Give China a Chance.

During a recent business trip to the People's Republic of China, accompanied by more than 400 representatives of MetLife, I saw all the ceremonial splendor and all the ancient glories a great nation can show a visiting American executive. Yet, after memories of the Great Hall of the People and the Great Wall fade, I know that I will always remember the people I met: individuals engaged in every variety of endeavor human society has devised, from pre-industrial farmers tilling fields with oxen to cell-phone-toting entrepreneurs. Above all, I saw a country full of working men and women. Those individuals are the reason MetLife is seeking a presence in China, and the reason we can all be optimistic at the opening that will result from the law granting permanent normal trade relations (PNTR) status for China.

I went to China to celebrate the accomplishments of our top sales agents and to see the country for the first time. But I also went because we have a vision of a flourishing China, a leader in the family of nations making the best possible life for all of China's 1.25 billion people. PNTR can be China's first step toward that goal. The world is truly growing smaller as markets open. People are growing closer, tied together in an economic web. The European Union, NAFTA and even business over the Internet are among the factors that allow people separated by distance, language and culture to transact freely. PNTR is the strand that will connect China to this economic web. By ensuring predictability in our trade relations with China, it will open the biggest market in the world to American goods and services.

PNTR is also necessary for Chinese membership in the World Trade Organization, which will compel China to acknowledge the same rules of trade as all other WTO members. This is the single most important measure the West can take to help China reform its economy, including its financial sector. PNTR and WTO will help integrate China into the world economy, and that's what will give the Chinese people more choices in shaping their financial future. That's why MetLife engaged in extensive communication and educational efforts in support of PNTR. We're proud of what we have done.

Passage of PNTR will not cause all of our differences with China to disappear. There's no magic in trade. But there's no broad-based prosperity without open trade and no freedom without prosperity. During my visit, I saw how China is moving into the 21st century. The streets of Beijing are booming with new construction sites, and new businesses are proliferating--clear evidence of vibrant economic development. I was equally encouraged that the government officials I met, including President Jiang Zemin, repeatedly expressed China's interest in nurturing the institutions that underpin a free economy. Jiang spoke of economic and financial reform and the development of the social security structure in China.

MetLife wants to participate in China's growing economy. As a financial-services company, we have more than 130 years of experience in helping working men and women to secure a better financial future. And we are pre-eminent in helping employers develop and provide employee benefit and pension programs to their employees. We believe that many of the business fundamentals we practice--such as transparent accounting, long-term investing, needs-based selling and superior service delivery--can only further the ongoing progress of China's economy and the Chinese people's daily lives. These business fundamentals are the sound principles upon which a strong economy and society can be built.

We all need to work with the forces that are drawing the world together, not against them. I had the privilege of seeing those forces at work when I was in China. I could never presume to say I know China after one brief visit, but I do believe that the best way to deal with China is to approach it with an open mind.

Robert H. Benmosche

Chairman, President and Chief Executive Officer

MetLife Inc.

Airing Out Concerns

Ever since the moisture-intrusion controversy involving exterior insulation and finish systems (EIFS) homes first surfaced in 1995, the insurance industry has attempted to redefine its relationship with the residential EIFS market.

Indeed, some carriers have stopped insuring EIFS jobs altogether, while others have raised premiums to prohibitive levels, forcing some contractors to forgo EIFS in favor of stucco or other types of wall cladding. Regrettably, a sizable segment of the insurance industry has bought into the misconception that EIFS must be inherently flawed because a number of EIFS-clad homes in Wilmington, N.C., experienced moisture intrusion five years ago.

Of even greater concern is the fact that many underwriters have yet to recognize that the latest generation of EIFS--developed in response to the ongoing moisture-intrusion debate--features drainage systems designed to eliminate incidental moisture buildup in the wall assembly of homes.

But what about stucco, brick and other claddings that many insurance companies view as safer than EIFS? Compelling evidence is now surfacing that moisture intrusion--especially in the wall cavity--is a universal problem that is as likely to damage homes sided with stucco, brick, wood and vinyl as homes clad with EIFS. In fact, brick has many more moisture-entry points than EIFS, but brick is far more difficult to test for moisture than EIFS.

In truth, no wall cladding, including EIFS with drainage, can be a totally effective moisture barrier unless moisture-entry points are adequately flashed and sealed and if other watershed components, such as high-quality windows, the roof, gutters, downspouts and water diverters, are properly installed and maintained. A recent article in the Journal of Light Construction confirms that even the best weather barriers cannot compensate for the lack of flashing and shoddy construction practices.

Ironically, the latest revelation that moisture intrusion is an "equal opportunity" nemesis comes from the New Hanover County (North Carolina) Inspections Department, where the EIFS debate originated nearly five years ago. Recently, the county's chief building inspector did a complete turnabout and conceded that there is evidence that wood rot resulting from moisture intrusion has been an ongoing problem in all types of residential construction in the Wilmington area. That assessment was substantiated by a local contractor, who told Greater Wilmington Business that there is evidence of moisture intrusion in 95% of new construction in the Wilmington area.

The chief building inspector further suggested that state-mandated vapor barriers had exacerbated the problem and should be banned in wet, coastal areas.

He also for the first time cited windows as "culprits" in the moisture-intrusion debate. As a result, no homes have been built with EIFS in the Wilmington area for nearly five years.

The overriding message in the chief building inspector's advisory is that moisture intrusion is a fact of life in poorly constructed homes. Yet, by previously insisting that only EIFS-clad homes are susceptible to serious moisture damage, the Inspections Department created a cauldron of doubt and fear that has done untold harm to the EIFS industry and to thousands of owners of EIFS homes.

In this climate of fear and suspicion, is it surprising that the insurance industry, too, has fallen victim to these exaggerated claims and innuendo?

Fortunately, not all segments of the insurance industry have written off EIFS. In fact, a number of insurance carriers, sensing that the anti-EIFS hysteria is unjustified, now view the residential EIFS market as a potentially profitable growth opportunity.

And the EIFS industry is leaving no stone unturned in its efforts to educate the insurance trade about the performance of EIFS relative to other cladding products. Over the past two years, industry representatives have met with executives of leading insurance companies and insurance trade associations in an attempt to dispel concern. The EIFS Industry Members Association has invited the insurance industry to participate in a newly formed coalition of organizations known as the Alliance for Better Home Construction, which is seeking to improve the quality of home construction, primarily through consumer education.

Despite our differences, the EIFS and insurance industries share common goals--to reduce costly and needless insurance claims arising from shoddy construction and to educate consumers about the potential pitfalls of buying any new home that fails to meet existing building standards. In the coming months, we intend to prove that there is much that our two industries can do together to promote quality home construction.

Stephan E. Klamke

Executive Director

EIFS Industry Members Association