As expected the U.S. Senate passed the bill granting China permanent normal trading relations (PNTR), thus clearing one of the final obstacles to the entry of the world’s most populous nation into the World Trade Organization (WTO).
While President Clinton, Trade representative Charlene Barshefsky and others hailed the measure’s approval as “a landmark agreement” that would open “tremendous economic opportunities,” others continued to oppose it, as having insufficient human rights safeguards, promoting further trade imbalance with China, and costing U.S. jobs.
PNTR gives insurers more opportunities to do business in the huge Chinese market. While some U.S. companies, notably AIG and Aetna, are already licensed in China, and Chubb and John Hancock are set to join them, new licenses have been very slow in coming, and business activities are currently limited to the regions around Shanghai and Guangzhou.
That should change. The U.S. will benefit from concessions made by the Chinese in negotiations with the EU earlier this year, and the Chinese market will therefore open more quickly. Geographical restrictions are scheduled to be phased out within 3 years, foreign investment in life companies may reach 50 percent, giving “effective management control” to foreign insurers, and wholly owned non-life subsidiaries will be permitted within two years.
CIGNA President and CEO H. Edward Hanway, a longtime supporter of PNTR, who has served in several official capacities, praised the Senate’s action, stating, “The Senate vote to grant PNTR status to China paves the way for full, normal and fair trade with China now and in the future.” He concluded that American companies, including CIGNA, would have “much greater access to the Chinese marketplace.”
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