Remarks by Samuel R. Berger at The Business Roundtable


THE WHITE HOUSE
Office of the Press Secretary


For Immediate Release February 8, 2000
As Prepared for Release

REMARKS BY SAMUEL R. BERGER
ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
ON CHINA

The Business Roundtable
St. Regis Hotel
Washington, DC

February 8, 2000

It seems hard to believe that it was seven years ago when I first met with The Business Roundtable. Back then, one of the most popular books in the nation was entitled "America: What Went Wrong?" Time Magazine had a story that asked: "is the U.S. in an irreversible decline as the world's premier power." Seven years later, America is in the midst of the longest economic expansion in our nation's history. Our military strength is unchallenged. Our alliances are strong. And our values are ascendant. Today, if you ask the question: "America: What Went Right," a big part of the answer is that we have a private sector willing to take risks and do what it takes to succeed in the global economy. I want to thank you all for the role you have played in creating this unprecedented moment of prosperity for our nation.

Tonight, I want to talk to you about a decision our country will make this year that is critical not only for your companies and industries, but for our nation and the world: China's entry into the World Trade Organization. Last fall, our negotiators completed an historic agreement with the Chinese. But before America can realize the full market-opening benefits of Chinese entry into the WTO, Congress must answer a simple question: will it grant China permanent Normal Trade Relations, the same arrangement we have given to 132 of the 134 countries in the WTO? Or will Congress turn its back on the sweeping changes China has agreed to make and risk losing ground on the issues we all care about?

I don't believe there can be a serious question that this agreement is in America's economic interest. For years, China has had open access to our markets, while its markets have been closed to American products and services. This agreement requires that China open its market on everything from agriculture to manufacturing while we agree only to maintain the market access we already offer to China. For the first time, U.S. companies will be able to competitively sell and distribute in China products made by American workers here at home. And it responds to unfair trade practices in China, including the dangers of import surges.

All of you already know that, of course, and I'm not going to regurgitate the considerable economic benefits of this agreement tonight. Because the importance of this agreement goes far beyond it manifest economic benefits. And so does the debate that surrounds it. In our talks with Members of Congress, most do not challenge the agreement on economic grounds. Critics are more likely to say that: China is a growing threat to Taiwan and its neighbors, and we shouldn't strengthen it. China is a drag on labor rights and environmental standards, and we shouldn't engage it. China is an offender of human rights, and we shouldn't reward it. China is a dangerous proliferator, and we shouldn't empower it.

Most of the concerns they raise on these issues are legitimate. We in the Administration share them. But this debate should not be defined as economic rights versus human rights -- or economic security versus national security. That is a trap, a false choice. This agreement is just as vital "if not more vital" to our national security as it is to our economic security. It is far more likely to move China in the right direction -- not the wrong direction -- on all of our other concerns. We can't duck these issues by saying that we're only interested in talking about economics. If we are going to win this debate, we must be persuasive that it promotes both growth and jobs in America and progress toward change in China I want to talk tonight about how this agreement will advance our overall national interests by encouraging the right kind of change in China.

To understand how, we need to understand the dilemma China finds itself in today. Over the last 20 years, China has made remarkable progress in building a new economy, lifting more than 200 million people out of absolute poverty. But it still faces daunting economic problems. Its system is plagued by corruption. Private enterprise still accounts for less than one-third of China's economy. China's workforce is increasing by 12 million each year. Millions are migrating from the countryside, where they see no future, to the cities, where only some find work. And economic growth has slowed just when it needs to be rising to create new jobs. China clearly cannot maintain stability or ensure prosperity by maintaining the status quo.

Hence the dilemma: China's leaders realize that opening China's antiquated markets to global competition risks unleashing forces beyond its control -- unemployment, social unrest, increasing domestic pressure for political change. Yet, if they don't move forward, China cannot make the next critical leap in development, because without competition from the outside, it will not build world-class industries that can survive in the global economy.

What does this mean for us? As the President said when Premier Zhu Rongji visited Washington last year, "if we've learned anything in the last few years from Japan's long recession and Russia's current economic troubles, it is that the weaknesses of great nations can pose as big a challenge as their strengths." There is a possibility that a strong China will one day emerge as a threat to peace and stability in Asia, and to our security as well. But as we focus on the potential challenges of a strong China, let us not forget the risks that could be posed by a weak China, beset by internal conflicts, social dislocation, criminal activity, and large-scale emigration -- a vast zone of instability in Asia.

With this agreement, China has chosen to speed the opening of its economy, despite the political risks that entails. Opponents of this agreement need to answer the question: do they really want us to reject that choice? The fact is, our interest lies in encouraging both stability and change in China by encouraging it to meet, not stifle, the growing demands of its people for openness, accountability, freedom, and reform. And bringing China into the WTO will help in three ways.

First, it will obligate China to deepen its market reforms. With lower tariffs, and greater competition, its private sector will expand; its state sector will shrink.

The introduction of competition results in natural pressure for progress. A decade ago, China's best and brightest students sought jobs in the government, in large state-owned firms or state-run research institutions. More and more, the best and brightest either are starting their own companies or working for foreign-invested companies -- where they generally get higher pay, a better work environment, and a chance to get ahead based on merit, not political connections.

U.S. companies are the leaders in China in developing human resources -- by emphasizing teamwork and respect for individual rights. In turn, Chinese firms are increasingly learning -- and if they haven't, they will -- that unless they change their working style and treat employees with respect, they will lose the top talent. This process will only accelerate as China joins the WTO, and we should do all we can to encourage it, because it will lift the standards for Chinese workers -- and their expectations.

Second, by speeding economic change, the agreement we reached has the potential to encourage China to evolve into a more open society.

In the past, the Chinese state was every citizens' employer, landlord, shopkeeper, and news provider all rolled into one. By advancing the flow of information, the pace of privatization, and the forces of competition, this agreement will accelerate a process that is removing government from vast areas of people's lives. And by giving investors and property owners protection against arbitrary government action, it reinforces the idea that individuals have rights.

By opening China's telecommunications market to cutting-edge American technology and international firms, the WTO agreement will help bring the information revolution to cities and towns across China. A year ago, China had two million Internet addresses. Today, it has nine million. Soon, people in some of the most remote villages in interior China will have access to CNN. And as they become more mobile, more prosperous, and more aware of alternative ways of life, I believe they will seek a stronger voice in shaping their destiny.

Of course, just two weeks ago, Beijing announced that it was cracking down on the Internet. It's outrageous -- but it's also futile. In this information age, cracking down on the Internet is like King Canute trying to still the waters. Indeed, that the Chinese government is pushing back against the increasing flow of information to the Chinese people only proves that the changes China is undergoing are real and threatening to the status quo. This is not an argument for slowing down the effort to bring China into the world; it's an argument for accelerating it.

In the end, as China opens to the information economy, it can succeed only as it liberates the minds of its people and empowers the individual. You know all too well: creativity is indivisible. In this age, you cannot expect people to be innovative economically and stifled politically. Bringing China into the WTO doesn't guarantee it will choose political reform. But by accelerating the process of economic change, it will force China to confront that choice sooner, and make the imperative for the right choice far more powerful.

This agreement will advance our national interests in a third way: it increases the chance that in the new century China will be on the inside of the international system, playing by the rules, instead of on the outside, denying them.

Under this agreement, some of China's most important decisions will be subject, for the first time, to the review of an international body. Why does that matter? Quite simply, it applies to China the basic principle at the heart of the concept of the rule of law: that governments cannot behave arbitrarily at home or abroad, that their actions are subject to rules consistently applied. Remember, China is choosing to embrace these obligations. As China becomes a stakeholder in the WTO and other international regimes, it will be more likely to accept the legitimacy of international norms, and define its future within the global community, not outside of it.

Opponents of this agreement will counter these arguments by saying it doesn't matter what we agree to because China will just break its promises. Of course, we cannot know for sure. But we do have reasons to believe that it will comply, and mechanisms to reinforce that. First, China is pledging to open its economy and its markets not just as a means of getting in the WTO, but because most of China's leaders believe reform is in China's interest. Second, if China violates its commitments, we're still in a better position, because it will confront judgments backed by a 135-member body, rather than being able to chalk it up to supposed U.S. bullying.

Some will argue that granting China permanent normal trade relations status is granting a favor that China hasn't earned. But it's important that the public understand what PNTR means: simply that we will give China the same tariff schedule we apply to almost every other nation in the world, and China will do likewise for us. It would eliminate the annual vote on China's trade status, which we do not apply to any other WTO member. Some argue we need the annual vote to address the other concerns we have with China, on proliferation or religious freedom. But Congress has the ability to address any part of our trade relationship with any nation, including China. And the annual China trade vote has lost any leverage it was once thought to have. Congress has affirmed our trading relationship with China for 20 years in a row.

Finally, others will argue that we are sacrificing human rights on the altar of trade. In fact, locking China out of the WTO would be a blow to the very cause they and we support. It would leave the Chinese people with less access to information, less contact with the democratic world, and more resistance from their government to outside influence and ideas. And no one could possibly benefit from that except the most rigid, anti-democratic elements in China itself. That's one reason reformers like Martin Lee and dissidents like Ren Wanding support this agreement.

Let me be clear: bringing China into the WTO is not, by itself, a human rights policy for the United States. The reality in China today is that Chinese authorities still tolerate no organized political dissent or opposition. Because the Communist Party's ideology has been discredited in China, and because it lacks the legitimacy that can only come from democratic choice, it seeks to maintain its grip by suppressing other voices. Change will come only through a combination of internal pressures for change and external validation of its human rights struggle. And we must maintain our leadership in the latter, even as the WTO agreement contributes to the former.

That's why we sanctioned China as a "country of particular concern" under the International Religious Freedom Act last year. It is why we are once again sponsoring a resolution in the UN Human Rights Commission condemning China's human rights record. We will continue to press China to respect global norms on non-proliferation; to encourage a peaceful resolution of issues with Taiwan; to urge China to be part of the solution to the problem of global climate change.

We must not and we are not relying on the hidden hand of the market to do all our heavy lifting on the issues we care about in China, and neither should the private sector. That's why it is important for our businesses in China to be agents of change by being good corporate citizens.

But to make the most of that opportunity, first we must get this agreement through the United States Congress. And we can't underestimate for a second how hard that is going to be. This fight involves two issues -- China and trade -- that individually and together have become the third rail of American politics today. The agreement is opposed by an eclectic coalition, from labor to the religious right. It creates real splits in both parties.

I'll promise you this: the President and every key person in the Administration will undertake the most intensive effort possible to succeed. We've already begun. I hope you will also recognize the stakes involved. For if we fail to obtain PNTR, we will lose the full benefits of the agreement. In a global economy, with global markets, your companies will be shut off from one-fifth of the world -- while your European, Japanese, and other competitors will be the beneficiaries of the very good deal we negotiated.

But failure would be bad for our country in other ways. It would send a penetrating signal to the rest of the world, particularly after the Senate's rejection last year of the Comprehensive Test Band Treaty, that America truly has turned inward. That would be devastating to our future.

At the moment of America's greatest strength and influence, we must be leading the world, and embracing change, not turning from it. Since President Nixon went to China in 1972, the United States has worked for the emergence of a China that contributes to peace in Asia. A China with an economy that is open to American products, farmers, and businesses. A China whose people have access to ideas and information, that upholds the rule of law at home and adheres to global rules on everything from non-proliferation to human rights to trade. This agreement is an unprecedented opportunity to advance all of those goals. I look forward to working with you in the months to come to turn those worthy and historic goals into a reality. Thank you.

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