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Economic Engagement with China Brings Benefits to U.S. Businesses

The Joint Commission on Commerce and Trade and the Strategic Economic Dialogue steer the crucial economic relationship between the United States and China.

by Tim Truman

Since China emerged on the world economic scene 30 years ago, the country has become a major player in the global economy. In 2007, China overtook Japan as the United States’s largest export market outside of the North American Free Trade Agreement (NAFTA) partners, and it displaced Canada as the leading source of imports. In 2007, U.S. exports to China expanded by 18 percent to $65 billion, while U.S. imports from China increased by 12 percent to $322 billion.

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Secretary of Commerce Carlos M. Gutierrez (second from right) joined (from left) President Antonio Saca of El Salvador, President Alvaro Colom of Guatemala, Mayor Shirley Franklin of Atlanta, and President Alvaro Uribe of Colombia at the Americas Competitiveness Forum 2008 on August 17, 2008.
On September 16, 2008, Carlos M. Gutierrez, Secretary of Commerce (second from right), discussed ways to improve the U.S.–China trade relationship with Chinese officials at the 19th JCCT meeting in Yorba Linda, California. He met with (from left) Sheng Guangzu, minister and customs commissioner-general of the General Administration of Customs; Chen Deming, minister of commerce; Wang Qishan, vice premier; and Susan Schwab, U.S. trade representative. (U.S. Department of Commerce photo)


“In both our countries, there has been a rise of economic nationalism,” said Carlos M. Gutierrez, secretary of commerce. “It threatens the progress we’ve made in increasing commercial partnerships—partnerships that benefit our citizens and our economies.”

The trade relationship between China and the United States will continue to grow through bilateral initiatives that will address market barriers when they arise. Those initiatives facilitate increased trade and help resolve problems. The U.S.–China Joint Commission on Commerce and Trade (JCCT) is the primary trade dialogue between the two countries.

On September 15, 2008, Gutierrez; Susan C. Schwab, U.S. trade representative; and Wang Qishan, vice premier of China, convened the 19th JCCT meeting in Yorba Linda, California. During the talks, both sides reached an agreement on steps that will promote increased trade flows.

JCCT Meeting Leads to Positive Outcomes

At the meeting, both sides discussed the importance of making progress on the protection and enforcement of intellectual property rights. China reaffirmed its commitment to advance negotiations to join the World Trade Organization’s Government Procurement Agreement. Chinese officials also agreed to streamline the approval process for setting up new foreign retail outlets, to lower the minimum capitalization requirements for telecommunications services (although more needs to be done), to postpone regulations that bar U.S. information technology companies from selling in China, and to accept from certain U.S. states some poultry products that had previously been banned.

25 Years and Counting

This year marked the JCCT’s 25th anniversary. Since its inception in 1983, the JCCT has been a useful forum for engagement and has delivered meaningful results for U.S. businesses, workers, and farmers.

Perhaps most important, the JCCT has ensured that U.S. and Chinese senior economic and trade officials continue to interact regularly, and those relationships have improved both countries’ abilities to address trade-related misunderstandings and problems. The JCCT has contributed to the dramatic trade growth between China and the United States.

Working Groups Tackle Trade Remedies, Steel, and Environmental Technologies

In addition to annual senior-level meetings, the JCCT comprises more than a dozen working groups and subgroups, which meet throughout the year to discuss a range of trade and investment issues.

On October 24–28, 2008, David Spooner, assistant secretary of commerce for the Import Administration, led a team of Department of Commerce officials to Beijing. The team participated in three JCCT working groups: the Structural Issues Working Group (SIWG), the Trade Remedies Working Group (TRWG), and the Steel Dialogue. The Import Administration cochairs each of the three working groups with the office of the U.S. trade representative.

The SIWG provides opportunities for discussing and sharing information on China’s market reforms, as well as the remaining structural impediments that China needs to complete to transition to market economy status. The October talks highlighted China’s recent economic reforms and pinpointed areas for future focus.

The discussions within the TRWG featured healthy exchanges on numerous issues related to administering trade remedy laws.

The Steel Dialogue is a unique working group that involves government and industry participation from China and the United States. During the meetings, industry representatives offered detailed overviews of their respective steel market situations and developments. Although the meeting did not result in any quick fixes for the concerns raised (for example, the United States is particularly concerned about continued government involvement in China’s steel industry), the dialogue represented a valuable opportunity to increase the understanding of different points of view. In addition, the U.S. delegation stressed the importance of market mechanisms for the health of the global steel market.

Environmental Technologies Featured

On October 21, 2008, Jamie Estrada, deputy assistant secretary for manufacturing, convened the first U.S.–China Environmental Industries Forum in Beijing, China. The forum allowed U.S. government and industry representatives to meet with their Chinese counterparts to help develop policies, relationships, and projects that increase the deployment of environmental technologies while addressing environmental and sustainability concerns.

Both countries have much to gain from this collaboration. China will become better suited to meet its goals to reduce air emissions, waste, and water consumption, while the United States can collectively address global environmental concerns and facilitate trade in the environmental sector. The JCCT’s Environment Working Group organized the event and will develop tangible action items to address the issues discussed.

U.S.–China Strategic Economic Dialogue

The U.S.–China Strategic Economic Dialogue (SED) is another important mechanism that guides the long-term development of the U.S.–China economic relationship. In 2006, presidents George W. Bush and Hu Jintao established the SED as a framework to address issues of mutual concern. The SED takes a long-term and strategic look at the economic relationship, while the JCCT focuses on specific trade issues. The SED has helped establish the 10-year Energy and Environment Cooperation Framework and has increased transparency in publishing trade-related rules and regulations.

The fifth SED took place on December 4–5, 2008, in Beijing, and it focused on balanced growth, energy and environmental protection, challenges to trade, and investment.

“Through the JCCT and SED, we continue to work with our Chinese counterparts to ensure we both pursue policies of openness that have helped drive our growth,” Gutierrez said. “I believe that in such an economic environment U.S. firms would welcome the opportunity to do even more business in—and with—China, thus expanding consumer choices and driving growth and job creation. This would be to the mutual advantage of both the United States and China.”

Contributors to this article include Rebecca Karnack and Joshua Wu of the Market Access and Compliance unit, Stephanie Langkamp of the Import Administration, and Todd DeLelle of the Manufacturing and Services unit.



Cooperative Initiatives Provide Additional Support

Efforts to improve the U.S.–China economic relationship do not begin and end with formal dialogues, such as the U.S.–China Joint Commission on Commerce and Trade and the Strategic Economic Dialogue (SED). The Department of Commerce leads and participates in other initiatives that are designed to provide information and assistance to targeted industries, and those initiatives have had a positive influence.

On September 18–19, 2008, the International Trade Administration hosted the second U.S.–China Symposium on Postal Reform and Express Delivery Services. The initiative is viewed as an important sectoral dialogue in the bilateral trade relationship with China. As China considers policies that would limit U.S. and foreign companies from the express document delivery market, the symposiums are proving to be an innovative way to demonstrate that China benefits from open markets and competition from U.S. express delivery carriers, such as FedEx and UPS. The symposiums also allow the U.S. government to ensure that those measures that exclude U.S. participation in the express delivery market remain high on the trade agenda.

More than 250 representatives from Chinese and U.S. firms attended the first-ever U.S.–China Innovation Conference last December, which was held in conjunction with the SED in Beijing. The success of this joint effort by the Department of Commerce and the Department of State, as well as China’s Ministry of Science and Technology, resulted in plans for a second conference at the December 2008 SED. These innovation conferences discuss how both governments can create a policy environment that best fosters global innovation and allows creativity to flourish through open markets and competition.