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U.S.-China Business Dialogue Speech - Thomas J. Donohue

Sunday, May 15, 2005 - 8:00pm

Thomas J. Donohue
U.S. Chamber President and CEO
U.S.-China Business Dialogue Opening Speech

Monday, May 16, 2005

Thank you very much, Mr. Zhao and good morning ladies and gentlemen.

Dr. Zhang, I'd like to express my appreciation to you sir for those thoughtful opening remarks. We are grateful to you and CCPIT for your efforts and leadership in organizing today's dialogue. We also appreciate that so many senior executives have taken time from their busy schedules to join us.

Our two organizations have been working together for a number of years. I think we can be proud of the role we have played in fostering closer commercial, political and friendship ties between our countries. We have made significant progress. Political relations are strong. Trade is growing – in both directions.

As many of you know, the Chamber was a leader in the effort to bring China into the rules-based system of the WTO. We remain strong supporters of U.S.-China commercial engagement.

Since the year 2000, U.S. exports to China have doubled and China has become our fifth largest export market. Many U.S. companies are reporting that that their investments in China are profitable and enormously beneficial to their global competitiveness.

These facts must NOT be overlooked even as we urge China's leadership to foster an improved bilateral trade relationship based on increasing market access for U.S companies.

Of course there have been bumps along the way – but that is normal among big trading partners. The United States, for example, works to manage commercial disputes with other significant partners such as Canada, Japan and the European Union all the time.

Nonetheless, it is no secret that we are in a challenging period in U.S.-China commercial relations. In the United States, many members of Congress, a growing number of American citizens, and even a segment of our business community, believe that China is not always playing by the rules.

While many positive steps have been taken, there are concerns about the protection of intellectual property rights, the use of industrial policy to favor domestic companies, the speed with which China is meeting its WTO obligations, and of course, the policy on currency.

Some are advocating punitive measures, such as high tariffs on all imports from China. The Chamber opposes these steps because we believe such measures would hurt American consumers, companies and workers, and damage a relationship of high and growing significance on all levels.

But we do believe that China should take visible, concrete steps to strengthen our commercial relationship. Let me quickly mention several areas:

First, we need to see better protection of intellectual property rights and stronger efforts to stop counterfeiting.

There should be a significant increase in the number of criminal IPR investigations, prosecutions, convictions and deterrent sentences involving U.S. and foreign rights holders. We also hope that China will quickly resolve high-profile IP cases involving U.S. stakeholders.

The Chamber is committed to working constructively with the Chinese government, its business leaders, and the provinces to address this critical matter. We want to facilitate information exchanges, sharing of best practices, and encourage cooperation among Chinese and foreign companies and organizations.

I am pleased to note that the Chamber will launch its first IPR technical assistance programs in several Chinese provinces this summer. We will also soon begin issuing, on a regular basis, an independent benchmarking index to help Chinese authorities measure, chart and demonstrate their progress.

Second, while progress has been made, we hope China will move more quickly to fully implement the letter and spirit of all WTO obligations.

We are encouraged by many positive steps, including China's recent release of rules that clarify how it will open distribution services to foreign companies. We hope implementation of these new rules is comprehensive, consistent, and transparent.

Yet, actions such as those that threaten to close off the government procurement market for U.S. software can only serve to undermine Premier Wen's pledge to foster an improved trade relationship based on increasing, not restricting, market access.

We hope that the Chinese government will suspend adoption of the proposed procurement regulations on software, and any similar discriminatory procurement rules.

We further urge that China refrain from the using industrial policies, standards, domestic content rules and other tactics designed to protect domestic markets.

Third, China should begin moving now, in an orderly fashion, to a market-based currency. Currency is a fascinating subject. No one really knows how markets and money will respond to changes in policy. Yet everyone has an opinion! Ours is that it is time for China take concrete steps on the path to a market-based currency.

Serious progress on these three fronts would greatly benefit China's economy and the aspirations of the Chinese people — while also helping supporters of continued engagement forestall punitive trade actions directed at China.

Therefore, we hope that you and CCPIT will continue your good efforts to move this dynamic country fully into the rules based system…to strengthen the rule of law…and to ensure that ALL companies, foreign and domestic, have an equal and fair opportunity to compete.

Let me hasten to add that the United States has responsibilities too.

The Chamber will continue to support sensible visa policies that facilitate legitimate business travel to the United States.

We will continue to work with the Bush Administration and the Congress, where appropriate, to examine how U.S. export control laws can be improved to increase U.S. high tech exports to China.

We must make our own products and business environment more competitive by addressing policies at home that undercut our competitiveness—such as excessive legal, regulatory, tax, and energy costs, as well as an education system that needs serious reform.

And I can assure you the Chamber will vigorously fight protectionist legislation in the United States that will benefit no one. What we are asking of our Chinese partners is that you help us get that done.

As we work through all these challenges in both our countries, it is extremely important that we do not overlook the opportunities. One thing that successful business people have in common all over the world – is that they are doers, not complainers.

Where others see only problems, successful business people see opportunities. I am hopeful that our dialogue today will continue the process of identifying ways our companies can work together to build partnerships and expand commerce.

Let me conclude these opening comments with one final thought. The citizens, business leaders and governments of both our countries must not forget that the importance of U.S.-China engagement extends far beyond commerce. We are leaders on the world stage and must therefore meet the burdens and responsibilities of leadership.

The United States and China need each other. We must be in a position to work together defeat terrorism, to defuse the nuclear threat on the Korean peninsula, to fight current and future pandemics, and to address global shortages of energy and other critical commodities.

This is a critical time for the global community. It is NO time to allow trade frictions to sidetrack a bilateral relationship of growing economic and strategic importance to Asia and the entire world.

We should not minimize the important work that remains on the trade and commercial front – but neither must we let it stand in our way or cause us to over-react.

With China's help and China's definitive action, we can achieve greater balance in our trade. We can generate even greater economic benefits for the people and workers of both our countries. All of this is within our grasp. It is a challenge and opportunity which we must not allow to slip away.

Thank you very much.