- The Washington Times - Wednesday, May 24, 2000

District of Columbia telecommunications company E-Globe has contracts with customers in China that could end in 48 hours. Risk like that keeps the company from making bigger investments and bigger profits.
But expanded trade ties with China, a bill the House will vote on today, would mean lengthy contracts, bigger investments and bigger profits.
E-Globe is just one of many companies, from construction to health care, telecommunications to computer systems, that stand to gain enormously from the bill to permanently normalize trade relations with China.
The bill would smooth China's entry into the World Trade Organization, lower tariffs on U.S. goods across a range of industries and create something businesses long for in the Byzantine market: certainty.
"Certainty is worth literally billions of dollars of revenue per year," said Christopher Vizas, E-Globe's chairman and chief executive officer.
The company would not project specific earnings growth, but officials believe such growth would be an inevitable result of passing the trade legislation.
A health care official agreed.
"Over time, there would be substantial benefit," said Lawrence Pemble, chairman of Chindex International, based in Bethesda, Md. Chindex operates the only foreign-owned, for-profit hospital allowed by the Chinese government.
Under the trade deal, U.S. insurance companies would be able to sell policies to the 1.3 billion Chinese residents, which could mean more business for the hospital.
With one of the world's fastest-growing economies, China is one of the world's biggest markets and is largely untapped by Western companies. The 15-member European Union reached a trade agreement with China Friday, a deal that effectively gives China enough support to enter the World Trade Organization, even without congressional approval.
Local companies hope to capitalize even more on the expanding Chinese market under the proposed trade deal. The Washington area, including parts of Virginia, Maryland and West Virginia, recorded sales of $51 million to China in 1998.
A broad range of industries in Maryland and Virginia are expected to benefit as a result of lowering tariffs under the agreement. These include information technology, chemicals, power-generation equipment, food-processing machinery, paper, yarn and fibers, toys and games, beef, poultry and dairy products, according to the Department of Commerce.
But regulatory questions and tariffs have kept companies out of the market or limited their activities. Lack of safeguards like contract enforcement has made Western businesses nervous that they could lose their investments through contract disputes or the seizure of assets by authorities.
"It is a very unpredictable marketplace," said one official with a telecommunications company active in China, who asked not to be identified. "If you achieve a measure of success, there may be a new set of regulations."
However, WTO membership may give Western businesses the confidence to seek bigger chunks of the Chinese market. For wireless communications company LCC International, that means a chance to do some real business, said Tom Faulders, chairman and chief executive officer of the McLean-based company.
He estimates that the Chinese market may need $2 billion to $3 billion a year in the design work that his company does. That's not including the $5 billion to $10 billion a year it will take to actually build and set up the wireless networks.
Other companies say the agreement would help both China and their own businesses, although no one offered specifics.
Officials at Bethesda-based Marriott International, which has "aggressive growth plans in China," said the agreement would open the Chinese market and help lodging companies with growing tourism, said spokesman Tom Marder.
ICF Kaiser International Inc. would have more opportunities to do construction, engineering and environmental work under the trade bill, said Bob Cochran, president of North American engineering operations. The Fairfax, Va.-based company already is looking to engineer and design new steel and aluminum plants, he said.
WorldCom spokesman Peter Lucht said, "It would potentially open up an area where we would do a lot of business."
The outlook for small businesses is less bright, according to one trading company official.
"I think WTO is more an organization to protect the very big businesses," said Jerry Curry, president of Reston, Va.-based Victoria International. He was one of about 20 businessmen to meet with President Clinton three months ago to talk about the trade agreement.
Mr. Curry said he left the meeting with mixed feelings about the agreement, but said it is probably better than the current trading arrangements.
"It helps to protect you when things go wrong, rather than help you if things go right," he said.
His company does not currently trade in China, but the agreement may create the opportunity to sell staples like corn, rice and even heating oil, he said.
Trading in goods like those may be the smart move, said Steve East, market analyst for Arlington, Va., investment company Friedman Billings Ramsey. The trade agreement will bring new investment, new jobs and a new standard of living. That will translate into demand for food and eventually perhaps consumer goods.
"It starts with what people eat," he said. "Beyond agriculture, it's just speculation."

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