United States-China trade relations : hearing before the Subcommittee on Trade of the Committee on Ways and Means, House of Representatives, One Hundred Third Congress, first session, June 8, 1993

202 Pages·1993·7 MB·English

by  United States. Congress. House. Committee on Ways and Means. Subcommittee on Trade

UNITED STATES-CHINA TRADE
RELATIONS
Y 4. W 36: 103-16
United States-China Trade Relations...
HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OFTHE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
JUNE 8, 1993
Serial 103-16
Printed for the use of the Committee on Ways and Means
•'^oftionrr*
U.S. GOVERNMENT PRINTING OFFICE
70-512CC WASHINGTON : 1993
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice.Washington.DC 20402
ISBN 0-16-0A1277-3

UNITED STATES-CHINA TRADE
'
1
RELATIONS
.W 36: 103-16
>d States-China Trade Relations...
HEARING
BEFORE THE
SUBCOMMITTEE ON TRADE
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OP REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
JUNE 8, 1993
Serial 103-16
Printed for the use of the Committee on Ways and Means
SPP
24
1993
'^^©•lynipr*
U.S. GOVERNMENT PRINTING OFFICE
70-612CC WASmNCrON : 1993
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice.Washington.DC 20402
ISBN 0-16-041277-3
CONfMITTEE ON WAYS AND MEANS
DAN ROSTENKOWSKl. Illinois, Chairman
SAM M. GIBBONS. Florida BILL ARCHER, Texas
JJ. PICKLE, Texas PHILIP M. CRANE, Illinois
CHARLES B. RANGEL, New York BILL THOMAS, California
FORTNEY PETE STARK, California E. CLAY SHAW, Jr., Florida
ANDYJACOBS, JR., Indiana DON SUNDQUIST, Tennessee
HAROLD E. FORD, Tennessee NANCY L. JOHNSON, Connecticut
ROBERTT. MATSUI, California JIM BUNNING, Kentucky
BARBARA B. KENNELLY, Connecticut FRED GRANDY, Iowa
WILLIAM J. COYNE, Pennsylvania AMO HOUGHTON, New York
MICHAEL A. ANDREWS, Texas WALLY HERGER, California
SANDER M. LEVIN, Michigan JIM McCRERY, Louisiana
BENJAMIN L. CARDIN, Maryland MEL HANCOCK, Missouri
JIM McDERMOTT, Washington RICK SANTORUM, Pennsylvania
GERALD D. KLECZKA, Wisconsin DAVE CAMP, Michigan
JOHN LEWIS, GeoiTgia
L.F. PAYNE, Virginia
RICHARD E. NEAL, Massachusette
PETER HOAGLAND, Nebraska
MICHAEL R. McNULTY, New York
MIKE KOPETSKI, Oregon
WILLIAM J. JEFFERSON, Louisiana
BILL K. BREWSTER, Oklahoma
MEL REYNOLDS, Illinois
Janice Mays, ChiefCounsel and Sta/fDirector
Charles M. Brain, Assistant Sta/fDirector
PHILXJP D. MoselEY, Minority ChiefofStaff
SUBCOMMnTEE ON TRADE
SAM M. gibbons, Florida, Chairman
DROABNERROTSTT.E.NMAKtOSWWIS,K<^l«,l»IiHtjdnHbiiisa^ ' PBHIILLLITPHMO.MACSR,ANCEa,lifIolrlinnioais
BARBARA B. KENNKUiY, Connecticut' E. CLAY SHAW, Jr., Florida
WILLL\M*J.~e6YNE, Pennsylvania DON SUNDQUIST, Tennessee
L.F. PAYNE, Virginia NANCY L. JOHNSON, Connecticut
RICHARD E. NEAL, Massachusetts
PETER HOAGLAND, Nebraska
MICHA^i,R. McNULTY, New York
(II)
CONTENTS
Page
Press releaseofTuesday, May 25, 1993, announcingthe hearing 2
WITNESSES
UJ5. Department of State, Hon. Winston Lord, Assistant Secretary for East
Asian andPacificAffairs 28
Office of the US. Trade Representative, Hon. Charlene Barshefsky, Deputy
US. Trade Representative 37
AmericanAssociation ofExporters & Importers, RonniNass 130
AsiaWatch, MikeJendrzejczyk 77
Emergency Committee forAmericanTrade, Robert L. McNeill 105
EthicalProducts, Inc., Newaik, NJ., Ronni Nass 130
Fashion Accessories ShippersAssociation, Inc.,Joel K. Simon 140
Motorola, RichardW. Younts 148
NationalAssociation ofManufacturers, R.K. Morris 118
National CouncilonChineseAffairs, HaichingZhao 60
Pelosi, Hon. Nancy, a Representative in Congress from the State of Califor-
nia .'..: 5
PueblaInstitute,Anne Himmelfarb 86
Russ Berrie & Co., Inc., Oakland, Calif.,JoelK. Simon 140
Solomon, Hon. Gerald B.H., a Representative in Congress from the State
ofNewYoric 10
Stark, Hon. Fortney Pete, a Representative in Congress from the State of
California 4
SUBMISSIONS FOR THE RECORD
American ChamberofCommerce inHongKong, statement 172
American Federation ofLabor and Congress oflndustrial Oi^anizations, Phil-
lipFishman, statement and attachment 176
AAmMeTri—cathneTeAxstsiolceiaMtainounfafocrtuMraenrusfaIcnsttuirtiutneg,Tsetcahtneomleongty, statement and attach- 183
ments 184
Crane, Hon. Phil, a Representative in Congress from the State of Illinois,
statement 14
Hard Corps Sports, Boulder, Colo., Carl S. Rapp, letter 188
Markey, Hon. Edward J., a Representative in Congress from the State of
Massachusetts, statement 189
MBI, Inc., Norwalk Conn., PeterB. Maglathlin, letter 191
Raichle MolitorUSA, Inc., Brewster, N!y., PeterSachs, letter 192
ToyManufacturers ofAmerica, Inc., statement 193
UnitedStates Recreational SkiAssociation, EdMcArthur, letter 195
on)

UNITED STATES-CHmA TRADE RELATIONS
TUESDAY, JUNE 8, 1993
House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, D.C.
The subcommittee met, pursuant to call, at 9:30 a.m., in room
1100, Longworth House Office Building, Hon. Sam M. Gibbons
(chairman ofthe subcommittee) presiding.
[The press release announcing the hearing follows:]
(1)
FOR IMMEDIATE RELEASE SUBCOMMITTEE ON TRADE «8
TUESDAY, MAY 25, 1993 COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
1102 LONGWORTH HOUSE OFFICE BUILDING
WASHINGTON, D.C. 20515
TELEPHONE: [phone]
THE HONORABLE SAM M. GIBBONS (D., FLA.), CHAIRMAN,
SUBCOMMITTEE ON TRADE, COMMITTEE ON WAYS AND MEANS,
U.S. HOUSE OF REPRESENTATIVES, ANNOUNCES
A PUBLIC HEARING ON
UNITED STATES-CHINA TRADE RELATIONS
on TraTdhee,HoCnoomrmaibtlteeeSaonm MW.aysGibabnodnsMea(nDs.,, UF.lSa..),HouCsheairomfanReporfestehnetaStuibvceosm,mittee
today announced that the Subcommittee will hold a public hearing on United
States-China trade relations, with particular emphasis on the
Administration's policy on extending China's most-favored-nation (MFN)
status beyond July 3, 1993. The hearing will be held on Tuesday, June 8,
1993, in the main Committee hearing room, 1100 Longworth House Office
Building, beginning at 9:30 a.m.
Title IV of the Trade Act of 1974, the so-called Jackson-Vanik amend-
ment, governs United States trade relations with nonmarlcet economy coun-
tries, including China. Title IV sets forth freedom-of-emigration
criteria that must be met, or waived by the President, as well as minimum
provisions that must be included in a bilateral trade agreement, in order
for the President to grant MFN status to a nonmarket economy country.
MFN status was first granted to the People's Republic of China on
February 1, 1980. China's nondiscriminatory trade status has been
extended annually since then on the basis of a Presidential waiver of the
freedom-of-emigration requirements in subsections 402(a) and (b) of the
Trade Act of 1974.
Unless renewed, the President's waiver authority, and consequently
China's MFN status, expires as of July 3 each year. The renewal procedure
under section 402(d)(1) requires the President, if he determines that
waiver-authority extension will substantially promote freedom-of-
emigration objectives, to submit to the Congress a recommendation for a
12-month extension no later than 30 days prior to the waiver's expiration,
i.e., no later than June 3, together with his reasons for the recommenda-
tion. The President may, at any time, terminate by Executive order any
waiver granted under section 402.
Under the terms of the 1974 Trade Act, as amended, the extension of
the waiver authority for an additional 12 months is automatic unless a
joint resolution of disapproval is enacted into law within 60 calendar
days after the July 3 expiration of the waiver authority, i.e., by
September 3. The enactment of such a resolution would rescind the waiver
authority and with it the grant of MFTJ status, effective 60 days after the
joint resolution's enactment. Congress has 15 legislative days following
the 60-day period for initial passage to consider any veto message.
It is expected that one or more Members of Congress will introduce
such a joint resolution of disapproval if the President requests an
extension of the waiver authority this year. In addition, legislation has
been introduced that would make the extension of China's MFN status in the
future also dependent on progress by China in the areas of human rights,
trade, and weapons proliferation.
DETAILS FOR SUBMISSION OF REOUESTS TO BE HEARD:
Requests to be heard must be made by telephone to Harriett Lawler,
Diane Kirkland, or Karen Ponzurick [telephone [phone]] by close of
business Tuesday, June 1, 1993. The telephone request should be followed
by a formal written request to Janice Mays, Chief Counsel and Staff
Director, Committee on Ways and Means, U.S. House of Representatives,
(MORE)
!
- 2 -
1102 Longworth Houa* Office Building, Washington, D.C. 20515. The Subcom-
mittee staff will notify by telephone those scheduled to appear as soon as
possible after the filing deadline. Any questions concerning a scheduled
appearance should be directed to the Subcommittee office [[phone]).
In view of the limited time available to hear witnesses, the Subcom-
mittee may not be able to accommodate all requests to be heard. Those
persons and organizations not scheduled for an oral appearance are encour-
aged to submit written statements for the record of the hearing. All
persons requesting to be heard, whether they are scheduled for oral
testimony or not, will be notified as soon as porsible after the filing
deadline.
Witnesses scheduled to present oral testimony are requested to
briefly summarize their written statements. The full statement will be
included in the printed record.
In order to assure the most productive use of the limited amount of
time available to question hearing witnesses, witnesses scheduled to
appear before the Subcommittee are required to submit 150 copies of their
prepared statement to the Subcommittee on Trade office, room 1136 Long-
worth House Office Building, at least 24 hours In advance of their
scheduled appearance. Failure to do so may result in the witness being
denied the opportunity to testify in person.
WRITTEN STATEMENTS IN LIEU OP PERSONAL APPEARANCE:
Any interested person or organization may file written comments for
inclusion in the printed recorc of the hearing. Persons submitting
written comments for the printed record should submit at least six (6\
copies of their comments by the close of business Wednesday, June 30,
1993, to Janice Mays, Chief Counsel and Staff Director, Committee on Ways
and Means, U.S. House of Representatives, 1102 Longvorth House Office
Building, Washington, D.C. 20515. If those filing written statements for
the printed record of the hearing wish to have their statements distribut-
ed to the press and the interested public, they may provide 100 additional
copies for this purpose to the Subcommittee office, room 1136 Longworth
House Office Building, before the hearing begins.
FORMATTING REOUIREMENTS
Each statemant pranntad for printinf to th« CommittM by a witnais, any writtafl statamant or axhibit wbmitted
for tha prjntad record or any writtan comman:! in rasponsa to a raquaat for writtan commants must conform to the
{uldalinaslistad below. Any statamantorexhibit not incompliancawith thasa(uidaKnaswifl no*beprinted, butwillb«
maintainedinthaCommitteefilesforreviewandusebytheCommittee.
1. All statementsandanyaccompanyingexhibitsfor printing mustbetypedinsinglespaceonlegrJ-sUepaperand
maynotexceedatotalof10pages.
2. Copies of whole docuntents submitted as exhibit material will not be accepted for printing. Instead, exhibit
material should be referenced and quoted or paraphrased. All exhibit material not meeting these speciHcations
willbemaintainedintheCommitteefilesforreviewandusebytheCommittee.
3. Statements must contain tha name and capacityinwhichtl-jwitnesswill appearor, forwrittencomments, the
nameand capacityoftheperson submittingthestatement, aswell as anyclientsorpersons,oranyorganisation
forwhomthewitnessappearsorforwhomthestatementissubmitted.
4. A supplemental sheet must accompanyeach statementhstingthaname, fulladdress, a telephone numberwhere
the witness or the designatedrepresentative may be reached and atopicaloutlineor summaryof thecomments
andrecommendationsinthefullstatement. This supplementalsheetwillnotbeincludedintheprintedrecord.
The above restrictions and limitationsapplyonlytomaterial being submitted fori>rinting. Statements andexhibits
or supplementary material submitted solelyfor distribution tothaMembers,thepressandthepublicduringthecourseof
apublichearingmaybesubmittedinotherforms.
**********
Chairman Gibbons. Grood morning, ladies and gentlemen. This is
a meeting ofthe Trade Subcommittee ofthe Ways and Means Com-
mittee, and we are here this morning to take up a very important
subject. The subject matter of this hearing is the trade treatment
that we shall extend to the People's Republic ofChina.
I think all of us know that China is and has been for some time
a Communist country and is therefore subject to the requirements
of the so-called Jackson-Vanik amendment which requires the an-
nual renewal ofmost-favored-nation treatment, that is, normal tar-
ifftreatment. In recent years many important events within China
have focused world attention upon China. I approve of the policy
that the President has recently announced regarding China. The
purpose of this hearing today is to get the public's response to that
policy.
We will also have to take up at some later date action on resolu-
tions to disapprove the President's policy. There is a tendency in
all ofthese debates to oversimplify the issues. I believe in construc-
tive engagement for China. I look upon China as being an impor-
tant factor in the world's development. One-fiflh of all the people
on Earth live within China. It is now rated as having the world's
third largest economy. Its background is far different as far as his-
torical development is concerned than the backgrounds of most of
us here in North America or in Europe.
China's focus on human rights is not as sharply honed as ours.
Their 6,000 years of civilization has taught them that they should
handle problems in a different manner than we see fit to handle
our problems. However, I do not want to isolate China again. I
want to include China within the family of nations, at least on a
probationary basis, to see what we can do to bring the way thev
treat their people up to t—he standards that we would like to think
we treat our people by equality, freedom, justice, all of those
things that we cherish so highly and rightly so. So that is the pur-
pose of this hearing this morning. I see our first witnesses here,
Ms. Pelosi, Mr. Stark, and Mr. Solomon.
We will go first to Mr. Stark, then to Ms. Pelosi, then to Mr. Sol-
omon.
STATEMENT OF HON. FORTNEY PETE STARK, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Stark. Thank you, Mr. Chairman. I appreciate the oppor-
tunity to testify before mv colleagues this morning on the question
of MFN for China. I will keep my comments brief. As a Member
from California, I am aware that China is an important market for
our exports, but we must not overlook several key facts.
One, China is selling M-11 missiles to Pakistan; two, China is
helping Pakistan and Iran build nuclear weapons; three, China has
blocked efforts by the U.N. Security Council to take a hard line
against North Korea's nuclear bomb development program.
Pakistan, Iran, and North Korea. We sit on our butts watching
while the PRC helps these countries develop weapons that could
annihilate the world.
Next time, Mr. Chairman, it won't just be the World Trade Cen-
ter that goes up in smoke. It could be an entire city fueled by a
bomb developed and supported by the PRC. What will we then tell