Compilation of Weekly Presidential Documents - February 28, 2000 - Remarks to the Business Council

� Thank you, Ralph, and good morning. I want to begin by asking if

the microphone's too loud, so-can we turn it down just a little bit?

That's good. I'm delighted to be here. I know you just had a good

panel on the economy. And I wanted to talk mostly about China today,

but I would like to mention just a couple of other matters very




� First of all, you've already talked in some detail about the

question of how to keep the economy going. And I don't have much to

add to what I'm sure Secretary Summers said, except I would like to

just make three points very briefly. Number one, I think it is

terribly important that we continue to pay the debt down and for

reasons that you understand. But it's an enormous hedge against the

necessary borrowing by business to continue to invest and continue

to grow. And whatever the Fed does, the interest rate structure will

be lower than it otherwise would be, not only now but for, perhaps,

decades in the future. So I think it is a critically important

thing. And I think it's important that people understand this. I've

seen all kinds of articles in the papers saying I've adopted

Coolidge economics, but I don't think so. We're continuing to invest

robustly in our people and our future. But I think it's important.



� The second point I want to make is, I think it is even more

important that we continue to invest in the education and skills of

our people. A lot of you are heavily involved in trying to make our

elementary and secondary schools better. We have a proposal now

before the Congress to make college tuition tax deductible, which

would functionally open the doors of 4 years of college to every

American, with the other increases we've made in the Pell grants and

other things. But I think we need to do more on this, particularly

with people who are already in their young adult years who are out

there and not either employed or are underemployed. I think that's




� And the third thing I would say is, many of you have helped us on

this new markets initiative, but I hope all of you will. Some of you

have been involved in OUT Welfare to Work Partnership, which has

12,000 companies now and has hired hundreds of thousands of people

from welfare to work. And reports indicate that they're doing quite




� But I think when you consider the fact that telecommunications,

among other things, enables us to bring economic opportunities to

rural areas-and in the worse case, some of our Indian reservations

still have unemployment rates that are around 70 percent-- there are

real opportunities there for noninflationary growth if we can figure

out how to do it. I don't want to minimize the risk. I'm trying to

get Congress to pass some legislation that would give significant

tax credits to minimize the risk of private sector investment in

these areas, but I think they are profoundly important.



��And as I said, I know a lot of you have been involved in this

already, but this is the only chance we've had, I think, in my adult

lifetime to genuinely bring free enterprise to people in places that

have been left behind. And it's an opportunity I think we ought to

take, and I also think it would be good for the overall economy.



� Now, I want to talk a little about China today, because I think it

is the most important question that the Congress will take up in the

first half of this year. And I realize that in many ways, I may be

preaching to the choir, but I think it's important that we all

understand not that this is a good thing to do but that -it is an

essential thing to do.



� For 30 years now, every single President, without regard to party,

has worked for the emergence of a China that contributes to the

stability, not the instability, of Asia; that is open to our

products and to our businesses; that allows people access to ideas

and information there; that upholds the rule of law at home and

adheres to the rule of law around the world.



� We have a big stake in how China evolves. We have, after all,

fought three wars in Asia in the 20th century. And the path China

takes to the future will either eliminate or cast a great shadow far

beyond its borders. I think we all know that. Therefore, it is clear

that the more we can promote peace and stability in Asia by helping

the right kind of China to develop, the more America's interests and

values will be served.



� The WTO agreement with China helps to advance all these goals in

unprecedented ways. It's the kind of opportunity that comes along

once in a generation. If we seize it, a generation from now people

will wonder why the debate was hard at all. If we don't, we'll be

regretting it for a generation.



� I don't think there's any question that this is in America's

economic interests. The agreement requires China to open its markets

on everything from agriculture to manufacturing to high-tech

products. All we do is simply agree to maintain market access

already given to China. For the first time, our companies will be

able to sell and distribute in China products made by American

workers here at home. It strengthens our response to unfair and

market-distorting trade from China, from import surges to forced

technology transfers to protection of intellectual property.



� One of the things I am quite sure that many Members of Congress

still do not know is that this agreement actually contains bilateral

protections that we don't now have to deal with problems like import

surges, and it's important that they know that.



� if you think about what this agreement could mean to our economy,

we could start with agriculture. From corn to wheat to barley,

tariffs are cut by two-thirds, and our farmers get full access to a

fifth of the world's population. It's little wonder that the pay

stubs at the Farmland Institute read, and I quote, "China will

account for nearly 40 percent of the future growth of American

agricultural products."



� With regard to our telecommunications industry, those of you in

that business know that China has the largest potential market in

the world, and only 5 percent of it has been tapped. This agreement

will allow our firms, which are already leading the world, access to

the other 95 percent.



� With regard to the auto industry, tariffs will fall by nearly 75

percent. The requirement that we rely on Chinese distribution is

eliminated, as is the requirement that we have to transfer our

technology, I think a very important advance secured by Ambassador

Barshefsky and Mr. Sperling in this agreement.



� For the first time, American manufacturers will be able to sell

American-made cars in China, to set up their own distribution

centers, to run their own service shops, to provide their own

financing to consumers. That means we'll sell more American cars and

auto parts there and have more jobs here at home.



� Most Members of Congress don't question the economic benefits.

Critics are more likely to say things like this: "China is a growing

threat to Taiwan and other neighbors. We shouldn't strengthen it."

"China is a drag on labor and environmental market rights, and if

you put them in the WTO, they will block further progress on those

issues." Or, "China is an offender of human rights, and we shouldn't

reward it." Or, "China is a dangerous proliferator. We shouldn't

empower it."



� Now, all these concerns, I believe, are legitimate. The question is

whether they will be advanced or undermined by the decision Congress

will make and America will make on letting China into the WTO. I

believe to set this up as a choice between economic rights and human

rights or economic security and national security is a false choice.

I believe that this agreement is vital to our national security and

that every single concern we have will grow greater and the problems

will be worse if we do not bring China into the WTO. So I believe

this agreement promotes not only the economic interests of the

United States but progress toward positive change in other areas in




� For the past 20 years, China has made progress in building a new

economy. It's lifted more than 200 million people out of absolute

poverty. It's linking so many people through its wireless

communication network that it's adding the equivalent of a new Baby

Bell every year. But the system still is plagued by corruption. Less

than one-third of the economy is private enterprise. The work force,

meanwhile, is increasing by about 12 million a year. At least 100

million people in China are still looking for work, and economic

growth has slowed just when it needs to be rising.



� So the leaders of China actually face quite a dilemma in making

this decision to go for Vv'TO membership. They realize that if they

open their markets to global competition, they risk unleashing

forces that are beyond their control: unemployment, social unrest,

demands for political freedom. This is a big decision in a country

that time and again has suffered more from internal chaos and

disintegration than from external threat.



� But they have concluded that without competition from the outside,

China will simply not be able to attract the investment or build the

world-class industries they need to thrive in a global economy. So

with this agreement, Chinese leaders have chosen to embrace change.

They are highly intelligent people. They know exactly what they're

doing, and they're prepared to take a risk that will require them to

change as well.



� So the real question for America is, now that they have decided to

take their risk, do we want to walk away from our decision? Do we

want to risk a total rejection of the profound decision and choice

they have made? I think it would be a terrible mistake. We need to

embrace their decision, not only for our own interests but for the

long-term interests of the world.



� The WTO agreement advances our interests by encouraging China to

meet, not muzzle, the growing demands of people for openness. Rather

than working from the outside in, it will work from the inside out,

as all profound change has to do.



� Let me just make a few points about this. First, having China in a

rule-based system increases the likelihood that China will follow

the rules of the road in terms of the international economy. Under

this agreement, for the first time, some of China's most important

decisions will be subject to the review of an international body. It

means China is conceding that governments cannot behave arbitrarily

at home and abroad, that their actions are subject to international




� Opponents say that doesn't matter, because China will just break

its promises. But if that were to happen, our differences can no

longer be ascribed to U.S. bullying. This time it will be 135

nations making collective judgment. Look, nobody agrees with the WTO

all the time. I don't agree with their FSC decision. I presume most

of you don't. And we'll have to work with Congress to try to figure

out whether there is a WTO-consistent way for us to continue to play

on a level playing field. But having a system of rules is,

nonetheless, profoundly important.



� Second, the agreement will obligate China to deepen its market

reforms and intensify the process of change. A decade ago, China's

best and brightest college graduates sought jobs in the Government

and large, stateowned firms or universities. More and more now,

they're starting their own companies or choosing to work for

foreign-invested companies where, generally, they get higher pay, a

better work environment, and a chance to get ahead based on merit,

not politics. That process will also accelerate if China joins the




� Third, this agreement has the potential to help open China's

society in noneconomic ways. In the past, virtually every Chinese

citizen woke up in the morning in an apartment or house owned by the

Government, went to work in a factory or farm run by the Government,

read newspapers written by the Government. The state-owned

workplaces operated the schools where they sent their children,

clinics where they got health care, the stores where they bought

food. The system was a big source of the Communist Partys power. The

meager benefits provided were a big Source of the loyalty it




� Now, with lower tariffs and greater competition, China's state

sector will shrink, the private sector will expand. In that way, the

WTO will speed a process that is removing Government from vast areas

of people's lives. It will also increase access to communications




� A year ago, China had 2 million Internet addresses. Now it has 9

million. The agreement will bring the information revolution to

cities and towns all across that vast nation it hasn't reached yet.

And as the Chinese people see how the world lives, they will seek a

greater voice in shaping their own lives. in the end, China will

learn what people all over the world are now learning: You can't

expect people to be innovative economically while beinz stifled




� Bringing China into the WTO doesn't guarantee, of course, that it

will choose a path of political reform, but by accelerating the

process of economic change, it will force China to confront the

choice sooner in ways that are more powerful, maling the imperative,

I believe, the right decision.



� Of course, bringing China into the WTO is not, by itself, a human

rights policy or a political rights policy for the United States.

The reality is that China continues today to suppress voices of

those who challenge the rule of the Communist Party. It will change

only by a combination of internal pressure for change and external

validation of the human rights struggle. So we must maintain our

leadership in the latter even if 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, why we're

once again sponsoring a resolution at the U.N. Human Rights

Commission condemning human rights abuses there. We'll continue to

press China to respect global norms on nonproliferation, and we'll

continue to reject the use of force as a means to resolve the Taiwan

question. We'll also continue to make absolutely clear that the

issues between Beijing and Taiwan must be resolved peacefully and

with the assent of the people of Taiwan.



� We must not, and we cannot, rely solely on the invisible hand of

the market to do all our heavy lifting in China and neither should

the private sector. For all of us, including the business community,

permanent NTR must mean a permanent commitment to positive change in




� But to even get that opportunity, we've first got to sell this

agreement to the Congress, and we can't underestimate how hard it

will be. I want you to know that 1 will push as hard as I can to

secure agreement as quickly as possible. I made that clear in the

State of the Union Address, in my press conference at Davos. Last

week I started meeting with Members of Congress, and those meetings

are continuing. You will get a fullcourt press from our

administration, ably led by Secretary Daley.



� Now, I know you realize the stakes here. If China doesn't approve

permanent normal trading relations, we risk losing the full benefits

of China's WTO membership. In a global market economy, your

companies would be shut off from a fifth of the world, while your

European, Japanese, and other competitors would take advantage of

the benefits we went to the trouble to negotiate. Failure would also

send a signal to the world that America is turning inward. It would

be, I believe, a devastating setback to our vision for the future.



� Now, I think it's important that we be honest with the Congress and

the country on one thing. We don't know-you don't know and I don't

know what choices China will make over the next decade. We can't

control the choices they make, but we can control the choice we

make; that's all we can do. And all my experience, not only as

President in dealing with China, but as a person who has lived more

than half a century in dealing with human nature, indicates that

this is a time for the outstretched hand in constructive




� And I believe-I will say again-if we pass this up, we will regret

it for a generation. And all of our successors and interests will be

paying a price far greater than economic, because of our rejection.

We cannot allow this effort to fail.



� We face a choice between a Chinese market open to American products

and services or closed to us-and only to us; between speeding the

opening of China's economy or turning our backs; between a China

that is on the inside of an international system looking out or on

the outside looking in.



� Let me just make one other comment about this. Some of our friends

in the labor community, with whom I have great sympathy, say that,

well, if you put China in the WTO, it will make it even harder for

legitimate labor and environmental issues to be raised, because we

know where they stand. Look, I just went to Seattle and met with the

people in the WTO. That's a hard sell no matter who's there, and it

won't change substantially if China's there. That's just not a vital

argument, given where all the other countries are. That is not




� A lot of you don't even agree with me on that, but I can just tell

you, whether you agree or not, the membership of China in or outside

the WTO, given the perceived interest of the other developing

countries that are going to be in the WTO on these issues, will not

materially change what the WTO does on that over the next decade. I

feel very strongly about that.



� So we've got a simple choice to make. And the first thing we have

to do is to make it clear that there will be a vote on this, and

that we want the vote as quickly as possible. And no one should take

a pass.



� I know that-I met with a lot of Republican members who were very

concerned about the religious liberty issue. I can just say-a lot of

you may know this-but the religious groups with whom I have met, who

have been involved in China for years, who have been doing their

missionary work there for years, are overwhelmingly in favor of

this. The forces that genuinely and sincerely advocate religious

freedom and then oppose this agreement are overwhelmingly people who

have not been involved in China, with the Chinese, seeing bow the

society works.



� So I really believe this is a choice for America between fear and

hope. They made a decision, and anybody who understands anything

about Chinese history knows that these people are very deliberate,

highly intelligent, and aware of the consequences of the decision

they have made. And they have decided to bear the risks of becoming

part of a more open society. They know it will require them to

change in ways that they have not yet come to terms with.



� We have the strongest economy we have ever had. We are the world's

only superpower, and whenever we walk away from an opportunity to

lead the world toward greater integration and cooperation, as I

believe we did with the Comprehensive Test Ban Treaty, we bear a

particular responsibility for future adverse consequences.



� So I ask you to help me with Members of the Congress, without

regard to party, based on the national interest, the clear

economics, and going beyond the economics. This is a profoundly

significant decision for the United States. It will affect our

grandchildren's lives, and we dare not make the wrong decision.



� Together, we can make sure it comes out all right. You can help us

pass this, but it can't be a casual effort. It's not going to be a

casual effort with me, and it can't be with you. And even if your

companies don't have any direct stake in this, as an American you

have a huge stake in it. As a citizen of the world-and most of your

companies are citizens of the world-you have a huge stake in it.

I'll do whatever I can. I implore you to do the same. And we'll have

a good time at the signing ceremony.



� Thank you very much.



� NOTE: The President spoke at 11:45 a.m. at the Park Hyatt. In his

remarks, he referred to Ralph S. Larsen, chair, Business Council.

The President also referred to FSC, the foreign sales corporation

provision of U.S. tax law.



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