TRADE DEALER

November 18, 1999
		U.S. Trade Representative Charlene Barshefsky details how she helped broker the U.S.-China trade deal. The deal is expected to allow China to enter the World Trade Organization.

Aug. 31, 1999: The outgoing U.S. ambassador to China discusses his life and career. Aug. 4, 1999: A look at China-Taiwan relations July 30, 1999: The controversy around meditation group Falun Gong. July 23, 1999: Tensions flare between China and Taiwan. June 9, 1999: Allegations of Chinese espionage June 4, 1999: The 10th anniversary of China’s Tiananmen Square crackdown. April 16, 1999: Chinese Premier Zhu Rongji visits North America. June 28, 1998: President Clinton challenges China on human rights during visit. June 23, 1998: A historical look at U.S.-China relations. Oct. 29, 1997: The China summit and human rights. June 24, 1997: The Congressional battle of China's "Most Favored Nation" trading status. Browse the NewsHour's coverage of Asia     United States Trade Representative U.S. Embassy in China Chinese consulate in New York	KWAME HOLMAN: Charlene Barshefsky, President Clinton's top trade negotiator, had reason to celebrate this week. After six days of negotiations, she shook hands with her Chinese counterpart on a major market- opening trade agreement. The pact, signed at a Beijing ceremony Monday, would pave the way for China's entry into the World Trade Organization, providing China new access to foreign markets. And if approved, the deal would open China to more foreign goods, a long-sought goal of U.S. businesses desirous of new markets for their products. Under the deal, U.S. companies doing business with China could, among other things, own as much as 50 percent of telecommunications companies in China; sell far larger amounts of wheat, corn rice, cotton, and other U.S. farm commodities; offer financial services to Chinese companies and consumers, including property and casualty insurance. The opening of China's markets under the agreement was 13 years in the making, and it still faces obstacles ahead. The European Union, Canada, and other countries must complete their own negotiations with China before it can be admitted into the World Trade Organization. And in this country, Congress must vote to grant China permanent normal trade relations status in order for the deal to go through. The pact has drawn fierce opposition from organized labor, a key Democratic Party ally. At a news conference in Washington today, Ohio Democrat Sherrod Brown predicted a major fight. REP. SHERROD BROWN: We're going to make this the biggest vote in the 106th Congress. We're going to shed so much light on this trade deal and bring so much attention to all of the behind-the-scenes prodding and poking from corporate America, that the only people who can vote for it and not feel the heat from their constituents must hail from Wall Street, or Boeing, or Hollywood. KWAME HOLMAN: WTO members will meet in Seattle later this month. For its part, Congress is expected to vote on China's trade status early next year.
	A deal good for the U.S. and China
	JIM LEHRER: And joining us now from the Old Executive Office Building is the U.S. Trade Representative, Charlene Barshefsky. Welcome. CHARLENE BARSHEFSKY, U.S. Trade Representative: Thank you. Pleasure to be here. JIM LEHRER: In simplest terms, what, to you, is the most important thing about having this new agreement? CHARLENE BARSHEFSKY: There are really a couple of points. First off, as a commercial matter, as a matter of market access of leveling the playing field with China, which has quite open access to our market, this agreement will provide extraordinary opportunity for American farmers and American workers in every sector -- the full range of industrial goods, a full range of agricultural commodities and the full range of services sectors. There is nothing excluded from this agreement. But second, consider the broader picture, and that is, moving China in the direction of a rule of law. That is, for example, basic obligations such as transparency, judicial review, the publication of all regulations, the notion that China will be held accountable to the contracts that it makes. These are extraordinarily important principles, which go well beyond the commercial side and indeed, will have, I think, positive spillover effects in other areas of Chinese practice and Chinese law; and third, the strategic significance of this agreement. The key for China is whether it will be a constructive force in the global community as well as in the Asia region or whether it will be a destructive force. Anything that moves China toward western norms, toward internationally accepted norms of behavior, starting here on the commercial side, but ultimately hopefully spillover effects in other areas of Chinese activity is an absolutely positive, correct, sensible thing to be doing, because the alternative, of course, would be to either isolate China or to suggest that western norms should not be the goal and neither of those outcomes is particularly desirable or productive. JIM LEHRER: Why did China want this deal? CHARLENE BARSHEFSKY: I think for a number of reasons. The first is that the architect of this deal for China is Premier Zhu Rongji. He is an economic reformer. He had announced several years ago a very bold program of economic reform -- to rationalize state-owned industry, to lower tariffs, to bring in foreign expertise, to allow for the opening of China's formerly closed services sectors. And what he sees now is the same that many leaders have seen around the world. He can use WTO accession to enhance and advance his own domestic reform program. A domestic reform program that is stalled for domestic politics can often be rekindled where there is an international obligation to point to. We will have succeeded in bringing in about 11 or 12 new countries into the WTO system by the time of the Seattle ministerial. And virtually every one of them, whether Latvia or Estonia, whether Moldova, whether Bulgaria, Azerbaijan, all of them have indicated to us that the success of their domestic economic reform programs hinges on the externality of a strong international commitment to reform in particular direction. Zhu Rongji sees precisely the same pattern for China. And second for China, there is a question of the political punch that China gets out of finally, after 13 years, being a member in good standing of the global trading community. Remember that when the GATT, which was the forerunner of the WTO, was formed in 1947 out of the Breton Woods Agreement, there were only 23 countries in the GATT, one of whom was China, because the GATT system was formed by the post-World War II allies, China being one of them. When Mao came into power and China went off on the Communist experiment, China ultimately withdrew its membership from the GATT. And for China, a long-sought goal has been to reemerge within this system, which it helped to create in 1947, and to do so, on the basis of acceptable standards. That, I think, is what we will have accomplished.
	A deal or else?
	JIM LEHRER: All right. Let's go back to last week and last weekend. You say it's terrific for China; it's a great thing. We just heard all the positive things. But the reporting that we were reading back here was it came very close to not coming off. Was that an exaggeration? Did it really come close to not making it? CHARLENE BARSHEFSKY: I always thought it would make it. Jiang Zemin and President Clinton had a number of private conversations in advance of my going out to China. I would not have gone had we not felt and had President Clinton not felt that the chances of at least making very significant progress were not readily apparent. We thought that the chances of at least significant progress were apparent. And for that reason, I went out and Gene Sperling joined me as well. JIM LEHRER: He's the President's chief economic advisor. CHARLENE BARSHEFSKY: Correct. We had ups and downs in the negotiations. And the amplitude of the ups and downs was fairly significant, particularly on the down side. JIM LEHRER: Give us an example. For instance, there was a suggestion - not a suggestion - a straight report that said you threatened to go home. You had your bags sent to the airport - CHARLENE BARSHEFSKY: Absolutely. JIM LEHRER: -- and you wanted to see the premier. If you didn't see the premier, you were on the airplane; you were out of there. Was that real? CHARLENE BARSHEFSKY: It was absolutely real. And of course; we saw the premier. The key here was to ensure that those people in the Chinese government who were "the" decision-makers, be those people with whom we also dealt apart from the negotiating level. Zhu Rongji was critical -- having Jiang Zemin's imprimatur on - what Zhu Rongji would offer - would actually put on the table -- was critical. We achieved that. President Clinton achieved that. And the result was that the deal came to closure. JIM LEHRER: But was that a bluff on your part, to make a deal? CHARLENE BARSHEFSKY: No. Absolutely. JIM LEHRER: You would have gone and gotten on that airplane and gotten out of there and said "Sorry, Mr. President, I couldn't do it?" CHARLENE BARSHEFSKY: Absolutely. And, in fact, the President and I had a lengthy conversation the night before. And we agreed that if Zhu Rongji was unavailable, if the signal from the Chinese was that these talks would prattle on and on to no conclusion that I should absolutely get on a plane and leave with Gene, with the entire team. So, we packed our bags. We had them sent to the airport. The Chinese understood this was their last opportunity because we also made clear we would not soon be coming back to Beijing. And they ponied up. JIM LEHRER: What was the sticking point? CHARLENE BARSHEFSKY: There were a couple of areas, the most significant of which had to do with our ability to continue to use non-market economy dumping rules against China for an extended period of time even after they joined the WTO, as well as our ability to use a special mechanism, newly created for China, to ensure that we could address any import surges from China over an extended period of time. We accomplished both with an anti-import surge remedy existing 12 years after concession and the continued use of non-market economy dumping rules continued for 15 years after accession. This is far in excess of expectation and indeed in excess of the requirements of many members of Congress that had concerns over these provisions.
	Will China comply?
	JIM LEHRER: What do you say to some union leaders and members of Congress, Democrats included, who charge that "it's an outrage to allow China, a nation with huge labor rights violations to enter the World Trade Organization?" CHARLENE BARSHEFSKY: If the issue is how do we change China, because that the is the issue squarely presented by the question of, for example, labor violations, or human rights violations… JIM LEHRER: You don't deny there are labor violations and human rights violations by China? CHARLENE BARSHEFSKY: Oh, there is no question -- there is no question that there is extraordinary room for improvement in China on both of those issues and on other issues as well, including religious freedom, for example. But the question is, how does one effect change in China in the direction in which one wants China to go? And the fundamental question that stems from that is, do you isolate China and assume they will somehow, on their own, by dint of threat or otherwise, move toward western values, or do you bring China into an organization that is rules-based, that is law-based, in which obligations are strictly enforceable, and move economic reform in China, move the development of law in China in an internationally-accepted direction as a first step, as a first step toward additional reform? JIM LEHRER: There are a lot of people who are skeptical that China won't follow the rules once they get in the WTO. CHARLENE BARSHEFSKY: I think that we have put in place a package of very stringent enforcement mechanisms, unlike any other accession, including the two special remedies I've already mentioned, the special safeguard, as well as the dumping remedy. And I think further, the more specific the obligations under which China operates, the more likely compliance and implementation; and one of the reasons that we negotiated very hard for a very long time was to ensure that the obligations China was undertaking in every sector and in every sub-sector of its economy were as specific, as delineated, as precise as possible, so there would be no question in China's mind what it was obligated to do at each and every step of the way.
	A deal for a president's legacy?
	JIM LEHRER: Finally there, have been stories here-- some of them indirectly attributed to you-- that one of the driving forces for you was that President Clinton wanted this deal as part of his legacy. Is that true? CHARLENE BARSHEFSKY: Certainly, a deal of this size is important to the President. It's important to the country and to the extent it's important particularly to the country, it forms part of a presidential legacy. But this is an issue, to be frank, that I identified in my earliest meetings with Mickey Cantor before I became his - JIM LEHRER: He was your successor, right? CHARLENE BARSHEFSKY: He was my predecessor. JIM LEHRER: Predecessor. All right. Sorry. Nobody is your successor yet, sorry. CHARLENE BARSHEFSKY: And he asked me in a session where he simply wanted to pick my brain, what I thought would be among the things he should do. And rather than say "complete NAFTA," or rather than say, "complete the Uruguay Rounds," I said, "you should bring China into the GATT system," which GATT being the forerunner of the WTO. This is something that I have always felt was exceptionally important as a matter of U.S. trade policy, as a matter of strategic policies to the U.S. in Asia, as well as globally, and as a basic matter of leveling the playing field in what has been an imbalanced trade relationship. And so I didn't look at this issue from the point of view of anyone's legacy. I had always looked at this issue from the point of view of the substance and the policy implications of getting a deal that was strong, commercially viable, in our interest, doable by China, and a deal that could have positive spillover effects in other areas that are non-commercial. JIM LEHRER: All right. I hear you. And thank you very much. CHARLENE BARSHEFSKY: My pleasure. Thank you.