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For Immediate Release
May 17, 2000

Grassley Statement on Mark-Up of Permanent Normal Trade Relations for China

Mr. Chairman, today's vote is an important and historic development. We are nearing the point where China will finally surpass the previous highpoint of its economic engagement with the rest of the world, which occurred in about 1946. It was in September 1946 when the United States helped establish the Preparatory Committee on the Havana Charter, which was supposed to then set up the International Trade Organization. China, along with the United States, was a member of that Preparatory Committee. The International Trade Organization was never established, largely due to opposition from this committee, so instead we set up the GATT, the General Agreement on Tariffs and Trade. China joined GATT but withdrew in 1950. So China is closer today to re-joining the world trade community than it has been in over 50 years.

Today's vote is also significant because we are paving the way for China's accession to the WTO. This development that will have enormous benefits for my state of Iowa and for the rest of the United States. Dr. Dermot Hayes, a distinguished agribusiness economist at Iowa State University, testified before this Committee just about one month ago on the effects of China's bilateral market access deal with the United States. He said, "I have calculated that the Chinese market, if fully opened to U.S. pork variety meats, would add about $5 per head to each of the 100 million hogs that we slaughter each year." This is very good news for Iowa producers who have suffered through historically low prices in 1998 and 1999. Moreover, if China accedes to the WTO, we may soon see the day when China becomes one of the world's biggest importers of farm products.

Just look at China's history, past and recent. China has long been a rice-oriented culture. During the1990s, rising incomes in China have boosted meat consumption by as much as 5 million tons per year. Dairy product consumption has more than doubled. Western fast-food restaurants are flourishing all over Shanghai, China's most trade-oriented city. But China has historically had a difficult time meeting the demand for farm products. In fact, China's past food problems are legendary. It has reportedly suffered through about 1,000 famines over the last 2,000 years. So there is enormous opportunity in China.

Mr. Chairman, I would like to make one last point about the importance of encouraging China to become a more integral part of the world economy. I do not believe it was a coincidence that China withdrew from the GATT in 1950, just as is began a long period of isolation from the West. This was a period of heightened tension, and even warfare, as American troops battled regular Peoples Liberation Army forces in Korea. And I do not believe it is a coincidence now, that just as China seeks to join the WTO, and seeks greater engagement with the world, that China is engaging in the most sweeping economic and political reforms since its revolution.

Are conditions in China perfect? Clearly, no. Are they where I would like them to be? Again, the answer is no. We have a challenging, and sometimes difficult relationship with China. It's a complicated relationship with several dimensions. It's up to us to manage this relationship. I believe that anchoring China more firmly in the world community, and exporting our values, as well as our goods and services, is a very good thing, and will bring many benefits, including the greatest benefit of all, mutual understanding and peace. Thank you, Mr. Chairman.