WTO: WILL CHINA KEEP ITS PROMISES? CAN IT? HEARING BEFORE THE CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA ONE HUNDRED SEVENTH CONGRESS SECOND SESSION JUNE 6, 2002 Printed for the use of the Congressional-Executive Commission on China ( Available via the World Wide Web: http://www.cecc.gov U.S. GOVERNMENT PRINTING OFFICE 80–730 PDF WASHINGTON : 2002 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 16:42 Jul 25, 2002 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 80730.TXT China1 PsN: China1 CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA LEGISLATIVE BRANCH COMMISSIONERS Senate House MAX BAUCUS, Montana, Chairman DOUG BEREUTER, Nebraska, Co-Chairman CARL LEVIN, Michigan JIM LEACH, Iowa DIANNE FEINSTEIN, California DAVID DREIER, California BYRON DORGAN, North Dakota FRANK WOLF, Virginia EVAN BAYH, Indiana JOE PITTS, Pennsylvania CHUCK HAGEL, Nebraska SANDER LEVIN, Michigan BOB SMITH, New Hampshire MARCY KAPTUR, Ohio SAM BROWNBACK, Kansas SHERROD BROWN, Ohio TIM HUTCHINSON, Arkansas JIM DAVIS, Florida EXECUTIVE BRANCH COMMISSIONERS PAULA DOBRIANSKY, Department of State GRANT ALDONAS, Department of Commerce D. CAMERON FINDLAY, Department of Labor LORNE CRANER, Department of State JAMES KELLY, Department of State IRA WOLF, Staff Director JOHN FOARDE, Deputy Staff Director (II) VerDate 11-MAY-2000 16:42 Jul 25, 2002 Jkt 000000 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 80730.TXT China1 PsN: China1 C O N T E N T S Page STATEMENTS Opening statement of Hon. Max Baucus, a U.S. Senator from Montana, Chairman, Congressional-Executive Commission on China ............................. 1 Levin, Hon. Sander, a U.S. Representative in Congress from Michigan ............ 3 Kaptur, Hon. Marcy, a U.S. Representative in Congress from Ohio ................... 4 Huntsman, Jr., Ambassador Jon M., Deputy U.S. Trade Representative, Washington, DC ................................................................................................... 5 Aldonas, Grant D., Under Secretary of Commerce for International Trade, Washington, DC ................................................................................................... 6 Westin, Susan S., Managing Director, General Accounting Office, Washington, DC .......................................................................................................................... 9 Murck, Christian, Chairman, American Chamber of Commerce, Beijing, China ..................................................................................................................... 30 Clarke, Donald, professor of law, University of Washington, Seattle, WA ......... 32 Fiedler, Jeffrey L., consultant, Food and Allied Service Trades Department, AFL–CIO, Washington, DC ................................................................................. 34 APPENDIX PREPARED STATEMENTS Huntsman, Jr., Jon M ............................................................................................. 46 Aldonas, Grant D ..................................................................................................... 48 Westin, Susan S ....................................................................................................... 54 Murck, Christian ..................................................................................................... 61 Clarke, Donald C ..................................................................................................... 66 Fiedler, Jeffrey L ..................................................................................................... 78 Baucus, Hon. Max .................................................................................................... 80 Pitts, Hon. Joseph R ................................................................................................ 82 Kaptur, Hon. Marcy ................................................................................................. 82 QUESTIONS AND ANSWERS Responses of Jon M. Huntsman, Jr. to questions from: Representative Wolf ............................................................................................. 83 Representative Levin ........................................................................................... 83 Representative Kaptur ........................................................................................ 84 Responses of Grant D. Aldonas to questions from: Senator Baucus .................................................................................................... 84 Representative Wolf ............................................................................................. 86 Representatives Kaptur and Wolf ....................................................................... 86 Representative Kaptur ........................................................................................ 87 Representative Brown .......................................................................................... 88 Responses of Susan S. Westin to questions from: Representative Wolf ............................................................................................. 88 Representative Kaptur ........................................................................................ 89 (III) VerDate 11-MAY-2000 16:42 Jul 25, 2002 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 80730.TXT China1 PsN: China1 VerDate 11-MAY-2000 16:42 Jul 25, 2002 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 80730.TXT China1 PsN: China1 WTO: WILL CHINA KEEP ITS PROMISES? CAN IT? THURSDAY, JUNE 6, 2002 CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA, Washington, DC. The hearing was convened, pursuant to notice, at 2:38 p.m., in room SD–215, Dirksen Senate Office Building, Senator Max Bau- cus (Chairman of the Commission) presiding. Also present: Representative Bereuter (Co-Chairman of the Com- mission), Senator Hagel, Representatives Wolf, Pitts, Levin, Kap- tur, Brown, and Davis; Grant Aldonas, U.S. Department of Com- merce; and D. Cameron Findlay, U.S. Department of Labor. OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA, CHAIRMAN, CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA The CHAIRMAN. The Commission will come to order. At the Commission’s earlier hearings, we focused on the relation- ship between human rights and the rule of law in China. We stressed that human rights can only be protected when there is a rules-based legal system that includes transparency and account- ability. Today, we will focus on developments in China in the area of commercial law. We will also look at the implications of this on broader legal reform in Chinese society. Last December, we ushered in a new era with China’s formal entry into the WTO [World Trade Organization]. The negotiations took over a decade. We spent a year in the Congress on passage of PNTR [permanent normal trade relations]. Now we are begin- ning to monitor Chinese implementation of the commitments they undertook. What do we want to accomplish? First, we want to ensure that China complies with the terms of accession and with the global standards of action embedded in the WTO. This is important. It is important to American manufacturers, to American service companies, to our farmers, to our ranchers, to our workers. China is our fourth-largest trading partner and is the country where we have our largest trade deficit. China’s accession to the WTO should provide greater opportunities for all Americans doing business there. Second, we want to promote continued progress in the develop- ment of the commercial rule of law in China. This will likely accel- (1) VerDate 11-MAY-2000 16:42 Jul 25, 2002 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 80730.TXT China1 PsN: China1 2 erate changes in the way China is governed, including in non-com- mercial areas. For example, as a WTO member, China must establish and maintain judicial and administrative mechanisms to review trade- related sanctions by government agencies. These must operate independently of the agencies that carried out the actions in ques- tion. If implemented, this should contribute to the development of a more open, market-oriented society. The government will be bound by the written rules. I believe that China’s membership in the WTO can be an important force in driv- ing the development of the rule of law more broadly. We are now at an early stage in WTO adherence and commercial law development in China. Senior Chinese leaders are fully com- mitted. We are already seeing changes in thousands of national and local laws and regulations. The Chinese Government has welcomed assistance from foreign governments and NGOs [non-governmental organization] to con- duct extensive training sessions on WTO requirements, on adminis- trative law, and on judicial reform. Chinese Government officials at all levels have been eager to learn about the steps needed to ensure that they are complying with commitments. Yet, there have been mixed signals about China’s commitments. There have been reports that new barriers have been erected to re- place barriers that were abolished, sanitary and phytosanitary standards that are still being used where there is no scientific basis, and regulations that were supposed to be in effect at acces- sion that have not been promulgated. We need to monitor these developments closely, and we need to speak out vigorously and promptly when China has fallen