At Grand Epoch City near Beijing on December 12 and 13, the United States and China held the third Strategic Economic Dialogue (SED). As special representatives of President George W. Bush and President Hu Jintao, Treasury Secretary Henry M. Pauslon, Jr. and Vice Premier Wu Yi served as co-chairs of the SED.
Discussions at the third SED led to a number of results that strengthen and deepen the bilateral economic relationship, including:
- In product quality and food safety, the United States and China committed to expand their dialogue and information-sharing to enhance the infrastructure of laws, policies, programs and incentives that allow for effective government oversight of exports of food, drugs, medical products, and consumer goods. To this end, the two countries signed memorandums in eight areas intended to improve the safety of exports. These included:
- Food and feed: Memorandum of agreement between the U.S. Department of Health and Human Services (HHS) and China's General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ), signed on December 11, 2007;
- Drugs and medical products: Agreement between the U.S. Department of Health and Human Services (HHS) and China's State Food and Drug Administration (SFDA), signed on December 11, 2007;
- Environmentally compliant exports/imports: Memorandum of understanding signed between the U.S. Environmental Protection Agency (EPA) and China's AQSIQ;
- Food safety: The U.S. Department of Agriculture (USDA) and China's AQSIQ agree to upgrade their food safety memorandum of cooperation to a ministerial-level;
- Alcohol and tobacco products: Memorandum of understanding between the U.S. Department of the Treasury and China's AQSIQ, signed on December 11, 2007; and,
- Additional areas: Toys, fireworks, lighters, and electrical products; motor vehicle safety; and pesticides tolerance and trade.
- In financial services, China agrees to announce before SED IV that the China Securities Regulatory Commission (CSRC) will conduct a careful assessment on foreign participation in China's securities firms and its influence on China's securities market and based on the results of its assessment, will make a policy recommendation on the issue of adjusting foreign equity participation in China's securities firms. The China Banking Regulatory Commission (CBRC) is currently conducting a scientific study of foreign participation in China's banking sector, that will be completed by December 31, 2008. By that time, based on the policy assessment's conclusions, the CBRC will make policy recommendations on foreign equity participation. China agrees to allow, in accordance with relevant prudential regulations, qualified foreign-invested companies, including banks, to issue RMB denominated stocks; qualified listed companies to issue RMB denominated corporate bonds; and qualified incorporated foreign banks to issue RMB denominated financial bonds. The United States and China welcome the recently approved application by China Merchants Bank to establish a branch in the United States. The U.S. government remains committed to apply national treatment to Chinese banks, confirms that applications by Chinese banks will be evaluated consistent with the principle of national treatment, and applies the same prudential standards to all applications by foreign banks to establish branches or subsidiaries or to acquire stakes in existing U.S. banking institutions. The U.S. notes China's request that the relevant U.S. regulators process expeditiously the applications of Chinese banks according to relevant regulations and procedures. The U.S. government also remains committed to apply national treatment to Chinese broker-dealers and investment advisers seeking to register and operate in the United States. China Banking Regulatory Commission (CBRC) and the U.S. Securities and Exchange Commission (SEC) have agreed in principle that the signing of an exchange of letters will be done in the near future on information sharing in connection with the cross border activity of financial institutions licensed by either the CBRC or SEC.
- In energy and the environment, the United States and China signed a memorandum of understanding strengthening cooperation in the area of biomass resources conversion for fuel, and negotiated a memorandum of understanding to cooperate on combating illegal logging and associated trade in order to promote sustainable forest management. China will develop and implement a nationwide program on SO2 emission trading in the power sector, and the U.S. will provide technical assistance for this program, as well as for basic water management programs and for adopting clean fuels and vehicle policies. The United States and China reaffirm our commitment "to reduce, or as appropriate, eliminate tariffs and non-tariff barriers to environmental goods and services" in the WTO.
- In transparency, the United States and China agree that transparency in administrative rule-making has been increased and public participation has been strengthened. They also agree to respect and build upon their international obligations on transparency, including their APEC and WTO commitments. Each country will:
- When possible, publish in advance any measure covered by its WTO obligations that are proposed for adoption, and provide where applicable interested persons a reasonable opportunity to comment on such proposed measures. Each country may comply with this obligation by regularly publishing such proposed measures in its designated official journal or by posting and permanently maintaining these measures on an official website;
- Publish in its designated official journal any final measure covered by its WTO obligations before implementation or enforcement.
- In rebalancing growth, both the United States and China commit to communicate on measures to address U.S.-China economic imbalances through dialogue and consultation, including discussions under the U.S.-China Joint Economic Committee. Both sides agreed to put great emphasis on opposing trade and investment protectionism. The United States and China welcome efforts both in the U.S. and internationally to assess the challenges created by the recent turbulence in the U.S. sub-prime market and in other global financial markets. The two countries agree to continue communication and information sharing in a timely manner on systemically significant economic and financial developments. Financial supervisory agencies in both countries agree to continue exchanges on supervisory measures. On December 13 and 14, 2007, Chinese Customs and U.S. Customs and Border Protection officials will hold technical discussions to agree on the joint validation procedure of the Customs-Trade Partnership Against Terrorism (C-TPAT) pilot project in China, which is expected to begin in early January 2008, with joint validations led by China Customs and technical input provided by U.S. Customs and Border Protection.
- In innovation, the United States and China co-hosted an Innovation Conference on December 10, 2007 in Beijing. Both sides discussed the factors contributing to a successful ecosystem for innovation, the appropriate roles of the public and private sectors in fostering innovation, and how to encourage the creation, protection and dissemination of intellectual assets. The two sides agreed to sustain dialogue, jointly host public-private innovation discussions, and other cooperation as outlined in the SED III Innovation Conference Outcomes document.
Both sides decided to prioritize work during the next six months. The two countries will:
- Further intensify dialogue and exchanges in the areas of product and consumer safety, including food, feed, and drug and medical products, through new and existing bilateral cooperation mechanisms.
- Conduct extensive cooperation over a ten-year period that will address energy and the environment. This ten year collaboration will advance technological innovation, adoption of highly-efficient, clean energy technology and technology in addressing climate change, and promote the sustainability of natural resources. We will establish a working group in order to start planning as soon as possible.
- Meet early next year and work together to jointly promote the negotiation in the WTO on the reduction or, as appropriate, the elimination of tariffs and non-tariff barriers to environmental goods and services to achieve results as soon as possible, recognizing the urgency of environmental challenges. Expand cooperation on development of a detailed plan to gradually reduce the sulfur content in fuels to 50 ppm or lower and introduce corresponding advanced vehicle pollution control technology, for incorporation into China's 12th Five Year Plan. Strengthen cooperation on construction and management of strategic oil stocks through the exchanges of information and technologies, as well as training, including cooperation with the International Energy Agency.
- Begin a high-level exchange of investment policies, practices, and climates. Intensify ongoing discussions regarding the prospects for negotiating a Bilateral Investment Treaty. Continue consultations in a cooperative manner on China achieving market economy status. Continue cooperation through the JCCT High Technology and Strategic Trade Working Group by positively implementing "Guidelines for U.S.-China High Technology and Strategic Trade Development" and taking appropriate constructive measures and working out an action plan to expand and facilitate bilateral high-tech and strategic trade. Relevant departments of the two sides have agreed to meet or hold a digital video conference (DVC) in the field of rules of origin.
- Explore the scope of respective international obligations on transparency. Continue to exchange information on reviewing and responding to comments received during the rulemaking process. Establish a communication mechanism to exchange information regularly on the conditions, procedures and timeframes for granting administrative licenses in areas of the Chinese market of interest to the United States and areas of the U.S. market to China.
The fourth SED will be held in Washington in June 2008.