December 2000 PulseOnline: TIA Around the Globe: China PNTR: The Year in Review

As the year 2000 comes to a close, it's a good time to reflect on the achievements of the last 12 months. One of the most important efforts TIA undertook during the year 2000 was helping ensure China's accession to the World Trade Organization (WTO). Below is a summary of the progress made in 2000 toward that goal.

Setting the stage for the activity of the year 2000 was an event that took place on November 15, 1999. At that time, after marathon negotiations in Beijing, the United States and China finally reached agreement on WTO accession. The bilateral deal struck between the two negotiating teams was historic in many respects. Its scope was wide-ranging, with broad and positive implications expected for foreign telecommunications firms. But it was also seen as a lifting of a major 13-year old impediment to China's entry to the WTO. (For a summary of that landmark deal, visit www.tiaonline.org/international/regional/asia.)

World Trade Organization logo

The next major milestone occurred on May 19, 2000, when the European Union and China reached a bilateral accession agreement. Many aspects of this agreement were similar to that of the U.S.-China bilateral agreement. However, the Europeans succeeded in accelerating China's commitment to open up its wireless telecommunications sector to foreign service providers by two years. At the same time, the agreement wrested commitments from China to issue insurance licenses according to a more aggressive schedule and added market-opening benefits for European cosmetics, spirits, and specialty agriculture products.

During this same period, the United States was heavily embroiled in preparations for a major and controversial vote on relations with China in the U.S. House of Representatives. The battle for granting Permanent Normal Trade Relations (PNTR) for China was a highly charged one, with both sides sending out record numbers of lobbyists to Capitol Hill to plead their cases. Labor unions, staunchly opposed to granting PNTR because of a fear of losing U.S. jobs overseas, organized several days' worth of union visit to Congress by union supporters, as well as numerous other events. Industry, in a similar manner, came together in large numbers to support passage of this legislation that would result in lower costs and increased business opportunities in one of the world's largest and most rapidly-growing markets for communications equipment and services, as well as agricultural goods, professional services, and much more. In the end, PNTR passed the House by a wider margin than expected (237 to 197).

The next hurdle was a vote on PNTR by the U.S. Senate. Industry at first expected the effort in the Senate to be much less controversial -- and a lot less work. However, Senate PNTR legislation got caught up in political wrangling that pushed the vote back until September, at which time the process of bringing the bill to a vote was complicated by efforts of Senators Fred Thompson (R-Tenn.) and Robert Toricelli (D-N.J.) to attach a controversial bill onto the PNTR legislation. The two senators' proposed amendment would have mandated unilateral trade and economic sanctions against the People's Republic of China, Iran and North Korea, or any country involved in weapons or any other proliferation activities. TIA and other lobbying organizations fought hard to kill this amendment, and the PNTR legislation finally passed -- with no amendments -- in the Senate on September 19 by a very strong 83-15 vote.

President Clinton officially signed PNTR into law at the White House mid-October, surrounded by U.S. Trade Representative Ambassador Charlene Barshefsky, Secretary of Commerce William Daley, Secretary of State Madeline Albright, and many other cabinet members and members of Congress who had worked so diligently to get the legislation passed during and before 2000. But even with the tremendous work accomplished in the U.S. this year, China's accession to the WTO is not yet ensured.

To accede to the WTO, China is now engaged in, and must complete, lengthy negotiations in Geneva at WTO headquarters. An international group is working hard to hammer out the text of two large and important documents, namely the Protocol and the Working Party Report, which essentially lay out the specific rules by which China will accede to the WTO. The negotiations in Geneva are still ongoing. Despite optimistic reports in the earlier part of this year, reports from the past few rounds indicate the talks have been contentious. Many reports even indicate China was backsliding on its WTO accession commitments. Essentially, negotiators have been hung up on the issues of insurance licenses and the right to invest in China's telecommunications sector. In addition, China still has one more bilateral trade agreement with Mexico to finalize.

Press reports from the end of October 2000 indicate Chinese officials are now targeting the middle of 2001 as the date when China will officially enter the WTO. There remain many issues on which negotiators in Geneva must come to a reasonable conclusion, with all sides indicating they are not willing to let China step back from the agreements it made in the past.

The WTO accession process is a complicated and laborious one. Because the negotiations are now happening at a multilateral level, there is little immediate activity TIA can undertake to keep the process moving forward. TIA will continue, however, to monitor the negotiations in Geneva to keep its membership informed of the process, and will support the U.S. negotiating team as much as possible. For questions on the WTO process or China's status at any time, contact Christine Keck at ckeck@tia.eia.org.