The Untapped Potential of U.S.-Taiwan Trade Relations

(Source: Reuters)

Q&A with Rupert Hammond-Chambers

By: Rachael Burton

Since 2004, Taiwan has consistently ranked as one of the top 12 trading partners of the United States. While many look to defense articles as being the marker of strong U.S.- Taiwan Relations, economic ties are often an overlooked strength in the relationship. The Taiwan Relations Act (TRA) stipulates that it is the policy of the United States to maintain the capacity to resist any forms of coercion that would jeopardize, not only the security of the people on Taiwan, but the social and economic system as well. Indeed, efforts to strengthen and enhance U.S.-Taiwan relations must take a holistic approach to the island's defense―to include economic vitality―as a credible deterrent and as a safeguard of Taiwan's contributions to the international community.

To explore future prospects of U.S.-Taiwan trade relations, the Project 2049 Institute and Rupert Hammond-Chambers discussed the overall trade relationship between the United States and Taiwan, Taiwan's contributions to global supply chains, as well as the economic opportunities and challenges Taiwan's government faces. Mr. Hammond-Chambers is the President of the U.S.-Taiwan Business Council and the Managing Director (Taiwan) for Bower Group Asia.

U.S.-Taiwan trade relations have evolved from Taiwan’s industry entering the global market to Taiwan’s entry into the World Trade Organization (WTO). By providing a brief overview of U.S.-Taiwan trade relations since the 80's, how would you characterize where trade relations stands today?

In the 1980's, trade relations between the U.S. and Taiwan could be characterized as stable, dynamic, and focused on “big-picture” issues. The real driving force behind trade relations was Taiwan's semi-conductor industry that propelled Taiwan's tech and manufacturing industry. Due to companies such as the Taiwan Semiconductor Manufacturing Company (TSMC), the growth of this industry cemented Taiwan's central role in the global technology supply chain. TSMC, among other companies such as MiTAC and Quanta Computer, would formulate and partner with U.S. companies to support the production and manufacture of technology for products such as calculators and basic technology games that put Taiwan's industry on the map. Taiwan's "economic miracle" continued to move forward with steady GDP growth at 5-6%. Paired with high demand from the United States, Taiwan's economy began to move up the value chain as Taiwanese companies were producing increasingly sophisticated information technology (IT) products, such as laptops. In addition, due to Deng Xiaoping’s “opening and reform” policies, Taiwan’s capital began to gravitate towards China (PRC) in an effort to keep manufacturing costs down, which anchored Taiwan businesses in China. In the 1990’s, the World Trade Organization (WTO) negotiations between the U.S. and Taiwan, which began in ‘94 and concluded in ‘98, was a significant period as Taiwan's economy was poised to undertake the first comprehensive process of reform and consolidation. However, due to political lobbying by Chinese authorities, Taiwan could not formally accede to the WTO until 2002, along with the PRC.  

Since entry into the WTO, the trade relationship has been marred by Taiwan's slowing economy, the ‘08 financial crisis, and two significant disruptions to U.S.-Taiwan trade talks. In 2003 and 2007, the U.S. enacted punitive freezes on the U.S.-Taiwan "Trade and Investment Framework Agreement” (TIFA) talks, the first freeze was in relation to Intellectual Property (IP) rights issues, and the second was on trade issues related to beef. There are rumors that the current U.S. Trade Representative (USTR) is considering another freeze on TIFA over disagreements on pork. At the moment, TIFA exists as the only official platform for Taiwan and the U.S. to have meaningful trade talks. As a result, greater commercial opportunities between the U.S. and Taiwan are wasted when this mechanism is not utilized. If Taiwan’s industry and companies are not as able to integrate into the United States’ economy, and high-level exchanges are less frequent, this weakens the overall relationship between the U.S. and Taiwan.  

From the 1980's to the early 2000's, U.S. and Taiwan trade relations flourished in large part due to a great deal of high-level exchanges between the United States and Taiwan's economic leadership. During the Clinton administration, a steady stream of economic ministers from Taiwan visited the United States to promote the trade relationship, participate in the negotiation process, and build relations with their interlocutors. Notably, the current President of Taiwan Tsai Ing-wen, at that time, was a key trade negotiator involved in Taiwan's entry into the WTO. However, the momentum of high-level discussions has waned as the pace of high-level meetings has slowed, tarnishing the precedent set in years past. For example, the most recent visit by a senior Taiwanese official to Washington was then-minister of economic affairs John Deng (鄧振中) in February 2015. The lack of high-level exchanges deprives Taiwan’s government of the ability to advocate on behalf of Taiwan’s industry and to build relationships with their counterparts in the United States. Taiwan and the United States should look to rebuild earlier precedence and momentum set in the 80's and 90's in regards to high-level economic exchanges.

What role do Taiwanese businessmen play in China's production growth? What differentiates them from their Chinese counterparts?

Taiwan businesses play a significant role in China's production growth. Taiwan's foreign direct investment (FDI) continues to flow into China, but mostly is comprised of existing investment to owned "legacy" facilities in order to upgrade equipment or to expand. Though Taiwan businessmen have anchored manufacturing plants in China, new Taiwan FDI tend to follow market trends that are moving to South and Southeast Asia, not to new investments in China. Another area that is less understood and appreciated about China's production growth is the role and leadership of Taiwan executives working in Chinese companies. Taiwanese executives are extremely competent at supply chain management, managing factories, and are incredibly capable businessmen and women. This skill set is lacking in China, so Chinese companies, and by extension the PRC state, benefits from Taiwan's talented business class. However, this is causing a talent drain on the island that the Tsai administration is working to address.

When it comes to business, what differentiates Taiwan from China? On the top of the list is intellectual property protection (or intellectual property rights [IPR]). Taiwan is well positioned and situated to handle higher end IPR than their Chinese counterparts. However, Chinese companies have a lot of muscle, and even though IPR is a significant competitive advantage for Taiwan, Beijing has the means to convince foreign companies to invest in China despite legitimate concerns over IPR. 

You have discussed the strengths of Taiwan’s industry and talent, as well as the island's role in the global supply chain. As Taiwan continues to advance and reinvigorate its economy, what barriers need to be overcome?

Taiwan struggles with regulatory issues and an absence of transparency over its business rules, which makes the environment difficult to navigate. For example, there are significant barriers to taking out money if one invests in Taiwan. The absence of private equity (PE) investment on the island is another challenge. While many Taiwanese companies would benefit from PE investment, ambiguous rules and regulations that are utilized to assess sales in fact create more hurdles for investors. The process itself lacks transparency and discourages foreign capital. While investors face similar challenges in China, the Chinese government does a better job of managing its regulations to attract foreign investment. However, recently, Taiwan's Financial Supervisory Commission announced a new regulation that will allow mutual fund managers to set up onshore vehicles for PE investments.

A second barrier is the challenge of creating a business and making it public, leading investors to look to China instead. The environment to start a business in Taiwan could be improved. Furthermore, an absence of people to work in these companies, paired with a lackluster visa program to attract and retain talent, remains an uphill battle for Taiwan. The Taiwan government has taken some action to address these fundamental issues through the Legislative Yuan’s passage of the “Act Governing Recruitment and Employment of Foreign Professionals” in late October. Yet, implementation of the law will be a crucial benchmark once the Executive Yuan conducts a review in spring 2018. Generally, there has not been a sense of urgency coming from the Taiwan government to address the issue of cultivating talent in an environment conducive for not just the “5+2 innovative industries” but for start-ups and the arts, as well.

On June 18th, Taiwan sent its largest-ever delegation to the fourth SelectUSA Investment Summit, held in Washington D.C., with the intent to expand economic ties in areas such as aviation, information and communication technology, machinery, petrochemicals, and steel. What are some of the opportunities and challenges currently facing U.S.-Taiwan trade relations in these sectors?

At this year’s SelectUSA Investment Summit, Taiwan not only sent its largest delegation, but it was the second largest behind China and ahead of Japan. This year, Taiwan businesses came with an interest in investing up to $34 billion in the United States. The Summit is an important economic space here in Washington D.C. and was well attended by U.S. companies. In addition, Matthew Pottinger, Senior Director for Asia at the National Security Council, met and spoke with the Taiwanese delegation at a forum hosted by the U.S.-Taiwan Business Council. Overall, this occasion allows industry and Taiwan’s government to dialogue, and SelectUSA serves as a good example of a platform through which the U.S. and Taiwan can engage on these issues outside of TIFA.

Taiwan’s SelectUSA delegation also made stops in San Francisco and Houston, highlighting the important relationship between Taiwan businesses and investments at the state and municipal levels. Robust Taiwanese-American communities in the U.S. (ie: Boston, Austin, and Silicon Valley) have contributed to the success of U.S.-Taiwan commercial relations. U.S.-Taiwan trade relations tend to be more productive at the state level as they focus on investments and exports, while larger trade barrier issues are under the purview of the federal government.

While the main challenges in U.S.-Taiwan trade relations deal with agriculture, sectors such as aviation, and information and communication technology (ICT), are strong with significant outsourcing to Taiwan by system integrators like Boeing and Lockheed. Companies such as Qualcomm and Apple are heavily invested in the island’s supply chain. While there are growing domestic environmental concerns regarding Taiwan's petrochemical industry, it remains a force on the island and seeks investment opportunities abroad. Steel remains an important sector for Taiwan but there are questions regarding unfair trade practices. A sector not mentioned is the role of energy and its impact on Taiwan's national security. 

In your statement to the House Foreign Affairs Asia Pacific Sub-Committee, you characterize U.S. policy as “under-realizing” the development of Taiwan’s market, which ultimately hurts U.S. exporters. Furthermore, bilateral solutions addressing issues related to intellectual property, beef, and pork, have yet to materialize. Given these challenges, the U.S.-Taiwan Business Council has recommended that the U.S. launch negotiations with Taiwan for a Free Trade Agreement (FTA) without preconditions. Why are negating preconditions important, and what does it signify?

The first issue regarding preconditions in U.S.-Taiwan trade negotiations is the moving goal post (i.e.: In 2003, the U.S. government asked Taiwan to address IPR, and in 2007, Taiwan was asked to address beef). The precondition issue can be judged as a punitive tactic, and is used as a barrier to ensure that the U.S.-Taiwan trade relationship is managed without aspiration. Economics and trade is a cornerstone of the Taiwan Relations Act (TRA), along with assisting Taiwan’s defense needs. Traditionally, the trade relationship has largely been able to maintain an apolitical stature in comparison to the security aspect of the relationship. Unfortunately, it appears that after Taiwan acceded to the WTO, the economic relationship has turned more political. The trade relationship has tracked the same way as the defense relationship, by means of a downward trajectory with an apparent effort by the U.S. government to maintain "stability" in the U.S.-China relationship. The U.S. entered Trans-Pacific Partnership (TPP) negotiations without preconditions. Arguably, even though the Trump administration is no longer pursuing the TPP, bilateral negotiations without preconditions between Japan, and thus Taiwan, should be considered.  

  

As President Tsai aims to build Taiwan's indigenous defense capabilities, what role can the U.S. defense industry and the U.S. government play in building Taiwan's indigenous capacity?

There is already some basic cooperation between Taiwan and U.S. defense industries that are separate from Foreign Military Sales (FMS) and offsets. For example, Boeing and Airbus source equipment from Taiwanese aerospace companies like the Aerospace Industrial Development Corporation (AIDC), which provides doors for commercial airplanes. However, these companies are system integrators that buy and assemble, they are not building everything themselves. Based on global standards, it is limited and difficult to become a qualified contractor within commercial and defense spaces. While Taiwan has made some inroads on this front, it has done a poor job of leveraging its offset programs to better integrate its companies as suppliers in the United States’ commercial and defense supply chain. As the Trump administration aims to secure sourcing within the U.S. defense supply chain, it will become increasingly difficult for foreign companies to source parts for U.S. defense items. Based on a U.S. Department of Defense (DoD) estimate, in 2013, U.S. defense spending of roughly $20 billion on equipment went to foreign contractors. Taiwan’s defense industry should be proactive in getting involved in the early stages of development programs here in United States. For example, had Taiwan participated in the  F-35 (Joint Strike Fighter [JSF]) program as a tier-2 JSF Security Cooperative Partner, it's possible that Taiwan would be better positioned to receive F-35's, and Taiwan’s industry would have become an industrial partner for the production of F-35’s. This was a huge missed commercial opportunity for Taiwan to integrate companies that were already certified in the supply chain. Current development programs that Taiwan’s government should seek to integrate into are land systems, light tanks/army programs, and missile defense platforms. Additionally, Taiwan has significant tech of its own in regards to missile development. Taiwan should be considered to enter into cooperative research and development projects with the U.S. defense industry on a shared-cost basis. In 2003, then Acting Undersecretary of Defense for Acquisition, Technology, and Logistics, Michael Wynne, submitted a letter to Congress that designated Taiwan as a “major non-NATO ally” which holds large implications for defense industrial cooperation with Taiwan. If Taiwan’s government is truly serious, they will identify several programs in the short to medium term and get involved. This would be the most effective way of starting the process of integrating Taiwan companies into the global defense industry supply chain. Countries like the Republic of Korea and Turkey have boomed by going this direction (as has NATO and non-NATO allies). The more integrated Taiwan and the U.S. are, the stronger the relationship will be.

You have mentioned that Taiwan’s economy is currently at a crossroads with a new President and administration working to invigorate Taiwan’s people and economy. What can be done to maintain and strengthen U.S.-Taiwan trade relations?

There is great potential in the U.S.-Taiwan trade relationship; however, at the moment, it is difficult to significantly expand it. The Trump administration is wielding a heavy stick vis-a-vis trade, with a focus on the trade imbalance between the U.S. and Taiwan. This could be addressed by Taiwan if the government sought alternative energy vendors in the United States, which could put a significant dent in the trade imbalance. Another consideration is for the U.S. to be prepared to release licenses and support some of Taiwan’s major defense programs. There is a need for dynamism in all aspects of the U.S.-Taiwan relationship and it begins with continuous high-level engagement between the U.S. and Taiwan governments. Iterated in President Trump’s first visit to Asia, the  “Indo-Pacific” strategy should certainly include Taiwan, given that President Tsai’s New Southbound Policy and Taiwan’s standing as a democratic government is well suited to fit into―and is already a part of― a “free and open” Indo-Pacific region.

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Rachael Burton is the Deputy Director at the Project 2049 Institute where she directs program management and and project development.

Interview with Author Ian Easton on "The Chinese Invasion Threat: Taiwan's Defense and American Strategy in Asia"

An Interview with author Ian Easton
by: The Project 2049 Institute

1. What is your book about?

The book is about China's secret military plan to invade Taiwan and how such a tragic future can be avoided. Most people believe North Korea is the biggest national security threat America faces, but a great power war between the U.S. and the PRC over Taiwan would be far worse. The Taiwan Strait flashpoint is also structurally less stable than the Korean Peninsula. It seems highly unlikely that anyone in North Korea actually thinks they could win a war against South Korea and the United States.                    

2. What inspired you to write this book?

My grandfather was a Marine who fought his way across the Pacific in World War II. Growing up, I was always asking him about the war. In response, he would sit me down and tell about these terrible battles, always emphasizing the point that war is hell and peace is precious. Later, when I moved to Taiwan to study Chinese, he told me that his unit was originally assigned to Operation Causeway, the planned February 1945 assault on Taiwan. Ultimately, the Pentagon aborted the operation and ordered the Marines to "leap-frog" Taiwan and land on Okinawa instead. My grandfather thought that was a brilliant move, and one that may have saved his life and, by extension, mine. So I had a personal connection to the history there. On top of that, it's pretty hard to live in Taiwan for any length of time and not think about the threat China poses to the island, especially after your first air raid drill.         

3. You draw heavily from leaked Chinese military documents. How did you get them?

In collecting research materials for the book, I went to all the same places as other American PLA-watchers. The breakthrough came in early 2015, when I was flipping through this internal Chinese army field manual and noticed that over 100 pages of it were dedicated to something called a "Joint Island Attack Campaign." I started reading and soon realized this was code for the invasion of Taiwan. After that, it seemed like every PLA document I picked up had at least a chapter or two on this operation.

4. What surprised you the most in reading internal PLA documents?

What surprised me was how obsessed the Chinese military is with invading Taiwan. According to them, this is their biggest and most difficult war plan by far. They seem to see it as this inevitable conflict. I was also surprised, and disturbed, by how brutal and bloody they envision the invasion to be. The training they give officers in China is very different from what in men and women in uniform receive in countries like the United States. I have read stacks of internal PLA documents on their visions for this operation. Not once have I seen a single line reminding the intended readers (Chinese officers) that they should respect international law and conventions regarding the avoidance of civilian casualties―this even when they are talking about urban warfare and house-to-house fighting in the streets of Taipei!   

5. What do you think Chinese military officers will think of the book?  

I'm doubtful that many of them will be allowed to read it. If they do, the political officers will likely despise the book since it goes against their propaganda line. But I suspect the real warriors in the PLA will appreciate it. They are professional pessimists and probably don't like the idea of wasting their lives trying to do something awful like this. 

6. What do you think Taiwanese military officers will think of the book?

They will probably think I'm giving them too much credit. They are a very self-critical community. They are trained to assume the sky could start falling at any moment and think they must prepare accordingly. But I firmly believe the Taiwanese are capable of mounting a ferocious defense of their homeland. I lived in Taiwan for over four years and saw firsthand how capable and tough the people there are. And I've seen the terrain, the beaches, the tunnels, how dug-in they are everywhere. I even went to the factory where they make their guns and test-fired their homemade T91 assault rifle. It's a great weapon for island defense and urban warfare.      

7. Did writing the book make you more or less worried about the possibility of a war in the Taiwan Strait? 

Overall, I guess I'm cautiously optimistic. Certainly I'm not losing any sleep. While the American track record on supporting Taiwan in recent years has been poor, there seems to be a growing sense in Washington that much more needs to be done and can be done to preserve the peace.       

8. Some former government officials have argued that the United States should explicitly guarantee Taiwan's security. Do you think Washington should have a mutual defense treaty with Taiwan, like it does with all Taiwan's democratic neighbors (Japan, South Korea, Philippines, Australia, etc.)?    

That's a great question, and it should be carefully studied and debated in Washington. I think it's certainly true that the most critical question deciding war and peace in the Strait will be what the United States does to bolster Taiwan's defense and deter Chinese aggression. Taiwan, like Japan and South Korea, cannot deter Chinese attack by itself without nuclear weapons, which they don't have and are unlikely to get. But I don't think the time has yet come for any explicit American commitment to Taiwan's defense. The situation is not nearly that dire. In the near term, Washington should send implicit signals of support to Taipei using diplomatic, economic, and defense channels. In that regard, President Trump's phone call with President Tsai was very helpful. That alone was worth the deployment of an entire squadron of F-35 stealth fighters or a THAAD missile defense battery. Politics is everything, especially in Asia. The hardcore military stuff is what you resort to when your policies have completely failed. War, by its very nature, is the ultimate act of human desperation. It means your national strategy, your intelligence, and your diplomacy all failed. Let's hope it never comes to that.

The Chinese Invasion Threat: Taiwan's Defense and American Strategy in Asia is now available on Amazon (paperback and e-book).        

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Ian Easton is a research fellow at the Project 2049 Institute and author of the book, "The Chinese Invasion Threat: Taiwan's Defense and American Strategy in Asia".

Congressional-Executive Commission on China 2017 Annual Report on Human Rights in China & Hong Kong

(Residents of Hong Kong host a vigil service outside the Chinese Liason Office of Hong Kong following the death of Human Right Activist and Nobel Peace Prize Winner Liu Xiaobo on July 13, 2017. Source: Geovien So / Barcroft Images)

The following excerpt includes the "Executive Summary" and "Recommendations to Congress and the Administration" from the Congressional-Executive Commission on China (CECC) 2017 Annual Report on Human Rights in China & Hong Kong.

I. EXECUTIVE SUMMARY

STATEMENT FROM THE CHAIRS

Seventeen years after the establishment of the Congressional-Executive Commission on China, the Commission’s mandate to monitor human rights and the development of the rule of law in China remains wholly relevant and urgently necessary.

China has benefited immensely from the international rules-based order in driving its growth and lifting millions out of poverty, but the political reform many believed would accompany China’s economic transformation and accession to the World Trade Organization has failed to materialize. Chinese government claims of global leadership in areas such as trade, environmental protection, and the building of international institutions—as expressed by President and Communist Party Secretary Xi Jinping at several high-profile international forums this past year—are belied by the reality of the Chinese government’s actions, which are not that of a responsible stakeholder.

While China stresses the need for global connectivity and openness, it continues to strengthen the world’s most sophisticated system of Internet control and press censorship and forges ahead with what it calls “Internet sovereignty,” the notion that nations should have total control over the Internet within their borders. The Chinese government’s expansive notion of sovereignty gives officials license to decry international criticism of their human rights record as one country interfering in the affairs of another. All the while, the Chinese government extends its own “long arm” to threaten and intimidate political and religious dissidents and critics living abroad; establishes Confucius Institutes at colleges and universities around the world, influencing these academic environments with its political agenda; and invests heavily in overseas media, exporting state propaganda and exercising soft power to shape movie production and other cultural media. Moreover, Chinese officials’ complaints of other nations’ “interference” into China’s affairs fail to take into account that the Chinese government is obligated to respect the fundamental rights of its citizens under its own constitution, and under international conventions it has willingly signed.

The Commission is mandated to document cases of political prisoners in China— individuals who were detained or imprisoned by the Chinese government for exercising their civil, religious, and political rights. Steadfast advocacy on behalf of individual political and religious prisoners, more than 1,400 of whom are active cases in the Commission’s far from exhaustive Political Prisoner Database, remains vital. These men and women, whose “crimes” intersect with nearly every issue area covered in the Commission’s Annual Report, represent the human toll exacted by China’s repressive and authoritarian one-party system. The death from liver cancer in July 2017 of Liu Xiaobo—a Chinese intellectual and 2010 Nobel Peace Prize laureate who was serving an 11-year sentence for “inciting subversion of state power” in connection with his pro-democracy work—brought renewed attention to the government and Party’s shameful treatment of political prisoners. In his last days, authorities repeatedly denied Liu Xiaobo medical treatment abroad, counter to his wishes and those of his wife, Liu Xia.

During this reporting year, we were inspired by the outspoken bravery of several of the wives of Chinese lawyers and rights defenders detained during the sweeping July 2015 crackdown on human rights advocates. In case after case, these women took up the mantle of their husbands’ plight, often at great risk to themselves and their children. By their own telling, many of these women had not previously been involved in their husbands’ efforts to pursue justice and accountability from their own government. However, as Chinese authorities conspired against them and their families—as their spouses’ unjust detentions grew from days to weeks to months—they became advocates in their own right. Their personal accounts of intimidation, harassment, and social marginalization stemming from official pressure—landlords refusing them housing, their children being denied entry to local schools, their lives under constant surveillance and movement restricted—coupled with their compelling public defense of their husbands’ innocence, have, in the words of one scholar, opened up a “new line of struggle that we have not seen before in China.”

Chinese government repression may temporarily satisfy the Communist Party’s desire to control its citizenry and maintain its grip on power, but as these women have shown, such measures often have the unintended consequence of stoking resentment and prompting activism in individuals who may have otherwise chosen not to engage. Even as the Commission’s reporting documents a continued downward trajectory in human rights protections since Xi Jinping’s ascent to power, there are other stories that demand telling: As the Chinese government suppresses authentic religious expression, the number of religious adherents multiplies; as the government censors the Internet, circumvention tools proliferate; as they brutally represses rights lawyers, their loved ones open up a “new line of struggle.”

Change in China will ultimately arise from within. However, the United States and other like-minded nations have a responsibility and a legitimate national interest in pressing the Chinese government to uphold human rights norms, respect the rule of law, and comply with its international commitments. It is in this context that we, as Chairman and Cochairman of the Congressional-Executive Commission on China, submit the Commission’s 2017 Annual Report.

Senator Marco Rubio                                              Congressman Christopher H. Smith
Chair                                                                        Cochair

II. RECOMMENDATIONS TO CONGRESS AND THE ADMINISTRATION

Embed Human Rights Throughout Bilateral Relations. The Administration and Congress should develop an action plan to facilitate interagency coordination on human rights in China and develop a coordinated approach that prepares all agencies interacting with Chinese government counterparts to pursue measurable, results-oriented human rights and rule of law outcomes. All agencies should be prepared to better articulate the link between human rights improvements in China and U.S. economic, security, and diplomatic interests.

Make Reciprocity a Priority. The Administration should open high-level discussions to create a rules-of-the-road agreement that ensures reciprocal treatment for U.S. institutions, businesses, and nationals operating in China. The Administration should take appropriate and reciprocal actions to ensure that U.S.-based media outlets as well as academic and non-governmental organizations have the same freedoms afforded to a growing number of Chinese government-sponsored and funded think tanks, academic institutions, and media entities in the United States, while ensuring that independent Chinese media and organizations remain welcome. In addition, any bilateral investment treaty (BIT) with China should effectively facilitate and enable market access for U.S. media companies and education institutions.

Hold Officials Accountable for Abuses. The Administration should use existing laws to hold accountable Chinese government officials and others complicit in torture, severe religious freedom restrictions, repatriation of North Korean refugees, or those participating in forced abortions or sterilizations, including by using the sanctions available in the Global Magnitsky Human Rights Accountability Act, the International Religious Freedom Act of 1998, and the Foreign Relations Authorization Act of 2000. Congress should consider allocating resources to identify and investigate Chinese government officials responsible for human rights violations.

Seek a Law Enforcement Agreement That Upholds Global Standards. Chinese government officials have sought repatriation of Chinese citizens overseas in connection with the government’s anticorruption investigations, offering the Administration an opportunity to press for a comprehensive law enforcement agreement that establishes diplomatic assurances guaranteeing verifiable prisoner due process protections and an end to torture in detention and forms of arbitrary detention, including “residential surveillance at a designated location.” The U.S. Government should not agree to any additional repatriations until the Chinese government can demonstrate that they are meeting the standards set forth in the International Covenant on Civil and Political Rights and other international human rights instruments regarding the treatment of criminal suspects.

Respond to Digital Protectionism. The Administration should consider seeking a high-level trade agreement to address the Chinese government’s growing digital protectionism that would include commitments on the free flow of news and information and the non-discriminatory treatment of U.S. digital products. The Administration should consider initiating a World Trade Organization dispute to challenge continued discrimination against U.S. technology and media companies and prepare targeted trade sanctions if the Chinese government continues to impose onerous requirements, including data storage in China and the disclosure of source code and encryption keys. The Administration should provide Congress more detailed information about the effects of Internet censorship on U.S. businesses in China and use existing legal provisions to address intellectual property theft and the privacy concerns of U.S. citizens due to Chinese cyber espionage. The Administration and the committees of jurisdiction in Congress should work to find ways to use the Committee on Foreign Investment in the United States to respond to unfair industrial policies that threaten national security, including by expanding its mandate to look at foreign investment in media and technology sectors.

Promote a Free Internet. The Administration, in collaboration with Congress and the Chief Executive Officer of the Broadcasting Board of Governors, should develop a comprehensive, multi-year strategy that partners with civil society, businesses, key technology industries, religious leaders, and human rights defenders to counter efforts by the Chinese government to promote “Internet sovereignty”; develop effective technologies that provide or enhance access to the Internet; and conduct research on ways to counter threats to Internet freedom, including the Chinese government’s intent to block access to virtual private networks (VPNs) starting in early 2018. The Administration and Congress should consider expanding programs providing digital security training for civil society advocates and projects that track, preserve, and recirculate media and Internet content deleted by Chinese government censors.

Expand Mandate of FARA To Counter Propaganda. The Administration and Congress should work together to expand the mandate of the Foreign Agents Registration Act (FARA) to encompass individuals working for foreign state-owned media, government-backed think tanks, or other non-profit organizations operating in the United States. In addition, the Administration should develop a “whole-of-government” strategy to respond to Chinese government propaganda, including by fully equipping the Global Engagement Center at the State Department to research and counter disinformation and by considering an expansion of resources for Voice of America and Radio Free Asia programming in China.

Speak With a Unified Voice on Human Rights. The Administration should, where appropriate, lead efforts with allies to develop coordinated responses to human rights violations, including by working together at the United Nations, by creating a multilateral human rights dialogue or jointly funding technical assistance and capacity-building projects, or by engaging in joint advocacy and the sharing of prisoner lists. The Administration should also coordinate with businesses and non-governmental organizations (NGOs) to develop a unified message about unfair industrial policies, digital protectionism, and the harm to U.S. and global interests from the PRC Law on the Management of Overseas NGOs’ Activities.

Help Address China’s “Missing Girls” Problem. The Administration should integrate the provisions of the Girls Count Act (Public Law No. 114-24) into foreign assistance programs and consider appointing a Special Advisor at the U.S. State Department to oversee the creation and coordination of assistance programs to address the social and economic issues created by the Chinese government’s population control policies and sex ratio imbalances, particularly projects that strengthen property and inheritance rights for Chinese women and girls and those that protect women and their families from the most coercive aspects of the population control policies. The Administration should develop talking points so that officials and diplomats can discuss problems linked to China’s dramatic sex ratio imbalance as part of bilateral dialogues on security, legal, trafficking, human rights, medical, and public health. In addition, Congress should continue to link U.S. contributions to the UN Population Fund for use in China with the end of all birth limitation and coercive population control policies in China.

Seek Protections for North Korean Refugees. Congress should reauthorize the North Korean Human Rights Act and consider expanding efforts to channel uncensored news and information into North Korea and to asylum-seekers in China through all possible means, including through North Korean defector communities. In addition, using the tools provided by Congress, the Administration should be prepared to impose secondary sanctions on Chinese corporations, individuals, or banks that profit from North Korean forced labor and those assisting the North Korean government in avoiding international sanctions.

Make Religious Freedom Diplomacy a Priority. Given that countries that severely restrict religious freedom are likely to face domestic instability and may also threaten regional stability, it is in the U.S. interest for the Administration to implement fully the provisions of the Frank R. Wolf International Religious Freedom Act (Public Law No. 114-281) and strategically employ the sanctions and other tools associated with the U.S. State Department’s designation of China as a “Country of Particular Concern” for severe restrictions on religious freedom. The Administration should reestablish the Religion and Foreign Policy Working Group within the Department of State’s Federal Advisory Committee to bring together experts from government, universities, religious and other NGOs to develop an effective multi-year plan to promote and protect religious freedom in China.

Prioritize Efforts To Combat Human Trafficking, Forced Labor, and Child Labor. Congress and the Administration should ensure that the U.S. Department of State’s Office to Monitor and Combat Trafficking in Persons and the U.S. Department of Labor’s Bureau of International Labor Affairs have sufficient resources and status within their Departments to effectively combat human trafficking and more accurately report on current conditions, including by reauthorizing the Trafficking Victims Protection Act of 2000. Congress should again consider legislation that improves U.S. Government data collection and reporting on the issue of human trafficking for the purpose of organ removal, globally and in China.

Promote Dialogue Regarding Tibet. The Administration and Congress should work together to press for unrestricted access to Tibetan autonomous areas in China and to facilitate the full implementation of the Tibetan Policy Act of 2002, including establishing a diplomatic office in Lhasa, and urging renewed dialogue between Chinese government officials and the Dalai Lama’s representatives. Administration officials, including the President, should meet with the Dalai Lama in his capacity as a spiritual leader and with the leaders of the Central Tibetan Administration. Congress should consider passage of the Reciprocal Access to Tibet Act (S. 821/H.R. 1872, 115th Cong., 1st Sess.). 

Calibrate Counterterrorism Cooperation To Protect Ethnic Minorities. Due to the Chinese government’s practice of labeling peaceful rights advocates and members of religious and ethnic minority groups as extremists or terrorists, the Administration should consider carefully the nature and scope of its counterterrorism cooperation with the Chinese government and, through the Office of the Director of National Intelligence, create guidelines for such cooperation to ensure that the United States does not condone Chinese authorities’ crackdown on domestic political dissent or restrictions on the freedoms of expression or religion. The Administration should develop interagency talking points to raise issues of human rights in China’s ethnic minority areas during bilateral and multilateral dialogues with Chinese military, public security, or other appropriate government officials.

Ensure American Nationals Are Protected. The Administration should consider seeking revisions to the U.S.-China Consular Convention to clarify that Americans detained in China may meet with a lawyer of their choice, contact their families regularly, privately discuss the details of their case with U.S. consular officials, and have U.S. Embassy officials attend all legal proceedings. The Administration should consider developing a formal strategy to secure the release of American nationals and the family members of American nationals who are extra-judicially detained in China and should work with Congress to ensure regular reports on the number of U.S. citizens detained or not permitted to leave China.

Reiterate U.S. Interest in Hong Kong’s Autonomy. The Administration should continue to issue annually the report outlined in Section 301 of the United States-Hong Kong Policy Act of 1992, subject to Congressional directives. Congress should consider ways to express through public statements, official visits, and resolutions the important connection between a free press, a vibrant civil society, an independent judiciary, and expanded democratic governance in Hong Kong and the mutual interests shared by the United States and China in maintaining Hong Kong as a center of business and finance in Asia. The Administration and Congress should work together to determine whether legislation or other measures are needed to revise the United States-Hong Kong Policy Act of 1992, including by passing the Hong Kong Human Rights and Democracy Act (S. 417, 115th Cong., 1st Sess.).

Develop a Code-of-Conduct for Civil Society. The Administration should work with U.S. civil society and non-governmental organizations, including cultural-exchange and sister-city programs, and humanitarian assistance, academic, and religious organizations, to formulate a code of conduct for interacting with the Chinese government in order to protect the academic freedom and universally recognized human rights of staff, faculty, or students living in China and to equip institutions to respond effectively when Chinese authorities attempt to encourage censorship, threaten visa denials or access to China, or dictate who can participate or what can be discussed in various programs, projects, or institutions.

Consistently Advocate for Political Prisoners. In meetings with Chinese government officials, Administration officials and Members of Congress should raise cases, both publicly and in private, of individuals detained or imprisoned for the peaceful expression of political or religious beliefs and those promoting legal reforms and human rights. The Administration should also consider creating a Special Advisor for Political and Religious Prisoners to coordinate State Department and interagency advocacy on behalf of political prisoners. Experience demonstrates that raising individual cases can result in improved treatment, lighter sentences, or in some cases, release from custody, detention, or imprisonment. U.S. officials are encouraged to consult the Commission’s Political Prisoner Database for credible and up-to-date information on individual prisoners or groups of prisoners. Please see representative cases of concern on the following pages.

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The Congressional-Executive Commission on China (CECC) was created by Congress in October 2000 with the legislative mandate to monitor human rights and the development of the rule of law in China, and to submit an annual report to the President and the Congress. The Commission consists of nine Senators, nine Members of the House of Representatives, and five senior Administration officials appointed by the President. 

Read the full CECC 2017 Report here.