PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | SPEECHES & EDITORIALS | 2000 | HEARING ON ACCESSION OF CHINA TO THE WTO

Hearing on Accession of China to the WTO Gary Benanav Chairman, PBEC U.S. Member Committee & Chairman and Chief Executive Officer, New York Life International Written Statement Submitted to the Committee on Ways & Means U.S. House of Representatives May 3, 2000 As the House prepares to vote on extending permanent "normal trade relations" status to China, members of this Committee and this body are confronted with an issue that is at once elegantly simple and extremely complex. Simple, because we are talking about making permanent a "normal" status that China has already had for two decades. Simple, too, because the benefits inherent in China's commitments in joining the WTO are so profoundly in America's economic interests. And at the same time, this question is deeply complicated, because China is itself incredibly complex, and so are the feelings that we Americans have about that country. For those of us who support PNTR-and the U.S. Committee of the Pacific Basin Economic Council does support it, vigorously-the merits of a "yes" vote are absolutely compelling. Nonetheless, we appreciate the challenges with which many Members of this body will be confronted later this month. We also agree with many of the goals expressed by many of the opponents of PNTR. However, we believe those goals can be achieved more effectively and more quickly by granting China PNTR status, bringing it into the WTO and integrating its economy more deeply with the global economy. Much as been said and written about this issue. My aim is to provide the Committee with a perspective on why China's integration into global economic institutions is so important to a region-the Pacific Basin-in which the United States has so much at stake, economically and geo-strategically. PBEC is a multilateral business organization supporting economic growth in the Asia Pacific region through economic cooperation and trade and investment liberalization. The PBEC US Member Committee includes American companies with aggregate sales of over one trillion dollars, and employing more than one million people. In my capacity as chairman of PBEC US, I am in regular contact with business leaders from all over the Pacific Rim. We work together to create business-led initiatives that link the region's economies together in dynamic and productive ways. Our meetings involve substantive dialogues about the challenges, opportunities, and trends facing our region. I can assure the Committee that no issue is considered more critical by PBEC members than ensuring China's stable economic evolution and its integration into regional and global economic institutions. PBEC's members approach the question of China's WTO membership from a variety of angles. First, of course, businesses throughout the region are intensely interested in expanded access to China's vast marketplace for goods, services and agricultural products. Continued growth and reform in China, coupled with the sluggish pace of growth in Japan, make access to the China market increasingly important for business in the region. PBEC members, in the United States and around the region, recognize that China has committed to a truly stunning series of steps to open its market to foreign goods, services, and investment. The bilateral WTO accession package negotiated by U.S. Trade Representative Barshefsky and her team is remarkable for the depth and breadth of market access improvements it contains. Because China's final WTO accession package will be based on the best market access offer for any particular product or sector, PBEC members are also closely monitoring China's negotiations with the European Union and other trading partners. In the product sector with which I am most familiar-life insurance-the commitment contained in China's accession agreements will mark a profound shift in the ability of American life insurers to establish businesses and sell policies throughout China. China's WTO membership will mean that companies like New York Life International can operate in a more certain and less restricted environment. The comprehensive scope of China's WTO commitments means that similar benefits will apply to PBEC members in virtually every economic sector, including telecommunications, food and agriculture, aerospace, and many others. Beyond the clear market access benefits, the regional business interests represented within PBEC also view China's WTO membership and PNTR as a boost for economic and political stability in the Asia Pacific region. The annual Congressional debate over NTR renewal, and the possibility that this status could be revoked, have been a constant source of concern to businesses in Hong Kong, Taiwan, and other Asia Pacific countries whose trade is increasingly intertwined with that of China. More broadly, business people in Asia have regarded the annual NTR debate as a sign of basic instability in relations between the United States and China. I cannot stress enough how much attention business people throughout the region devote to the dynamics of U.S.-China relations. It's important to understand that, when relations are rocky between two of the region's strategic powerhouses, ripple effects-in financial markets, trade, and other aspects of economic life-are felt throughout the region. No one in the region expects that differences between the United States and China would-or even should-disappear altogether as a result of China's WTO membership and approval of PNTR. Nonetheless, these steps would be seen as a positive sign of new stability in U.S.-China relations. And that would be a very good thing indeed for American economic interests throughout the Pacific Basin. A more stable U.S.-Sino relationship, combined with more economic contacts and transactions between companies and people on both sides of the Pacific, will actually increase America's ability to influence China positively on non-economic issues and policies where our two countries differ. Very much related to this issue of stability is the potential for China's WTO membership to facilitate the integration of this giant economy into global economic systems and institutions. As a growing economic power in Asia, China is an increasingly important player in regional trade and investment flows. By the same token, China represents growing economic and competitive challenges for businesses around the region. All of us in the Asia Pacific business community have a huge stake in encouraging China to be a cooperative, constructive, and fully integrated player in the region's economic affairs. Nothing is more critical to that objective than China's membership in the World Trade Organization. WTO membership will, by definition, bring China into a framework of rules, and procedures for enforcing those rules. Business leaders in the Pacific Basin recognize that even when China is in the WTO, there will continue to be bilateral trade conflicts between China and the U.S. and others, including small economies in the region. The WTO, through its dispute resolution processes, provides workable mechanisms for addressing specific trade tensions. Moreover, the WTO's multilateral system of dispute resolution strengthens the position of small countries in the region that might be unwilling to confront China on a strictly bilateral basis. In closing, PBEC members in the United States and around the region are keenly aware of the importance and implications of Congress' consideration of China's WTO accession in general, and the PNTR issue in particular. We appreciate this Committee's thoughtful leadership on an issue whose implications will be felt so broadly around our increasingly integrated region.