|WHITE HOUSE ON LABOR|
April 10, 2000
Labor Aspects of PNTR: Benefits for American Workers and Farmers
The White House
China Trade Relations Working Group
Permanent Normal Trade Relations For China Means More U.S.-Made Exports To China. American Workers And Farmers Will Get The Full Benefits Of China's Accession Only If Congress Grants PNTR. If Congress enacts PNTR, there will be more exports to China of products made in the United States by American workers and farmers. If Congress does not grant PNTR, our competitors will enjoy the full market access and enforcement rights in China that we will be denied.
The U.S.-China WTO Accession Agreement Gives American 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. agricultural exports by 2005.
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 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 businesses 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.
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 gives the U.S. strong protections against dumping. The agreed protocol provisions ensure that American workers and farmers will have strong protection against unfair trade practices, including dumping. The U.S. and China have agreed that we will be able to maintain our current anti-dumping methodology (treating China as a non-market economy) in future anti-dumping cases. This provision will remain in force for 15 years after China's accession to the WTO.
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
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.
Increasing by 75 percent staff devoted to monitoring and enforcing China's trade commitments at USTR: The additional resources sought for USTR would strengthen its ability to pursue a two-track strategy of negotiating good, smart agreements, and ensuring that the terms of those agreements are fulfilled. This initiative would create new positions in four areas of expertise -- legal, economic, geographic, and sectoral - to be devoted to monitoring and enforcement of trade agreements. For example, in addition to USTR's request in the FY 2001 budget to add staff in areas of growing significance for trade agreement enforcement and negotiations, such as agriculture, WTO affairs, Africa, China, environment, and labor, this initiative would enable USTR to substantially increase staff devoted to the litigation of WTO trade disputes in all sectors, especially agriculture, manufacturing, services, and intellectual property protection. Significantly, USTR's professional staff devoted to monitoring and enforcing China's trade commitments would be increased by 75 percent.
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.
The President's Recently Proposed Manufacturing Initiatives Would Further Increase Opportunities And Protections For American Workers. On February 4, the President announced $386 million in new proposals and program expansions that will help strengthen American manufacturers, workers, and communities and help keep manufacturing a strong and vital part of the U.S. economy in the 21st century. The President's FY 2001 Budget request calls for:
Expanding trade promotion and financing. The President's proposal calls for a $215 million increase in available export financing - a 26.5% increase - that will generate over $3 billion in new manufacturing exports. The proposal also requests $11.6 million to develop next-generation trade promotion programs to help small manufacturers find markets abroad through the Internet -- an export advisor on every desktop.
Expanding and enhancing assistance for workers and communities. The President has proposed a $35 million increase to create a new office to craft and coordinate Administration-wide responses and provide necessary recovery and adjustment funds for communities adversely affected by trade or by severe and sudden economic distress -- increasing economic adjustment resources by $175 million over five years. The initiative would also include an increase for the reform of the trade adjustment assistance programs -- which provide for retraining of trade-impacted workers and extensions of unemployment benefits to these workers while in training. Key elements of the reforms would include a consolidation of the current trade adjustment assistance (TAA) and NAFTA-TAA programs, expansion of coverage to include workers displaced as a result of shifts of production to any country, and an increase in the statutory cap on amounts for worker retraining in a given year -- a $31 million increase in FY 2001 and a $459 million increase over five years.
Developing and making available technologies that enable smaller manufacturers to thrive. The President has requested $20.5 million to provide technical assistance to smaller manufacturers and other businesses to overcome barriers to the use of the Internet and E-Commerce, and $4 million to accelerate the development of the technology infrastructure needed for manufacturers to conduct reliable electronic commerce.
Upgrading the skills of the manufacturing workforce. The President's proposal calls for $30 million in new matching grants to States for innovative training approaches designed to upgrade the skills of the manufacturing workforce and a tripling of funding to strengthen the science and math preparation of technicians being educated for the high performance workplace of advanced manufacturing.
Passage Of PNTR And China's WTO Accession Will Further Open China To American Values And Practices. U.S. companies are more committed than their Asian competitors to progressive labor management practices and protecting the safety of their workers.
We Will Continue to Press China To Respect Internationally Recognized Labor Rights. The United States continues to make clear our concerns about labor rights violations in China. President Clinton and President Jiang announced a dialogue on labor issues in June 1998 that addresses core labor standards, labor law, and development of social safety net issues. In 1998, China joined the United States and other members of the International Labor Organization (ILO) in adopting a new Declaration of Fundamental Rights and Principles at Work. This Declaration included a follow-up compliance mechanism and covered rights such as freedom of association, right of collective bargaining, non-discrimination, and the abolition of forced labor. The Chinese Minister of Labor and Social Security visited Washington in 1999 to begin the bilateral labor dialogue. Secretary Herman made clear the priority we place on implementation of internationally recognized labor standards, and our firm opposition to and deep concern about the detention, arrest, and imprisonment of persons for labor-related activities that are protected by ILO standards. The U.S. has supported ILO findings on China's law and practice in the area of freedom of association.
The U.S. Must Grant Permanent NTR Or Lose The Full Benefits Of The Agreement. We will continue to raise our concerns over core labor standards. The market access and protections provided in our bilateral agreement on China's accession to the World Trade Organization will ensure that American workers and farmers can benefit fully from our trade with China. If Congress were to refuse to grant permanent NTR, our Asian, Latin American, Canadian, and European competitors would reap these benefits but American workers and farmers would be left behind.
Source: White House China Trade Relations Working Group