United States Combating Use of Standards as Trade Barriers Benjamin H. Wu 1 On May 13, 2005, Benjamin Wu, the Department of Commerce's assistant secretary for technology policy delivered this testimony to the House of Representatives Committee on Government Reform. (excerpt) 2 Mr. Chairman and members of the Committee, thank you for the opportunity to address your concerns on the use of domestic source restrictions by foreign governments. 3 Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governments, in the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take recent action. 4 The Department of Commerce is committed to ensuring that standards are fair and responsive to market and technology needs, and that we partner with industry to combat standards as trade barriers to American goods and services. 5 While U. S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and participate in the Chinese marketplace, it is important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the United States' third largest trading partner, with total merchandise trade between the two nations reaching $231 billion. The United States exported over $35 billion of merchandise to China, an increase of over 25 percent over the previous year. 6 Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U. S. businesses. In this regard, I have been asked by the Committee to address a specific example where China has caused great concern with U. S. industry in its application of domestic source requirement standards - China's pending software procurement regulation which could limit the ability of U. S. industry to sell software products and services to the Chinese government. U. S. software companies, which are widely recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing information technology market. This is especially necessary to combat and offset the perceived high rate of software piracy in China. 7 The U. S. Department of Commerce, along with the Department of State and Office of the U. S. Trade Representative, have been working hard to ensure that U. S. software companies continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal. 8 Thank you Mr. Chairman. I would be happy to address any questions you or the members of the committee may have. Which best describes the speaker's point of view in this speech? A) The speaker supports China in its efforts to increase the amount of American goods in its markets. B) The speaker hopes that the trade barriers China has set up for American goods will grow the economy. C) The speaker believes that the United States should strive to imitate China's foreign goods trade barriers. D) The speaker is opposed to China establishing restrictions to the sale of software created in the United States.