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

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

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