Mighty global corporation Intel is fervently behind the normalisation of trade with Red China, and is putting its considerable muscle behind a lobbying group which wants the US Congress to just say 'yes' on 22 May 22.

As part of our continuing efforts to allow journalists to ask the right questions, we print below an internal Intel document which outlines the official view and also gives the answers to the questions you might not have thought about yet. Here we go...

Intel Confidential

May 15, 2000

IM Alert: China Trade/Congressional Vote, Rev. 0

Background
On May 22, 2000 the United States Congress is voting on the China Permanent Normal Trade Relations. Intel strongly supports the bilateral agreement and supports permanent normalization of trade with China. In the coming weeks Intel will work with the China Business Coalition, a group of nearly 200 other companies which have supported open trade with China. The Coalition will launch a nation-wide campaign to communicate to congress and the public the importance of this issue beginning tomorrow with newspaper press and a links from www.intel.com.

As Intel's support for this agreement becomes clear we can anticipate some front-line contacts. There are no reporting requirements at this time.

Please use the reactive Q&A below to answer inquiries on this matter. There are no reporting requirements at this time. Please refer customers to the Intel web site (to be published later) or use the reactive Q&As below to answer inquiries on this matter Please contact Roger Chang immediately if there are additional questions that the Q&A does not address. Roger Chang can be contacted at 408-765-5504, pager 888-749-6982, or on email --Roger C Chang-- for questions or clarifications.

Intel Confidential

China Trade/Congressional Vote
Questions and Answers
Prepared by Chuck Mulloy
January 17, 2000

Background

The recent turmoil surrounding the World Trade Organization (WTO) meetings in Seattle has emboldened organized labor to fight congressional approval the recent bilateral trade agreement between the United State and China.

Congress grant permanent normalization of trade relations (PNTR) between the U.S. and China before the agreement becomes effective. Currently congress must annually review and approve normal trade relations. Major labor leaders have declared their opposition and intend to force congress to reject the treaty.

Intel strongly supports the bilateral agreement and supports permanent normalization of trade with China. In the coming weeks Intel will work with the China Business Coalition, a group of nearly 200 other companies which have supported open trade with China. The Coalition will launch a nation-wide campaign to communicate to congress and the public the importance of this issue.

This Q & A is for reactive purposes. Refer press inquiries to Chuck Mulloy (408) 765-3484.

Key Messages:

• Intel believes Congress should approve the bilateral trade agreement with China in implement permanent normalization of trade.
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• The approval of the bilateral agreement will help move China into the global trading community and provide greater access to Chinese markets and help create export-related jobs in the United States.
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• Trade and technology have been the driving force behind the current economic growth in the U.S. and we believe opening the Chinese market will help to fuel continued growth.
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• The U.S. market is already open to China. But China which has the world's largest population is not open to the U.S. The approval of the bilateral agreement open's (sic) the Chinese markets to U.S. products.
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• We believe within the next three years China will be the second largest PC and integrated circuit market in the world.
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• 60 percent of Intel's sales come from international markets yet more than 70 percent of our employees are located in the United States.
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• Intel is the third largest U.S. exporter as a percentage of total sales.

Questions and Answers:

Q1: What is Intel's position on the resumption of normal trading relations with China?
A1: Intel supports permanent normal trading relations with China. China is the world's second largest market for high tech products and Intel believes we should have access to that market. This access helps create export-related jobs in the U.S.

Q2: Organized labor, The AFL-CIO, the teamsters and others have vowed to force congress to reject the bilateral agreement. What are Intel's plans?
A2: Intel will join with other companies through the China Business Coalition to convince members of congress that normal trade relations will benefit the U.S. economy and U.S. workers.

Q3: Why is the issue important to Intel?
A3: The Chinese semiconductor market is currently estimated at more than $8 billion and it is growing rapidly. According to the Semiconductor Industry Association China could become the world's second largest semiconductor market by the year 2010. This represents a major export opportunity for U.S. semiconductor manufacturers. The recent bilateral agreement between the U.S. and China addresses virtually all of the key barriers to trade such as tariffs on high tech products, restrictions on investments, and restrictions on direct product distribution. The agreement also provides a mechanism for enforcing China's trade agreement.

Q4: How do you respond to those critics who say China's human rights track record does warrant the normalization of trade relations?
A4: We believe that much more can be achieved by working with the Chinese government than by isolating them. For example, Intel has an assembly and test facility in China. It is becoming a model for environmental management and control. In China we use the exact same methods for environmental health and safety controls as we use in the United States

Q5: The opponents of the China trade agreement have a host of issues with China such as workers rights issues, environmental issues and human rights issues. They say that normalization of trade removes any leverage the U.S. may have to get the Chinese government to address these issues. What's your view of these assertions?
A5: China is a sovereign nation and ultimately we don't have the ability to dictate their behavior. However, these issues are valid topics for discussion but we believe there are other forums which would be more appropriate to address these kinds of issues. For example the International Labor Organization would be a more appropriate organization to address workers rights. The WTO was created to deal with trade issues not labor issues.

Q6: What activities will the CBC be undertaking in its program to gain congressional approval?
A6: The companies in the CBC will be engaging in an educational program to help congress understand how important this issue is the U.S. companies and their employees. The CBC's focus will be to accent the interests of American citizen's and their employers as it relates to trade

Q7: What sort of operations does Intel have in China?
A7: Yes. We have a $200 million assembly test facility in Pudong, Shanghai and a research and development center in Beijing. That center is focused on development of Chinese speech and language technology. Ultimately that development effort can help improve speech recognition for other languages. We also have investments in some local companies, Sohu, SPS, YKSoft, Supresoft and Superdata.

Q8: Organized Labor claims they effectively shut down the WTO talks in Seattle and that they will be equally effective in convincing congress not to approve the China agreement. What is your view of this claim?
A8: We're somewhat puzzled by the labor's position on the China issue. The U.S. has dropped its trade barriers and the agreement with China will drop their barriers. In our view this creates a level playing field, which will help create U.S., based export jobs. We are confident that we can educate Congress to approve the agreement. This past summer Congress overwhelmingly approved the annual NTR agreement with China. Clearly they understand the economic impact of their decision.

Q9: One issue for labor unions is the fact that they don't want to compete with the low hourly wages of Chinese workers. They maintain they'll lose that battle every time. What's your reaction to that?
A9: The US worker needs to meet foreign competition with productivity and technology . However, the U.S. work force is unfairly harmed when competitors dump products below costs or subsidize industries to improve their productivity. The agreement with China prohibits dumping and government subsidies on products but instead encourages competition on areas like design and productivity.

Roger Chang
Issue Manager
Issue Prevention & Management
Intel Corporation

So now you know. ®