Remarks by the Honorable Jennifer Dunn, Republican of Washington State

Jennifer Dunn

Asia Society
Hong Kong One Year After Transition:
Business Opportunities and Policy Challenges
Asia Society Policy and Business Conference
Seattle, June15–16, 1998

Members of the Asia Society, Washington State China Relations Council, Hong Kong Trade Development Council, and distinguished guests.

Thank you so much for the opportunity to address this very important conference.

For over 40 years, the Asia Society has been helping to forge a unique bond between Asia and the United States. Thanks to your leadership, many Americans better understand the significance of the economic prosperity and democracy enjoyed by many citizens in this unique region of the world.

As we enter a time of potentially great economic and diplomatic insecurity, however, the work of the Asia Society has taken on an added importance.

Clearly, the issues of America’s national security, regional stability in Asia, trade, and human rights will all be hotly debated in the public arena over the next couple of months. I would like to talk with you about some of these challenges that lie ahead, and ask for your assistance in helping me educate my colleagues in Congress about the importance of strong U.S. involvement in Asia.

First, I would like to relay some personal observations from my recent trip to Hong Kong—where I had the good fortune of being able to witness the first elections there since the reversion to China rule. For me, it was a fascinating opportunity to witness trends in democracy and in the economy since I had visited Hong Kong with the Speaker in March of 1997 and on the occasion of Hong Kong’s reversion to the PRC last June.

Perhaps the most promising symbol of Hong Kong’s desire to retain control over its future was the number of citizens who turned out to vote. Despite the heavy rainfall that fell on the city throughout the day, 53 percent of the population participated in this most fundamental of democratic exercises when only 32 percent were expected. Several polling places were closed and I saw television pictures of voters wading through knee-deep water in order to vote.

All of us who live here in the Northwest know that bad weather normally means poor voter turnout. But, I believe that we can conclude that neither rain nor Chinese rule has tempered Hong Kong’s enthusiasm for self-governance!

The government was very effective in posting signs announcing election day, and prominently positioning voting booths so that there was no confusion about where to cast your ballot. Ultimately, however, I believe it was the economic conditions of Hong Kong that created this exceptional turnout.

In the first quarter of this year, Hong Kong experienced a negative 2 percent growth rate, and property values have depreciated an average of 40 percent since last summer. Tourism has fallen badly because of high prices brought about by Hong Kong’s dollar being tied to the strong U.S. dollar. Unemployment has risen to 3.8 percent, high by Hong Kong standards.

Voters recognized that the government must play a role in pulling the economy out of this slump, but they also want to make sure that it’s a government that reflects their values—free market capitalism grounded in private investment, personal freedom, open trade, minimal regulation, and low taxation.

As we have always seen here in the U.S. the universal truth about elections is that people vote their pocketbook.

I had the great pleasure of meeting with Martin Lee and Anson Chan—who is with us here today—to discuss their reactions to the vote. Martin Lee’s interpretation of the vote was that democratic reforms must be pushed much harder and faster. The government’s response, at least the day following the election, was to put the lid on any such mood. After meeting with both of them, I am confident that their participation in the government will only serve to bolster the values that have become part of the collective soul of Hong Kong. In addition to the exceptional leaders in Hong Kong, it will take a multi-lateral effort to steer this economy out of rough waters. For our part, the U.S. must act quickly to ensure Most Favored Nation status to China.

China MFN is not simply a Washington D.C./Beijing issue. Hong Kong is a gateway to China for billions of dollars worth of U.S. goods. Without this important step, we will slam the door on this gateway and lock out American investment in one of the most productive free market economies in the world.

Chris Patton was very successful in communicating the importance of MFN to Hong Kong and its employment force to Members of Congress in Washington, D.C. before reversion last year. I advised the members of Am Cham and others to take very seriously the need to convey the weight of this again this year before the MFN vote. Already, Anson Chan is successfully telling this story in Washington, D.C.

All of us here understand the importance of open relations with China. The economic effect of enhanced trade helps build the U.S. economy and strengthen international markets. As a nation, however, we must shape our foreign policy around more than simply the pursuit of wealth.

The open exchange of goods and services has been a critical component of fostering understanding between nations for centuries. Creating an environment of normal relations and ongoing engagement only serves to lower the walls of fear and suspicion, while building a spirit of cooperation through joint venture.

What should be our objective with China with respect to trade relations?

I believe that liberalized trade with a Communist society in the process of opening itself to the world community will someday deliver to our trading partners our most precious gift: freedom.

As a superpower that extols the virtues of capitalism, who are we as a people if our sole objective is wealth for ourselves. Economic and personal freedom for those who we engage in commerce ought to be their reward as well. As we expand our economy through increased international trade, let us remember our obligation to bring to others what we so normally enjoy ourselves.

Granting permanent MFN for China and bringing them into the World Trade Organization is the critical next step in this process. It is well beyond time to realize that not granting MFN for China is unacceptable; it would be equivalent to severing any U.S.–China relationship.

This would do absolutely nothing to bring pressure on China to release political prisoners, grant total religious freedom, hold elections, allow more property ownership, or contain proliferation. A country that denies the human spirit cannot sustain the wave of personal freedom that accompanies open relations with the rest of the world. Only isolation will foster rigid conformity.

As a citizen of the State of Washington, and somebody who has been involved in trade issues between the U.S. and China for several years now, I am well aware of the high standards that American companies require of their business transactions in Asia and of the good those standards do in setting an example.

I’m sure each of you who travels to China and other Asian countries has a story about how trade has helped lift a person out of poverty, enabled a young family to afford a permit for a second child, provided an open door through which a Ned Graham can distribute Bibles into the countryside, or simply improved the life of some individual in some tangible manner. As we begin to debate our policy of engagement with China, I urge you to share these stories with those Members of Congress who may be deciding this important issue with far less experience than your own.

You are the daily ambassadors of American values, and those of us in Congress spreading the message of free and open trade must hear how open relations can lead to internal reform.

Of course, normal relations with China will not only expose the world’s most populated country to the rest of the international community, it will help to stabilize an area of the world filled with burgeoning democracies and nuclear powers. In this sense, it is in our national security interest to maintain an open dialogue.

Countries such as Mongolia and Indonesia are at critical stages right now and need time for their political transformations to mature. Jeopardizing the Chinese economy by isolating it from international trade would only drag these fragile nations deeper into economic crisis and, most likely, internal chaos.

The need to have a strong Chinese economy to anchor Asia is even more true as we enter a new era of nuclear proliferation in South Asia.

Over the last month, I have heard a great deal of criticism regarding Congress’ stance on the many new questions that have arisen in this area. I would like to address some of these issues because to ignore them is to ignore reality and to appear naïve.

First, let’s look at some facts. On May 1, 1998, the CIA reported that China now possesses 18 long-range ICBMs armed with nuclear warheads, 13 of which are pointed at the U.S. It has been widely reported that they continue to develop and fine tune short, middle, and long-range missiles.

The PRC played a large role in the development of nuclear technology in Pakistan throughout the 1970s, and provided defense applications of nuclear technology for them throughout the 1980s. Now we are hearing that similar technology is being sold to Iran.

When reports begin to surface about the Administration’s approval to transfer sensitive missile technology to China from U.S. companies, China’s inappropriate diversion of U.S. aeronautic manufacturing equipment to their defense facilities, and the agreement of the U.S. to sell supercomputers to China capable of greatly advancing their nuclear capability, Congress must respond.

This is particularly true when you consider that much of this was done over the objection of the Pentagon, whose analysts argued that national security could be jeopardized.

This sort of intelligence immediately requires a response from Congress, whose responsibility it is to protect the national security interests of the U.S.

The Preamble of the U.S. constitution clearly states that the federal government is to “provide for the common defense and promote the general welfare”—in that order. Any Member of Congress would be derelict in his duty if he were to simply cast aside these allegations without inquiring into their legitimacy. As you all know, the U.S. policy towards China is multi-faceted and nuanced. The importance of opening up their market to U.S. goods, eliminating religious persecution, permitting political dissent, and promoting rule of law cannot be overstated.

At the same time, protecting the freedom and safety we hold precious in this country must be our primary goal when it comes to relations with any country. It is in a category by itself above these other important objectives.

As the world’s most populated country and a growing superpower, China is becoming one of the major players on the world stage as we enter the new millennium. We cannot place an over-importance on one aspect of our relationship with China without asking the tough national security questions that will always demand Congress’ attention.

I’ve been told that recent allegations about the transfer of sensitive technology are really nothing to worry about. I sincerely hope that’s true.

But, the objections raised by Pentagon analysts raise troubling questions about the consequences of such transactions. It is only through the Administration’s open cooperation with Congress that we will be able to better understand their implications.

I look forward to participating with other Members of Congress in this inquiry and answering these important questions. The lessons we learn from investigations into the selling of sensitive technology will help us more carefully weigh national security issues as we move forward in bringing China into the World Trade Organization.

The day after tomorrow the House Ways and Means Subcommittee on Trade—of which I am a member—will officially kick of this year’s Most Favored Nation debate. We will once again hear testimony from some of the most informed expert witnesses on this subject, and begin to build a record that we can take to the full U.S. House of Representatives.

As it is every year, this will be a tough fight. Therefore, I once again ask your assistance in helping me to convince my colleagues that engagement through free and open trade is the best way to further the cause of personal freedom.

Thank you again for extending me an invitation to speak to this very distinguished group. I consider it an honor that my home State of Washington plays such an important role in world trade, and look forward to working with each of you in the future to further the ideals of democracy and personal freedom throughout Asia.