U.S. and China Reach Trade Agreement

(November 16, 1999) The U.S. and China reached an agreement on Monday, November 15, in Beijing on ascension of China to the World Trade Organization. The details of the agreement, particularly those regarding the Internet, telecommunications, and intellectual property, were not released. U.S. telecom companies are optimistic.

U.S Trade Representative Charlene Barshefsky addressed the agreement in a press conference. "There was some ambiguity as to coverage of the Internet from last spring. This has now been fully covered." However, she did not say how it has been covered.

The USTR also issued a press release which stated that "In response to the commitments contained in the agreement signed today, President Clinton will work with other WTO member countries to gain China's entry as soon as possible and will seek from Congress the approval of permanent Normal Trade Relations (NTR)."

Charlene Barshefsky

Barshefsky also addressed telecommunications in her press conference. "This is terribly important for the development of the Chinese economy as well as for basic access for foreign telecommunications suppliers. In addition, we have clarified further commitments on satellites and we're pleased that we now have full coverage for satellites in the context of telecommunications."

Barshefsky also stated: "With respect to telecom, we also clarified distribution issues on audio-visual, which were unclarified last spring, and that is the right to form joint ventures for distribution for videos and sound recordings and that has now been secured."

"Last, with respect to telecom. Originally, our conception on telecom had been quite limited. Inward investment in telecom culminating in 51 percent four or five years down the road. The 51 percent issue was a very significant issue for China. What we have done instead is to allow for 49 percent investment by foreign telecom providers in China from date of accession."

"This is very significant and unprecedented," said Barshefsky. "Moving to 50 percent in the second year after accession. And as you know under Chinese law, contractual management and operational participation is possible in a 50/50 situation. Here again, we tried to balance a particular sensitivity of China with the absolute commercial interests of the United States, leading to an overall strengthening of the commitments particularly in terms of earlier access at a much greater level than previous contemplated."

Telecommunications Industry Association President Matthew Flanigan is optimistic. He stated after the announcement that "the benefits of China's eventual accession to the WTO will be reaped by China as well as foreign investors. A thriving telecommunications sector is key for any country desiring to create a solid information-based society."

"Today's agreement, the first step toward this goal, has the promise of developing a more competitive telecommunications environment in China, bringing lower prices and a wider selection of telecommunications products to the Chinese marketplace," said Flanigan. "With sales of telecom infrastructure equipment in China rising rapidly over the past decade, fair and transparent access to China's marketplace is a welcome sign for U.S. industry."

The TIA also stated in a press release that the "TIA stands ready to support the deal on Capitol Hill on behalf of its member companies. U.S. Congressional approval is required to grant Permanent Normal Trade Relation (PNTR) status to China before U.S. companies can enjoy the negotiated market access provisions."

Art Kobler, President of AT&T China, had this to say: "Today's WTO agreement between the US and China is a significant step forward for global business and we look forward to learning the details in relation to China's telecom market. AT&T hopes the agreement will result in substantive moves towards liberalisation of the telecom sector. We believe opening the telecommunications service industry will be good for consumers, good for businesses, and good for the industry overall."

Rep. Tom Bliley, Chairman of the House Commerce Committee, also praised the agreement. "I am pleased that we have reached a deal on China's entry to the WTO," said Rep. Bliley. "This will be of great benefit to American businesses and U.S. workers."

"Entry into the WTO is an important step forward in moving China in the direction of free the free markets," said Rep. Bliley. "I look forward to supporting this key step in promoting free trade."

Barshefsky opened the press conference by stating that "I think this is a profoundly important agreement for a number of reasons. As a trade agreement it obviously protects American Commercial interests and enhances significantly America's commercial interests. The agreement itself is absolutely comprehensive. It covers all goods, all services, all of agriculture. It covers a variety of rules with respect to import surges, technology transfers, state trading enterprises, and high dumping, investing, subsidies and other issues."

She added that "this agreement will strengthen the Rule of Law in China. And I think actually, this is the most import aspect of this agreement. The WTO is a rules-based trading regime. It encompasses almost 140 nations. And the rules, the base rules on transparency, no discrimination, judicial review, administrative independence are absolutely critical to the functioning of the modern economy."

Barshefsky also addressed tariffs, banking, securities, automobiles, and textiles.

However, Barshefsky did not discuss enforcement of intellectual property rights.