U.S., China Sign 10-Year Agreement To Work Together on Environment

By Ariana Eunjung Cha
Washington Post Foreign Service
Thursday, December 13, 2007

XIANGHE, China, Dec. 13 -- The news from the third session of Cabinet-level economic talks between the United States and China was more about what negotiators didn't achieve than what they achieved.

Unable to reach an agreement on major financial services and trade tariffs issues during two days of meetings outside Beijing, U.S. and Chinese officials instead focused on something a little easier to collaborate on: the environment.

U.S. Treasury Secretary Henry M. Paulson Jr., at the close of the meeting Thursday, said the two countries signed a 10-year agreement to work together on clean technology and sustainable natural resources. The countries also announced the completion of joint study on air pollution, efforts to increase the use of biowaste fuel, and a pledge to collaborate to stop illegal logging.

"China and the U.S. recognize that working together we can be more effective in achieving energy efficiency, energy security and a cleaner environment," Paulson said.

With the United States acting as chief customer to China's growing industrial economy, the two sides recognize that it is central to each nation's interest that they work together in "maintaining a stable, secure and prosperous global economic system," Paulson said.

In previous sessions of the strategic economic dialogue, U.S. officials said they were close to getting agreement from the Chinese on two major issues: increasing foreign ownership caps for Chinese banks, which had remained stuck at 25 percent for years; and the elimination of tariffs, some as high as 16 percent, on imports of energy services and technologies.

On these subjects, U.S. officials would only say that the dialogue continues and that China has said it is conducting "careful assessment" of this issues.

Paulson's Chinese counterpart, Chinese Vice Premier Wu Yi, said one of the major achievements of the dialogue was moving the conversation beyond short-term, hot-button issues to working together to achieve longer-term strategic goals.

"Both sides have come to realize that with the rapid development of economic globalization and further progress of bilateral economic and trade relations China-U.S. economic ties will exert greater influence," Wu said in her closing remarks.

The strategic economic dialogue was launched in the fall of 2006, a time when Congress were threatening to impose massive tariffs on Chinese goods if the China did not allow the value of its currency, which is pegged to the dollar, to rise more rapidly. China has argued that doing so too quickly might cause instability in its economy.

There was no breakthrough on that issue at the talks and during the two-day day session on this topic. However, on the first day of the talks, China's next commerce minister turned the tables on his U.S. counterparts by engaging in something that until recently had always been an inside-the-Beltway specialty: spin.

"Unscientific" was how Chen Deming described the idea that a radical revaluation of China's currency could help fix the widening trade gap between his country and the United States. He said it was irresponsible to push for a rapid increase in the yuan's value against the dollar, an argument frequently made by U.S. officials and members of Congress. "If we were to see excessively fast appreciation of the . . . currency, then it will cause repercussions for the global economy, global financial markets," Chen said. "And, ultimately, it won't serve all of us any good."

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