Barshefsky Battles Trade Barriers

Barshefsky Battles Trade Barriers

Fast-track authority is on life support and it's up to U.S. Trade Representative Charlene Barshefsky, the nation's top trade ambassador, to help resuscitate it.

Barshefsky persuades, prods and pressures allies and rivals to allow U.S. information technology companies into their markets - despite protests from local industry. The stakes are huge. By 2001, Asian governments alone are expected to be spending $25 billion per year on information technology.

For now, members of Congress, not foreign protectionists, are Barshefsky's problem. She must help persuade the House of Representatives to approve fast-track authority, which would allow Congress only to approve or reject - but not to amend completed deals.

Barshefsky argues this is a temporary phenomenon in an interview with WT staff writer Neil Munro.

WT: What is the reaction from foreign governments as you try to knock down barriers to U.S. high-tech trade?

Barshefsky: Countries have been rather responsive to information technology agreements because countries have an interest in being - or appearing to be - on the cutting edge of the telecommunications revolution. They also wish to attract business. As important, they wish to attract capital. One of the lessons of the global economy is that money is finite, and there is competition for money. To the extent that countries wish to compete successfully for investment dollars, their attractiveness relative to other countries will depend in part on the developed nature of their infrastructure, as to which IT is now critical.

WT: How can industry help open foreign markets?

Barshefsky: It is very important for [U.S.] industry to educate its counterpart industries in these countries as well as to let their views be known to counterpart governments, academics, think-tanks, opinion makers ... by educating people, holding conferences, bringing delegations. The global telecommunications talks [in 1996 and 1997] would never have been successfully conducted without industry conferences and seminars.

WT: What levers do you have to open up China to high-tech companies?

Barshefsky: China can be persuaded, not only by the United States, but also by its other trading partners. In that regard, China may wish to be in the mix [of negotiations] rather than standing on the sidelines.

WT: What is the role of sanctions?

Barshefsky: We threatened sanctions [on China in 1995] because intellectual property rights violations are outright theft and the theft was occurring on a massive scale - globally on the worst scale of any country.

China has since taken very important and rather dramatic steps to help curb piracy rates. While much remains to be done, we are very pleased with the enforcement actions that China has taken.

The lesson is that where our interests are directly jeopardized by actions that the Chinese, or any country might take, if necessary, we will respond by unilateral action.

WT: Have you threatened sanctions in any other information technology issues?

Barshefsky: Nothing I would publicly disclose.

WT: What progress can you report in your negotiations to open up the Chinese market to U.S. services, including banking, insurance and systems integration?

Barshefsky: Services talks with China are slow. China has a rather underdeveloped services sector and it is concerned that open access to foreign service providers, particular from developed counties, that have substantial services expertise, will undermine the development of China's indigenous services sector. We don't agree with the analysis that is reflected in their current services offering to [the World Trade Organization], which is not up to par.

We struck an important agreement on telecommunications in the World Trade Organization [accord], which included Asian countries, and we are in negotiations on financial and insurance services in the WTO.

Also, two years ago, China threatened substantial restrictions on financial information providers, which would have required those providers to provide proprietary technology and customer lists to their Chinese competitor, which was also the regulator of the industry. After two years of effort, China has backed off from those requirements.

WT: Can you persuade Congress to pass fast track in 1998?

Barshefsky: We view the postponement of a fast-track vote in the House as a short-term phenomenon. After consulting with the leadership in the House - both sides of the aisle, of course - and affected groups, we would intend to proceed next year.

WT: Will trade talks be hurt even if fast track is enacted?

Barshefsky: I don't think so, to the extent that our trading partners perceive the postponement of the vote as short-term in nature, which we believe it to be. To the extent that the postponement reflects an inward turning by the United States, then I think the fallout, not just for the trade agenda, but for U.S. leadership in a host of areas, could well be compromised.

WT: Will Congress' rejection of fast track make any difference to the second round of the trade-enhancing Information Technology Agreement or to China's accession to the WTO?

Barshefsky: China's accession to the WTO is not a fast-track matter. The pace of China's access depends on China and its appreciation of the necessary commercial concessions that need to be made.

In terms of the ITA II ... we will be on schedule [for completion of a deal next summer] and I believe that we will have the [fast-track] authority necessary to implement it by the time we need to implement it.

WT: Will the Asian currency crisis hurt U.S. high-tech exports to Asia?

Barshefsky: The currency crisis injects a new element into the Asian-Pacific Economic Council meeting. We will have to await the meeting to see if the currency crisis is used in any way as a reason for [delaying] particular market openings. [On business], the impact of the currency crisis may be felt in two ways, the increased export competitiveness of Asia nations, and second, demand in those countries may be dampened, potentially decreasing imports from the United States and other countries.

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