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Remarks by Ambassador Ron Kirk at the U.S.-China Business Council

"US-China Trade Relations Today and Tomorrow"

U.S.-China Business Council
June 2, 009

Washington
, D.C.

*AS PREPARED FOR DELIVERY*

Thank you, President John Frisbie and the U.S.-China Business Council. It is a pleasure to speak to all of you.

We meet at a moment when the world is working to emerge from an economic crisis.

This crisis, as you know, has touched both the United States and China.   Families have struggled and businesses have failed in both our countries.

President Obama has made leading America out of this recession job number one... job number two... job number three... and job number four.

He has launched initiatives to get America working again.  He has acted to fix our banking system, to get lending going again.  He has sought to work through the challenges facing major industries.

These things have been done to help American families survive this time of turmoil.

The outlook for the economy remains unclear.  And while there are some positive signs, there remains a great deal of work to do.

No one policy has been powerful enough to end this economic downturn.  Only a carefully coordinated effort is making things right again.

And today, I can tell you: international trade can and should play an important role in America's continuing economic recovery, and the world's.

The President believes that the United States needs a new framework for trade.

He recognizes that trade is essential to America's prosperity.  It has the potential to lift up workers in America and around the world.

But to accomplish this, trade agreements need to work for all Americans.

They need to have strong labor and environmental standards.

We need to do a better job of enforcing our trade agreements.

And we need domestic policies to help Americans succeed in an increasingly dynamic economy.

The President will be outlining this framework in the near future.

In the meantime, the Office of the United States Trade Representative is moving forward on trade goals that every American can get behind.

We're seeking to cultivate better paying jobs here at home.  We are doing that by opening markets around the world to U.S. goods and services.

We are working to enforce the rights of the U.S. in the global trading system.  We want to make sure that Americans feel the many benefits of trade, far more than its costs.

China is one of our most important trading partners.  Improving our relationship with China will be an important part of achieving the President's goals.

As a matter of fact, Treasury Secretary Timothy Geithner is in China this week, working to strengthen our nations' bilateral relationship.

I had the opportunity last month to meet with Chinese Minister of Commerce Chen Deming.

We agreed to work together on the task set out by Presidents Obama and Hu... that is, the construction of a positive, cooperative, and comprehensive relationship between the U.S. and China.

Our countries have significant challenges.   But our relationship presents a great opportunity as well.

In 2001, China became a member of the rules-based global trading community by joining the WTO.

Since then, exports of U.S. goods to China have gone up by 273 percent.

By comparison, U.S. exports to the rest of the world rose by just 73 percent in the same time frame.

China's WTO commitments also enabled U.S. services companies to gain footholds in China's market.

These gains occurred in key sectors such as financial and distribution services, and express delivery.

Granted, we started from a low baseline of market access with China.

But these gains for the U.S. indicate significant progress.

And they speak of the extraordinary opportunities for job creation here in the United States if we shrink our trade imbalance with China, and if China further opens its market to U.S. goods and services.

It's hard to find any silver lining in this current economic crisis, which has hurt so many families and businesses.  But the recession has caused many countries, including China, to reexamine their overall economic policies.

As a result, China has acknowledged its need to become less export dependent, and to build more of its own consumer market to stimulate domestic demand.

Such a shift could create a great opportunity for American farmers, ranchers, producers, and workers.

The benefits would be seen not just in greater balance in the U.S. relationship with China, but in jobs created here at home.

The health and growth of our bilateral relationship with China will depend, in part, on this job-creating access to China's markets for U.S. goods, services and investment.

We are committed to working closely with China to fully develop that relationship.

There are two primary ways that the U.S. will pursue this.

Our approach to China will involve both direct diplomacy and strong enforcement of America's rights in the global trading system.

USTR's preferred instruments are those of engagement with China, through dialogue, ongoing efforts to negotiate a bilateral investment treaty, and coordinated efforts with like-minded trading partners. 

Our principal tools for engaging with China include the Joint Commission on Commerce and Trade, and the Strategic and Economic Dialogue.

Commerce Secretary Locke and I, along with Vice-Premier Wang Qishan, will convene a meeting of the JCCT later this fall.

Soon, Ambassador Demetrios Marantis will make his first trip to China as Deputy USTR to begin our preparations for this important meeting.

At this meeting, the U.S. and China can join together in affirming open trade and investment, and working together in a cooperative fashion.

We can reaffirm the commitment we both made at the G-20 to avoid protectionist measures that undermine trade rules.

We can address immediate trade frictions, such as regulatory and market access issues that impede U.S. businesses in China.

But the JCCT must go further. We must make meaningful progress on bedrock trade concerns that spring from the U.S. and China's differing economic approaches.

In some cases, China's industrial and procurement policies, as well as standards and licensing procedures, favor domestic and state-owned enterprises and discriminate against foreign firms.

We intend to deepen our dialogue and seek solutions on these important issues where we differ.

And here at home, this Administration is working across a number of agencies to coordinate our economic engagement with China.

USTR and the Commerce Department are working closely with State and Treasury to determine a clearer, and more productive, division of objectives for the upcoming Strategic and Economic Dialogue and the JCCT.

Each forum can tackle a distinctive set of important challenges and opportunities that face the U.S. and China.

Dialogue and negotiation normally resolve trade frictions far more quickly than litigation.  And in a tough economy, time is not on our side.

American producers need enhanced market access now to save jobs and create new, better-paying jobs here at home.  So we need results sooner rather than later.

This approach has been productive. 

And China has shown itself willing to resolve issues through negotiation.

Most recently, China decided not to impose inappropriate standards that would have significantly disrupted trade in information security products.

So the U.S. will continue to urge China to adopt policies that will lead to more balanced growth...

... that will encourage foreign participation, and discipline state-led economic development...

... and that will strengthen accountability, transparency, and the rule of law.

China should also make a serious effort to accelerate the growth of its services sector.

And China must do a better job of enforcing intellectual property rights ... and standards on the environment, labor, and product safety.

Changes to these policies are not only in America's interest.  I respectfully submit that they are in China's interest as well.

When negotiation offers the fastest, best, and surest way to achieve our goals with China, the United States will take that road.

But when our preferred course doesn't work, we will not hesitate to use other tools, such as dispute settlement, to enforce the rules as written.  The seven WTO cases that we have taken against China show that.

Dispute settlement is a normal and healthy part of relations between major trading partners.

It provides an important forum for resolving issues that otherwise could create significant strains.

We are committed to working positively and cooperatively with China.  But we will always put the interests of American businesses and workers at the fore.

We will not yield on enforcing the right of American businesses and exporters to compete on a level playing field with China.

If we can do it by trade diplomacy, we will.  If we have to file at the WTO, we'll file.  And as appropriate, the U.S. will also apply trade remedies fully and fairly as provided for under WTO rules.

The way that USTR approaches disputes with China will be an important element... and an important example... of this new administration's new focus on enforcement.

USTR intends to move more aggressively to ensure the rights of the American exporters.

We intend to restore confidence that there can be a level playing field for our workers and businesses.

President Obama and I believe that on that level playing field, Americans can compete in any sector - from services to manufacturing to agriculture.

So we will pull out all the stops to see our rights made real for the sake of working families here at home.

The American people deserve this Administration's best effort to ensure a fair game on trade.  They deserve the smartest possible engagement and enforcement.

It will take both to craft a trade policy that is more responsive and more responsible to the American people's concerns.

It will take both to forge the strongest, most beneficial relationship with the People's Republic of China.

The Obama Administration is committed to achieving these goals.

We look forward to working with you, and with our counterparts in China, to do so.

We believe we have a strong foundation for better cooperation with China, bilaterally and multilaterally.

I take our Chinese partners at their word: that China will work with the United States toward a positive and cooperative relationship on trade, investment, and economic issues.

This commitment should encompass not only our bilateral relationship, but also multilateral efforts such as the Doha Round of talks within the World Trade Organization.

President Obama and I are committed to a successful conclusion to the Doha round.

We seek a balanced and ambitious agreement that yields meaningful new market flows for all.

China has been clear that it is prepared to shoulder its responsibilities as an important member of the WTO.

The U.S. believes that China can play a constructive role in the Doha talks, commensurate with its standing as a global trading power.

The United States recognizes that Doha is a development round.  The least developed countries are not being asked to engage in further market openings to get a Doha deal done.

However, we do see a role for advanced developing countries like China - and India, and South Africa, and Brazil - to make the hard choices that are required of those who would move to the fore of the global trading community.

China and the United States can and should consider changes that will put Doha's multilateral negotiations on a straighter path to success.

I am ready to work with Vice-Premier Wang, Minister Chen, and other senior Chinese officials toward this end - and to make sure that America's bilateral relationship with China continues to grow and prosper.

Working within the rules-based system, the U.S. and China can build on the progress that we have made.   We can cement smart trade policies as a pillar of our future together.

Thank you.