A Sweet and Sour U.S. Mission to China : Trade: Energy Secretary O’Leary has high hopes for the trip. But the feud over product piracy casts a long shadow.
It’s hard to cancel a power trip. When U.S. Energy Secretary Hazel O’Leary scheduled her trade mission to China a year ago, she did not expect Washington and Beijing to be poised on the brink of a trade war over Chinese piracy of U.S. copyrights.
Today, when O’Leary’s delegation of 65 American business leaders arrives in Beijing to negotiate billions of dollars in energy deals, her trade office colleagues will be there too, facing off with Chinese officials in a last-ditch attempt to avert a billion dollars in sanctions. Washington has vowed to slap 100% tariffs on $1.1 billion worth of Chinese products unless China agrees to strict protection of U.S. trademarked goods before Feb. 26.
“I had to think about . . . should we go or shouldn’t we go?” O’Leary said in Hong Kong last week. Despite the shadow cast by the looming trade war, she decided to stick to the schedule.
“Among our two nations, we are very clear about where there’s agreement and where there’s disagreement,” she said. “We’re very anxious to reduce the rough spots.”
The commercial mission highlights the Clinton Administration’s continued emphasis on strong trade relations with Beijing amid simmering differences over copyright piracy, human rights and even China’s military posture in Asia. Negotiations are further complicated by paramount leader Deng Xiao-ping’s failing health and the anticipated transition of power.
But O’Leary illuminated her decision to charge ahead with a gesture to a pie chart entitled “The Energy Future.” A large red slice represented China’s growing power needs, requiring $262 billion of investment by 2010.
The U.S. energy industry, she says, is ready to claim its share.
“It’s a big, rich market,” O’Leary said of the fast-growing nation, which marked the birth of its 1,200,000,000th citizen this week. But, she cautioned, “it’s a very expensive market in which to play.”
Among the players on this power trip are such California-based giants as Chevron Corp. and the Bechtel Group Inc., and wind-energy companies Flowind Corp. of San Rafael, and Zond Systems Inc. of Tehachapi. Allied Technology Group of Fremont will be talking about oil and gas projects and Ahlstrom Development Corp. of San Diego will focus on clean coal technologies, the government says.
O’Leary champions alternative energy sources and U.S. expertise in environmental technology, but she is not one to go tilting at windmills.
“I have got this terrible reputation for being awfully, awfully frank,” O’Leary said with a grin at a news conference. She proved it later when she declared: “I’ve never seen--in business relationships or government relationships--changes in policy or practices occurring overnight just because someone flew in with a big plane (full) of people.”
The 60 companies represented on the trip know all about China’s risks and rewards but are willing to brave the flimsy legal structure, opaque project approval process and currency convertibility problems to win long-term profits. O’Leary notes that despite these well-known problems, “Nobody’s moving away from the table.”
Executives representing power generation, oil and gas, environmental technology and nuclear safety want to offer China cheaper, cleaner and more efficient energy, and to provide financing to help pay for it. Delegates will accompany O’Leary to meetings with top ministers.
Enthusiastic business people say that up to $8 billion in contracts could come out of the trade mission. Many already have deals in the works and expect that this U.S. government support will help move them along. O’Leary’s earlier recent trade mission and follow-up trips to India garnered about $10 billion worth of energy contracts, she says.
At the end of O’Leary’s itinerary is a slot reserved for a “private sector signing ceremony” and a meeting with China’s trade minister, Wu Yi, who may have to take time out from feverish intellectual property rights talks for the event.
O’Leary says it is rare in business or government to have everything going smoothly at once.
“This is business as usual,” she says.
Still, the fact that business continues as usual concerns some observers who fear that human rights--previously the focus of U.S.-China talks--has been dropped off the agenda. O’Leary’s visit is the second senior-level trade mission to Beijing since Washington extended China most-favored-nation status and de-linked it from China’s human rights performance last year. Since then, there has been only one trip--junior level and low profile--focusing on human rights.
“We spent a lot of time and energy to start a dialogue,” says John Kamm, a Hong Kong businessman and human rights activist. “Then they come around and we’re not there to meet them.” The issue of human rights, he says, “really dropped off the map.”
O’Leary, who has brought a humanitarian shine to her high-powered job by insisting on an end to U.S. nuclear testing, and mandating compensation for American victims of nuclear experimentation, says she will bring up human rights in private meetings with top Chinese officials.
