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Positions & Statements


Follow Up Letter to USTR Regarding China's Accession to WTO


                                                                                    October 30, 1997


The Honorable Charlene Barshefsky

United States Trade Representative

Office of the U.S. Trade Representative

600 17th St., NW

Washington, DC   20506


VIA FAX:  395-3911


Dear Charlene:


I am writing to follow up on my correspondence with your office of March 17 regarding the negotiations on China’s accession to the World Trade Organization.  The U.S. Council  for International Business is particularly concerned that the interests of service providers should be vigorously pursued in the negotiations.  Our earlier letter covered the full range of WTO issues; I would like to take this opportunity to elaborate on the issues affecting the services sector.


As you know, the U.S. Council’s position is that China’s accession to the WTO must be based on a commercially viable terms that commit China to comply with WTO disciplines and to open its markets to additional imports of both goods and services.  The terms should include special measures to ensure that the transparency of China’s laws and regulatory procedures is improved significantly.  This issue is vitally important to all our members, but it has special implications for those companies, such as service providers, many of which require a local commercial presence and operate in more regulated environments.  The accession negotiations offer an important opportunity to seek improvements in China’s administrative and regulatory procedures to bring about a high degree of transparency and to bring them more into line with practices in other major markets.


With regard to market access for services, China’s adherence to the General Agreement on Trade in Services will be a welcome step forward, but China must include in its GATS schedule specific market access and national treatment commitments on a broad range of service sectors.  Many of the other GATS rules (in addition to market access and national treatment) only apply to service sectors for which the signatory has scheduled specific commitments, so the quality of China’s GATS schedule is especially important to our service providers.  With regard to specific sectors, we strongly recommend the following measures.


·         Telecommunications - As with other countries acceding to the WTO, China should make meaningful commitments under the WTO Agreement on Basic Telecommunications.  At a minimum, meaningful commitments would include a date certain for full liberalization and adoption of the Reference Paper in its entirety.

·         Financial Services - China should make high-quality commitments under the GATS to liberalize access to its financial service sector, including banking, insurance, securities and diversified services.

·         Professional Services - In its scheduled GATS commitments, China should cover the full range of professional services, including accounting, auditing and bookkeeping services, as well as tax and management consulting, legal services, services related to advertising and media sales, and advertising and marketing services.  Those commitments should eliminate a variety of de facto impediments. For example, in the accounting sector China should assure the right to choose local affiliates on contractual terms substantially equivalent to worldwide norms; permit the establishment of branches or other offices authorized to perform statutory work; adopt the use of international standards; and remove the ban on the advertising of professional services.  As another example, China should extend complete reciprocity to legal services and permit American firms to hire Chinese attorneys licensed to practice law in China.  There should be no restrictions on the number of licenses or locations for legal practice.

·         Publishing - China should make timetabled commitments to liberalize both investment (including joint ventures) and access to publishing services for books, magazines and newspapers, such as financial information services.  As a related matter, it is essential that China demonstrate a significant commitment to enforcing its intellectual property protection legal system and to stop piracy and exploitation of copyrighted materials.

·         Tourism - China should agree to repeal by a date certain its law prohibiting non-Chinese companies from establishing full service travel agencies in China.  As part of this liberalization, China should permit non-Chinese companies the same rights that are enjoyed by travel companies in other WTO countries.  A full service travel license would permit the sale of standard tourist financial services such as selling travelers checks and would permit all licensed travel agencies to act as ticketing agents for international and domestic airlines.


In addition to the specific service sectors mentioned in this letter, a broad issue of concern to many U.S. firms remains the ability of foreign firms to distribute their products within China.  Currently foreign firms are not permitted to distribute directly their products within China, but must instead use government-authorized Chinese distributors.  Such restrictions on the ability to distribute goods within China impose a significant barrier to market access for foreign firms.  China should agree to provide all foreign firms with the right to determine how their products are distributed within China.  This is a fundamental market access issue which must be resolved in the services negotiations related to China’s WTO accession.


In closing, while all the areas we identified in my March 17 letter remain important to our members, we believe that the United States cannot afford to accept Chinese membership in the WTO without clear and meaningful commitments on services.  The U.S. is the world’s leading service exporter, and China is an increasingly important market for our service providers and for the international companies they serve.  China itself, moreover, will benefit from access to modern, state-of-the-art services which provide an essential infrastructure for business growth and development.


I wish you every success in completing the negotiations with China, and want to assure you that the U.S. Council stands ready to assist your effort in any way we can.




Abraham Katz