- The Washington Times - Thursday, May 11, 2000

The U.S. Congress is on the verge of casting a historic vote, one that future generations and the entire world will scrutinize and reflect on. This vote will not only be used by many historians to rate this Congress and this administration, but, more importantly, it will help determine America's place in the world.

The record will show that the vote is on granting China Permanent Normal Trading Relations (PNTR) so the Chinese market will be open to U.S. goods and products when China joins the World Trade Organization. The real vote will be on whether America will be a leader in the world by choosing trade, jobs and opportunity, or whether America will play the ostrich, hiding its head in the sand while the world passes it by.

And have no doubt the world will pass us by. I don't believe that many people realize what it will cost us in terms of economic growth, jobs and national security if Congress disapproves PNTR. The financial services industry is a case in point.

The financial services industry is a large and flourishing segment of our economy. In 1997, according to Census Bureau data, finance and insurance constituted the fourth largest industry by sales and receipts. Moreover, it was the largest industry by payroll. Jobs created in our industry are good jobs, paying an average of $44,000 nationally. With passage of PNTR and the opening of the Chinese market, the financial and insurance industry can create more good-paying jobs.

In insurance alone, China represents an incredible opportunity. The Chinese insurance market is largely undeveloped, but growing rapidly, up 11 percent last year. Yet the Chinese still spend less per capita on insurance than individuals in 77 other countries including Bulgaria and Zimbabwe. With a population of 1.2 billion, total written premiums in China in 1998 were only $14.3 billion while premiums in the United States, with approximately one-quarter of the population, were $736.8 billion. As China develops economically, the need for insurance will grow exponentially, approaching the level in the rest of developed world or about $1.2 trillion. This is more than today's entire global insurance market of $1 trillion.

American insurance companies are prepared to compete in China, but we can only do so if Congress passes PNTR. Without passage, foreign firms will capture this market instead. Their dominance in China would likely hurt our ability to compete in any country, including the United States. Needless to say, this will severely diminish our industry's ability to create good jobs for Americans.

Many people are opposed to granting PNTR to China because of its record on human rights and its bellicose foreign policy. Opponents argue that it is important to maintain the leverage of an annual vote on maintaining PNTR. As a practical matter, however, voting every year for the last 19 years has had little or no impact on China. Retaining annual votes for the next 19 years is not likely to be any more effective. Conversely, the passage of PNTR for China and its membership in the World Trade Organization will give us the influence needed to bring change to China.

The unprecedented access by American firms would expose the Chinese to Western values and free market principles. Because of the economic growth the international trading community will bring to China, Chinese leaders will have a vested interest in playing by the rules. And as their country grows and prospers, they will have an increasingly large stake in maintaining the peace and becoming a more open and freer society.

I urge Congress to vote to approve PNTR for China because it is serves America's economic, national security and human rights interests.

Robert E. Vagley is president of the American Insurance Association, which represents more than 300 major insurance companies.

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