"The Need for Mutual Openness in U.S.-China Commerce"
Remarks by
THOMAS J. DONOHUE
President and CEO, US Chamber of Commerce
Shanghai, China
May 24, 2010
Introduction
I'd like to express my appreciation to Robert Roche, Brenda Foster, and the entire Amcham staff for the opportunity to be here today. I know it's a very busy time for you.
Amcham Shanghai is the largest and fastest growing American chamber in the Asia-Pacific region.
Your work has helped advance the U.S.-China commercial relationship in many important ways. We appreciate your leadership.
I'd also like to congratulate you on the important role you played in mounting and launching the World Expo. We did our best to help too and are a proud sponsor of the USA Pavilion.
I had the opportunity to visit a number of pavilions yesterday and they were spectacular. In fact, we enjoyed the Expo so much, we're going back there tomorrow before returning to Washington.
What I'd like to do is make a few comments about how we see the U.S.-China relationship and global trade agenda from our vantage point in Washington, D.C.
After that, I'd be happy to respond to your questions on any subject.
The Trade Agenda in Washington is Stuck
In case you haven't noticed, there are a few things going on back home—a tenuous economic recovery a financial regulatory reform bill that creates more problems than it solves...a health care bill that we believe will drive the United States even further into debt and then, of course, the mid-term elections this November.
In fact, politics are driving a great deal of the agenda in Washington – and unfortunately, politics are driving the trade agenda right into the ground.
Organized labor, which can put tremendous pressure on the administration and Congressional majority, strongly opposes new trade and investment deals. This is despite the fact that new agreements would pry open markets and create millions of jobs for American workers.
I believe that the administration is populated with a number of serious voices who support trade—our trade representative, Ambassador Ron Kirk, is one of them.
Beginning with the President himself, they have said many of the right things about trade. We were particularly encouraged when President Obama embraced our call in his State of the Union address in January to double American exports over the next five years.
Unfortunately, we haven't seen much movement since then.
About a week and a half ago I made a speech at the National Press Club in which I outlined the cost of inaction.
Think about this: According to the WTO, there are 262 free trade agreements in force around the globe today, but the United States has just 11 FTAs covering 17 countries.
America is party to only one of more than 100 negotiations of bilateral and regional trade agreements.
We are also far behind in the race to enact bilateral investment treaties.
It is inexcusable that Congress and the administration are sitting on three excellent Free Trade Agreements—with Colombia, Panama, and South Korea.
Six months ago, the U.S. Chamber released a study which warned that the United States could suffer a net loss of more than 380,000 jobs and $40 billion in lost export sales if we fail to implement it failed to implement these agreements while the EU and Canada go ahead with theirs.
In fact, the EU and Canada are moving forward. That means they will be able to sell their products in those markets at a better price. The United States will lose market share and jobs.
But that's not all. The South Korea pact has the potential to be a model for other agreements across the Asia-Pacific a region that now accounts for half of the global economy. We're talking about the future here!
So we face many challenges in the United States when it comes to trade and global commerce.
We need to get back in the game and negotiate more bilateral and regional arrangements. We must not give up on a Doha round.
We also need to reform our export control rules, get rid of self-defeating Buy American regulations, and overhaul our visa and immigration policies.
Then, there are a whole host of competitive challenges facing the American economy.
Our infrastructure is running out of capacity. Our public education is failing to equip our young people with the skills they need to compete globally. And lawmakers seem all too eager to saddle American companies and our capital markets with the excessive taxes, mandates, and regulations.
All of this is a prescription for shipping more jobs and more companies out of the United States, and ceding important markets to others.
Questions about the Future
Why am I raising these issues on a trip to China? Because I've always found that when you want to carry some messages to an important trading partner, you can earn a lot of credibility by first acknowledging the many challenges we face in the United States.
And that's what I did on Friday in Beijing. I had an opportunity to meet with Vice President Xi Jin Jinping as well as other senior leaders and ministers.
I assured the leaders that, working with good partners like Amcham Shanghai, the U.S. Chamber would continue to educate our policymakers and the public on the fundamental importance of U.S.-China relations—and how both countries benefit immensely from the commerce between us.
We believe in this relationship. We support this engagement, and we want to work to make it better and better.
Furthermore, we will continue to oppose protectionism in all its forms at home and abroad, and believe the U.S. market should be open to Chinese products, investments, and people.
As your surveys have shown, and as our members have told us, most companies find their experience in China to be positive and profitable.
But there are growing concerns about the future—about whether China is backtracking on the progress it has made to open its markets and whether U.S. companies will enjoy a level-playing field.
In fact, these concerns have risen to the highest level I've seen in 10 years.
We are concerned about elements of China's industrial and indigenous innovation policies—including the use of discriminatory government procurement lists, standards setting and tax measures, and compulsory certification rules which seem designed to force technology transfer and restrict foreign competition.
On Friday evening, the Finance Ministry released a draft procurement product content standard for comment.
That's a welcome step. And I think we'll keep moving in the right direction. We hope further steps will be taken, including elimination of procurement lists and China's timely accession to the WTO Government Procurement Agreement on commercially meaningful terms.
We have expressed ourselves very clearly to the U.S. and Chinese officials who are today participating in the Strategic and Economic Dialogue talks in Beijing.
I also advised the Chinese leadership that our companies are concerned about continuing investment and operating restrictions in sectors ranging from financial services, insurance, telecommunications, distribution and logistics, direct-to-consumers services, and express delivery services.
Currency remains a strong irritant as well—and we'd like to see some progress soon. The debt crisis in Greece and the weakening of the Euro may make this more difficult in the short-run.
And, while there has been a significant commitment to strengthen IP laws and enforcement, but we remain very concerned about high levels of piracy and counterfeiting, as well as questions about the commitment to protect and enforce foreign patents.
The Need for Mutual Openness and Deeper Collaboration
I think the Chinese leadership understands that unlike other voices in our country, we don't play politics with a commercial and strategic relationship of this importance. So hopefully, the messages we conveyed will have a positive impact.
And let's also hope that the two governments have a productive Dialogue in Beijing. We need concrete progress soon to help ensure that protectionist voices do not prevail in the United States Congress.
Ladies and gentlemen, all trading relationships of this size, importance, complexity, and interdependence will have frictions. We can deal with those. But what is most critical is that Washington and Beijing never waver in their commitment to open markets, and the free exchange of goods, services, products, ideas, capital, and people. We must all work together in cooperation to keeping this important relationship.
Now more than ever, the concerted leadership of China and the United States is needed.
- It's needed to restore the global economy to full health and address its imbalances
- It's needed to set a positive example by resisting protectionism in all its forms and by further lowering the trade and investment barriers between us
- It's needed to lead the world to a new global trade agreement that could lift millions out of poverty
- It's needed to develop solutions to the energy and environmental challenges of our time
- And leadership by China and the United States is needed to address with strong mutual action the many threats to global peace and security that exist across the world today.
Our two countries and systems are very different. We have never pretended otherwise. But we are finding more and more reason to work together.
After a few short decades, the United States and China have managed to create one of the deepest and most significant commercial engagements in history.
The days ahead can be even more successful if both the United States and China remember what brought us this far – a commitment to the mutual openness of our markets.
Keeping our commercial and strategic relationship on sound footing—making sure it grows and deepens—is a fundamental challenge facing the leaders of the United States and China. It's our responsibility as a business community to see that they meet this challenge courageously and successfully.
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