U.S. Relations With the People's Republic of China (2008)

U.S. Department of State

The Administration's Focus on Promoting Free Trade and Enhancing U.S. Trade and Export Opportunities

Daniel Sullivan, Assistant Secretary of State for Economic, Energy and Business Affairs
Address to the National Association of Manufacturers
Washington, DC
September 26, 2008

As Prepared for Delivery

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WTO Doha Round

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To generate the kind of economic growth, development and poverty alleviation that we all committed to when we launched the Round, key emerging markets, particularly India and China, must make commitments that result in new trade flows, not new trade barriers. The economics are real – Doha will set the terms of trade through the next decade and beyond. The IMF projects that 50% of global economic growth between now and 2013 would be provided by China, India, Brazil, Argentina, and ASEAN.

The U.S. continues to work toward a strong NAMA package to create real market access for U.S. exporters. We continue to press for an ambitious sectoral element in NAMA that can provide real market openings in advanced developing countries. The U.S. needs a NAMA outcome that includes commitments on key sectors, such as chemicals, electronics, industrial machinery, and forest products. The U.S. is also a sponsor of sectorals on healthcare, gems and jewelry, and sports equipment and will continue to promote them.

We seek constructive engagement on these sectors from advanced developing countries (such as Brazil, China and India) so that we can understand their specific sensitivities and work to address them through different options in each sector. We will remain engaged with USTR and with NAM and U.S. industry as these discussions progress.

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FTAs with Colombia, Panama and South Korea

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Korea currently charges almost 7% tariffs on American manufactured goods. Our average tariff on Korean products is about 2%. The FTA will level the playing field and make our products more competitive. Korea is a vital force for stability at a time of great challenge and change on the Korean peninsula and the broader Northeast Asia region. Ratification of the FTA will strengthen America's critical strategic partnership with Korea, which dates back more than fifty years. The FTA will also ensure that the U.S. continues to be a powerful voice for security and prosperity in the region. It will send a strong signal to Japan, China, and other Asian trading partners that they will need to reform and open up their markets or risk falling behind.

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Investment

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The President's policy statement has guided our subsequent work in multilateral and bilateral settings devoted to open investment. The 2007 G8 summit represented a success in bringing the open investment agenda to the leaders' attention. Likewise, the Heiligendamm process launched two years ago brings major emerging countries – Brazil, China, Mexico and South Africa – into the multilateral discussion of open investment policy.

Furthermore, at the OECD, the State Department leads our efforts on investment and we continue active participation in the Freedom of Investment project.TheFreedom of Investment and National Security Project, which involved key OECD member governments and key emerging economies, including Russia, China, Brazil and India, developed policy guidelines to assist governments in addressing legitimate national security concerns without compromising the long standing open investment policies promoted by the organization. We look forward to participating in the eighth Freedom of Investment roundtable at the OECD Investment Committee meetings next month.

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In June at the Fourth meeting of the U.S.-China Strategic Economic Dialogue (SED), the U.S. and China agreed to launch BIT negotiations. The first round of negotiations was held in early September. We have scheduled a second round to be held in mid-October (Oct. 13-17), and we are working to make substantial progress in the coming months.

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China

We are urging China to continue its integration as a responsible member of the global economy. As such, we are encouraging China to increase transparency in its approach to development assistance and lending as it seeks markets for its products and looks for new or untapped sources of energy and other raw materials in Africa and elsewhere.

We are concerned that China's stepped-up lending to developing countries risks saddling them with additional debt. We would like China to do more to coordinate its aid programs with other donors and urge it to incorporate debt sustainability criteria into its lending practices. We encourage China to become involved overseas in ways that enhance rather than undercut international efforts to nurture good governance and sustainable growth.

China must also do its part in addressing global imbalances by stimulating domestic demand, reforming its financial markets, and allowing greater exchange rate flexibility. As Secretary Paulson has said, "strengthening and reforming financial markets will ultimately allow the Chinese to freely float their currency."

As part of that effort, we held the fourth Strategic Economic Dialogue (SED) meetings with the Chinese in Annapolis in June, and under Treasury Secretary Paulson's leadership we will meet again with Chinese economic leaders in Beijing in December. While we are using SED meetings to discuss longer-term, cross-cutting economic issues that affect US-China economic relations and the global economy, we also want to make progress on more pressing issues that strain our relationship in the short term, such as China's inflexible currency and weak IPR protection.

In preparation for the December SED meeting, we are working closely with the Chinese on several strategic areas. We are discussing the development of efficient service sectors and the creation of an innovative economy. Our two countries have agreed to a 10-year cooperative plan to promote sustainable and clean energy use and to better protect the environment. We are also discussing how China can rebalance its growth through a strengthened social safety net and increased household consumption. Progress on these issues will benefit not only China and the U.S. but will also contribute to stronger growth for the entire global trading community.

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