StorageTek, Inc.
Louisville, Colorado 80028
July 12, 2001

The Honorable Philip M. Crane
Chairman, Committee on Ways and Means
United States House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

Re: Renewal of Normal Trade Relations with China

Dear Representative Crane:

On behalf of StorageTek, Inc., I am writing to support the extension of Normal Trade Relations (NTR) with China. By extending NTR with China this year, the United States Congress will send a strong message to China that the US is a dedicated trading partner and committed to ensuring a smooth accession for China to the World Trade Organization (WTO).

StorageTek is a Colorado-based, high-tech multinational company manufacturing and marketing data storage products and services. The company, which has 7,600 employees, sells over $2 billion in products and services annually in over 50 countries. StorageTek now sells over 50% of its storage products (which are almost exclusively manufactured domestically) overseas. Currently, a small percentage of our international sales are with China. However, that number is expected to rise dramatically following China’s WTO accession.

The Sino-US trade relationship is important to StorageTek for two reasons. First, we import several important component parts for domestic production that are produced in mainland China. Second, greater China (PRC, Taiwan, Hong Kong, Macao) is one of our top four growth markets worldwide. StorageTek in greater China has experienced average revenue growth of approximately 100% per annum since opening our Beijing office in November 1998. The entry of the China into the World Trade Organization will create substantial investment in information technology infrastructures, as companies prepare to deal with international corporations. This creates greater opportunities for US-based companies such as StorageTek. For example, we are targeting major banks in the region, along with telecommunications firms, government institutions, and oil and gas companies for increased opportunities associated with WTO accession. In anticipation of such growth, in 2001 StorageTek will open new offices in Shanghai, Taiwan, and Guangzhou to complement our existing operations.

In addition, China’s accession to the WTO has positive effects throughout the information technology industry as a whole. WTO accession means China unilaterally adopts the WTO Information Technology Agreement (thus eliminating tariffs on most IT products); allows for

trading and distribution rights, which eliminates costly middlemen; adheres to the WTO Trade-Related Intellectual Property Rights (TRIPS) Agreement providing for added protections for U.S. intellectual property; and agrees to subject itself to the WTO multilateral, dispute resolution system for addressing international trade disputes. In a broader sense, China would benefit from increased Access to American commercial information technologies. These technologies, including those manufactured by StorageTek, enabled people worldwide to improve business efficiency across all sectors, enhance educational and social opportunities, and connect with one another. Continued and improved market access for US commercial information technology in China will ultimately contribute to the advancement of economic and social reform in China.

Each one of these benefits, however, could be lost without renewal of NTR this year. If NTR with China is not renewed, tariffs on Chinese goods will increase ten-fold to 40-50%, increasing the cost of consumer goods and components – a tax paid by US citizens. Also, American high-tech firms have invested, and slowly garnered market share in China. An interruption of our bilateral commercial relationship will undermine these investments and the hard-fought gains U.S. companies have made in the Chinese market, ceding them to our foreign-based competitors.

On June 8, 2001, during bilateral talks in Shanghai, the United States and China reached agreement on major outstanding issues concerning China's accession to the WTO. United States Trade Representative Robert B. Zoellick and China’s Minister of Foreign Trade and Economic Cooperation Shi Guangsheng capped 15 years of negotiations on areas including domestic support for agriculture, services, and trading rights. This breakthrough signals China imminent accession to the WTO, likely before the end of 2001. After proceeding this far, failure to renew NTR for China during the "closing" period of WTO negotiations would destroy 15 years of progress and cause significant harm to StorageTek and the IT industry.

Recently you said, "It is indeed heartening for those of us who support normalizing U.S. trade relations with China to observe that China's negotiations to join the WTO are close to concluding. The momentum for opening trade with China is building. Last year, we passed the permanent normal trade relations legislation, and earlier this month, USTR made significant progress with the Chinese to further open their markets to our goods and services. We need to keep the momentum going by renewing China's NTR status for another year." StorageTek agrees with these sentiments wholeheartedly and calls upon the US Congress to extend NTR to China for another year to allow the completion of China’s WTO accession.

Sincerely,

Gary Francis
Corporate Vice President