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Accession of China to the Wto Hearing Committee on Ways ACCESSION OF CHINA TO THE WTO HEARING BEFORE THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION MAY 3, 2000 Serial 106–105 Printed for the use of the Committee on Ways and Means ( U.S. GOVERNMENT PRINTING OFFICE 67–832 DTP WASHINGTON : 2001 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 COMMITTEE ON WAYS AND MEANS BILL ARCHER, Texas, Chairman PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York BILL THOMAS, California FORTNEY PETE STARK, California E. CLAY SHAW, JR., Florida ROBERT T. MATSUI, California NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania AMO HOUGHTON, New York SANDER M. LEVIN, Michigan WALLY HERGER, California BENJAMIN L. CARDIN, Maryland JIM MCCRERY, Louisiana JIM MCDERMOTT, Washington DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana MAC COLLINS, Georgia JOHN S. TANNER, Tennessee ROB PORTMAN, Ohio XAVIER BECERRA, California PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida WES WATKINS, Oklahoma LLOYD DOGGETT, Texas J.D. HAYWORTH, Arizona JERRY WELLER, Illinois KENNY HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida A.L. SINGLETON, Chief of Staff JANICE MAYS, Minority Chief Counsel Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occur- rences are inherent in the current publication process and should diminish as the process is further refined. ii VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 C O N T E N T S Page Advisory of April 18, 2000, announcing the hearing ............................................ 2 WITNESSES U.S. Department of the Treasury, Hon. Lawrence H. Summers, Secretary ....... 23 U.S. Department of Agriculture, Hon. Dan Glickman, Secretary ....................... 29 U.S. Department of Commerce, Hon. William M. Daley, Secretary .................... 33 Office of the United States Trade Representative, Hon. Charlene Barshefsky, United States Trade Representative .................................................................. 39 China Outreach Ministries, Inc., Reverend Daniel Baida Su .............................. 96 Columbia 300, Inc., Kyle J. Burns ......................................................................... 121 Dui Hua Foundation, John Kamm ......................................................................... 99 Citigroup, Inc., and Ford Motor Corporation, New York, New York, Hon. Robert E. Rubin .................................................................................................... 63 United Automobile, Aerospace, and Agricultural Implement Workers of Amer- ica, Alan Reuther ................................................................................................. 111 U.S.-Taiwan Business Forum, David N. Laux ...................................................... 125 United States Commission on International Religious Freedom, Hon. Elliott Abrams .................................................................................................................. 88 Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia 10 SUBMISSIONS FOR THE RECORD California-Asia Business Council, Oakland, CA, statement ................................ 140 Direct Selling Association, statement .................................................................... 141 Pacific Basin Economic Council, Gary Benanav, statement ................................ 142 Transglobalnetwork.com, Mountain View, CA, R. Theodor Kusiolek, state- ment ...................................................................................................................... 143 United States-China Business Council, Robert A. Kapp, statement ................... 145 Wei Jingsheng Foundation, New York, NY, Wei Jingsheng, statement ............. 152 iii VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 ACCESSION OF CHINA TO THE WTO THURSDAY, MAY 3, 2000 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, DC. The Committee met, pursuant to notice, at 10 a.m., in room 1100, Longworth House Office Building, Hon. Bill Archer (Chair- man of the Committee) presiding. [The advisory announcing the hearing follows:] (1) VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 2 ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 April 18, 2000 No. FC–21 Archer Announces Hearing on Accession of China to the WTO Congressman Bill Archer (R–TX), Chairman of the Committee on Ways and Means, today announced that the Committee will hold a second hearing on the bi- lateral trade agreement between the United States and China and on the pending accession of China to the World Trade Organization (WTO). The hearing will take place on Wednesday, May 3, 2000, in the main Committee hearing room, 1100 Long- worth House Office Building, beginning at 10:00 a.m. Oral testimony at this hearing will be from both invited and public witnesses. In- vited witnesses will include the Honorable Robert E. Rubin, Former Secretary of the Treasury, and the Honorable William M. Daley, Secretary of Commerce. Also, any individual or organization not scheduled for an oral appearance may submit a writ- ten statement for consideration by the Committee or for inclusion in the printed record of the hearing. BACKGROUND: China applied for accession to the General Agreement on Tariffs and Trade (GATT) in July 1986, and work has proceeded in the China Working Party since that time to negotiate the conditions upon which China will enter the WTO. Article XII of the Agreement Establishing the World Trade Organization states that any State or separate customs territory may accede to the WTO ‘‘on terms to be agreed between it and the WTO.’’ In practice, any WTO applicant must negotiate terms for membership in the WTO in the form of a Protocol of Accession. Through the operation of a Working Party, the United States and other WTO members have an opportunity to review the trade regimes of applicants to ensure that they are ca- pable of implementing WTO obligations. In parallel with the Working Party’s ef- forts, the United States and other interested member governments conduct separate negotiations with the applicant. These bilateral negotiations are aimed at achieving specific concessions and commitments on tariff levels, agricultural market access, and trade in services. On November 15, 1999, Ambassador Barshefsky announced the successful comple- tion of bilateral talks on China’s accession to the World Trade Organization. The expansive market access agreement will provide broad market openings for U.S. ag- riculture, manufactured products and services, along with Chinese commitments to adopt WTO rules relating to such issues as technology transfer and offsets, sub- sidies, product safeguards, and State enterprises. In a separate agreement signed in April 1999, China agreed to end sanitary and phytosanitary bans on the importa- tion of U.S. wheat, meat, and citrus products. The Agreement represents a crucial step in China’s WTO accession process. Other steps that remain ahead include the conclusion of bilateral negotiations with a num- ber of other WTO members, as well as the multilateral negotiations on China’s ac- cession protocol. China then must complete its domestic process for implementing the country’s WTO commitments. Congressional approval of permanent normal trade relations (NTR) is not nec- essary for China to accede to the WTO. However, in order for American businesses, farmers, and workers to be guaranteed an opportunity to benefit from the trade con- cessions and better compete in China’s markets, China’s name must be removed VerDate 20-JUL-2000 14:10 May 02, 2001 Jkt 060010 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 K:\HEARINGS\67832.TXT WAYS3 PsN: WAYS3 3 from Title IV of the Trade Act of 1974, the so-called Jackson-Vanik amendment, which provides for an annual review of China’s trade status based on freedom of emigration. Otherwise, the United States would be in violation of Article I of the GATT, which requires the extension of ‘‘unconditional’’ most favored nation (or NTR) status, and subject to trade sanctions. If the United States does not remove the conditions im- posed by Jackson-Vanik, the United States would have to invoke the non-application clause of the GATT, meaning that China would be able to withhold benefits of the 1999 bilateral agreement from the United States. In response to progress achieved in China’s WTO commitments
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