China may deserve some latitude in making the transition to a market economy. We are concerned that China has a long way to go on such fundamental issues as the rule of law, transparency of its regime, uniform application of trade rules and distribution rights. China has earned international praise for the responsible role it has played to date in addressing the Asian financial crisis. By maintaining its currency at a stable value, China has helped to avert another round of competitive currency devaluations. It is worth noting that China has done this at great expense to its own exports.
China can earn additional praise by committing to international norms of fair trade.
Looking at our annual MFN exercise, China is concerned that the U.S. Congress may not agree to permanent MFN even in the context of a WTO accession agreement. Thus Chinese negotiators appear cynical about the benefits to them for making concessions that might be rejected by Congress. We urge Members of Congress to consider the vote on MFN in this context and to send a strong signal that permanent MFN is a desirable option in the very near future, particularly in the context of measurable progress on WTO accession. Mr. Chairman, the integrity of the WTO system is at stake in China's WTO negotiations. Final accession terms will doubtless be used as a benchmark for accession negotiations for Russia, Ukraine, Vietnam and other economies that are still in the early stages of a difficult transition from a centrally planned to a market economy.