Week of May 19, 2000

SUMMARY: On May 17, The House Ways and Means Committee and Senate Finance Committee both steadily approved the legislation which would grant China permanent normal trade relations (PNTR) with the United States and do away with the current annual Congressional vote on China’s trade status. With these votes, the trade legislation moves onto the floor of the House of Representatives during the week of May 22-26. Since Senate approval of the measure has been strong, the Finance Committee vote of 18-1 was not unexpected. However, because of wavering support in the House, the 34-4 vote in the Ways & Means Committee came as a pleasant surprise to backers of PNTR in the House. A package of measures designed to create means to monitor human rights conditions in China and ensure against a loss of U.S. jobs from potential surges of imports from China is thought to have swayed undecided Committee members to vote in favor of the trade bill. While this is an encouraging sign for advocates of PNTR, many promoters including Rep. Robert Matsui (D-CA), who is rounding up critical support for the measure, still express concern about the undecided contingent of Democratic House Members who may decide to outcome of the vote next week in the House.

SUMMARY: Though U.S. administration officials rejected Taipei’s appeal to the United States to play a mediator role in resolving cross- Taiwan Strait disputes over sovereignty, Taiwan officials maintain that they will push for peaceful negotiations with mainland Chinese officials through "track II" or unofficial channels of dialogue. The U.S. State Department spokesman clearly stated the Administration’s position that "the United States government is not mediating and does not seek to mediate between the two sides," claiming that these issues should be resolved by the two sides. Taiwan officials including Foreign Minister designate Tien Hung-mao and Vice President-elect Annette Lu clearly favor U.S. involvement in the mediation process, stating that the U.S. should not "stay behind the curtain" as it pushes Taiwan to the negotiating table. The United States?awkward position between China and Taiwan puts it in an uncomfortable position where failure to contribute the mediation could prove detrimental to its relationship with both sides.

SUMMARY: On May 17, Philippines President Joseph Estrada and Chinese President Jiang Zemin signed an agreement to settle territorial disputes peacefully as a part of a joint statement on the framework for cooperation between the two countries in the 21st century. Ties between Manila and Beijing have been strained mainly over the contentious issue surrounding territorial disputes in the Spratly Islands in the South China Sea which have existed for decades, which involve many other Southeast Asian countries including Brunei, Malaysia, Vietnam and Taiwan. In what President Estrada called a "a milestone and a historic document for the blueprint of future Sino-Philippines relations," President Jiang pledged to resolve disputes in the Spratlys through peaceful consultation and in accordance with international law. Furthermore, the two leaders used this opportunity to express support for expanded cooperation in areas of economic and trade development, science and technology, culture, and agriculture. While questions exist on the sincerity of Chinese intentions in following through with the terms of the agreement due to the contentious nature of the territorial issues in the South China Seas, President Estrada claimed that he believed China would live up to the agreement based on several reassurances he received from Jiang.

SUMMARY: After five days of marathon talks, China and the European Union finally signed a trade pact that will pave the way for China’s planned entry into the World Trade Organization.

As of Thursday May 18, the two sides still butted heads over five or six areas of contention. These contentions included major EU demands over issues of overseas ownership in Chinese mobile phone and car ventures. The reports said that China was willing to accept only 49 percent of overseas ownership, in line with the US trade pact. Other areas of contention included insurance, distribution and retail services, and China’s state trading monopolies.

China had been attempting to join WTO for 14 years, and agreement with the 15-member EU was the last major barrier facing China. Only seven WTO members, out of 136, are left to agree to trade deals with China. It is expected that the remaining accession to China’s membership will be settled near the end of this year, paving the way for formal entry sometime in the year 2003.

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The U.S. and China This Week

uscpf@uscpf.org

Last updated: 19 May 2000