- The Washington Times - Thursday, April 13, 2000


Ever since Republicans gained control of Congress in the 1994 elections, President Clinton and Vice President Gore have relentlessly demagogued the GOP as a collection of "isolationists" who want to turn back the clock and turn America away from its global responsibilities. Well, yesterday an estimated 15,000 labor union members arguably the most powerful constituency in the Democratic Party converged on Capitol Hill to demand that Democratic congressmen recommit themselves to reducing the benefits that U.S. businesses and consumers receive from the expansion of trade throughout the world. Given that international trade has propelled global economic growth throughout the postwar period, it is difficult to imagine a more damaging, self-inflicted wound than this.
Having successfully prevailed upon increasingly isolationist Democratic congressmen to deny President Clinton the "fast-track" negotiating authority he needs to reduce trade barriers, organized labor has now targeted legislation that would grant China permanent Normal Trade Relations (NTR). In the past, subject to congressional veto, U.S. presidents have had to annually approve NTR for China. Congress has never reversed those decisions. As part of China's accession to the World Trade Organization (WTO), which is expected to occur later this year, Mr. Clinton has submitted legislation that would exempt China from the annual approval process and confer upon it permanent NTR. Most trade experts have argued that once China enters the WTO, unless Congress approves permanent NTR, China need not extend to U.S. businesses and the employees of those exporting businesses the massive trade concessions it will offer other countries as a condition of its entry into the WTO, the 135-member international organization that establishes international rules governing trade.
To obtain U.S. approval of its entry into the WTO, China has committed itself to reduce tariffs significantly; to open its agricultural markets; to eliminate subsidies on farm exports; to allow foreign companies to own 50 percent of Chinese telephone service providers and to invest in Chinese Internet companies; to allow foreign firms to provide banking, insurance and other financial services in the Chinese market; and to subject itself to U.S. anti-dumping penalties for the next 15 years.
Given that it is China's essentially closed market that will be opened and that China already enjoys virtually unfettered access to the U.S. market, where it has compiled a nearly $70 billion annual trade surplus, the trade benefits of China's WTO entry would accrue to U.S. businesses and farmers. (Other nations' markets are not nearly as open to Chinese exports as U.S. markets, but they will be after China joins the WTO.) The benefits of the rather remarkable market-opening agreement that U.S. Trade Representative Charlene Barshefsky negotiated last November with Zhu Rongji, the reform-minded Chinese premier, would be forfeited if Congress denies China permanent NTR.
For his part, Mr. Zhu is hoping that China will derive economic benefits from the internal reforms that WTO membership will require China to undertake. He clearly is taking a very big gamble, as recent riots by unemployed Chinese minors have confirmed. Yet, he really has no choice. Without a drastic acceleration of economic reform, which hard-liners have so far prevented, Mr. Zhu surely knows that economic disaster beckons for China. What Mr. Zhu may not know is that it will be very difficult for the corrupt Chinese Communist Party to retain totalitarian power in the long run following the dramatic increase in economic freedom and the expansion of Internet communications that China's entry into the WTO would bring about. Such changes in Chinese society are long-term and fraught with uncertainties along the way. More immediate benefits would go to American exporters and to the forces opposing American isolationism, Democratic and otherwise.

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