ITI CALLS HOUSE PASSAGE OF PERMANENT NORMAL TRADE RELATIONS A SOLID WIN FOR AMERICA'S TECHNOLOGICAL LEADERSHIP

May 24, 2000 Washington DC - The Information Technology Industry Council (ITI) today called House passage of permanent normal trade relations (PNTR) with China "a solid win for continuing America's technological leadership and a step toward reform in China." The group praised the strong bi-partisan support for the 237 to 197 victory.

"The real winners of today's vote are American workers and consumers," said Rhett Dawson, president of ITI. "By granting PNTR with China, the House of Representatives sent a strong message that opening new markets is a key component of America's economic future and that free trade is perhaps the best way to bring about democratic reforms within China."

ITI is the association of leading IT companies. It made passage of PNTR with China one of its top legislative priorities this year. In addition, the group notified Congress that it will give extra weight to the PNTR vote in the annual ITI High-Tech Vote Guide.

"This is one case where victory really does have many fathers," continued Dawson. "This is a perfect example of policy makers putting America's interest ahead of politics. Congressmen David Dreier (R-CA) and Bob Matsui (D-CA) deserve much credit for their leadership and perseverance on this key issue. The Administration worked round the clock to secure passage. And, a diverse group of industries - from agriculture to PCs - worked together in an effort to open new markets and help grow America's economy."

ITI member companies export over 55% of their total output, making the IT industry the United States' largest exporter. In addition, China is one of the fastest growing markets for information technology. China will soon be the world's second largest market for cell phones; China is already the world's fastest growing market for personal computers; and the number of Chinese Internet users (8.9 million) is expected to double to about 20 million by the end of the year.

"One of the final hurdles to opening the Chinese market - about to be the third biggest market in the world -- and admitting China in to the World Trade Organization has been removed. This paves the way for the IT industry to continue to grow its exports and maintain America's technological leadership," concluded Dawson.

ITI member companies include: 3COM; Agilent; AOL; Apple; Cisco; Compaq; Corning; Dell; Eastman Kodak; EMC, Gateway; Hewlett-Packard; IBM; Intel; Lexmark; Microsoft; Motorola; NCR; Nortel Networks, Panasonic; Pitney Bowes; SGI; Sony; StorageTek; Symbol Technologies; Tektronix; Tyco; and Unisys.

BENEFITS TO THE U.S. HIGH-TECH INDUSTRY OF PNTR WITH CHINA

China is a huge, critical and fast-growing market for high-tech products and services. PNTR for China will yield a positive effect on every sector of the high-tech industry.

Telecommunications

• China's market for cellular telecommunications is growing exponentially; By the end of 1999, China counted more than 40 million cellular subscribers, coming close to its target of becoming the world's second largest cellular market.
• Telephone use in China is expected to grow from 12 percent of households currently to 22 percent by 2003.
• The November 15, 1999 bilateral deal between the U.S. and China offers U.S. telecommunications manufacturers expanded opportunities in China's exploding market.

Software

• The American software industry is a trade success story, generating a $20 billion surplus each year, and 60 percent of U.S. software company revenues come from overseas sales.
• Industry experts estimate that 95 percent of the business applications software used in China was pirated in 1998, depriving the software industry of nearly US$1.2 billion in licensing revenue.
• By joining the World Trade Organization (WTO), China will become subject to the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) the best vehicle to combat software piracy.

Internet Development

• The number of Chinese Internet users has grown dramatically from 1.1 million in May 1998 to nearly 9 million at the end of 1999. By the end of 2000, the number of Internet users in China is expected to reach 20 million.
• China's accession to the WTO will give the U.S. an opportunity to participate in the development of the Internet and e-commerce in China. Vital social services, such as education, communications and telemedicine, can be delivered over the Internet, laying the groundwork for e-commerce and the economic growth, productivity, and jobs it will generate.
• China will lower tariffs on a wide range of information technology products that will facilitate the adoption of Internet architecture and increase the purchase of computers. These tariffs, which currently average 13.3 percent, will be reduced to zero by 2005.

Computers

• Exports to China of U.S. computer and office equipment increased well over 500 percent between 1990-1998. China's personal computer market is growing twice as fast as the world average and is expected to be the world's second largest by the end of this year.
• The American computer sector is poised to expand its exports to this rapidly growing market, increase high-wage American jobs, and continue our technological leadership and competitiveness.
• China has agreed to adopt the Information Technology Agreement which eliminates China's customs duties on computers and peripherals-which currently average 10-15 percent-by 2003.

Semiconductors

• The current semiconductor market in China is up to $8 billion per year. Some analysts expect it to become the third largest semiconductor market by 2001 and the second largest by 2010.
• The semiconductor equipment and materials market in China is estimated to be over $1 billion per year and is projected to reach almost $4 million in 2003.

©2000 Information Technology Industry Council