U.S. State Department Geographic Bureaus: East Asia and Pacific Bureau







May 23, 1995

Mr. Chairman, I very much appreciate the opportunity to come before this committee to discuss with you the renewal of Most Favored Nation status for China. You have just heard from my colleague, Ambassador Barshefsky, the many avenues in which we are pursuing the interests of the United States in trade with China and the importance of MFN to maintaining our trade relationship and providing jobs and export opportunities for America. I want to add a few words to put the MFN issue into the overall context of American foreign policy toward China.

This Administration believes the U.S. national interest is served by developing and maintaining friendly relations with a China which is strong, stable, prosperous, and open. Last year the President decided to renew China's most-favored-nation (MFN) trade status because he concluded that strengthening broad engagement between the U.S. and China offers the best way, over the long term, to promote the full range of U.S. interests with China, including our human rights, strategic, economic and commercial concerns.

The President's MFN decision recognized that engagement with China has enabled us to make progress and to reduce differences on a wide range of issues. High-level engagement provides valuable opportunities to remind China of the need to adopt and fulfill international norms. Pursuing the interests of the United States is of course the fundamental premise of our China policy. In trade and other areas, we must apply this yardstick as we address the entire constellation of bilateral, regional and global concerns in which our countries' interests intersect.

Comprehensive Engagement:

It is in this context that the President approved in September 1993, a strategy of "comprehensive engagement" with China. The purpose of this strategy can be simply stated:

o to pursue all of our interests at the levels and intensity required to achieve results;

o to seek to build mutual confidence and agreement in areas where our interests converge; and

o through dialogue, to reduce the areas in which we have differences.

We believe our engagement strategy has succeeded not only in helping to advance U.S. interests with China but also in encouraging China's continued integration into the international community.

Following high-level consultations with us last October, China re-affirmed its commitment to the Missile Control Technology Regime (MCTR). China agreed that it would not export ground-to-ground missiles subject to the MCTR.

China has continued to be a quiet but helpful partner in regional affairs of great concern to us, most notably on the Korean peninsula.

China has also joined us in continuing efforts to support the transition to a democratically elected government in Cambodia. China continues to integrate itself into the greater East Asian community by participation in regional fora such as APEC and the Asean Regional Forum.

China is moving ahead with development of its Agenda 21 program for protecting the environment into the twenty-first century. The Vice President has agreed to become personally involved in working on a U.S. - China sustainable development initiative.

You have heard from my USTR colleagues about the status of our efforts to negotiate China's accession to the World Trading Organization. We also continue to address a number of trade issues bilaterally, most recently through the successful conclusion of negotiations on the protection of intellectual property rights.

Through our comprehensive engagement strategy we have played an active role in some of the above examples and provided positive encouragement in others.

Our foreign policy toward China continues to focus on three baskets of core concerns: human rights, non-proliferation and economic issues. Let me review where we stand on each.

Human Rights

The United States has very serious concerns about human rights abuses in China. In considering whether to renew China's MFN status last year, the key question was how the United States could best advance human rights and other vital interests in China. The President decided that extending MFN would promote broad engagement between the U.S. and China, not only through economic relations but through cultural, educational and other contacts. These contacts, combined with vigorous efforts to promote human rights, are more likely to encourage constructive change in China.

Frankly, we have not seen the kind of progress we would like on human rights in China over the past year. The recent detention of five dissidents is just the latest example of Beijing's continued defiance of internationally-recognized norms in this area. At the same time, however, we have made some progress on the four human rights related initiatives announced by President Clinton in May 1994.

We have continued our bilateral human rights dialogue with the Chinese. The seventh round took place in Beijing January 13-15, 1995. We again raised our core issues of concern--freedom of speech, association and religion and the treatment of prisoners and persons detained by the government in these dialogues, but also sought to broaden and make more substantive our engagement with the Chinese on rule of law issues and legal exchanges.

We have also continued our efforts to work for improvements in the human rights situation in China in multilateral fora. We joined with the E.U. and a number of other countries to introduce and pass a China resolution at the UNHRC in Geneva. In spite of intense Chinese lobbying, we and the co-sponsors, were able to defeat China's procedural motion to block the resolution. For the first time in five years, the resolution came to the floor. Although it was defeated -- by only a single vote -- the resolution sent a strong signal that China's human rights practices are of global, not just bilateral, concern. Furthermore the vote laid down a marker that no country can avoid scrutiny of its human rights practices by the international community.

Thanks to their already high standards for international business practices, American businesses have become the employer of choice in China. Through their everyday operations, they are quietly contributing to the transformation of Chinese society. We have been consulting with U.S. businesses, human rights NGOs, Congress, and labor organizations on the development of a set of voluntary business principles for use in China and elsewhere in the world. These principles were informally released March 27 at the White House; consultations continue to further develop the principles and the plan for their implementation.

The Voice of America has increased its programming in China by one hour with a program called DATELINE, which consists of news reports, analysis and live correspondent interactive. A second weekly hour-long radio/TV simulcast program has also been added. Called CHINA FORUM, it addresses a wide variety of issues through news features, guest interviews, and comprehensive discussion organized around a weekly topic.

We are increasing our support for American NGOs that are working to promote a stronger civil society in China.

In enforcing our statutes on the prohibition against prison labor goods entering the United States, we have initiated investigation in over fifty cases and visited six suspected facilities this year already. We have twenty detention orders outstanding against products alleged to have forced labor content. In the past two weeks we have received reports of visits to two more suspected prison labor facilities. We have prosecuted where we thought we were justified and the Chinese have punished factory managers where we have found trade in forced labor products.

Through difficult, but successful negotiations, we are developing a workable system for investigating allegations of trade in forced labor products. We are constantly in touch with the relevant authorities in China and are establishing a relationship based on mutual trust and confidence.

Since the signing of the Statement of Cooperation on Implementation of the Prison Labor MOU in March of 1994, the Chinese have been cooperative in fulfilling their obligations under both the SOC and MOU. Although cooperation slowed down somewhat since January 1995 due to personnel changes in the Chinese Ministry of Justice, the Embassy has recently had meetings with the MOJ and reports that the process is moving ahead again.

There is some concern that the Chinese, while allowing inspections of the "Reform through Labor" camps (Laogai), will not allow the inspection of "Reeducation through Labor" camps (Laojiao). Since both types of camps use forced labor, it is critical to proper enforcement of U.S. trade law that we be allowed to inspect both types of camps.

We continue to press the Chinese for access to these facilities and, recently, at least one responsible official has indicated that our concerns are being viewed positively.

We have made counternarcotics cooperation an element of our ongoing dialogue with the PRC and have received high level assurances from the Chinese authorities that they desire greater cooperation in this area. On our own initiative we have conducted training programs for Chinese drug enforcement officials. The DEA conducted an enforcement training course in Xiamen, Fujian last year. A group of Chinese customs officials were trained at the U.S. Customs detector dog school in 1994. More training by DEA is scheduled this year.

In addition, we have consistently encouraged China to urge Burma to take more initiative to control the production and trafficking of opium and heroin. The Chinese authorities have shown that they are willing to send a strong message to trafficking groups in Burma. In 1994, the Chinese tried and executed Yang Maoxian, the brother of the leader of a principal trafficking group, the Kokang. This was a clear signal to trafficking groups in Burma that China will act vigorously to stem the regional trade in heroin.

Economics and Trade

We have deep concerns over the current imbalance in our trade relationship with China. Last year our bilateral trade deficit was nearly $30 billion, second only to our trade deficit with Japan. You have heard from my USTR colleagues how we are vigorously promoting our trade agenda both bilaterally and multilaterally.

As in other areas of our China relationship, we base all of our trade initiatives on international rules and disciplines -- of the WTO and other international conventions.

-- Ongoing negotiations over accession to the WTO for China are part of our overall strategy of creating valid frameworks for our trade relations.

Through trade, U.S. concepts filter into the consciousness of all Chinese. Opening markets for America's idea industries -- movies, CDs, interactive software, television -- and for products that make communicating easier -- such as fax machines and copiers -- spread U.S. values and ideals.

We also continue to expand our export promotion efforts - one of the central responsibilities of what Secretary Christopher refers to as our "America Desk" - and cooperative programs in scientific and technical fields. For example, during Secretary O'Leary's visit to China in March, we not only witnessed the signing of commercial agreements that will facilitate billions of dollars in new U.S. exports, but also established the framework for scientific, technical and economic cooperation in developing China's sustainable energy development program.

Secretary Brown's visit to China last August was equally successful in helping to build long-term economic and business ties between China and the United States. Secretary Brown will return to China in July for the next session of the Joint Commission on Commerce and Trade (JCCT). Besides promoting American business opportunities and trying to resolve some of the problems American firms face in doing business in China, this year's JCCT will focus on a significant new training initiative which will help to further develop the infrastructure China needs to sustain its economic growth and transition to a rules based society.


China is a significant producer of nuclear, chemical and missile-related equipment, materials and technology.

Since China is a major player in the international arms world, Chinese observance of the multilateral proliferation regimes is necessary to halt the spread of weapons of mass destruction and missiles. Proliferation is a high-level concern in our dealings with Beijing, and comprehensive engagement has helped us to move ahead on several fronts with the Chinese in this very important area of U.S. national interest.

We continue to work with the Chinese to bring their policies into line with prevailing world standards on the full range of nuclear and conventional weapons proliferation issues. As is the case in most issues with China, we are making varying degrees of progress in these endeavors.

The U.S. is concerned over China's nuclear cooperation with Iran. While China's cooperation does not involve nuclear weapons usable material, equipment, or technology, and is subject to safeguards, we oppose such cooperation because we are convinced that Iran is using its civilian nuclear program and its NPT status as covers for nuclear weapons development.

In October, 1994, the U.S. and China agreed to work together toward the earliest possible achievement of a multilateral, non-discriminatory, and effectively verifiable convention banning the production of fissile materials for nuclear weapons or explosive devices.

Such a convention will help prevent the proliferation of nuclear weapons, as it provides a vehicle for halting the production of nuclear weapons fissile materials in key threshold states.

Another major breakthrough in our proliferation dialogue with the Chinese is represented by the October, 1994 Joint Statement on Missile Non-proliferation.

The Chinese have agreed to a global ban on exports of MTCR-class ground-to-ground missiles. This exceeds the "strong presumption of denial" requirements of the MTCR guidelines. In addition, China has accepted the principle of "inherent capability" in defining an MTCR-class missile.

Both the U.S. and China affirmed their respective commitments to the Regime's original guidelines and parameters. We intend to engage the Chinese further with the goal of bringing their commitments fully into line with those of the Regime's members and adherents.

As a prelude to the Chinese commitments in the agreement, the U.S. lifted sanctions imposed against China in August, 1993 for transfers to Pakistan.

We are currently engaged in exchanges with China on missile proliferation, nuclear cooperation and nuclear proliferation, and export controls. China has agreed to a series of meetings with U.S. experts over the next few months to discuss these issues.

China supported indefinite and unconditional extension of the NPT and voted with the United States at the NPT extension conference earlier this month in New York.

We regret China's continued nuclear testing and have called on Beijing to stop its testing program immediately. In this regard we welcome China's statements that they will join the CTBT and cease nuclear testing. We will continue to engage the Chinese on these and other non-proliferation issues.

In the security area, we are moving ahead with military to military contacts. We believe these contacts, especially at high levels, serve to reassure both sides as to each other's intentions. Defense Secretary Perry visited China last year in October and we are continuing our ongoing program of exchanges of high-level military officers.

In sum, the Administration is committed to a policy of comprehensive engagement with China as the best means to advance U.S. national interests across a wide range of issues. That concludes my opening remarks, I would be happy to answer any questions you may have.


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