Richard L. Williams, Acting Deputy Assistant Secretary of State, Bureau of East Asian and Pacific Affairs. Carl W. Ford, Jr., Principal Deputy Assistant Secretary, International Hon. William F. Ryan, president and chairman, Export-Import Bank of Hon. Fred M. Zeder, president and CEO, Overseas Private Investment Corporation; accompanied by Howard Hills, general counsel of OPIC and vice president for Insurance and Felton Johnson.. Nancy Frame, Deputy Director, United States Trade and Development Program, accompanied by Betsy Harman, China Director for United Michael Oksenberg, Center for Chinese Studies, University of Michigan.... Aryeh Neier, executive director, Human Rights Watch..... Frank J. Gaffney, Jr., director, Center for Security Policy Ye Ning, student, Washington College of Law, American University. Peter V. Handal, president, Victor B. Handal & Bro., Inc., on behalf of the American Association of Exporters and Importers. Howard Lewis, III, vice president, International Economic Affairs, Na- MATERIAL SUBMITTED FOR THE RECORD Textile Bilateral Agreement with China............. Amount of loans (value) and purpose are in the World Bank and the Asian Development Bank in China that have been suspended with United States Transfer of unused Chinese textile quotas to other countries................................ United States loans to China. APPENDIXES 5. Letter from William F. Ryan, acting president and chairman, Export- Import Bank of the United States to subcommittee chairman Solarz clarifying how Eximbank is impacted by section 2(b)(1)(B) of the Export- (III) HUMAN RIGHTS AND POLITICAL DEVELOPMENTS IN CHINA United States-China Relations: Where Do We Go From Here? THURSDAY JULY 13, 1989 HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, SUBCOMMITTEES ON HUMAN RIGHTS AND INTERNATIONAL ORGANIZATIONS, ON ASIAN AND PACIFIC AFFAIRS, AND ON INTERNATIONAL ECONOMIC POLICY AND TRADE, Washington, DC.. The subcommittees met at 10:25 a.m., in room 2154, Rayburn House Office Building, Hon. Stephen J. Solarz (chairman of the Subcommittee on Asian and Pacific Affairs) presiding. Mr. SOLARZ. The subcommittee will come to order. Today the Subcommittee on Human Rights and International Organizations, the Subcommittee on Asian and Pacific Affairs, and the Subcommittee on International Economic Policy and Trade meet to assess the changes which have taken place in United States policy toward China in light of the brutal suppression of the democracy's movement in that country and to examine whether additional steps are needed. The issue before us today is not whether the United States can continue to do business as usual with the government in Beijing. That has already been decided. We cannot. In the days since the Tiananmen massacre, the Bush Administration first suspended the transfer of defense articles to China and halted all visits between U.S. and Chinese military leaders. Later the President announced the suspension of all high-level government contacts and that the U.S. will take steps to postpone consideration of loan applications to China by international financial institutions. The House of Representatives has also spoken. Two weeks ago, by a vote of 418-zero, the House voted to continue by statute the suspensions of OPIC, the transfer of defense articles, including satellites, and the non-liberalization of export controls. In addition, the House suspended trade and development program funds for China, suspended licenses for crime control and detection equipment and eliminated certain gray areas in the transfer of nuclear-related technology. The House gave the President the authority to waive these suspensions if there has been a significant improvement in the political and human rights situation in China or if the national security interests compel it. (1) The key question before us today is the extent to which the United States Government should take further steps to restrict the cooperation with China which developed over the past decade. Should the United States continue to grant preferences to China that it does not grant to the more politically and economically orthodox countries of Eastern Europe, such as most-favored nation status? Should the United States impose new economic sanctions on China, which our friends and allies are unwilling to impose? Should the United States impose new economic sanctions on China which may hurt American interests or the Chinese people more than they hurt the Chinese Government? How, in the case of China, should the United States reconcile its obvious geopolitical and economic interests with its equally obvious commitment to democracies and human rights? To help us clarify these issues, we have with us today a series of witnesses from the Executive Branch. Next week we will hear from the private sector. Testifying today are Ambassador Richard Williams, the Acting Deputy Assistant Secretary for East Asian and Pacific Affairs at the Department of State; Joan McEntee, the Acting Under Secretary for Export Administration in the Department of Commerce; Carl Ford, the Principal Deputy Assistant Secretary for International Security Affairs in the Department of Defense; Priscilla Rabb, the Director of the U.S. Trade and Development Program; William Ryan, President and Chairman of the Export-Import Bank of the United States; and Fred Zeder, the President and Chief Executive Officer of the Overseas Private Investment Corporation. A little bit later in the hearing we will be temporarily suspending our discussion of China while the Subcommittee on Human Rights takes up a resolution concerning the situation in Bulgaria, but until that time we will proceed with our China hearing. Before asking the witnesses to testify, let me yield to my colleagues on the committee first, the distinguished chairman of the Subcommittee on Human Rights, Mr. Yatron, for an opening com ment. Mr. YATRON. Thank you, Mr. Chairman. I want to commend the subcommittee chairmen and ranking members for convening this hearing here today. The hearing is timely in light of the continuing turmoil in China. Our reaction to the ongoing crack-down on pro-democracy demonstrators and what it means for the future of our relationship with China needs to be addressed. In responding to China's repression, the President has been entirely justified in seeking to balance our human rights concerns with our strategic interests in China, but the unanimous approval of the recently-passed sanctions amendment in the House suggests that the American people want a stronger response. The questions before us now are: have those sanctions which are already in place effectively pressured the Beijing Government to curtail its repressive measures, and are similar sanctions being invoked by our allies? In the past the U.S. has imposed military and economic sanctions against other countries for human rights violations, such as South Africa, Poland, Libya, the Soviet Union, and Panama with varying degrees of success. Some will argue that China will not yield to foreign pressure and opinion and that further sanctions, as called for in the House-passed amendment, would have little or no impact on China's human rights conduct. Others will suggest that to influence change in China, a stronger U.S. reaction is in order. One fact is clear, the repression continues with no end in sight. As of now, Congressional sanctions have not been enacted into law. A significant policy difference between the branches will only benefit Beijing, and I would hope that today's hearing will enable the Congress and the Executive to maintain a bipartisan approach to events in China. Thank you, Mr. Chairman. Mr. SOLARZ. Mr. Gejdenson, the chairman of the Subcommittee on International Economic Policy and Trade. Mr. GEJDENSON. Thank you. I would first commend Chairman Solarz for his leadership on this issue today and on the House Floor as we did the Foreign Affairs bill in recent weeks. The situation in China is one that I think all of us were moved by the bravery of the students in China, and there is some pressure to balance our other interests with our concern for the students and democracy. But I think one thing that must be clear from our actions here and from the Executive branch is that there are no markets so immense, no profits so large, that we should set aside the values that hold us together as a nation, and I think the world was outraged at the action taken by the Chinese Government against their own people. We have acted in the Congress in a bipartisan manner, unanimously passing these sanctions, and while there may be differences between the Congress and the Executive branch, I would say that there is no difference in our desire to see a change in the way the Chinese Government responds to its own people. I think that Congress has a better sense of the pulse of the American people and their outrage over what happened to the Chinese students and others in China. I have drafted a discussion draft of a bill that includes additional economic measures that might be used against China. This discussion draft includes revoking China's most-favored nation status, prohibiting the Export-Import Bank from operating in China, unilaterally stopping the export of dual-use commercial goods to the Chinese military and police, multilateral negotiations to roll back the favorable export control treatment accorded to China and renegotiating the U.S.-China bilateral multi-fiber agreement. In order to encourage a multilateral approach, which I think would be best, I have suggested in this discussion draft that the President lead our allies within six months at a conference to focus on a common approach to China. We have seen the President of the United States take leadership at economic summits and sum-mits that deal with the defense of the Western world at NATO, and I think it is clearly his role and our role as the leading democratic nation to lead other democratic nations in a conference dealing with the freedom and the plight of the Chinese people. |