GUTIERREZ: Good afternoon. I would like to thank everyone for
coming this afternoon and I want to thank our Chinese hosts for all the hard
work they put into setting up and preparing the 16th annual JCCT
meeting. Representing the
U.S. delegation is my fellow JCCT
co-chair United States Trade Representative Rob Portman and the Secretary of
Agriculture Mike Johanns.
today’s meetings are a step forward.
However, we must insure that commitments translate into results. Let me just highlight two of the
outcomes of our discussions today.
The first is in the area of intellectual property. The government of
China has agreed to increase criminal
prosecutions for intellectual property crimes. The government of
China has also agreed to increase the
percentage of cases that are referred for criminal prosecutions. And, importantly, Chinese officials have
also agreed to strengthen efforts to stop piracy at trade fairs and to establish
a nationwide effort to improve police coordination in investigating IPR crimes
across all parts of China. These are important steps forward.
second issue where we have made progress is in the area of market access,
especially for U.S. software. The Chinese government software market
is an $8 billion market and this is a very important matter – a very important
issue for U.S. companies.
said, today’s meetings were a step forward but it is only one step. The real outcome of this meeting will be
known when we see the results in the coming months. Right now we know that
China has full access to the
U.S. market. American companies simply want the same
access in China. President Bush has instructed us to not
be satisfied until that imbalance is rectified. Commitments made in meetings are one
step but only one step. And, as
President Bush has reminded us, very often what really counts are the
results. What really matters are
the outcomes. We will be working
very closely with our Chinese partners to insure that we achieve the results
agreed to at today’s meeting. Thank
you and I would like to turn it over now to Ambassador
PORTMAN: Thank you Secretary Gutierrez and I
agree with Secretary Gutierrez that we had frank and constructive meetings
today. The JCCT is an important
bilateral mechanism in the U.S.-China relationship. It’s an opportunity for us to engage
constructively with one another on the very important economic and trade
relationship that we have. In fact,
I believe that the fact that Secretary Gutierrez, Secretary Johanns and I are
all three here signify the importance that the United States attaches to the
economic relationship with China and the importance we attach to our very real
trade issues which separate us. I
want to thank our Chinese hosts for their preparations for these meetings.
sum up the outcome of this year’s JCCT as measured progress. The Chinese have agreed to take a number
of actions that Secretary Gutierrez has said that are important to us. He has outlined well the intellectual
property changes. One additional
one that will be helpful to me, frankly, in Washington, because I receive a lot of
complaints from U.S. companies about intellectual
property, is that the Chinese government has agreed to have an ombudsman in the
Washington embassy of
China to help small and medium size
U.S. businesses better protect their
intellectual property rights in China.
also received a commitment to delay proposed government procurement regulations
for software that would be very damaging to
U.S. business. We have also received a commitment by
China that they will notify to the WTO
all of its subsidies which is government support for
China’s industry services and
agriculture by the end of this year.
This is something that we have asked for, for a long time. It helps with regard to
transparency. It helps with regard
to knowing better the details of our trade relationship – to be able to better
inform. We also received a
commitment to insure the right of U.S. businesses to distribute their
goods throughout China. And, there have been a number of
licenses issued recently as a result of the JCCT, so we have been able to clean
up a backlog in licenses for distribution.
We also have a commitment that direct sales persons will now be able to
sell U.S. made products door to door in
Gutierrez has said it well. This is
a step forward and we welcome these new commitments and I want to thank Vice
Premier Wu Yi for her personal efforts to make this progress. However, even with the measured progress
in these areas much more needs to be done to address the very real problems we
face in market access. At a time
when the U.S. is running an historically high
deficit with China, the current imbalance in our
trade is neither healthy for China nor the
States. There are many factors that contribute
to that imbalance but one is the need for better access to the Chinese
market. Through the JCCT we’ve made
some progress today but our job now is to insure that more actions are taken to
insure market access, intellectual property protection and other vital issues in
our economic relationship. We need
to balance the relationship. We
need to further expand U.S. exports by having the Chinese
open their markets just as we have opened our market in the
States to Chinese products.
I want to
close by saying that this evening I will have the opportunity to travel to the
city of Dalian in
China is hosting an informal and very
important gathering of WTO members to try to advance the ongoing
Doha development agenda which is the
WTO world trade negotiations.
Secretary Johanns will also join me at this important meeting.
China is represented by Commerce
Minister Bo Xilai at these meetings and I want to commend
China for what I see is an increasingly
important role that China is playing in expanding world
trade through the Doha development agenda. Thank you.
SECRETARY JOHANNS: The meeting today for agriculture was
very successful. There are five
areas that I would like to touch on just very briefly and then we will be happy
to answer any questions that you have.
first area I am very pleased to indicate that as a result of our cooperation
through the U.S.-China high level working group on biotechnology, the Ministry
of Agriculture has approved the final pending biotechnology event which is NK603
second area, in the past week the USDA and the Ministry of Agriculture held the
inaugural meeting of the USDA-MOA joint committee on cooperation in agriculture
as well as the first session of the newly formed agriculture working group of
the JCCT. This set the stage, and
we agreed to pursue, further cooperative research and exchanges of mutual
interest. We also announced a
follow on project funded by the Trade and Development Agency which will be
coordinated by the Department of Agriculture which will provide training on
trade related aspects of biotechnology.
area, each side has agreed to provide a transparent process outlining the
remaining steps for the commencement of trade for our respective market access
requests for beef and related products and for cooked poultry. This October USDA will host a BSE
technical team from China.
China will host a food safety and
inspection service audit team.
fourth area, both sides have reached an agreement on furthering our technical
cooperation through a memorandum of understanding on food safety and plant and
animal health. We initialed that
in the fifth area, we’re also very pleased to indicate that we intend to
continue training in sanitary and phytosanitary matters. We have agreed that
China will provide training for
U.S. experts and that the
U.S. will host a long-term training
program for Chinese experts later this year. So, our work in the area of agriculture
as a result of this meeting and other meetings held in conjunction, has been
very fruitful. I also want to
express my appreciation to our Ambassador and his team and to our Chinese hosts
for hosting this meeting here. We
would be happy to take questions if you have any.
GUTIERREZ: We have time for a few questions. Yes, sir.
QUESTION: I would like to ask a question of you
Secretary Gutierrez and you Mr. Portman, if I may. I know that the Commerce Department has
a Bureau of Industry and Security which looks at dual use technologies and there
is also the U.S.-China Economic Security Review Commission. Can you tell us who, insofar as economic
security in a broader sense, what you are doing, what the challenges are by the
PRC? On the issue of software, I
guess this would be for Mr. Portman, could you elaborate on what the agreements
were today to open up the software market and if there were any other parts of
the telecommunications or information technology industries
GUTIERREZ: We require a license for exports that
are deemed to be sensitive from the standpoint of national security. To give you an idea of the scope of
that, today the amount of business done that requires an export license is
approximately $540 million. That’s
less than two percent of our total exports to
China. The amount of licenses that have been
denied total about less than $11 million.
So, we are talking about something that we believe is important, is
sensitive to our national security.
It’s something that we will monitor very closely but it is not something
that is standing in the way of the development of our trade, at least from the
standpoint of what the numbers suggest.
PORTMAN: With regard to your question on
intellectual property, software and telecommunications, let me first say that I
have just been informed that this document is now being circulated to the press
which is a fact sheet which the three of us have prepared which outlines some of
the progress that we have talked about today. With regard to software, the first place
to go is intellectual property. We
strongly believe that the software market in
China is not as great as it should be
because there is such rampant piracy of
U.S. software. So, we are very concerned about
that. We believe that the steps
that are outlined here which include increased criminal prosecutions, a
commitment from China to do that, are important. But we need to see outcomes. We are not satisfied with process. We need to see results. So, this will outline a number of
commitments on process on prosecutions and on increasing the ability of
China to be able to stop the piracy
which hurts Chinese entrepreneurs and innovators and inventors and recording
artists and movies, just as it does the
with regard to software specifically, we are very concerned about the proposed
Chinese regulations for government procurement which would prohibit us from
having access as U.S. exports to the very large, very
significant Chinese procurement market.
This is something that we have raised repeatedly and we have raised it
again today and have received an assurance from the Chinese government that they
will not issue these very damaging draft regulations on software procurement in
their current form as it further considers public comments and makes revisions
in light of its WTO commitments.
So, we’ve got a commitment for delay basically. And, again, this is very
important to us. The Secretary has
talked about how important software is, talked about it being an $8 billion
market here. We are looking for a
level playing field.
We also had a commitment from the
Chinese government today to redouble their efforts, and accelerate their
efforts, to join the WTO government procurement agreement. And, for those of you who follow trade,
you know that this is an extremely important aspect of protecting software
because it takes the WTO commitment to the next level which is requiring, just
as the United States does, that there be a procurement requirement as well that
would protect U.S. software and its ability to be used by Chinese government
entities and by state owned entities.
So, we have made some progress, we would like to see more progress and
With regard to your question on
telecommunications, we did not receive all the commitments that we sought in
terms of addressing barriers to telecommunications exports, or financial
services including insurance all of which are very important to us. These are areas where the
States has a relative advantage; we’d
like to see more market opening.
But with regard to telecommunications,
China agreed to a new dialogue to
discuss, among other things, capitalization requirements which we believe is the
single most important issue right now with telecommunications as well as resale
services and other issues agreed to by both sides. So we have an agreement to
open a new dialogue with regard to telecommunications. Hope that answers your
will all be receiving a sheet of paper with all the outcomes for your background
material. Looks something like
this. Ok. Thank you. Yes sir.
QUESTION: I wonder whether you have made any
progress in the textile disputes during your discussions today? And my second question is on CNOOC and
UNOCAL. I wonder if you have
discussed this particular case in today’s meeting as well, and whether any
progress has been made? And can you
comment on the composure of the safeguards? Who is representing the Department of
Commerce and who is representing USTR in that Commission? Thank you.
explained today to Chinese government officials that we applied safeguards on
several categories of Chinese textiles based on market disruption, which is our
right to do so under WTO. And, we
agree that going forward in the spirit of our partnership that we will continue
to consult as we look at further market data in the future.
Regarding your question on UNOCAL,
this is a…it’s a sensitive matter.
This is an acquisition. We
do not comment on acquisitions.
There are several parties involved and you mentioned our foreign
investment review process that is a confidential process. So we just ask that we let the process
take hold, that we let it proceed, and do so in a manner that is fair to all
parties which is strict confidentiality.
You had a question on you had a question on visas you said? No, ok, thank you. Yes sir.
QUESTION: Did you talk about this case in today’s
meeting? Can you confirm that?
GUTIERREZ: We did
QUESTION: No. Ok.
QUESTION: Should the American public be in any way
concerned about the prospect of CNOOC buying UNOCAL?
GUTIERREZ: Well, as I just mentioned, this is a
process that is done in confidentiality.
I believe it would be highly inappropriate for any of us to comment
publicly about an acquisition process which is taking place and where there are
several parties involved. And, I
also mentioned that the whole foreign investment review process is one that
takes place in strict confidentiality, so it would be very inappropriate to make
QUESTION: I have question that is still about the
textile issues, since you did not reach any agreement today. So I want to know… What is the main
obstacles that you can not reach an agreement and will you discuss the problem,
continue to discuss about it when, where and how? Thank you.
GUTIERREZ: Well our process with that we have
agreed to under WTO calls for a consultation period. And we have had one meeting with Chinese
officials within that consultation period.
And we will have future meetings as part of that consultation period. And
we agreed that we will continue to consult any of these matters come up a when
there is market disruption. When we believe that our markets our markets are
being disrupted in a manner that requires action, we will consult with our
Chinese partners on that. So
consultations are taking place.
PORTMAN: Can I just follow up on that question
for a moment because I know there is a great interest in the textile issue, and
make a point that Secretary Gutierrez frankly made in our discussions, which is
to put this in some context. We have a very healthy trade relationship with
China, as you know, including an
historically high trade surplus on the part of
China. All of the invocations combined, all of
the safeguard invocations combined, constitute roughly fifteen percent of the
textile trade and less than 1.5 percent of our trade with
China. Also this year alone in 2005, textile
exports to China will double. And, I just think we need to keep this
in mind as we are talking about the textile issue, and put it in the context of
our broader relationship.
GUTIERREZ: Yes in the back
QUESTION: Do you expect an agreement with
China on textile and do you have a
timetable for it?
GUTIERREZ: As I mentioned we are in consultations
with Chinese officials. We have had
one meeting already in consultations.
We will proceed with that consultation period and, as we have agreements,
as we have matters to announce, we will do so. But, I believe it’s premature to
announce agreements before they have been reached. And, we did say today that we will
continue to monitor market information to determine whether our markets are
being disrupted and that we will consult with Chinese officials, that we will
apply our rights to put safeguards in place in a prudent manner. But, we are currently in consultations
and we will let that process evolve.
QUESTION: Secretary thank you for giving me
the opportunity to ask a question. When you say increase the number of criminal
prosecutions, can you give us specifics because the Chinese government just
today in a state council press conference said that they investigated over
thirty thousand trademark violations last year, fifteen thousand in the first
six months of this year alone. They
have processed hundreds and hundreds of thousands of people, put people in
jail. So what kind of commitment
did you get from them? How much of
an increase would you like to see, doubling? Tripling? quadrupling? Can you give
us specifics please? Thank
GUTIERREZ: Well at this point… That’s a very good question and your
question goes to the heart of what we agreed today is what matters ultimately is
results and what matters is outcomes.
We agreed to increase the number of prosecutions, we agree that the
number of cases taken forward will increase and now what we have to do is
monitor those cases and compare them to what they have been doing this
year. Ultimately, we know that
there is a piracy rate in the market place for software and the result that will
count the most is that piracy rate decline. And, the result that will also reflect
these efforts will be that our sales of videos, our sales of movies, our sales
of software, increases. Because,
that is the ultimate outcome of increased efforts on piracy is that sales of
legitimate goods increase. And,
that is really the measurement that will count and that is what we will be
time for one more question.
QUESTION: You say that you want
outcomes. Will you measure the
outcomes of a more open Chinese market by a reduction in the bilateral trade
deficit? In other words, will you
measure China’s performance by the bilateral
deficit being reduced? And, if so,
over what period of time?
GUTIERREZ: Well that is – That’s one of the
measures that we will look at, obviously, is the difference between
China’s exports to the
U.S. and our exports to
China. What we will focus on very, very
intensely is our exports to the Chinese market. As I mentioned before,
China has full access to our
market. What we want is full access
to the Chinese market. So, what
really counts is how much we are exporting to
China. And, how much access we have to the
Chinese market. And how much we can
increase our exports to the Chinese market. Today we do roughly $35 billion of
exports. That number needs to go
up. That number needs to
increase. And, that’s the number
that we will be focused on. And, that will be the reflection of whether we have
more access to the Chinese market or not.
I believe that is all we have.
I thank you for coming, I thank you for your attention. Thank you.