- The Washington Times - Tuesday, May 23, 2000

The battle over expanded trade with China, which will be decided tomorrow when a bitterly divided House votes on the issue, is a story of diametrically opposed visions of whether trade with the Asian giant serves or sacrifices U.S. interests.
To supporters, the bipartisan project of encouraging free and open commerce with China and bringing it into international economic organizations is an achievement of epic proportions.
"It is one of those great moments when we can work hand-in-hand for the good of America and the world," House Ways and Means Committee Chairman Bill Archer, Texas Republican, said shortly before the panel gave overwhelming support to the measure Wednesday.
To opponents, especially organized labor, the legislation is a crass power play by multinational corporations and an out-of-touch Washington establishment.
It is an unjustified favor to Chinese Communist dictators who repress their people and bully Taiwan, they say.
"We are here because President Bill Clinton and the Republican leadership are about to betray the country by passing [the China trade deal]," James P. Hoffa, president of the International Brotherhood of Teamsters, thundered during a rally on Capitol Hill last month.
On its face, tomorrow's vote will be on whether to make permanent China's access to the U.S. market under the same terms as most other countries, a status now known as normal trade relations (NTR), but formerly called most favored nation (MFN). The president has renewed China's status annually, and Congress has voted to support his decision.
The "rogue nations" of Iran, Iraq, North Korea and Cuba enjoy no NTR status at all.
Though U.S. foreign policy toward China has been criticized, Congress has never revoked its NTR status, which effectively would cut off trade in both directions. The annual battle has become "perfunctory," in the words of Rep. Sander M. Levin, Michigan Democrat, as permanent NTR has become a political reality, if not a legal one.
"We all know that the annual renewal has been a meaningless act," said Rep. Robert T. Matsui of California, a prominent pro-trade Democrat.
But the legal change is required to ease the way for China's entry into the World Trade Organization (WTO). After 13 years of give-and-take, the United States and China hammered out a massive agreement in November that would reduce barriers to U.S. exports. President Clinton has pushed Congress to approve the deal before he leaves office.
The pact is not a free-trade agreement, which would give China unfettered access to the U.S. market, but Congress must grant permanent NTR for China's concessions under the accord to take full effect. While the House vote tomorrow will be tight, Senate passage is virtually assured.

Opening China's markets

The Clinton administration and the Republican leadership in Congress, aided by a massive mobilization of business groups, have tried to focus lawmakers' attention on the economic benefits for the United States that would come with access to the enormous Chinese market.
The deal would reduce Chinese tariffs on U.S. industrial exports from an average of 25 percent to just under 10 percent. Duties on agricultural products would fall equally dramatically, from 31 percent to 14 percent.
Beneath these statistics lie a broad array of market opportunities for nearly every sector of the U.S. economy, and passage of permanent NTR for China would unleash a scramble to exploit them.
The Chinese market for telecommunications equipment, for example, an area in which the United States is a world leader, is growing up to 40 percent each year as China each year installs as many telephone lines as U.S. giant Pacific Bell operates.
But the high-tech industry is not the only sector casting a coveting glance east. The chemical, auto, machinery and furniture industries all would see dramatic tariff reductions. And agricultural companies, thinking of 1.3 billion underfed Chinese, are looking to take advantage of expanded quotas for wheat, corn and rice, and lower tariffs on beef, citrus and cheese.
Finally, U.S. service industries telecommunications, finance and transportation, for example would have a better chance of entering a market in which they thus far have made only a small dent.
NTR supporters hope Chinese membership in the 135-member WTO would give the United States a better method of forcing China to live up to its promises. The WTO dispute-settlement mechanism would place China in the international spotlight and minimize division among other countries.
"China will be subject to enforcement by all 135 WTO members, significantly diminishing China's ability to play its trading partners off against one another," U.S. Trade Representative Charlene Barshefsky said.
The U.S.-China deal would take effect after WTO members wrap up lingering details, and after China ratifies the agreement, possibly by the end of this year.

U.S. casualties?

Though most economists attribute the U.S. trade deficit to macroeconomic factors not trade policy opponents stress the growing trade gap between the United States and China as a chief reason to oppose expanding trade with China. As Americans have bought more goods made in China, especially consumer goods like toys and apparel, and low-end electronics, the U.S. deficit reached $68.7 billion in 1999 and appears set to climb this year.
NTR opponents see in these statistics evidence of a campaign by corporate America to move production out of the United States and use China, with its cheaper labor force, as a platform to export back to the United States.
Rep. Marcy Kaptur, Ohio Democrat, told of how Huffy bicycles, once manufactured in her district, are produced in China by workers making 33 cents per hour and imported by the United States. The 300 U.S. employees became casualties of free trade.
"Americans are becoming like gerbils in a cage because of how multinational corporations organize their production," Mrs. Kaptur said.
Plenty of Americans agree with Mrs. Kaptur, at least partly. Despite a nearly decade-long economic boom, many Americans remain skeptical of the benefits of free trade, especially with China, according to most polls. Last week, a poll by the Pew Research Center found that 49 percent of Americans oppose permanent NTR for China, and only 30 percent support it, though most respondents knew little about the issue.
Mr. Matsui laments that the public has little appreciation of the law of comparative advantage, the 200-year-old theory advanced by the British economist David Ricardo. It holds that nations with different income levels benefit from trade. Many Americans do not grasp the need to make fewer bicycles and more computer chips here, he said.
"The whole issue of globalization is really troubling to the average citizen," he said.

Heavy lobbying

But public skepticism has not stopped the White House from mounting its biggest campaign ever to get Congress to pass legislation. Since Mr. Clinton's official kickoff speech in March, Cabinet officials past and present and even former presidents have jumped into the fray, urging wavering House members to support the China trade deal with arguments that go well beyond economics.
Secretary of State Madeleine K. Albright called the China trade issue "the most important national security vote" of the year. She and Mr. Clinton have argued that supporting open trade and private enterprise in China, part of the administration's policy of "engagement," is the most viable lever for democratic change in China.
"[B]y forcing China to slash subsidies and tariffs that protect inefficient state industries … by letting our high-tech companies in to bring the Internet and the information revolution to China, we will be unleashing forces that no totalitarian operation rooted in the last century's industrial society can control," Mr. Clinton said in a speech Sunday.
Opponents scoff at the notion that trade flows inevitably will promote reform in China. With many though not all Chinese dissidents at their side, they demand that the United States threaten to squeeze China's $81 billion in exports to this country to promote democratic change.
"We oppose permanent NTR because America should not give up the leverage to help bring about democratic reform," said Rep. David E. Bonior, the Michigan Democrat who is leading the anti-NTR forces in his party.
NTR opponents call attention to the endless list of human rights abuses in China, which even the State Department concludes have become more, not less, egregious.
"The Chinese government has continued to backslide in the areas of human rights, worker rights, religious freedom and democracy over the last few years, despite large increases in U.S. China trade," said House Minority Leader Richard A. Gephardt, Missouri Democrat.
Mr. Bonior and his allies also have hammered away at the fact that China has an atrocious record of compliance with previous agreements in an effort to show that all the benefits from the agreement touted by NTR supporters are illusory.
"[N]ations should live up to the trade agreements they have signed before they enter into new ones," Mr. Bonior said.
Though the debate has been long on hyperbole on both sides, in their more reflective moments, advocates of the China trade deal admit that obtaining its compliance with the deal will be a herculean task but insist the trouble will be worth it.
Dave McCurdy, a former Democratic congressman from Oklahoma who is lobbying Congress as president of the Electronic Industries Alliance, said support for NTR constitutes a vote for a long-term strategy, not instant gratification. He acknowledges the pressures on undecided members from union workers worried about their jobs and dissidents who suffered greatly at the hands of the Chinese regime. Yet he feels comfortable asking his former colleagues for their support.
"It's a tough vote," Mr. McCurdy said. "But it's called leadership."

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