- The Washington Times - Thursday, April 12, 2001

Business lobbyists yesterday breathed a sigh of relief that the United States and China defused the potentially explosive standoff over an American air crew detained in China as a result of a midair collision.

The crisis has industry advocates speculating the issue could spill over into the broader China debate weeks before the Bush administration and Congress confront what will likely be the last annual debate over China's trade status.

"Things are looking much better today than they did yesterday," said Christopher Padilla, director of international trade relations for Eastman Kodak.

The crisis, which was resolved through intense diplomacy over 11 days, left American companies, normally very active in the debate over China policy, at a loss for words. Any hint that business was advocating trade and investment with China over the interests of the crew was sure to backfire, leading business to avoid lobbying the Bush administration, business leaders said.

"There was nothing for business to do," one industry source said on the condition of anonymity. "We can't possibly make that argument."

Rhett Dawson, president of the Information Technology Industry Council, which represents major technology firms, said business backed the Bush administration's line. Mr. Dawson said he had private conversations with U.S. officials, but that there was no concerted effort by business.

"I told them they were showing the patience that they needed to show," Mr. Dawson said. "And that turned out to be right."

U.S.-Chinese commercial relations will enter a crucial phase over the next six weeks.

By June 3, President Bush must notify Congress whether he intends to extend China "normal trade relations" for another year. This status gives Chinese exports to the United States the same tariff treatment as all but a handful of countries, such as North Korea and Cuba.

Congress approved legislation last year giving China this status permanently, but it only takes effect once China joins the World Trade Organization. At that point, a 1999 agreement that lowers tariffs and other trade barriers for U.S. goods and services goes into effect.

Additional negotiations on China's WTO membership have become bogged down in the last few months as China has tried to avoid tough commitments on trade in agricultural products and financial services.

Mr. Padilla and other lobbyists said business groups would essentially "talk around" the plane incident, and argue that promoting trade with China is in the American interest.

"Before the plane crisis, the merits of this approach were clear," he said. "We hope to get the Congress to realize that it's in our national interests, especially economically."

Congressional allies of expanded trade with China foreshadowed this strategy, stressing that the Bush administration's engagement, rather than confrontation, of China helped solve the crisis.

"This successful outcome was due largely to careful and thoughtful negotiations that recognized the importance of a pre-existing relationship between the United States and China," said Sen. Max Baucus, Montana Democrat. "Had it not been for elements such as a normalized trade agreement with this country, the outcome could have been far different."

But Sen. Charles E. Grassley, the Iowa Republican who heads the Finance Committee, cast doubt on whether the Chinese are ready to join the WTO, where membership is based on abiding by a complex set of rules.

"China's action has called into question their commitment to join an international forum governed by the rule of law," he said.

House Minority Leader Richard A. Gephardt, Missouri Democrat, an opponent of last year's China trade bill, called for continued pressure on China on a broad range of issues.

"These events clearly demonstrate that our ongoing dialogue with China must include diplomatic pressure to bring about its compliance with international standards in the human rights, trade and security arenas," Mr. Gephardt said.

Rep. Duncan Hunter, California Republican, called the plane incident an example of why not to trade with China.

"This incident calls into question our current policy of sending American trade dollars to a nation that has displayed signs of hostility toward the United States," he said.

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