Press Release by Congresswoman Pelosi

Congresswoman Nancy Pelosi

Testimony before the Ways and Means Committee on the U.S. - China Bilateral Trade Agreement and the Accession of China to the WTO

February 16, 2000

Our relationship with any country should make trade fairer, the world safer and people freer. Indeed, the current U.S.-China relationship has ignored three pillars of foreign policy - promoting democratic values, stopping the proliferation of weapons of mass destruction and growing our economy by promoting U.S. exports abroad.

For the past decade, the debate in Congress on U.S.-China policy has focused on human rights, proliferation and trade. Advocates of unconditional Most Favored Nation (MFN) status have argued that economic reform would lead to political reform in China. Unfortunately, just the opposite is the case. While the Chinese government negotiates bilateral trade agreements, it escalates a crackdown on peaceful activity in the areas of religion, the Internet and on any organization perceived to be a threat to their rule.

China continues to make the world a more dangerous place by its cooperation with Pakistan's missile program, cooperation with Iran and threats to the democracy in Taiwan. But putting aside concerns of ongoing human rights violations and the continued proliferation of weapons of mass destruction, I believe the decision to oppose permanent Normal Trade Relations (NTR) at this time is justified on trade concerns alone.

When we started this debate ten years ago the trade deficit was $6 billion for 1989. Now it has grown to almost $70 billion for 1999. China continues to violate our trade agreements and we continue to reward them for it.

The debate before us is of critical importance to our economy and the global trading system. Permanent NTR must not be rushed and we must have a full and open debate on all aspects of this decision. In light of China's pattern of violation of trade agreements and the rapidly increasing trade deficit, I believe that the U.S. Congress should not give up its authority to review annually China's trade record at this time.

We should wait to see if China takes steps to implement the bilateral agreement before we consider permanent NTR. The WTO agreement with China will be phased in over five years, but we will give up our leverage if permanent NTR is passed now, before we have evidence that the agreement will be implemented.

Already there is reason to be concerned that Chinese officials are backing away from the bilateral agreement. For example, on wheat, the USTR Fact Sheet states that "China will establish large and increasing tariff rate quotas for wheat . . . with a substantial share reserved for private trade." But, only a few days later, China's chief WTO negotiator stated that "it is a complete misunderstanding to expect this grain to enter the country . . . Beijing only conceded a theoretical opportunity for the export of grain." (South China Morning Post, January 7, 2000)

On insurance, the USTR Fact Sheet specifically states that "China agrees to award licenses [to U.S. insurance firms] solely on the basis of prudential criteria, with no economic needs test or quantitative limits." But Ma Yongwei, chairman of the China Insurance Regulatory Commission sees things differently. He states that "even after accession to the WTO, Beijing reserved the right to block licenses for foreign insurance companies if their approval seemed to threaten stability of economic policy." (Financial Times, November 19, 1999)

Any possible WTO agreement must be viewed against the background of the Chinese government not complying with agreements it has signed.

China's compliance with a well-conceived, commercially acceptable and enforceable WTO agreement would be an improvement over China's wholesale violations of international trade practices. However, with China's pattern of refusing to play by the rules, a WTO agreement that is not realistic or enforceable will wreak havoc on the international trade regime.

As events leading up to the Seattle Ministerial and the Ministerial itself illustrate, the WTO is on shaky ground. Unless China's WTO accession is done properly, it will further weaken the organization. Enforcement is key.

There is little evidence that the Chinese government will honor the commitments it makes in either a bilateral or multilateral forum. Examples of China's trade violations are as follows:




The Chinese government has a remarkably consistent record of violating its international commitments. Some argue that allowing China into the WTO will force them to play by the rules. The reality is that the Chinese government will not abide by their agreements if it is not in their interest to do so.

Even if we ignore China's continuing violation of human rights,

Even if we ignore China's ongoing proliferation of weapons of mass destruction,

On the basis of trade issues alone, Congress should not surrender its authority to review China's trade status. Congress should insist that China take steps to implement the bilateral agreement before permanent NTR is adopted. I am preparing legislation to that effect.

This decision is too important to our economic future to base it on a litany of broken promises instead of a record of performance.

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