitment to the elimination
of child labor. The program will assist these countries develop national policies and programs
that make education an attractive and affordable alternative to child labor.
IPEC projects will continue to target specific industry or sectors with a high incidence of child
labor, the new bilateral program will focus on providing greater access to quality education to
entire cities, countries or even region covering a much larger number of children engaged in, or at
risk of engaging in, exploitative work. By targeting the prevention and removal of children
engaged in abusive work and increasing access to basic quality education, this comprehensive
$100 million initiative effectively leverages resources to ensure a greater impact in eliminating
abusive child labor and providing millions of children with a chance at a better future.
As part of the Administration's continuing commitment to lead the fight against abusive child
labor around the world, President Clinton issued Executive Order 13126 ("Prohibition of
Acquisition of Products Produced by Forced or Indentured Child Labor") on June 12, 1999. The
Executive Order is designed to prevent federal agencies from buying products made with forced
or indentured child labor. That goal is consistent with current laws that, among other things,
outlaw the importation of products made with forced or indentured child labor. (Need to
supplement and update after next week).
Pursuant to commitments made by President Clinton in the last three State of the Union addresses
to combat abusive child labor, the Administration has increased budgetary allocations for U.S.
Customs enforcement against imports manufactured with forced or indentured child labor from $3
million for FY1999 to $5 million in FY2000 and $10 million for FY2001.
With the FY1999 allocation, Customs assigned additional agents devoted exclusively to child
labor to Bangkok, Hong Kong and Montevideo. Customs will open a field office in Delhi this
year. Customs has issued detention orders barring the importation of hand-knotted carpets from
four firms in Nepal and hand-rolled cigarettes known as "beedis" from a company in India
because of suspicions that forced or indentured child labor was being used. Treasury exercises
close policy oversight over this top Customs law enforcement priority with the assistance of an
Advisory Committee on International Child Labor Enforcement established last year.
[Missing: USAID input on support to American Center for International Labor Solidarity]
13
ANTI-SWEATSHOP INITIATIVES
The Administration facilitated the establishment in August 1996 of the Apparel Industry
Partnership (AIP), a group of apparel and footwear companies, unions, and religious and human
rights groups committed to the common purpose of eliminating substandard working conditions in
the United States and abroad and to give consumers the information they need to make informed
purchasing decisions. Growing out of the AIP, the Fair Labor Association (FLA) is a nonprofit
organization consisting of companies, religious and human rights groups and universities
established to protect the rights of apparel and footwear workers in the United States and around
the world. The FLA Charter Agreement, adopted in November 1998, creates a first-of-a-kind
industry-wide code of conduct and monitoring system. The code of conduct includes:
Prohibitions against child labor, worker abuse or harassment, and discrimination;
Recognition of workers' right of freedom of association and collective bargaining;
A minimum or prevailing wage, and a cap on mandatory overtime to 12 hours per week;
and
Provision of a safe and healthy working environment.
The Charter Agreement also lays the foundation for the creation of an independent monitoring
system that will hold companies publicly accountable for their labor practices, as well as those of
their principal contractors and suppliers around the world. USAID currently provides a grant to
the FLA to cover start-up costs. USAID has also provided a grant to the International Labor
Rights Fund for a pilot training program to train indigenous NGOs, including trade unionists, to
monitor conditions in factories in Guatemala and Indonesia. After training, these monitors would
be certified to participate in the FLA factory monitoring program or for other factory monitoring
standards and programs developed by other organizations.
The $4 million Anti-Sweatshop Initiative is a new U.S. Government effort to support programs to
eliminate sweatshop conditions overseas. Administered by the Department of State's Office of
International Labor, this initiative will make grants to NGOs, unions and corporations involved in
programs to eliminate abusive working conditions at factories that produce for the U.S. market.
Grants of up to $1 million will be made to promote the adoption of voluntary corporate codes of
conduct, to develop monitoring mechanisms and train monitors to ensure that such codes are
implemented, to conduct research and to undertake other innovative, sustainable and replicable
approaches to address sweatshop conditions. The initiative will seek to impact a range of
geographic areas and industries, build capacity among indigenous and foreign NGOs and
encourage collaboration among different segments of society, including business, religious,
student and consumer groups, NGOs and trade unions.
14
May 2000
Momentum Calendar
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
1
2
3
4
5
6
12:00 PM Hoyer speech,
8:00 AM Daley DBG
12:30 PM Senate Dem
10:00 AM Human Rights
Johns Hopkins Univ
4:00 PM NDC briefing
Caucus w/ Daley and
briefing w/ Harold Coe,
6:20 PM Martin Lee mtg
H-137 guest: Martin Lee
Barshefsky, LBJ Room
B-318 Rayburn
7:00 PM Cong mtg Yellow
Bipartisan lunch hosted by
2:30 PM Bipartisan Tech-
Oval
Maloney and Sessions
nology press conf. Hse
China Principal mtg
Ways and Means Hearing
triangle
w/ Daley, Barshefsky,
China Principal mtg.
and Summers
House D's Announcement
Daley's Texas Day
7
8
9
10
11
12
13
Farm Broadcasters Event,
9:00 AM Senate Banking
10:00 AM Hse Banking
Akron, OH stop (T)
Oval or RR
Hearing w/ Summers
Hearing w/ Summers,
China/Ag Event, Decatur,
China Principal mtg
Barshefsky (T)
IL
Validator China Event,
China Principal mtg
East Room
Cong mtg Yellow Oval
W & M Subcommittee Markup, this week (T)
14
15
16
17
18
19
20
10:00 AM SBA China
Ag Co. Hearing w/ Daley,
China Principal mtg
Hearing, 2360 Rayburn
Glickman and
Cong mtg Yellow Oval
China Principal mtg
Barshefsky
Am Farm Bureau fly-in; possible briefing
W & M Full Committee Markup, this week (T)
21
22
23
24
25
26
27
Cong mtg Yellow Oval
China Principal mtg
China Principal mtg
Cong mtg Yellow Oval
House China vote (?)
28
29
30
31
April
June
SMTWTFS
SMTWTFS
I 2 3
2 3 4 5 6 7 8
4 5 6 7 8 9 10
9 10 11 12 13 14 15
16 17 18 19 20 21 22
11 12 13 14 15 16 17
23 24 25 26 27 28 29
18 19 20 21 22 23 24
Memorial Day
30
25 26 27 28 29 30
Projected House and Senate Recess
Printed by Calendar Creator Plus on 5/4/2000
May 2000
Momentum Calendar
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
1
2
3
4
5
6
12:00 PM Hoyer speech,
8:00 AM Daley DBG
12:30 PM Senate Dem
10:00 AM Human Rights
Johns Hopkins Univ
4:00 PM NDC briefing
Caucus w/ Daley and
briefing w/ Harold Coe,
6:20 PM Martin Lee mtg
H-137 guest: Martin Lee
Barshefsky, LBJ Room
B-318 Rayburn
7:00 PM Cong mtg Yellow
Bipartisan lunch hosted by
2:30 PM Bipartisan Tech-
Oval
Maloney and Sessions
nology press conf. Hse
China Principal mtg
Ways and Means Hearing
triangle
w/ Daley, Barshefsky,
China Principal mtg
and Summers
House D's Announcement
Daley's Texas Day
7
8
9
10
11
12
13
Farm Broadcasters Event,
9:00 AM Senate Banking
10:00 AM Hse Banking
Akron, OH stop (T)
Oval or RR
Hearing w/ Summers
Hearing w/ Summers,
China/Ag Event, Decatur,
China Principal mtg
Barshefsky (T)
IL
Validator China Event,
China Principal mtg
East Room
Cong mtg Yellow Oval
W & M Subcommittee Markup, this week (T)
14
15
16
17
18
19
20
10:00 AM SBA China
Ag Co. Hearing w/ Daley,
China Principal mtg
Hearing, 2360 Rayburn
Glickman and
Cong mtg Yellow Oval
China Principal mtg
Barshefsky
Am Farm Bureau fly-in; possible briefing
W & M Full Committee Markup, this week (T)
21
22
23
24
25
26
27
Cong mtg Yellow Oval
China Principal mtg
China Principal mtg
Cong mtg Yellow Oval
House China vote (?)
28
29
30
31
April
June
SMTWTFS
SMTWTFS
I
I 2 3
2 3 4 5 6 7 8
4 5 6 7 8 9 10
9 10 11 12 13 14 15
16 17 18 19 20 21 22
11 12 13 14 15 16 17
23 24 25 26 27 28 29
18 19 20 21 22 23 24
Memorial Day
30
25 26 27 28 29 30
Projected House and Senate Recess
Printed by Calendar Creator Plus on 5/4/2000
DRAFT of May 2 - 7:30 pm
SUMMERS STATEMENT ON LEVIN PROPOSALS
For
May 3 Testimony
The Administration believes that the proposals being developed by Congressman Levin with
others are constructive and address issues of major importance, and we welcome further dialogue
on these proposals among Members on both sides of the aisle. For example:
We agree that it is a priority for the United States to press for improvement of China's human
rights, religious freedoms, labor rights and the rule of law. Finding alternatives to the annual
NTR renewal process, such as a Commission, to keep a spotlight on these issues makes
sense.
We agree as well that it is important to have a vigorous program, both within the USG and
within the WTO, to monitor China's implementation of its WTO commitments and to ensure
China lives up to them. And we must have adequate resources to accomplish this.
Finally, we agree that we must make clear the rules and procedures this and future
Administrations will employ to implement the strong import safeguard protections we
negotiated.
We are committed to working with Congress to address these concerns, and are receptive to
ideas that make good substantive sense and can garner broad bipartisan support. We could not,
of course, accept anything that would in any way condition PNTR.
Administration Guidance on Levin Proposal
May 4
The Administration believes that the proposals being developed by Congressman Levin with
others are constructive and address issues of major importance, and we welcome further dialogue
on these proposals among Members on both sides of the aisle. For example:
We agree that it is a priority for the United States to press for improvement of China's human
rights, religious freedoms, labor rights and the rule of law. Finding alternatives to the annual
NTR renewal process, such as a Commission, to keep a spotlight on these issues makes
sense.
We agree as well that it is important to have a vigorous program, both within the USG and
within the WTO, to monitor China's implementation of its WTO commitments and to ensure
China lives up to them. And we must have adequate resources to accomplish this.
Finally, we agree that we must make clear the rules and procedures this and future
Administrations will employ to implement the strong import safeguard protections we
negotiated.
We are committed to working with Congress to address these concerns, and are receptive to
ideas that make good substantive sense and can garner broad bipartisan support. We could not,
of course, accept anything that would in any way condition PNTR.
Administration Guidance on Levin Proposal
May 4
The Administration believes that the proposals being developed by Congressman Levin with
others are constructive and address issues of major importance, and we welcome further dialogue
on these proposals among Members on both sides of the aisle. For example:
We agree that it is a priority for the United States to press for improvement of China's human
rights, religious freedoms, labor rights and the rule of law. Finding alternatives to the annual
NTR renewal process, such as a Commission, to keep a spotlight on these issues makes
sense.
We agree as well that it is important to have a vigorous program, both within the USG and
within the WTO, to monitor China's implementation of its WTO commitments and to ensure
China lives up to them. And we must have adequate resources to accomplish this.
Finally, we agree that we must make clear the rules and procedures this and future
Administrations will employ to implement the strong import safeguard protections we
negotiated.
We are committed to working with Congress to address these concerns, and are receptive to
ideas that make good substantive sense and can garner broad bipartisan support. We could not,
of course, accept anything that would in any way condition PNTR.
May 2000
Momentum Calendar
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
1
2
3
4
5
6
12:00 PM Hoyer speech,
8:00 AM Daley DBG
12:30 PM Senate Dem
10:00 AM Human Rights
Johns Hopkins Univ
4:00 PM NDC briefing
Caucus w/ Daley and
briefing w/ Harold Coe,
6:20 PM Martin Lee mtg
H-137 guest: Martin Lee
Barshefsky, LBJ Room
B-318 Rayburn
7:00 PM Cong mtg Yellow
Bipartisan lunch hosted by
2:30 PM Bipartisan Tech-
Oval
Maloney and Sessions
nology press conf. Hse
China Principal mtg
Ways and Means Hearing
triangle
w/ Daley, Barshefsky,
China Principal mtg
and Summers
House D's Announcement
Daley's Texas Day
7
8
9
10
11
12
13
Farm Broadcasters Event,
9:00 AM Senate Banking
10:00 AM Hse Banking
Akron, OH stop (T)
Oval or RR
Hearing w/ Summers
Hearing w/ Summers,
China/Ag Event, Decatur,
China Principal mtg
Barshefsky (T)
IL
Validator China Event,
China Principal mtg
East Room
Cong mtg Yellow Oval
W&M Subcommittee Markup, this week (T)
14
15
16
17
18
19
20
10:00 AM SBA China
Ag Co. Hearing w/ Daley,
China Principal mtg
Hearing 2360 Rayburn
Glickman and
Cong mtg Yellow Oval
China Principal mtg
Barshefsky
Am Farm Bureau fly-in; possible briefing
W& M Full Committee Markup, this week (T)
21
22
23
24
25
26
27
Cong mtg Yellow Oval
China Principal mtg
China Principal mtg
Cong mtg Yellow Oval
House China vote (?)
28
29
30
31
April
June
SMTWTFS
SMTWTFS
1
I 2 3
2 3 4 5 6 7 8
4 5 6 7 8 9 10
9 10 11 12 13 14 15
16 17 18 19 20 21 22
II 12 13 14 15 16 17
23 24 25 26 27 28 29
18 19 20 21 22 23 24
Memorial Day
30
25 26 27 28 29 30
Projected House and Senate Recess
Printed by Calendar Creator Plus on 5/4/2000
5/5/00
-INTERNAL USE ONLY-
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
China PNTR Outreach
May 2000
TBD DATES:
-Mtg. Of Working
1 - POTUS, Podesta,
2 - POTUS: Martin Lee
3 -Daley, Glickman,
4
5 - Daley: Asia Society
6
Party in Geneva
Barshefsky: Young
Mtg w/ Members of
Summers, Barshefsky:
(Houston, TX)
Presidents Org.
Congress
Ways & Means testimony
-Barshefsky: Nat. Conf.
- US Commission on
- POTUS: Independent
- Summers: National
of State Leg.
Intern'l Religious
Insurance Agents of
Press Club
-Koh: HR Briefing
Freedom issues Annual
America
- Daley, Barshefsky,
Report
Summers: Young
Ricchetti: Senate Caucus
-Chinese Labor Day (5/1-
Presidents Org.
Policy Luncheon
5/3)
Berger: Address at
- Release of Commerce
- Schumacher: Manzullo
Columbia (NY)
Enforcement Package
event, Rockford, IL
Daley, Eizenstat: ITTA
-WTO General Council
Policy Summit
Mtg.
9 - POTUS:
7 -
8 - POTUS: Farm
Distinguished Amers
10 -Albright: U. Cal at
11 - POTUS: Meeting
12 - POTUS: Ag. Event
13 - Barshefsky:
Broadcasters
- Albright: World Trade
Berkeley Commencement
with Members of
(travel)
Commencement Address
- Albright: AP
Ctr Dinner (Denver, CO)
-Summers: Chase H & Q
Congress
-Barshefsky: National
at University of
Journalists (NYC)
- Albright: Enviro.
Conf. and Dinner (San
-Summers, Barshefsky
Policy Assn. Board of
Minnesota Law School,
- W & M Trade
Technology Roundtable
Francisco, CA)
(T): House Banking
Trustees "Trade @
(St. Paul, MN)
Subcomm mark up (T)
- Glickman: Farm
-Cohen: Asia Society
Committee
Crossroads"
- Anniversary of Belgrade
Broadcasters
-Hall: Travel to China
- Mallett: FL Council of
- Sperling:
embassy bombing
- Daley: Life Insurance
(5/10-5/12)
100
Ambassadors Forum
- Former POTUS letter
CEOs Press Conf
-HIRC Hrg.
(Dallas, TX)
- Richardson: APEC Min
- New England Business
(San Diego, CA) (5/9-
Council (Admin
5/12)
participation TBD)
-Barshefsky (T),
Summers (T): Sen
Banking Comm.
- KS City Business
Alliance (admin
participation TBD)
5/5/00
-INTERNAL USE ONLY-
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
14 -International
15 -Glickman: Kansas
16 - Alvarez: House
17 -Herman: Chinese
18 -POTUS: Meeting
19
20 - Barshefsky:
Trade Week
Rotary Club (Wichita)
Small Business
Labor Min. Mtg. (T)
with Members of
Commencement Address
-Barshefsky: Foreign
Subcommittee Hearing
- Barshefsky, Glickman,
Congress
at Hood College,
Press event
on International Trade
Daley: House Ag
-Sperling: CED Board
(MD)
- Daley/Sperling: ESI
- Glickman, Summers:
Committee Hearing
of Directors Keynote
-Inauguration of new
(5/15-5/17)
American Farm Bureau
-Barshefsky: American
-Cuomo: Travel to
Taiwan President
-Senate Finance Comm.
Federation
Farm Bureau Federation
China (5/18-5/23)
Mark up (T)
- Small Business CEO
Breakfast
- W & M Mark up (T)
press conf (Admin
- EU-China negotiations
participation TBD)
-AmCham Door Knock
21 -Albright:
22 - POTUS: Meeting
23 -
24
25 - House vote
26 - Glickman:
27 - Memorial Day
Possible
with Members of
Georgetown Public
Recess (5/27-6/5)
commencement
Congress
Policy Commencement
address at George
- Conference on
Washington
disarmament convenes in
University (T)
Geneva
- Summers:
Wharton School of
Business
Commencement
28
29 - Memorial Day
30
31
5/5/00
-INTERNAL USE ONLY-
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
China PNTR Outreach
June 2000
FYI: Cohen's Trip
1
2
3 - Annual PNTR vote
to China (Date: TBD)
4
5 - - Senate bill on the
6 - APEC Trade
7
8
9
10
floor
Ministerial
11
12
13
14
15
16
17 Albright:
Commencement address
at Northeastern
University (Boston, MA)
18
19 -Senate Vote (T)
20
21
22
23
24
25
26
27
28
29
30
USDA
Fact Sheet
U.S. Department of Agriculture
Permanent Normal Trade Relations with China
Foreign Agricultural Service
February 2000
What's at Stake for Texas?
Texas is a leading producer of agricultural and forest products and a major exporter. Fisheries are
also important. In 1998, the state's total cash receipts from farming reached $13.2 billion. Wood
product shipments totaled $3.2 billion in 1996, and
commercial fish landings were $183 million in 1998. As
for exports, Texas ranked fourth among all 50 states, with
Texas' Agricultural Exports
the value of agricultural products leaving the state
estimated at $3 billion in 1998. These exports help boost
$ Billions
farm prices and income, while supporting jobs both on the
$4 -
farm and off the farm in food processing, storage, and
transportation.
$3.4
$3.0
$3 -
Trade Benefits
$2.5
The following key products are important to Texas, and
$2
expected to reap some of the largest export gains from
China's accession to the World Trade Organization
(WTO).
$1 -
#
Cotton-As the nation's largest cotton producer,
Texas' cotton exports worldwide were estimated at
$0
$708 million in 1998. China is the world's largest
1991
1996
1998
Source: Economic Research Service, USDA
consumer and producer of cotton, and one of the
largest overseas markets for U.S. cotton. Under its
WTO accession agreement, China will establish a tariff-rate quota (TRQ) on cotton of 743,000
metric tons, which will grow to 894,000 metric tons by 2004. Imports under the TRQ will be
charged a nominal 1-percent tariff and private traders will be permitted to handle two-thirds of
imports under the TRQ. In 1998, China imported less than 200,000 metric tons of cotton from
all countries. China's commitment to end export subsidies will reduce its price competitiveness
in other markets.
#
Beef-With the nation's largest cattle industry, Texas' live animal and red meat exports
worldwide were estimated at $693 million in 1998. China currently imports very little beef, but
income growth and rising demand from urban centers are expected to result in significantly
increased demand for imports. Under its WTO accession agreement, China will lower its tariff
from 45 percent to 12 percent on frozen beef and from 45 percent to 25 percent on chilled beef
by 2004. Tariffs on variety meats will be lowered from 20 percent to 12 percent. There will be
no quantity limits at these tariff levels. As a result of the 1999 U.S.-China bilateral agreement,
China agreed to accept all beef from the United States that is accompanied by a USDA
certificate of wholesomeness.
#
Feed Grains-Texas' feed grain and product exports worldwide were estimated at $329 million
in 1998. China's grain policies are becoming more market-oriented and its WTO accession
commitments will speed up this process, opening up real long-term opportunities for foreign
grain suppliers. China committed to a nominal 1-percent tariff on all grains imported within a
tariff-rate quota (TRQ). The TRQ on corn will be initially set at 4.5 million metric tons and
grow to 7.2 million metric tons by 2004. Private traders will be permitted to handle 25 percent
of imports under the TRQ, growing to 40 percent. In 1998, China imported less than 250,000
metric tons of corn from all countries. China's commitment to end export subsidies will reduce
its price competitiveness for corn in other markets.
#
Solid Wood Products-Texas has the seventh largest lumber industry in the nation. Spurred by
the elimination of certain tariffs on logs and lumber in the 1990's, China has emerged as the
world's third largest wood importer. U.S. value-added wood exports to China are at record
levels. Under its WTO accession agreement, China will substantially reduce its remaining tariffs
on value-added wood products by 2004. Tariffs on plywood will drop from 15 percent to 4
percent. Existing tariffs set at 18 percent on particleboard, oriented strandboard, doors,
windows, and flooring will drop to 4 percent, and fiberboard tariffs, currently ranging from 12-
18 percent, will drop to 4-7.5 percent.
OF
U.S. DEPARTMENT OF COMMERCE
COMMENCE
International Trade Administration
April 2000
STATES
OPPORTUNITIES FROM CHINA'S ACCESSION TO THE WTO
Texas
The U.S.-China Bilateral Agreement on China's accession to the WTO opens an important market to Texas's
exports, benefitting key industries and creating export and employment opportunities. The importance of exports to
China and the benefits of the Agreement for Texas and its key industries are outlined below.
State Export Profile
Tariff elimination for information technology
products including integrated circuits. Major tariff
Texas' merchandise export sales to China totaled $583
reductions for power generation equipment, special-
million in 1998-a 46 percent increase from the $399
ized machinery, medical equipment, scientific and
million sold to China in 1993.
measuring instruments, photographic equipment, air
conditioning equipment, pumps and compressors,
China ranked as Texas' 20th largest export destination
agricultural equipment, synthetic yarn, special
in 1998.
purpose vehicles, construction equipment, prefabri-
cated buildings, glass fibers, trucks, paper, food
Texas' exports to China are broadly diversified with
processing machinery, and environmental technol-
almost every major product category registering
ogy equipment.
exports to the Chinese market in 1998.
Low tariffs for most chemicals at WTO harmoniza-
Many key Texas export categories more than doubled
tion rates, including plastics, pesticides and organic
sales to China from 1993 to 1998.
chemicals, and petroleum oils.
Included in Texas' exports to China are sales from key
Elimination of import restrictions for products such
metropolitan areas: Houston ($313 million) and Dallas
as construction and medical equipment and special-
($92 million).
ized machinery.
Several Texas cities recorded rapidly increasing
The agreement will open the market for a wide range
exports to China during 1993-98, including Lubbock
of services, including telecommunications, banking,
(8,321 percent), McAllen-Edinburg-Mission (2,686
insurance, financial, professional, hotel, restaurant,
percent), and Austin-San Marcos (2,569 percent).
tourism, motion pictures, video distribution, software
entertainment distribution, periodicals distribution,
business, computer, environmental, and distribution
Sector Snapshot
and related services.
U.S. farmers no longer will have to compete with
export subsidies on China's agricultural products.
China has agreed also to eliminate sanitary and
Texas Increased Its Exports to China by
phytosanitary barriers that are not based on sound
$185 Million From 1993 to 1998
scientific evidence, such as the restrictions on meat,
poultry, and citrus. In addition, exporters will benefit
700
Texas' Merchandise Exports to China (Millions of Dollars)
from broadening the right to import and distribute
583.4
600
imported products in China and from tariff cuts on a
wide range of products including beef, raw hides, dairy
500
products, and poultry. Also, China will end its import
398.7
400
monopoly for bulk commodities and establish a large
300
low-duty tariff-rate quota for cotton and corn.
200
As a result of the Agreement, Texas's key export sectors
100
benefit from reduced tariffs in China, strong intellectual
0
property protection and improved trade rules protecting
1993
1998
U.S. industries against unfair trade practices and
Source: U.S. Department of Commerce, Exporter Location Series.
removing burdensome obstacles, including:
Texas
Opportunities from China's Accession to the WTO
Page 1
Key Industry Benefits
expo t pe fo mance o local content equi ements as a
condition for importation or investment approval.
Information Technology
China has agreed to apply tariffs uniformly and all
taxes equally to domestic and foreign power genera-
China will eliminate its duties for all information
tion equipment businesses. This will alleviate the
technology products, as defined by the WTO Informa-
uncertainty associated with China's inconsistent
tion Technology Agreement (ITA), by January 1,
application, refund, and waivers of its 17 percent
2005. These products include electronics, computers,
value added tax.
fiber optic cable, and other telecommunications
equipment. The current duties on information technol-
Heating, Ventilating, and Air Conditioning
ogy products average over 13 percent. All quotas on
Machinery (HVAC) and Large Appliances
ITA products will be eliminated at the time of China's
WTO accession. Within four years of its accession into
This category includes heaters, ventilators, air condi-
the WTO, China will eliminate its tendering require-
tioners, washers, dryers, refrigerators, and centrifuges.
ments for non-government purchases of ITA products.
China will reduce its tariffs on HVAC/large appliances
Trading and distribution rights for ITA products will
from an average of 24.3 percent to an average of 15.2
be phased in over three years. China has agreed to
percent by January 1, 2005. Quotas and licenses on air
apply tariffs uniformly and all taxes equally to domes-
conditioners will be phased out by 2002 with an initial
tic and foreign ITA businesses. This will alleviate the
quota level of $286 million. Quotas and licenses on
uncertainty associated with China's inconsistent
refrigerators will be phased out by 2001 with an initial
application, refund, and waivers of its 17 percent value
quota level of $132 million. Quotas and licenses on
added tax. China has agreed that it will not condition
washers will be phased out by 2001 with an initial
import or investment approvals on technology transfer,
quota level of $7 million. All quota levels will grow
or on conducting research and development in China.
15 percent annually until eliminated. China will
eliminate tendering requirements for non-government
Chemicals
purchases of washers. Upon accession into the WTO,
China will eliminate its tendering requirements for
This sector includes chemicals and chemical products
non-government purchases of centrifugal ventilators.
such as cosmetics, pharmaceuticals, agricultural
Trading and distribution rights for HVAC and large
chemicals, resins, and plastics. China will reduce
appliances will be phased in over three years. China
average tariffs on chemicals by more than half to an
will not apply or enforce export performance or local
average rate of 6.9 percent by January 1, 2005. All
content requirements as a condition for importation or
priority U.S. chemical exports, as well as all products
investment approval. China has agreed to apply tariffs
in the Chemical Tariff Harmonization Agreement of
uniformly and all taxes equally to domestic and
the Uruguay Round (CTHA) are included in the tariff
foreign HVAC and large appliance businesses. This
reductions. In addition, China will eliminate all quotas
will alleviate the uncertainty associated with China's
on chemical products by 2002. Trading rights will be
inconsistent application, refund, and waivers of its 17
phased in over three years from accession for most
percent value added tax.
chemicals. China will not apply or enforce export
performance or local content requirements as a condi-
Beef
tion for importation or investment approval. China has
agreed to apply tariffs uniformly and all taxes equally
China currently imports very little beef, but income
to domestic and foreign chemical product businesses.
growth and rising demand from urban centers are
This will alleviate the uncertainty associated with
expected to result in significantly increased demand
China's inconsistent application, refund, and waivers
for imports. Under its WTO accession agreement,
of its 17 percent value added tax.
China will lower its tariff from 45 percent to 12
percent on frozen beef and from 45 percent to 25
Power Generation Equipment
percent on chilled beef by 2004. Tariffs on variety
meats will be lowered from 20 percent to 12 percent.
China will reduce its tariffs on power generation
There will be no quantity limits at these tariff levels.
equipment including generators, turbines, boilers, parts
As a result of the 1999 U.S.-China Agreement on
of auxiliary plants, motors, transformers, and batteries
Agricultural Cooperation, China agreed to accept all
from an average of 13.4 percent to an average of 8.5
beef from the United States that is accompanied by a
percent by January 1, 2004. If WTO members agree to
USDA certificate of wholesomeness.
and adopt the energy sectoral initiative that originated
in APEC, China will join this initiative and eliminate
Cotton
its tariffs on these products. Trading and distribution
rights for power generation equipment will be phased
China is the world's largest consumer and producer
in over three years. Within four years of its accession
of cotton, and one of the largest overseas markets for
into the WTO, China will eliminate its tendering
U.S. cotton. Under its WTO accession agreement,
requirements for non-government purchases of power
China will establish a tariff-rate quota (TRQ) on
generation equipment. China will not apply or enforce
cotton of 743,000 metric tons, which will grow to
Page 2
Opportunities from China's Accession to the WTO
Texas
894,000 met ic tons b 2004. Impo ts unde the TRQ
al ead in effect at the time of China's accession fo
will be charged a nominal 1 percent tariff and private
U.S. companies currently operating in China.
traders will be permitted to handle two-thirds of
imports under the TRQ. In calendar year 1999, China
Environmental Services
imported 46,000 metric tons of cotton from all coun-
tries. China's commitment to end export subsidies will
For key environmental services, China will allow
reduce its price competitiveness in other markets.
foreign service suppliers to provide environmental
consultation through cross-border delivery. Other
Dairy Products
foreign environmental service providers may operate
in China through a joint venture. China has also agreed
China's dairy product consumption is rapidly increas-
to grandfather the existing level of market access
ing due to rising incomes and government promotion.
already in effect at the time of China's accession for
China's milk production is also growing, but the
U.S. companies currently operating in China.
domestic dairy sector is not expected to keep up with
the growth in demand. Under its WTO accession
Tourism Services, Including Restaurant Services
agreement, China will cut its tariffs on selected dairy
products by 2004. Specific reductions include: selected
China will allow unrestricted access to the Chinese
cheeses (from 50 percent to 12 percent); lactose (from
market for restaurant operators, including the ability to
35 percent to 10 percent); and ice cream (from 45
set up majority-owned restaurants upon accession and
percent to 19 percent). In recent years, the United
100 percent foreign-owned restaurants in three years.
States has supplied approximately one-fifth of China's
China has also agreed to grandfather the existing level
dairy imports.
of market access already in effect at the time of
China's accession for U.S. companies currently
Poultry Meat
operating in China.
With imports accounting for 12 percent of total
consumption, China is already the second leading
Trade Stories
market for U.S. poultry meat exports. Under its WTO
accession agreement, China will cut its tariff in half
Poly-Flex, Inc. (Grand Prairie), a manufacturer of
(from 20 percent to 10 percent) by 2004 for frozen
synthetic liners for landfills and irrigation canals, has
poultry meat cuts. There will be no quantity limits at
experienced a growing market in China for its product.
these tariff levels. As a result of the 1999 U.S.-China
In 1999, Poly-Flex completed installation of a geo-
Agreement on Agricultural Cooperation, China agreed
membrane liner for a private waste management
to accept all poultry meat from the United States that is
company in the city of Dalian. It is also hoping to
certified wholesome by USDA.
make a successful bid for a major World Bank-
sponsored irrigation canal project in Xinjiang prov-
Architectural and Engineering Services
ince. Poly-Flex's experience over the years in China
has led to a growing concern with transparency and
Foreign firms can establish majority-owned joint
rule of law, however. In addition, Poly-Flex products
ventures or provide cross-border services in cooperation
face a stiff 17 percent import tariff. According to Poly-
with Chinese professional organizations. China has also
Flex's vice president for international sales, William
agreed to grandfather the existing level of market access
(Trade Stories continued on page 8)
ROLE OF SMEs IN EXPORTS TO CHINA
Small & Medium-Sized Companies Account for 71 Percent
Of All Firms Exporting From Texas to China
Small and medium-sized enterprises (SMEs) are
responsible for a growing share of U.S. exports to China.
Medium
In 1997, SMEs generated 35 percent-more than one-
11%
Small
third-of all U.S. merchandise exports to China. This
60%
figure is up significantly from a 28 percent share in
1992.
The 35 percent SME share of the China market in
29%
1997 was higher than the SME share of overall U.S.
Large
merchandise exports (31 percent) in that year.
Seven of every ten firms exporting from Texas to China
in 1997 were small or medium-sized enterprises (fewer
672 companies exported merchandise from Texas to China In 1997
than 500 employees).
Definitions: small = fewer than 100 employees: medium . 100-499 employees; large a 500 or
more employees. Source: 1997 Exporter Data Base, U.S. Department of Commerce.
Texas
Opportunities from China's Accession to the WTO
Page 3
Overview of China WTO Accession Benefits to the United States
The Agreement is a one-way deal that will open
ensure that quota-holders are not impeded in utilizing
China's now largely closed market to U.S. exports. By
their allocations.
enacting Permanent Normal Trade Relations (PNTR),
the United States is merely maintaining the market
China has committed not to use export subsidies for
access policies it already applies to China. If Congress
agricultural products when it joins the WTO. This
enacts PNTR, the agreement is expected to provide a
commitment is particularly useful for China's potential
substantial boost for U.S. exports. If Congress fails to
exports of corn, rice, and cotton, which in the past have
pass PNTR, American companies, workers and farmers
displaced U.S. product from third-country markets.
will be denied the great bulk of benefits of the agree-
ment the United States already negotiated-including
Bilaterally, China agreed to the terms for removal of
broad new market access for critical services such as
scientifically unjustified restrictions on importation of
telecommunications and distribution, strong import
U.S. wheat and other grains, citrus and meat.
protections, and the right to enforce China's commit-
ments through WTO dispute settlement. Failure to
Foreign exchange balancing requirements-which
enact PNTR means fewer U.S. exports to China. U.S.
link a company's level of imports to its level of
competitors in Europe, Asia and elsewhere will gain
exports-will be eliminated upon accession. This
market share at the expense of U.S. exporters as these
allows U.S. companies to make market-driven deci-
countries will enjoy the full benefits of China's market
sions about what to import and export instead of
opening WTO commitments.
decisions driven by the Chinese government.
Deep cuts for tariffs in manufactured products
Local currency banking will be allowed starting with
sectors¹ affecting most U.S. exports-averaging an
foreign clients upon accession, followed by Chinese
across-the-board 60 percent cut in tariffs for industrial
enterprises two years after accession and Chinese
products. Important gains include a 62.5 percent cut in
individuals five years after accession. Foreign currency
tariffs for pulp, paper and printed material and elimina-
business will be allowed without geographic restric-
tion of tariffs for information technology products
tions upon accession. China currently limits foreign
including electronics, telecommunications equipment,
banks to foreign currency business in selected cities.
and computer equipment.
Foreign securities firms may currently only trade in a
Tariff bindings for every sector. U.S. industries gain
limited number of stocks designated for foreign inves-
greater certainty of access with China's commitment
tors and then only via shared commissions. Upon
not to raise tariffs on any products above the negoti-
accession, China will allow foreign firms to trade these
ated ceiling (bound) rates.
shares with no Chinese intermediary. By three years
after accession, foreign entities may establish securities
Huge reduction in paperwork costs-a boon to
joint ventures (JVs) with a minority equity share for
smaller exporters. Simplification, harmonization of
foreign investors to underwrite all shares and corporate
customs procedures and licensing will slash costs of
and government debt, and trade all these securities
processing export orders.
except those equity shares restricted to Chinese inves-
tors. Also upon accession, foreign entities may establish
Elimination of quotas and non-automatic licenses
minority JVs to manage assets of all sorts.
for all manufactured products by year 2005. Only a
handful of quotas will remain after year 2003. While
Insurance licenses will be granted on a prudential
quotas are being phased out, the quota level will be
basis, without numerical restrictions or discretionary
higher than our current export levels and will increase
economic needs tests. China currently only allows
by 15 percent each year until the quota is eliminated.
selected foreign companies (including four U.S.
companies) to operate in China on a limited basis in
By joining the WTO, China is committing to establish
only two cities.
a tariff-only import regime for agricultural products;
all non-tariff barriers will be eliminated. Any other
Majority equity share for foreign non-life insurance
measure, such as inspection, testing, and domestic
entities will be permitted upon China's accession.
taxes, must be applied in a manner that is consistent
Wholly owned subsidiaries will be allowed two years
with WTO rules requiring a transparent and nondis-
after accession. Life insurance joint ventures will be
criminatory system. All health-related restrictions must
permitted at 50 percent equity share upon accession.
be based on sound science.
Easier access to and more control of distribution
China also committed to implementing agriculture
systems in China allowing U.S. companies to operate
tariff-rate quotas (TRQs) on economic rather than
commission agents' services, franchising services,
political criteria. These commitments are designed to
wholesaling, retailing and direct sales of their own
ensure a transparent and consistent system for allocat-
products in three years post accession for almost all
ing shares of the TRQ to end users and provisions to
products.
Page 4
Opportunities from China's Accession to the WTO
Texas
Foreign companies will also be permitted greater
Greatly improved enforcement of China's commi -
control and access to other services related to
ments through the WTO dispute settlement process. The
distribution, including maintenance and repair, rental
United States will now have allies in other WTO mem-
and leasing, advertising, technical testing and freight
bers to address violations of international trade norms.
inspection, packaging, courier, storage and warehous-
ing, and freight forwarding agency services.
Current U.S. practice of using a special, non-market
economy methodology when calculating dumping
The right to trade (import and export) will be permit-
margins in antidumping investigations involving
ted for almost all products within three years of
imports from China will remain in effect for 15 years.
accession. Currently, the right to trade is strictly
Chinese industries will continue to have the burden of
limited; only companies that receive specific authori-
proving to the U.S. government that market economy
zation or who import goods to be used in production
conditions prevail in their industry to avoid application
have such rights.
of this methodology.
Telecommunications services are currently not permit-
China will apply its trade-related laws uniformly
ted to be supplied by foreigners in China. However,
throughout all of China including land and seaports.
with its accession, China has agreed to allow foreign
participation for both value-added and basic services.
China will be required to apply equally the value-
China has also agreed to undertake all the obligations
added tax (currently at 17 percent for most products) to
contained in the WTO Reference Paper on pro-competi-
domestic goods as well as imports under the WTO
tive regulatory principles. Telecom services which
national treatment provisions.
foreigners can supply under the Agreement include e-
mail, voice mail, online information and database
The United States will have access to a product-
retrieval, facsimile, paging, cellular, and internet
specific safeguard mechanism for 12 years which will
services via any technology including satellites.
allow the U.S. to address more easily any rapidly
increasing Chinese imports in a targeted fashion in
Professional service providers will now be permitted
cases of actual or threatened market disruption to a
to operate in China and receive national treatment for
U.S. industry.
accounting, auditing, bookkeeping, management
consulting, legal, tax consulting, architectural, engi-
China has agreed to incorporate into the WTO a
neering, and computer services.
textile-specific safeguard drawn from the U.S.-China
Bilateral Textile Agreement.
The elimination of local content requirements will
result in better access for U.S. exports and eliminate
unfair incentives or requirements to use domestic goods.
'For more information on tariff reductions, see tariff
summary table.
U.S. exports and investments will be free from
government-imposed conditions such as technology
transfer, research and development in China, and
offsets. Upon China's accession, such conditions may
ADDITIONAL INFORMATION
only be negotiated between the parties to a contract
AND ASSISTANCE
and not imposed or enforced by the government.
The reports for each of the 50 states are available at
U.S. companies can sell their products in China and
www.chinapntr.gov, as well as supplemental information
not be forced to export a certain percentage back to
on the benefits of China's membership in the World
the United States or elsewhere. This eliminates the
Trade Organization for U.S. industry and agriculture.
non-market incentive to use China as an export
Additional information on agricultural products is
platform.
available from www.fas.usda.gov and speeches and
testimony are provided on www.ustr.gov.
State-owned and state-invested enterprises will be
For counseling and assistance regarding exporting to
required to buy and sell based on commercial consid-
China, call the Trade Information Center at 1-800-USA
erations, making the purchase process more market-
TRAD(E) or the Agriculture FAS Trade Assistance
driven and transparent for U.S. companies and will
Office at 202-720-7420.
provide new sales opportunities to U.S. firms.
To discuss problems you are experiencing in exporting
to China or a Chinese trade barrier you are encountering
China has agreed to establish judicial review proce-
that is limiting your ability to export, please contact the
dures for the prompt review of all administrative
Commerce Department's Trade Compliance Center. The
actions relating to the implementation of laws, regula-
fastest means to contact the Trade Compliance Center is
tions, judicial decisions and administrative rulings
the internet at http://www.mac.doc.gov/tcc. It can be
related to its WTO obligations. The tribunals will be
reached also via e-mail ([email protected]), fax (202-482-
independent of the agencies entrusted with administra-
6097), or phone (202-482-1191).
tive enforcement.
Texas
Opportunities from China's Accession to the WTO
Page 5
Key Industry Tariff Reductions Resulting from the Agreement
Product
Average
Average
Percent
Product
Average
Average
Percent
Description
Base
End
Change
Description
Base
End
Change
Rate¹
Rate²
Rate¹
Rate²
Agriculture equipment
11.5
5.7
50.4
Nonferrous metals
9.3
6.6
29.0
23.4
10.0
57.2
Aluminum
14.2
Auto parts
9.4
34.0
Beer
70.0
0
100.0
Oil and fuel
7.4
4.9
33.7
Paper and printing
Building materials
16.4
14.1
14.0
machinery
14.3
10.8
24.5
Glass fibers
16.0
7.0
56.2
Photographic
Chemicals
11.1
6.9
37.8
equipment
19.4
14.7
24.2
Cosmetics
29.3
11.9
59.3
Fertilizers
5.0
4.0
20.0
Power generation
Pharmaceuticals
9.6
4.2
56.2
equipment
Soda ash
9.0
5.5
38.8
including batteries
13.4
8.5
36.6
Civil aircraft
14.7
8.1
44.9
Precious metals
13.8
11.0
20.0
Compressors and pumps
15.5
9.0
41.9
Prefabricated buildings
22.0
10.0
54.5
Construction equipment
13.6
6.3
53.7
Pulp, paper and printed
material
14.4
5.4
62.5
Distilled spirits
60.8
34.2
44.0
Railway equipment
5.7
4.4
22.8
Engines
12.4
7.9
36.2
Recorded media
10.0
6.8
32.0
Environmental tech-
nologies equipment
13.4
6.9
48.5
Rubber products
14.5
11.4
21.4
Fish
20.5
11.4
44.3
Rubber- and plastic-
working machinery
15.7
7.7
50.9
Food processing
machinery
13.5
9.8
27.4
Scientific and measuring
equipment
12.1
6.1
49.6
Footwear
25.0
20.8
16.8
Small household
Footwear machinery
11.5
8.4
26.9
appliances
31.2
24.7
20.8
Furniture
22.0
0
100.0
Special purpose vehicles
17.4
12.4
28.7
Heavy machinery
14.5
7.8
46.2
Specialized machinery
14.0
8.4
40.0
Husbandry machinery
10.3
7.3
29.1
Steel
10.3
6.1
40.7
HVAC3
24.3
15.2
37.4
Telecommunications
Information technology
equipment not
covered under ITA4
13.5
0
100.0
covered under ITA4
24.0
17.2
28.3
Laboratory machinery
12.9
10.2
20.9
Optical fibers
13.5
2.5
81.4
Leather
18.7
16.2
13.3
Textiles and apparel
27.1
11.7
56.8
Machinery parts
8.1
4.7
41.9
Synthetic yarn
18.1
5.0
72.3
Medical equipment
9.9
4.4
55.5
Toys
23.0
0
100.0
Metalworking machinery
15.1
11.4
24.5
Trailers
13.8
10.0
27.5
Molds
10.2
7.3
28.4
Trucks
31.5
18.5
41.2
Motorcycles
58.3
41.7
28.5
Vending machines
23.0
13.6
40.8
Motor vehicles
75.9
23.6
68.9
Welding machines
14.8
9.8
33.7
Passenger motor
Wood
12.5
4.6
63.2
vehicles
84.1
25.0
70.0
'Average 1997-98 applied duties for each product category. Reductions will be made from the 1997-98 base rate for each
tariff line. Most cuts will be made in equal annual increments.
2Average end rate for each product category which will be attained once China phases in all duty reductions agreed bilaterally
with the United States. All reductions will be completed by January I, 2008, with 70 percent of all reductions on industrial goods
achieved by 2003 and 98 percent of all industrial duty reductions by 2005. China's agreements with other countries may result in
lower rates and shorter staging.
3Includes heaters, ventilators, air conditioners, washers, refrigerators, centrifuges/dryers.
"WTO Information Technology Agreement (ITA), implemented in July 1997.
Page 6
Opportunities from China's Accession to the WTO
Texas
Key Agricultural Tariff Reductions Resulting from the Agreement
Product
Base Rate
End
Percent
Product
Base Rate
End
Percen
Description
1997-98¹
Rate²
Change
Description
1997-98'
Rate²
Change
Beef
45
12
73.3
Pecans
35
10
71.4
Pork
20
12
40.0
Pistachios
35
10
71.4
Poultry
20
10
50.0
Cheese
50
12
76.0
Oranges
40
12
70.0
Lactose
35
10
71.4
Grapefruit
40
12
70.0
Ice cream
45
19
57.8
Lemons
40
12
70.0
Yogurt
50
10
80.0
Apples
30
10
66.7
Hop cone pellets
30
10
66.7
Cherries
30
10
66.7
Hop extracts
20
10
50.0
Grapes
40
13
67.5
Ginseng
40
10
75.0
Pears
30
10
66.7
Soybean flour
40
15
62.5
Peaches
30
10
66.7
Potatoes: Frozen
Canned peaches
30
10
66.7
hash browns
25
13
48.0
Raisins
40
10
75.0
Potato flour, meal and
flakes
30
15
50.0
Orange/grapefruit juices
35
15
57.1
Potato chips
25
15
40.0
Celery
13
10
23.1
Yellow grease
40
10
75.0
Lettuce
16
10
37.5
Soup
45
15
66.7
Cauliflower
13
10
23.1
Pet food
30
15
50.0
Broccoli
13
10
23.1
Wine
65
20
69.2
Frozen mixed vegetables
13
10
23.1
Protein concentrates
45
10
77.8
Frozen sweet corn
13
10
23.1
Water-based drinks with
Tomato paste
25
20
20.0
sugar
65
20
69.2
Tomato ketchup
30
15
50.0
Other water-based drinks
50
35
30.0
Almonds
30
10
66.7
Cigarettes
65
25
61.5
Hazelnuts
35
10
71.4
Tobacco
40
10
75.0
'Base rate: 1998 current applied duty from which reductions will be made.
End rate: End rate that will be attained by January 1, 2004, when China finishes phasing in all agricultural duty reductions
agreed bilaterally with the United States. China's agreements with other countries may result in lower rates and shorter staging for
some products.
Key Agricultural Tariff Rate Quotas (TRQ)
Product
Initial TRQ
2004 TRQ
Private Share
1999 Chinese Impor s³
Description
(million metric tons)
(million metric tons)
(percent)
(metric tons)
Wheat
7.3
9.6
10
448,000
Corn
4.5
7.2
25 growing to 40
70,000
Rice
168,000
Short/medium grain
1.3
2.6
50
Long grain
1.3
2.6
10
Cotton
0.743
0.9
67
46,000
Soybean oil⁴
1.71
3.2
50 growing to 90
804,000
3Import data from China Customs Administration, on a calendar year basis.
"TRQ quantity and private share will be phased in by 2005. On January 1, 2006, China will eliminate the TRQ and state trading
for soybean oil, with nothing but a 9 percent duty remaining.
Texas
Opportunities from China's Accession to the WTO
Page 7
(Trade Stories continued from page 3)
Neal, bringing China into the WTO would be a step in
the right direction for his company's prospects for
increased exports to China.
GSE Lining Technology, Inc. (Houston) is a manu-
facturer of geosynthetic lining products for solid waste
landfills, mining operations, industrial/wastewater
treatment facilities, agriculture, and other applications.
GSE Lining Technology earned approximately $2.6
million on its last two projects in China and is cur-
rently negotiating contracts to do work on six landfill
operations. GSE Lining Technology's Mark Harris
believes that this is just the "tip of the iceberg" and
that there will be many more opportunities for the
company in China.
Page 8
Opportunities from China's Accession to the WTO
Texas
MEMORANDUM FOR GENE SPERLING
April 7, 2000
FROM:
Malcolm Lee
Timothy Punke
RE:
April 8 Remarks to NAM
You are scheduled to make remarks to the NAM Board Meeting on Saturday morning, April 8, at the
Turnberry Island Resort. They would like you to speak to them about the politics of the China deal, as
well as what additional steps the business community can take to be helpful.
This will be a group of 100-125 CEOs and senior business leaders. 10,000 of NAMs 14,000
companies are small or medium sized businesses. The remaining third are large companies like United
Technologies or FMC. NAM has divided up districts with BRT and the Chamber and is organizing
factory visits for Members of Congress in 23 key districts. Jasinowski is stressing to his members the
need for the CEOs to communicate to their employees and suppliers the importance of this vote.
Your remarks to them will be open press. They have suggested 15-20 minutes of remarks and 10-20
minutes of Q&A.
Contact Person:
Howard Lewis, 202-637-3000; Joni Hodgson 202-637-3065.
In Florida: 305 936-2910 936-2911
Former Commerce Asst. Sec. Frank Vargo is new Exec. VP Int'l for NAM, and
is there and can help you with anything.
Approach. Since this will be open press, suggest you briefly state case for why PNTR is
overwhelmingly in our national interest, with a focus on benefits to small and medium sized
companies, and dispell some myths. You need to emphasize the importance of educating their
employees and suppliers. You will likely get questions about the politics of the PNTR fight: whether
support is eroding, and whether we worried about a repeat of Seattle in Washington in the coming
week, what we are negotiating with Congress.
Current Background Information
AFL-CIO campaign: AFL-CIO began their ad campaign this week. Their ads are hitting on all of
the usual points -- labor, environment, China's failure to comply with trade agreements, etc.
Demonstrations will begin in Washington this Sunday -- and will take place all week.
President's Speech on Monday: The President spoke in California this week on China PNTR, and
is meeting with members of Congress constantly. He announced 2 letters of support this week --
one from 43 governors and one from about 200 high-tech CEOs. Also announced that Zoe Lofgren
(D-CA), who had not previously supported Normal Trade Relations for China, will now support
PNTR. Secretary Daley and Secretary Glickman will be leading congressional delegations to
Congress next week. As you know, last week 19 Members who had previously voted for annual
NTR sent a letter to the President announcing their opposition to PNTR.
Date for Vote: Hastert announced Wednesday the date for a vote -- the week of May 22.
EU-China Negotiations: expected to resume in Brussels in a few weeks.
Berger's Trip to China. Berger had a constructive trip to China. The Chinese expressed their
strong views, and we expressed ours -- but we do not have reason to believe that there will be a
flare-up over Taiwan prior to Chen's inauguration in mid-May.
NAM
FRAMEWORK FOR SPERLING REMARKS
ACKNOWLEDGEMENTS
NAM President Jerry Jasinowski and NAM Board Chairman James Keyes (Johnson Controls Inc
make auto parts).
IMPORTANT VOTE
One of the most important votes that this Congress will make, certainly this year or any year. Vote
that will impact every single American, and shape our future.
ALLOUT EFFORT
Hastert announced Wednesday the date for a vote -- the week of May 22.
The President spoke in California this week on China PNTR, and is meeting with members of
Congress constantly.
President announced 2 letters of support this week -- one from 43 governors and one from about
200 high-tech CEOs.
Also announced that Zoe Lofgren (D-CA), who had not previously supported Normal Trade
Relations for China, will now support PNTR.
Secretary Daley and Secretary Glickman will be leading congressional delegations to Congress
next week.
Cabinet both working Congress and traveling country to make clear why PNTR is overwhelmingly
in our national interest.
CORECTING THE MYTHS
One-Way Deal: As the President said on Monday, this vote is on an agreement "that lowers no
American Trade barriers, lower no American tariffs, grants no greater access" to our market.
This is not NAFTA. China's access to our market will not change. We give up nothing. But
tariffs on our products will go down by half or more on every product we export.
We Are Not Voting on Whether China Joins the WTO: A "No" vote on PNTR does not keep
China out of the WTO.
China will complete its bilateral agreements - and it will join the WTO regardless of what
Congress does.
Voting no on PNTR does not punish China - it punishes American workers, farmers, and
companies.
If Congress votes no, we lose the strong market opening, import protection and enforcement
rights we negotiated, while our competitors in Europe, Australia, Asia, and elsewhere will
enjoy them all.
Some say, "We can wait." We can't. Do you really think that American exporters and
companies will not be at a disadvantage if we arrive after our competitors have already
established a foothold?
Take the example of China's exploding telecom and Internet market - a sector where US firms
lead the world. In China last year, Internet subscribers quadrupled from 2 million to 9 million.,
This year that number is expected to increase to 20-25 million. Can we afford to be left behind
- not just from an economic perspective - but in helping to shape the way Chinese receive
information?
The Chinese Market Is Increasingly Important to U.S. Small and Medium Sized Businesses.
A dominant and growing share of U.S. exporters to China are SMEs.
Eighty-two percent of all U.S. exporters to China in 1997 were SMEs. SMEs generated over
35% of total U.S. merchandise exports to China in 1997.
The number of small firms exporting to China has risen at a rapid rate. From 1992 to 1997 the
number of SMEs exporting to China surged by 141 percent -- compared to an 81 percent rise in
the number of large-company exporters.
The value of SME exports to China more than doubled (107 percent) between 1992 and 1997,
increasing by nearly $2 billion. That made China the third largest growth market for SMEs
globally over this period.
Overall Gains In Exports To China Will Benefit Small Businesses Supplying U.S. Companies.
PNTR means more exports to China. Many small businesses supply products and services to
larger companies that then export to China.
Small and Medium Sized Businesses Will Benefit In Many Ways From China's
Implementation Of Its WTO Commitments.
The significant reduction of tariffs will help U.S. SMEs exporting to China compete on a more
level playing field with companies located there.
Paperwork costs for SMEs will be reduced significantly as customs and licensing procedures
will be simplified and made uniform throughout China.
Under the trading rights provisions, U.S. exporters will no longer be required to use Chinese
Government- approved "middlemen" to sell their products in China. They will be able to sell
U.S.-made products directly to customers in China - which will mean a significant decrease in
export costs.
Easier access to and more control over distribution systems in China will allow U.S. companies
to oversee commission agents' services, franchising services, transportation, wholesaling,
repairs, and retailing of their products. One-third of all U.S. SME exporters to China could
benefit from this provision as these companies are involved in wholesaling.
U.S. exports will receive uniform treatment with regard to tariffs and the same treatment as
Chinese firms for taxes.
This streamlining of China's requirements for trading in China is particularly valuable to
SMEs, which typically have fewer resources than larger businesses to deal with often complex
and costly regulations.
China will be required to conform its standards and inspection procedures to WTO norms,
eliminating excessive testing requirements and other barriers that are especially
disadvantageous for SMEs.
Stronger enforcement of intellectual property rights through the WTO will benefit U.S.
companies making "cutting-edge" products that involve unique technologies or processes.
Small Businesses Also Will Benefit From Application Of WTO Rules To China. Membership
in the WTO will support the further development of the rule of law in China. This will aid
American SMEs in several ways:
Greater transparency, impartial dispute settlement, and other features of China's WTO
membership will benefit SMEs in particular -- in view of their limited resources and the
particular challenges they face in dealing with China's often complex legal and regulatory
policies.
Through WTO dispute settlement, we would gain a stronger means for ensuring Chinese
compliance with its obligations. China has agreed to subject its decisions to impartial review,
and ultimately imposition of sanctions if necessary -- and China will not be able to block panel
decisions. If China loses a dispute, it will have to change the offending practice, provide
compensation, or be subject to denial of access to our market in an amount proportional to the
harm it causes. The U.S. has been the most frequent user of the WTO dispute settlement
mechanism, obtaining favorable results so far on 23 of the 25 complaints that we have initiated
and that have been acted upon.
In addition, the President's new enforcement/compliance budget initiative includes provisions
focused on the special needs of SMEs. For example, it will provide new resources to help
smaller businesses assess their options for using U.S. trade laws to respond to WTO-
inconsistent trade practices. The additional resources for monitoring China's compliance with
its obligations will also help SMEs address any potential market access barriers.
This Deal Increases Protections Against Unfair Trade: Benefits American workers and farmers
because of increased market access - but also:
Enhanced "China-specific" safeguard
Ability to apply special methodology if China's companies dump their products - guaranteed
for 15 years.
Strong measures to eliminate forced technology transfer and local content requirements that can
drain American jobs and technology.
We Don't have to Wait for the EU:
Hastert set a vote for late May.
Congress need not wait to give the President authority to grant PNTR.
Other bilateral negotiations can only strengthen the strong deal we negotiated.
President's legislation requires him to certify that the terms are "at least equivalent" to those we
negotiated in November.
We Need PNTR:
Cannot retain annual NTR and achieve full benefits of the agreement. Moreover, this deal will
lock in economic reform, advance rule of law and move China in direction of greater openness.
Will remove Chinese Government from vast areas of economic life, promoting economic
freedomes.
WORKING WITH CONGRESS
Congress has a legitimate oversight role on human rights and foreign policy. There is interest on
both sides of the aisle, and within the Administration, in strong enforcement of China's WTO
commitments and in continuing to monitor and assess China's human rights practices and
continuing to voice our very real concerns.
We are consulting closely with members of Congress, listening to their thoughts and concerns, and
are reviewing constructive ideas that advance our national interents and concerns and that broaden
the bipartisan consensus for PNTR.
COMPANIES MUST BE VOCAL: ENTERING CRITICAL PERIOD
Vote has been set. Entering critical period.
Essential to educate your employees and suppliers about benefits of trade generally, and PNTR
specifically.
In next 10 days, opponents of this agreement will be out in force. Members will be home for
recess, and under pressure.
Supports have to make their views known. This is a one way deal that we would be fools to walk
away from.
BACKGROUND FACTS AND STATISTICS
UNPRECEDENTED NEW MARKET ACCESS
The U.S.-China WTO Accession Agreement Gives American Companies Workers And
Farmers Unprecedented Access To China's Market. China maintains extensive barriers to
imports of American products and restricts access to U.S. services. The one-way Agreement
negotiated in November requires China to open its market, while we are required only to maintain
the market access policies we already apply to China by granting PNTR. Denying China PNTR
will cost American exports and the jobs they support, as our competitors in Europe, Asia, and
elsewhere capture Chinese markets that we fought to open. Under the strong, enforceable market
opening Agreement negotiated by the United States:
China will cut agricultural tariffs by more than half priority products. On U.S. priority
agricultural products, tariffs will drop from an average of 31% to 14% by January 2004, with
sharper drops for beef, poultry, cheese, pork, and other commodities. For the first time, our
producers will be able to export and distribute directly inside China for every agricultural product
of export interest to the United States without going through state-trading enterprises or
middlemen. USDA estimates that China's WTO accession would result in $2 billion annually in
additional U.S. exports by 2005.
China will eliminate agriculture export subsidies. China has committed not to use export
subsidies for agricultural products when it joins the WTO. This commitment would level the
playing field in third-country markets for U.S. exports of corn, rice, and cotton -- which in the
past have been displaced by unfairly traded Chinese exports.
China will eliminate scientifically unjustified restrictions on U.S. agricultural products.
China has committed to fully abide by the terms of the WTO Agreement on Sanitary and
Phytosanitary Measures, which requires that all animal, plant, and human health import
requirements be based on sound science -- not political agendas or protectionist concerns.
Additionally, China and the United States agreed bilaterally on the terms for the removal of
scientifically unjustified restrictions on imports of U.S. wheat, citrus, and meat.
China will sharply reduce industrial tariffs. Industrial tariffs on U.S. products will fall from an
average of 24.6% in 1997 to an average of 9.4% by 2005. Considering that manufactured goods
comprise a large proportion of American exports, the drop in Chinese tariffs is good news for our
workers in high-tech and basic industries.
China will eliminate tariffs and quotas on information technology products by 2005. Chinese
tariffs on information technology products currently average 13%. Upon accession to the WTO,
China will adopt the Information Technology Agreement, which eliminates import duties on these
products. China will eliminate two-thirds of its tariffs by 2003 and the remaining one-third by
January 1, 2005. China will eliminate quotas immediately upon accession.
China will allow new rights to import and distribute. At present, China severely restricts
trading rights (the right to import and export) and the ability to own and operate distribution
networks -- both essential to move goods and compete effectively in any market. China will phase
in trading rights and distribution services for almost all products over 3 years, and also open up
sectors related to distribution services, such as repair and maintenance, warehousing, trucking, and
air courier services. This will allow our manufacturers to export to China from here at home,
and to have their own distribution network in China, rather than being forced to set up factories
there to sell products through Chinese partners.
BENEFITS TO SMALL AND MEDIUM SIZE BUSINESSES
THE U.S. CHINAWTO ACCESSION DEAL:
BENEFITS FOR SMALL- AND MEDIUM-SIZED OMPANIES
April 6, 2000
PNTR Means More U.S. Exports to China: China's entry into the WTO will dramatically reduce market
access barriers currently imposed on U.S. exports of goods and services, including those exported by small- and
medium-sized enterprises (SMEs - companies with 500 or fewer employees) and provides a means to ensure
China's compliance with its commitments. But U.S. companies, farmers and workers will be denied the full
market access and enforcement benefits of China's commitments unless Congress enacts permanent Normal
Trade Relations (PNTR) for China.
The Chinese Market Is Increasingly Important to U.S. Small Businesses. A dominant and growing
share of U.S. exporters to China are SMEs.
Eighty-two percent of all U.S. exporters to China in 1997 were SMEs. SMEs generated over 35%
of total U.S. merchandise exports to China in 1997.
The number of small firms exporting to China has risen at a rapid rate. From 1992 to 1997 the
number of SMEs exporting to China surged by 141 percent -- compared to an 81 percent rise in the
number of large-company exporters.
The value of SME exports to China more than doubled (107 percent) between 1992 and 1997,
increasing by nearly $2 billion. China made China the third largest growth market for SMEs
globally over this period.
Small Businesses Will Benefit In Many Ways From China's Implementation Of Its WTO
Commitments.
The significant reduction of tariffs will help U.S. SMEs exporting to China compete on a more
level playing field with companies located there.
Paperwork costs for SMEs will be reduced significantly as customs and licensing procedures will
be simplified and made uniform throughout China.
Under the trading rights provisions, U.S. exporters will no longer be required to use Chinese
Government- approved "middlemen" to sell their products in China. They will be able to sell U.S.-
made products directly to customers in China - which will mean a significant decrease in export
costs.
Easier access to and more control over distribution systems in China will allow U.S. companies to
oversee commission agents' services, franchising services, transportation, wholesaling, repairs, and
retailing of their products. One-third of all U.S. SME exporters to China could benefit from this
provision as these companies are involved in wholesaling.
U.S. exports will receive uniform treatment with regard to tariffs and the same treatment as
Chinese firms for taxes.
This streamlining of China's requirements for trading in China is particularly valuable to SMEs,
which typically have fewer resources than larger businesses to deal with often complex and costly
regulations.
China will be required to conform its standards and inspection procedures to WTO norms,
eliminating excessive testing requirements and other barriers that are especially disadvantageous
for SMEs.
Stronger enforcement of intellectual property rights through the WTO will benefit U.S. companies
making "cutting-edge" products that involve unique technologies or processes.
Small Businesses Also Will Benefit From Application Of WTO Rules To China. Membership in
the WTO will support the further development of the rule of law in China. This will aid American
SMEs in several ways:
Greater transparency, impartial dispute settlement, and other features of China's WTO membership
will benefit SMEs in particular -- in view of their limited resources and the particular challenges
they face in dealing with China's often complex legal and regulatory policies.
Through WTO dispute settlement, we would gain a stronger means for ensuring Chinese
compliance with its obligations. China has agreed to subject its decisions to impartial review, and
ultimately imposition of sanctions if necessary -- and China will not be able to block panel
decisions. If China loses a dispute, it will have to change the offending practice, provide
compensation, or be subject to denial of access to our market in an amount proportional to the harm
it causes. The U.S. has been the most frequent user of the WTO dispute settlement mechanism,
obtaining favorable results so far on 23 of the 25 complaints that we have initiated and that have
been acted upon.
In addition, the President's new enforcement/compliance budget initiative includes provisions
focused on the special needs of SMEs. For example, it will provide new resources to help smaller
businesses assess their options for using U.S. trade laws to respond to WTO-inconsistent trade
practices. The additional resources for monitoring China's compliance with its obligations will
also help SMEs address any potential market access barriers.
Overall Gains In Exports To China Will Benefit Small Businesses Supplying U.S. Companies.
PNTR means more exports to China. Many small businesses supply products and services to larger
companies that then export to China. For example, a majority of Boeing's suppliers are small
businesses. Boeing purchased over $30 billion worth of materials in 1999 from more than 28,000 U.S.
suppliers located in every state. These suppliers employ about 200,000 workers. Boeing's cumulative
sales to China have totaled $19 billion and the company forecasts a market worth $120 billion over the
next 20 years. A more open Chinese market thus will help support jobs for thousands of workers at
SMEs and other companies across the United States -- including many that do not export directly to
China.
This Is A One-Way Deal In Which China Has Agreed To Open Its Market While The United
States Simply Maintains The Market Access Policies We Already Have. If Congress enacts
PNTR, there will be more exports to China of products made in the United States by American
workers, farmers, SMEs and other businesses. If Congress does not grant PNTR, our
competitors will enjoy the full market access and enforcement rights in China that we will be
denied.
FAIR TRADE AND WORKER PROTECTIONS
The Agreement Gives American Workers And Farmers New Leverage To Ensure Fair Trade
And To Protect Against Import Surges, Unfair Pricing, And Abusive Investment Practices.
In addition to opening China's markets to more exports made in the U.S. by American workers and
farmers, this Agreement strengthens our ability to ensure fair trade and to protect American
farmers and workers from import surges, unfair pricing, and abusive investment practices such as
offsets and forced technology transfer. Prior to the negotiations, Democrats and Republicans in
Congress raised legitimate concerns about the importance of safeguards against unfair competition.
As a result, no agreement on WTO accession has ever contained stronger measures to strengthen
guarantees of fair trade and to address practices that distort trade and investment.
The Agreement's China-specific safeguard improves our ability to respond to import
surges. China has agreed to a 12-year country-specific import safeguard mechanism that will
provide stronger and more targeted relief than that provided under our current Section 201 law.
This ensures that the U.S. can take effective action in case of increased imports of a particular
product from China that cause or threaten to cause market disruption in the United States. This
applies to all industries, permits us to act based on a lower showing of injury than Section 201,
and permits us to act specifically against imports from China.
China has agreed to prohibitions on practices that can cost Americans jobs and
technology. China will no longer require U.S. companies to transfer their technology in order
to export or invest in China. This will better protect U.S. competitiveness and the results of
U.S. research and development. In addition, China will no longer require U.S. manufacturers
to export as a condition for importing inputs, to use Chinese-made parts for products sold in
China, or to balance the value of their exports and imports, so as to prevent a net loss in foreign
exchange. If existing contracts contain such provisions, China has committed not to enforce
those contract requirements. In addition, China will not condition import licenses or
investment approval on performance requirements, including offset and technology transfer
requirements, or deny approval of imports or investment because there is a competing Chinese
producer. This Agreement will make it significantly easier for American companies to export
to China from the U.S., rather than having to set up in China to sell products there.
China's commitments will be enforceable through WTO dispute settlement for the first
time. In no previous trade agreement has China agreed to subject its decisions to impartial
review, and ultimately imposition of sanctions if necessary -- and China will not be able to
block panel decisions. If China loses a dispute, it will have to change the offending practice,
provide compensation, or be subject to denial of access to our market in an amount proportional
to the harm it causes.
The United States maintains the right to use the full range of American trade laws. These
include Special 301, Section 301, Section 201, and our antidumping laws, all of which continue
to be effectively used to advance U.S. interests in a WTO-consistent manner.
The U.S. will maintain its ability to protect its important interests. Strong provisions in the
WTO rules allow the U.S. -- even when dealing with a country enjoying NTR status -- to
continue to block imports of goods made with prison labor, to maintain our export control
policies, to use our trade laws, and to withdraw benefits, including NTR, in a national security
emergency. And Congress can, at any time, choose to revoke PNTR, if circumstances warrant
and Congress is willing to forego WTO benefits.
ENFORCEMENT
The United States Will Monitor Vigilantly And Enforce Aggressively. We are already
preparing for an increased monitoring and enforcement effort through President Clinton's request
for $22 million in new enforcement and compliance resources for USTR, the Commerce
Department, USDA, and the State Department. The President is requesting resources for the
largest monitoring and enforcement effort for any agreement ever, covering China's obligations in
the WTO and strong enforcement of our trade laws.
Tripling resources for China compliance monitoring at the Department of Commerce:
The President's new initiative would triple resources dedicated to China trade compliance --
including administration of our unfair trade laws. Commerce would more than double the
number of compliance officers in Washington devoted to China to ensure effective enforcement
of China's WTO accession commitments and other bilateral trade agreements.
Seventy-Five Percent Increase in China Enforcement Personnel at USTR: The additional
resources for the U.S. Trade Representative would strengthen its ability to ensure that the terms
of our agreements are fulfilled. This initiative would create new positions in four areas of
expertise -- legal, economic, geographic, and sectoral -- to be devoted to negotiating,
monitoring, and enforcing trade agreements, and would significantly increase staff dedicated to
China.
Monitoring compliance overseas: The new Commerce/State Overseas Compliance Program
provides for trade experts to monitor compliance with international trade obligations and
support enforcement of U.S. trade laws, such as those involving market access issues,
subsidies, dumping, and other unfair trade practices. By strengthening our capacity to gather
information "on the ground" in foreign countries, this initiative would help American
businesses make the most of market access opportunities and facilitate the investigation of
trade agreement violations.
Increased enforcement for American agriculture: The President's budget calls for providing
additional resources to the U.S. Department of Agriculture to bolster its legal and technical
expertise in areas covered by trade agreements and U.S. trade law. USDA monitors
implementation of the WTO agreement's agricultural trade liberalization provisions and works
with USTR to ensure compliance.
DEFICIT AND TRADE FLOWS
U.S. Exports Will Increase If Congress Grants PNTR: We expect trade to increase in both
directions, but U.S. exports will be significantly higher if Congress enacts PNTR and guarantees
American exporters the expanded market access rights we negotiated.
For agriculture alone, USDA estimates that China's WTO accession would result in at least $2
billion annually in additional U.S. exports by 2005.
Independent studies also suggest that our exports will increase. A report by an economist at the
Institute for International Economics, for example, suggests that U.S. exports to China are likely to
increase by at least $3.1 billion per year even in the short run. The Congressional Research
Service, citing the results of a Goldman Sachs analysis, suggests that U.S. exports to China could
rise by $12.7 billion to $13.9 billion a year by 2005.
Increases In U.S. Imports From China Largely Reflect A Displacement Of Exports From Other
Asian Countries. According to official U.S. estimates, our trade deficit with China was approximately
$69 billion in 1999. Our exports to China totaled about $13 billion and our imports from China totaled
about $82 billion. Our exports to China have more than doubled over the past decade, but our imports
have grown more rapidly. As the Asian Newly Industrializing Economies (NIEs), consisting of Hong
Kong, Korea, Singapore, and Taiwan, have developed, production of light manufactures has shifted to
China.
Over the past decade, China and the Asian NIEs have, in aggregate, accounted for a nearly constant
share of U.S. imports -- about 16 percent in 1989 and about 17 percent in 1999, with only a small
amount of variation in between those years.
If U.S. consumers were not purchasing these light manufactures from China, they would be
purchasing them from other, less competitive, low-income countries. As a result, U.S. consumers
could pay higher prices.
The Aggregate Share Of U.S. Imports From China
And The Asian NIEs Has Remained Nearly Constant
Share Of Total U.S. Merchandise Imports
20
18
Aggregate Share
16
14
12
10
Hong Kong, Korea, Singapore, Taiwan
8
6
China
4
2
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Macroeconomic Forces Determine Our Overall Trade Balance. Strong growth in the United
States, coupled with weak growth in other parts of the world, has produced our substantial overall trade
deficit. These factors have increased U.S. demand for imports relative to foreign demand for our
exports. Overall, however, open trade, in a rules-based multilateral system, dampens inflation, spurs
innovation, and promotes economic growth.
Our Bilateral Deficit Reflects China's Specialization In Consumer Goods. Consumer goods --
consisting largely of products like footwear, apparel, toys, and some consumer electronics -- account
for nearly 70 percent of U.S. imports from China. Lower income households in particular benefit from
the availability of these competitively priced products. The EU and Japan run bilateral deficits with
China for similar reasons. Given China's comparative advantage in producing these kinds of
consumer goods, our trade deficit with China will continue to account for a substantial share of our
overall trade deficit. Nevertheless, the elimination of Chinese barriers to imports will present new
opportunities for U.S. exporters.
DRAFT-5/04/00
Proposed China Framework
I. Congressional-Executive Commission on China
Proposal: As part of the framework for bringing China into the WTO, the proposal will establish
a Congressional-Executive Commission on China. The Commission will consist of nine
Members of each House, plus five Presidential appointees.
The Commission will have three pillars within its scope. The first pillar will be monitoring
human rights in China (including religious freedoms). The second pillar will be monitoring
overall aspects of labor market issues in China. The third pillar will be monitoring and
encouraging the development of rule-of-law and democracy-building in China.
The Commission will submit to Congress and to the President an annual report)of its findings,
including as appropriate WTO-consistent recommendations for legislative and/or executive
action? It will also maintain lists of victims of human rights abuses in China. Finally, the
Commission will respond to information requests from individual Members of Congress.
The model for this Commission is the Commission on Security and Cooperation in Europe, a
Congressional-Executive entity established in 1976 to monitor compliance by other countries
with the provisions of the Helsinki Final Act.
The CSCE experience indicates that a China Commission will be an effective mechanism for
maintaining pressure on China with respect to labor market issues, rule of law issues, and human
rights.
From its creation in 1976 to the end of the Cold War, the CSCE was one of several important
instruments for championing human rights, democracy and rule of law in the countries of the
former Soviet bloc. Since the Cold War, the CSCE has monitored elections in former Soviet
bloc countries.
The strengths that the CSCE has exhibited include the following:
*
It has pulled together large amounts of information related to human rights, regional
security, and other issues, analyzed that information, and communicated it to the
Administration, Congress, and the public in a manner that generally is considered
impartial and authoritative. Its credibility with the Administration and Congress has
given the CSCE a good deal of influence in shaping policy on issues within its areas of
expertise.
*
The CSCE has become a reliable liaison between the U.S. Government and dissidents,
human rights leaders, intellectuals and other citizens of the countries that it monitors.
DRAFT-5/04/00
*
The CSCE has drawn attention to particular cases of human rights violations. During the
worst days of Soviet bloc repression, the Commission brought cases to the attention of
governments in the Soviet bloc and worked to resolve them.
Based on the CSCE experience, there are several reasons to expect that a China Commission will
be an effective means of maintaining scrutiny and pressure on China in the areas of human rights
(including religious freedom), worker rights, and rule of law:
First, a bipartisan standing Commission will institutionalize Congressional examination
of measures by the Government of China that affect U.S. interests. Commitment to this
task will be permanent and concentrated, as opposed to sporadic and diffuse, as has been
the case under current law (i.e., annual reviews).
*
Second, the Commission will become an effective base from which to mobilize support
for particular improvements in China's policies and practices. For instance, if the
Commission spotlights particularly egregious conduct by the Government of China, it
will be able to rally a bipartisan consensus for pressing China to change its conduct more
easily than an individual Member of Congress would otherwise be able to do.
*
Third, as Chinese citizens gain greater access to the outside world through the Internet
and other modes of communication, the Commission will become an important conduit
between Chinese citizens, on the one hand, and the U.S. Government and public, on the
other. For instance, victims of human rights abuses in China and their advocates in the
NGO community will be able to communicate directly with the Commission.
Fourth, the Commission will be a strong, effective, and unique point of contact on China
issues between Congress and the Administration. Thus, as in the case of the CSCE, the
Commission will be used to highlight for the Administration issues of particular concern
to Congress. This will assist the Administration in deploying its diplomatic and other
foreign policy tools most effectively.
II. Legislating the China Product-Specific, Anti-Surge Safeguard
Background: The November 1999 Agreement between the United States and China contains a
product-specific safeguard, which will be included in China's protocol of accession to the WTO.
The safeguard permits the United States and other WTO Members to provide relief to domestic
industries and workers, "where products of Chinese origin are being imported into the territory of
any WTO Member in such increased quantities or under such conditions as to cause or threaten
to cause market disruption to the domestic producers of like or directly competitive products."
DRAFT-5/04/00
This special anti-surge safeguard will apply to China for a period of 12 years following China's
accession to the WTO.
The China safeguard contains lower causation and injury standards than ordinarily would apply
between WTO Members. According to the U.S.-China Agreement, market disruption occurs
when subject imports "are increasing rapidly, either absolutely or relatively, so as to be a
significant cause of material injury, or threat of material injury to the domestic industry." By
contrast, under the U.S. law that applies to other WTO Members (section 201 of the Trade Act of
1974), the relevant inquiry is whether goods are being imported into the United States "in such
increased quantities as to be a substantial cause of serious injury."
Issue: There is a need to spell out how the anti-surge safeguard in the U.S.-China Agreement will
be implemented as a matter of U.S. law. Therefore, Congress should develop and write into law
a procedure for U.S. industries and workers to seek and obtain relief under the China
product-specific safeguard.
Proposal: Under the proposed legislation, U.S. industries or workers claiming injury due to
import surges from China would file a petition with the U.S. International Trade Commission ("
ITC"), or the ITC would initiate an investigation at the request of the President or on motion of
the House Ways & Means Committee or Senate Finance Committee. Within 60 days after
receipt of the petition or request/motion, the ITC would make a determination as to whether the
subject imports are causing or threatening market disruption. If the ITC determination is
affirmative, the President would be required to request consultations with the Government of
China. This would start a 60-day consultation period, as required by the U.S.-China Agreement.
Twenty days after the ITC made an affirmative determination with respect to market disruption
(i.e., 80 days after receipt of the petition or request/motion), the ITC would make a
recommendation of actions necessary to prevent or remedy the market disruption. Twenty days
later, the U.S. Trade Representative would publish a notice of proposed action, seeking
comments on the appropriateness of the proposed action and whether it would be in the public
interest. An opportunity for hearing on that action would also be provided.
If the United States and China are unable to reach agreement within the consultation period, then
the President will be required to decide what action, if any, to take within 25 days after the end of
consultations. Any relief proclaimed would become effective in 15 days.
The entire period from petition (or request/motion) to proclamation of relief would be 150 days.
The proposal will make clear the standards for application of Presidential discretion in providing
relief to injured industries and workers. If the ITC makes an affirmative determination on market
disruption, there will be a presumption in favor of providing relief. That presumption can be
overcome only if the President finds that providing relief would have an adverse impact on the
DRAFT-5/04/00
United States economy substantially out of proportion to the benefits of such action, or that such
action would cause serious harm to the national security of the United States.
The proposal also will authorize the President to provide a provisional safeguard in cases where "
delay would cause damage which it would be difficult to repair," as permitted under the U.S.-
China Agreement. If such circumstances are alleged, the ITC would be required to make a
preliminary determination on market disruption and critical circumstances on an abbreviated
schedule. After receiving an affirmative preliminary ITC determination, the President would be
required to determine whether to provide such relief on a similarly abbreviated schedule.
Finally, the proposal will implement a provision in the U.S.-China Agreement concerning trade
diversion. That provision addresses circumstances in which a safeguard applied by a third
country with respect to Chinese goods "causes or threatens to cause significant diversions of
trade" into the United States.
Under the proposal, if another WTO Member requests consultations with China under the
product-specific safeguard, the U.S. Customs Service would begin monitoring imports of subject
products into the United States. If, on the basis of this monitoring or other credible evidence, it
is determined that an action by another WTO Member threatens or causes significant trade
diversion, the USTR will request consultations with China and/or the Member imposing the
safeguard. If, as provided in the Agreement, consultations fail to lead to an agreement to address
the trade diversion within 60 days, the USTR will publish notice of proposed action and provide
an opportunity for the public to provide evidence and views on the proposed action. After
receiving such views, the President shall determine, within 20 days, what action, if any, to take to
prevent or remedy the trade diversion.
III. Continuing Oversight of China's Compliance With WTO Obligations
A. Annual Report on China's Compliance With WTO Obligations
Proposal: This provision will require the U.S. Trade Representative to issue an annual report on
China's compliance with WTO obligations. The report will cover compliance by the People's
Republic of China with commitments made in connection with its accession to the World Trade
Organization, including both multilateral commitments and any bilateral commitments made to
the United States.
The report's contents will be more comprehensive than the China section in USTR's National
Trade Estimate Report on Foreign Trade Barriers. The report will be a complete analysis of
Chinese compliance with the implementation of obligations. By highlighting where China is
meeting obligations and where it is falling short, the report will be a guide to where and how to
commit enforcement resources.
DRAFT-5/04/00
B. Annual WTO Review of China's Compliance With WTO Obligations
Proposal: In negotiating China's Protocol of Accession, the Administration will press for a
mechanism for reviewing China's compliance with WTO obligations on an annual basis.
Given the early stages of development of a free market and rule of law in China, it is necessary
that China be given special scrutiny within the WTO. Paired with the annual report by the USTR
(described in the immediately preceding section), there will be two mechanisms to ensure strong
oversight of China's trade record.
IV. Task Force on Prohibition of Importation of Products of Forced or Prison Labor
Proposal: The import of goods made by forced or prison labor into the United States is
prohibited by U.S. law (section 307 of the Tariff Act of 1930), consistent with the GATT 1994.
Article XX of the GATT allows countries to take action without retaliation to prohibit import of
goods made by prison labor. The proposed provision will instruct the President to establish an
interagency task force, chaired by the Secretary of the Treasury or his designee, to monitor and
promote effective enforcement of this prohibition, including compliance by Chinese and other
foreign exporters. The task force will include officers and employees from the Departments of
Treasury, Commerce, Labor, and other agencies. The task force will coordinate closely with the
U.S. Customs Service to promote maximum effectiveness of Customs enforcement of Section
307 of the Tariff Act of 1930 in the following specific areas:
1)
investigations of allegations of forced or prison labor imports;
2)
working with the Chinese government and other foreign governments to arrange
visit to suspected prison labor facilities;
3)
providing technical assistance to China and other foreign governments to ensure
that forced or prison labor goods are not imported into the U.S.;
4)
monitoring U.S. ports for forced or prison labor goods; and
5)
engaging in any other activities necessary to stringently enforce section 307 of the
Tariff Act of 1930.
The task force will strengthen the ability of the U.S. Government to stop imports of goods made
by forced or prison labor. The members of the task force will work with the Chinese
Government and other foreign governments to ensure that this prohibition is strictly enforced.
V. Monitoring and Enforcement of Foreign Government
Compliance With Trade Agreements
DRAFT-5/04/00
Proposal: This provision calls for additional resources to be allocated to the Departments of
Commerce, Agriculture, and State, and to the Office of the U.S. Trade Representative to
strengthen the ability of the United States to monitor and enforce Chinese and other foreign
government compliance with trade agreements. The provision will include resources to promote
the following activities, among others:
1)
staffing to monitor China's compliance with the WTO Agreements;
2)
defend U.S. safeguard, antidumping, and countervailing duty measures and U.S.
policy to maintain strong trade remedies;
3)
enforce U.S. trade laws, including import monitoring, subsidy enforcement, and
prompt antidumping and countervailing duty investigations under Title VII of the
Tariff Act of 1930;
4)
create a Trade Law Technical Assistance Center to assist small and medium sized
businesses, workers, and unions with preparation of petitions seeking remedies for
alleged violations of trade laws;
5)
create an Overseas Compliance Program, that will monitor compliance with
international trade obligations by foreign governments;
6)
commit additional funds to investigate, prosecute and defend cases before the
WTO and NAFTA tribunals;
7)
commit funds and resources to analyze the impact of trade on the economy of the
United States;
8)
increase legal and technical expertise in areas covered by trade agreements and
U.S. trade law, including food safety and biotechnology.
The wide-ranging provisions will substantially increase the ability of the U.S. Government to
monitor and enforce Chinese and other foreign government obligations in international trade
agreements. In addition to calling for funds for enforcement, the framework calls for legal and
technical assistance for companies and workers pursuing antidumping and countervailing
remedies.
VI. Promotion of Adherence to Core Labor Standards in Foreign Countries
Proposal: This proposal calls for the allocation of resources to the Department of Labor to
provide assistance to China and other foreign countries in complying with internationally
recognized worker rights. Such assistance will be provided on a multilateral or bilateral basis
DRAFT-5/04/00
and will support working with international organizations that promote core labor standards, such
as the International Labor Organization. Specific provisions will include resources for
multilateral and bilateral technical assistance programs on issues such as:
1)
development of laws, regulations, and other measures to implement
internationally recognized worker rights, including elimination of the worst forms
of child labor;
2)
establishing national mechanisms for the enforcement of national labor laws and
regulations;
3)
training government officials concerned with the implementation and enforcement
of national labor laws and regulations;
4)
developing an infrastructure to educate workers about their legal rights and
protections under national labor laws and regulations.
The Administration, including the Secretary of Labor, will continue to pursue efforts to promote
and advance core labor standards in China, including through a bilateral dialogue and programs
with China.
In FY 2000, the Congress appropriated $30,000,000 to the Department of Labor for bilateral and
multilateral technical assistance programs to promote core labor standards and social safety nets.
The present provision will expand upon that appropriation to carry out this mission, including
with respect to China.
VII. Accession of Taiwan to WTO
Proposal: This provision will express the sense of the Congress that the WTO General Council
should approve both the PRC's accession and Taiwan's accession at the same General Council
session.
EXECUTIVE ORDER
COMMISSION ON WORKERS, COMMUNITIES AND ECONOMIC CHANGE IN THE NEW
ECONOMY
By the authority vested in me as President by the Constitution and the laws of the United
States of America, including the Federal Advisory Committee Act, as amended (5 U.S.C. App.), it
is hereby ordered as follows:
Section 1. Establishment. There is established the Commission on Workers,
Communities and Economic Change in the New Economy ("Commission"). The
Commission shall be comprised of not more than 15 persons appointed by the President
from individuals who are representatives of State or local agencies relating to workforce
development or community economic development, workforce development professionals
and educators, labor organizations (chosen from representatives who are nominated by a
national labor federation), business leaders and Members of Congress. In addition, the
Secretaries of the Treasury, Labor, Commerce and Housing and Urban Development shall
serve as non-voting ex-officio members of the Commission. The President shall appoint a
chairperson from among the voting members of the Commission.
Sec. 2. Functions. The Commission shall conduct a study of matters relating to
economic dislocation and worker and community adjustment to such dislocations. In
carrying out this study, the Commission shall examine:
(a) the impact of international trade, technology, globalization and the changing nature of work on
both workers and their communities;
(b) the effectiveness of existing programs at the Federal level in assisting workers
and communities in adjusting to economic change, including the adequacy of the
design of such programs and resources devoted to such programs;
(c) the strategies for providing workplace education and training to assist workers in
acquiring new skills;
(d) the strategies for assisting communities to adjust to changing economic
conditions and the changes in the mix of employment opportunities in those
communities;
(e) the role of public-private partnerships in implementing job training and
community assistance; and
(f) the role of income support and economic security programs in facilitating worker
adjustment in rapidly changing economic circumstances.
Sec. 3. Report. Not later than 12 months after the first meeting of the Commission, the
Commission shall prepare and submit to the President and the Congress a report that
contains:
(1) a detailed statement of the findings and conclusions of the Commission relating
to the study carried out under Section 2;
(2) a compendium of best practices and policies carried out by employers and
public-private partnerships in providing workers with the education and training
needed to effectively adjust to economic change;
(3) a compendium of best practices and policies carried out by or on behalf of
communities in responding to large-scale economic changes; and
(4) any recommendations relating to legislative and administrative actions that the
Commission determines to be appropriate.
Sec. 4. Administration. (a) Members of the Commission shall serve without
compensation for their work on the Commission. While engaged in the work of the
Commission, members appointed from among private citizens of the United States may be
allowed travel expenses, including per diem in lieu of subsistence, as authorized by law for
persons serving intermittently in the Government service (5 U.S.C. 5701-5707).
(b) The Department of Labor shall provide the commission with funding and administrative
support. The Commission may have paid staff including detailees from Federal agencies.
The Secretary of Labor shall perform the functions of the President under the Federal
Advisory Committee Act, as amended (5 U.S.C. App.), except that of reporting to the
Congress, in accordance with the guidelines and procedures established by the
Administrator of General services.
Section 5. General Provisions. The Commission shall terminate 30 days after submitting
its report.
Timothy E. Punke
05/05/2000 07:19:58 PM
Record Type:
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CC:
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Subject: afternoon reuters story
for gene/lael
Forwarded by Timothy E. Punke/OPD/EOP on 05/05/2000 07:19 PM
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05/05/2000 04:51:35 PM
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Subject: afternoon reuters story
Friday May 5 2:50 PM ET
Congress Set to Take Up China Watchdog Plan
By Adam Entous
WASHINGTON (Reuters) - Legislation setting up a commission to monitor human rights in
China is expected to be introduced next week, as the congressional battle intensifies over
President Clinton's landmark trade agreement with Beijing.
The legislation, proposed by Michigan Democratic Rep. Sander Levin and backed by the
White House, called for Congress to set up a commission that would review a wide range of
Chinese policies, including human rights and labor standards, and could recommend
enforcement "actions" against Beijing as long as they were consistent with World Trade
Organization (WTO) rules.
Levin, the ranking Democrat on the House Ways and Means Trade Subcommittee, said he
planned to introduce the bill next week, and that it will be co-sponsored by a Republican,
probably Nebraska Rep. Doug Bereuter.
"I would hope we can do that next week," Levin told
reporters. "We're expanding our discussions on both sides
of the aisle and the administration. There's increasing interest
and increasing support."
Levin's proposal is also making inroads in the Senate, where
Sen. Max Baucus, a Montana Democrat, said he was likely to sponsor the bill.
The House was scheduled to vote on the trade agreement in the week of May 22-26. The
Senate was to follow in early June. If backed by the House, aides said it should garner
bipartisan support in the Senate, where passage of permanent normal trade relations
(PNTR) for China is virtually assured.
PNTR would guarantee Chinese goods the same low-tariff access to U.S. markets as
products from nearly every other nation. China now enjoys that status only after an annual
congressional review.
Battle Intensifies
The announcement came as the White House intensified its lobbying campaign in what was
shaping up to be this year's biggest legislative battle, pitting business against labor.
Commerce Secretary William Daley flew to Texas on Friday to meet with Rep. Ruben
Hinojosa, an undecided Democrat, hoping to secure his vote. On Tuesday the administration
will bring former U.S. presidents and other officials to the White House to endorse the
agreement.
The Clinton administration saw Levin's proposal as a way of reaching out to Democrats in
the House of Representatives who want a forum to air their concerns about human rights
and labor abuses in China in exchange for supporting the market-opening pact when the
House votes.
Levin's plan may also win Republican backing, according to key lawmakers. "We're
looking forward to some kind of bipartisan resolution on that in the not-so-distant future,"
said Rep. David Dreier, a California Republican.
But the proposal faces opposition from labor unions and other groups, including Public
Citizen's Global Trade Watch, which called it a ``toothless sham."
By some congressional estimates, Levin's proposal could give the agreement a
15-or-20-vote boost in the House. With the help of the legislation, Clinton's allies said they
should be able to get support from 70 to 80 House Democrats, along with 150 Republicans
-- enough to ensure passage. Approval requires 218 votes in the 435-member House.
Permanent Normal Trade Relations Sought
The trade agreement, which paves the way for China to join the Geneva-based WTO,
called on Beijing to open a range of markets, from agriculture to telecommunications.
In exchange, the White House says, Congress must grant PNTR to China.
Under Levin's legislation, Congress would create a special "congressional-executive
commission" that could investigate Chinese human rights abuses, analyze U.S. security
concerns and issue recommendations to lawmakers.
Aides said these recommendations could include sanctions consistent with WTO rules, such
as a cessation of U.S. Export-Import Bank and U.S. Overseas Private Investment Corp.
support to China. Congress could also direct the Clinton administration to oppose new loans
to China from the World Bank and the International Monetary Fund.
Levin said the legislation would not use the term "sanctions," but instead refer to ``actions
that would be WTO-consistent." Some House Republicans have balked at the term
"sanctions," saying it was too confrontational.
In addition, Levin's proposal would include strengthened safeguards against import surges
and call for the WTO to review China's compliance with the pact on an annual basis. It
would also urge the WTO to admit Taiwan immediately after China.
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