[1] In Search of a Chinese Trade Deal

The New York Times November 3, 1999, Wednesday, Late Edition - Final Page 24; Column 1; Editorial Desk
            President Clinton's new efforts to salvage a trade deal with China enabling it to join the World Trade Organization come as welcome news. The initiative, begun with a phone call last month from Mr. Clinton to President Jiang Zemin, seeks to repair what administration officials now concede was a policy blunder in April when Washington rejected market-opening terms offered by Prime Minister Zhu Rongji on his visit to the United States. Worse yet, publication of the Chinese terms by the administration triggered opposition by opponents of Mr. Zhu's reforms inside China, making any deal more difficult to achieve.

If Mr. Clinton wins terms this time around as favorable as those he rejected in April, he will have performed a remarkable feat of recovery. More likely, China will offer less, and the administration will have to accept it as the price of getting a deal. It may then be difficult to sell the arrangement to Congress, where skepticism of Chinese intentions is running high just as the presidential campaign has begun heating up. The April deal, according to the administration's own summary, would have propelled Chinese economic institutions toward market discipline. Mr. Zhu agreed to cut tariffs below those of most American trade partners, eliminate export subsidies, permit foreign investors to buy substantial shares in insurance and telecommunications companies, protect foreign investors and intellectual property rights and commit state-owned enterprises to make purchases on the basis of price and quality, thereby eliminating discrimination against foreign companies.

These terms were seen as concessions to the West. In fact, they would benefit the Chinese economy over all, though some parts of that economy might suffer. The United States economy is already open to Chinese products, and consumers reap the benefits of unfettered trade. But China's borders are often closed. Opening them would bring Chinese consumers attractive imports and force domestic companies to compete with foreign ones.

But beyond the narrow impact of trade, China's admission to the W.T.O. could have dramatic political impact. Mr. Zhu, like economic reformers throughout the third world, wants to use commitments to the W.T.O. to make it hard for domestic opponents to overturn reforms. Violations of China's commitments to the W.T.O. invite retaliation by China's trade partners.

The administration faces an obstacle to reaching a deal because of Congressional opposition and anxiety about foreign competition in the labor movement. Congress can scuttle the deal by refusing to relinquish its right under current United States laws to deny China trading rights that it would automatically enjoy as a member of the W.T.O.

The most vigorous opponents of China in Congress represent Southern textile and apparel industries that fear cheap imports. But recent studies show that these fears are exaggerated. Chinese exports to the United States would rise by a modest amount. But almost all would come at the expense of exports from other third-world countries rather than from American manufacturers and workers.

Mr. Clinton must also deal with a Chinese demand that the United States promise not to invoke "anti-dumping" rules to drive out low-priced Chinese exports. If China won this demand, it might cause distress among a small number of American workers but would do low-income American consumers an enormous favor. The administration faces the challenge not only of reaching a good deal with China but of then selling it to Congress and to anxious workers.

[2] Many Winners and Some Losers in Trade Accord With China

The New York Times November 16, 1999, Tuesday, Late Edition - Final SECTION: Section C; Page 1; Column 2; Business/Financial Desk By LOUIS UCHITELLE

For American International Group, the giant insurer, the new trade agreement with China is a long-awaited go-ahead to sell insurance everywhere in China, not in just a few cities. AT&T sees the door open to provide Internet services in China. But Milliken & Company, the big textile manufacturer -- forecasting doom -- says that President Clinton's negotiators have signed a death warrant for textile makers in America.

Many industries -- commercial banking, auto and aircraft maanufacturing, farming and food processing, investment banking, electronics, money management -- hailed the agreement yesterday between China and the United States as a wonderful opportunity to expand rapidly into the giant Chinese market. The Clinton administration gave its blessing to China's entry into the World Trade Organization in exchange for numerous market-opening concessions. "Right now, we have $200 million in revenue from selling insurance in China and I expect that to grow to a very big number in the future," said Maurice R. Greenberg, chairman of American International Group, which has been selling life insurance to the Chinese since 1992. The agreement would allow the insurer to greatly increase the number of its branch offices, which now number only four, and expand into property and casualty insurance -- well ahead of other American insurers just moving into China.

The dissonant notes came mainly from textile makers, although a spokesman for the computer software industry said his people would withhold judgment until they knew the details of the agreement dealing with piracy. "We are cautious in endorsing anything until we have seen the final ink dried on the paper," said Dan Duncan, a vice president of the Software and Information Industry Association.

The piracy rate for business software has been 95 percent in recent years, which means that for every 100 copies of Microsoft Office software exported to China, 95 are copied illegally, Mr. Duncan said. "One has to wonder why the rate has stayed so high over the years unless there is some government involvement."

Textile import quotas now limit the shipment of yarn and cloth to the United States from China's modern and low-cost textile industry, which is big enough to supply the entire world, said John F. Nash, counsel for Milliken in Washington. The World Trade Organization requires its member countries to phase out tariffs and quotas, but American manufacturers had counted on 10 more years of limits on Chinese imports, until 2010, Mr. Nash said. The new agreement, however, specifies Jan. 1, 2005.

"The administration and Congress are spending our jobs like drunken sailors," Mr. Nash said, arguing that many of the 551,000 people still employed in American textile factories could lose their jobs as a result of the accord. The deal reached in Beijing is subject to Congressional approval.

The A.F.L.-C.I.O. also objected strenuously to a deal with a country with a poor human rights record and numerous violations of labor standards. In a statement that promised fierce opposition to Congressional approval, John Sweeney, president of the A.F.L.-C.I.O., said, "The agreement reached this weekend deals away our democratic principles and most cherished values, and we will fight it."

But the cheering from corporate America carried the day. "China is the only place in the world where you can go and see economic development right in front of your eyes," said Stephen S. Roach, chief economist at Morgan Stanley Dean Witter. "If China comes alive, they are going to really need advice and insight from global financial service companies like ours."

American commercial banks are big beneficiaries. Since 1997, they have been allowed to provide services to foreign companies operating in China. Now they will gradually be allowed to provide services to Chinese companies, making loans, handling currency transactions and providing other services. "Based on our understanding of the terms, the agreement provides a very significant liberalization in China's financial services market," said a spokesman for Citigroup, which has seven offices in China.

For the first time, American money managers, including the big Wall Street brokerage houses and mutual funds like FMR's Fidelity, Vanguard and T. Rowe Price, will be allowed to form joint ventures with Chinese companies, owning up to 33 percent at first and as much as 49 percent in a few years. Just as these companies rushed into Japan when that nation opened its gates, they most likely will rush into China, where they see a fresh supply of investor cash.

"The Chinese are big savers," said Robert Hormats, vice chairman of Goldman, Sachs International.

Telecommunications companies see themselves as big potential winners. AT&T, whose operations are limited now to providing services for 50 foreign multinational companies in China, sees the agreement as the first step in allowing American companies to invest in Chinese Internet providers. "Internet is the biggest area that we are currently excluded from," said Bruce Jackson, AT&T's vice president for global marketing.

Motorola also viewed the agreement, or at least the sparse details available yesterday, as a new Chinese willingness to permit foreign investment in mobile phone systems and other telecommunications services -- providing Motorola with an expanded market for the cell phones, pagers and semiconductors that Motorola already manufacturers in China.

"Any expansion in investment opportunities in China translates into opportunities for Motorola," said Norman Sandler, the company's director of strategic issues. "Motorola itself might invest in new wireless ventures, foreign or Chinese, and sell equipment to them."

Automakers, whose sales in China are still tiny, hailed a provision in the agreement that will let foreigners provide the Chinese with car loans, but most said they were waiting to see the final terms before judging its benefits. And Caterpillar Inc. pointed to China's new willingness to let foreign companies distribute their own products exported to China, replacing Chinese distributors.

"We are allowed to own one dealership now and we would set up more, although how many more we don't know yet," said William Lane, Caterpillar's director of governmental affairs. "This is just the first bite of the apple" he added. "By joining the World Trade Organization, China will be obligated to permit further market openings."

Farm organizations said that China had moved in the right direction in lowering tariffs on food imports, although Gene Paul, president of the National Farmers Organization, cautioned: "This is not going to change the current situation of low prices. I've read that China had a record corn crop, and we have to realize that ships run both ways."

Electronics manufacturers expressed concern that the Chinese government would press foreign manufacturers to buy supplies from state-owned Chinese companies. But in general, United States corporations saw in the treaty a new willingness by China's leaders to abide by international rules of trade and to avoid conflict.

That is certainly the view at Boeing, which has always sold aircraft to Chinese airlines. "This treaty brings us a huge step toward creating a normal business relationship between the two countries," said Tim Neale, a Boeing spokesman. "And in that climate we can be very successful."

 China is currently the fourth-largest trading partner of the United States after Canada, Mexico, and Japan. The hope in corporate America is that with the trade agreement, exports to China will rise. THE BIGGEST EXPORT ITEMS (1999 through August, in billions.)

U.S. EXPORTS TO CHINA

Machinery and transport equipment -- $4.8

Chemicals -- $1.4

Manufactured goods -- $0.7

Other -- $1.7

CHINA EXPORTS TO U.S.

Manufactured goods -- $27.1

Machinery and transport equipment -- $16.1

Manufactured materials -- $5.2

Other -- $2.7

(Source: Census Bureau)

 

[3] Opening China's Markets

The New York Times November 16, 1999, Tuesday, Late Edition - Final SECTION: Section A; Page 26; Column 1; Editorial Desk

The Clinton administration appears to have salvaged the trade agreement with China that it could have concluded in April if President Clinton had not rejected it. The new agreement, announced yesterday in Beijing, paves the way for China to join the World Trade Organization, committing it to obey rules that apply to all other major trading partners.

Zhu Rongji, the Chinese prime minister, offered much the same terms seven months ago on a visit to the United States. Mr. Clinton's last-minute rejection, based on his fear that Congress would not go along, embarrassed Mr. Zhu and gave his domestic critics time to build opposition to an arrangement that would have accelerated China's push toward freer markets. Since April the administration has scrambled to correct its blunder. Yesterday it succeeded. The new terms appear about as bold as the old ones. China promises to cut tariffs below those of many of America's other trade partners. It agrees to end export subsidies, give American exporters the right to distribute goods and open up Chinese markets to American farmers, banks, insurance, telecommunications and Internet companies.

By one calculation, the agreement will do little for the Chinese economy because its exports already enjoy unfettered access to American consumers. One exception is textiles and apparel. The new terms grant the Chinese an important concession -- the United States will phase out quotas on Chinese goods as fast as it phases out quotas on textiles from other trade partners. This provision will not hurt American manufacturers, since Chinese apparel sales mostly come at the expense of other third world exporters.

But by a second calculation, the impact on the Chinese economy could be profound. By joining the trade organization, China's market advocates now have the weight of international law on their side. Mr. Zhu expects trade accords to tilt domestic debate over economic reform in his favor.

There are critics who say that China will not live up to its trade promises, and that the trade organization is incapable of forcing it to do so. Perhaps. But with China outside the organization, the United States has no real leverage. With Chinese membership, the United States can marshal international sanctions for violations. Besides, the imposition of the rule of law on trade might strengthen the hand of domestic forces fighting for the rule of law for the rest of Chinese society.

 

[4] From Minks to Mules, U.S. Issues China Trade Details

The New York Times March 15, 2000, Wednesday, Late Edition - Final SECTION: Section A; Page 10; Column 3; Foreign Desk By JOSEPH KAHN WASHINGTON

Mink skins, with or without head, tail or paws. Diesel locomotives. Pure-bred asses and mules.

Those are turn-of-the-millennium equivalents of throw-weights and hard-target killers, the stuff of diplomatic progress between superpowers. These days, when the United States and China take confidence-building measures, they deal in capers, not submarine-based missiles. The Clinton administration, responding to Congressional pressure, today declassified and released a 250-page document, "Agreement on Market Access Between the People's Republic of China and the United States of America." Both sides have hailed the agreement, signed in November, as their greatest diplomatic breakthrough since they renewed economic ties in 1979.

The accord helps redefine relations between the most powerful country and the most populous. But it does so without much diplomatic wordplay or soaring verbiage. In fact, there are no more than a handful of passages that include full English sentences. It is less a treaty than a spreadsheet.

"I don't think the United States has ever negotiated a trade agreement with this kind of specificity," said Ira Wolf, a senior trade adviser to Senator Max Baucus, Democrat of Montana, and certainly one of the few people outside the United States Trade Representative's office to have perused the eye-straining small print.

Until today, the document had been distributed only to people with security clearances. "It wipes out all the ambiguity," Mr. Wolf said.

President Clinton has called the agreement, negotiated over 13 years, a cornerstone of bilateral relations. It helps clear the way for China to join the World Trade Organization, the regulatory agency in Geneva. More broadly, it enshrines in print China's commitment to allow capitalism -- at least as far as next-day courier services, life insurance policies and nonrefractory mortars add up to capitalism -- to spread to most regions and most corners of the economy.

Mr. Clinton faces perhaps his last big legislative battle to have Congress agree to a step that would let American companies benefit from the pact, granting China permanent normal trade status. Congress would sacrifice its annual review of China's trade status, in effect providing Beijing the same trading rights in the United States that most other nations have.

The mood of Congress is mixed. Although many lawmakers argue that that the accord is a clear winner for United States companies, some Republicans and Democrats alike say China does not deserve permanent rights because it violates international standards of human rights and threatens to use force against Taiwan. Clinton administration officials have called the vote, which they hope to have by Memorial Day, too close to call.

The administration has summarized the main benefits of the agreement for months, but the text was kept classified until today. Both sides agreed to keep it secret while China was negotiating with other nations to join the W.T.O.

Though lawmakers, their aides and some executives viewed the text in secure rooms, supporters of the accord demanded that the administration release it publicly. The secrecy had become a potent issue for unions and consumer groups opposed to giving China permanent trading rights.

Some critics have argued that the administration and the World Trade Organization have conspired to keep many trade issues under wraps because they fear public scrutiny.

The administration sought China's approval to release the text early. Beijing agreed, in its eagerness to win the vote in Congress.

Representative David Dreier, a California Republican who supports permanent status, said the release could clear up lingering uncertainties. "This makes the job of explaining the concrete benefits of bringing China into the rules-based trading system a little easier," he said.

But some lawmakers who say they are wary about permanent status said the release had not turned them into supporters. "It's a little late," said Senator Paul Wellstone, Democrat of Minnesota. He said the administration was trying to rush a vote.

With the agreement's reading like a complex arms-control treaty, it is a sweeping blueprint for commercial relations between China and the United States well into the 21st century. Rarely has the United States pinned down a trading partner on so many elements of business life.

The biggest breakthroughs would be in farm products, where China dropped nontariff barriers to imports of virtually everything from wheat to harvesters, though many such goods would remain subject to quotas.

The United States says China made another concession when it let Washington treat it as a nonmarket economy for 15 years. That gives Washington leeway to impose duties on imports from China if it decides that China is flooding the American market with goods produced below cost.

But the document, several inches thick, is perhaps more notable for its breadth than any of the specifics.

The agreement charts how many films foreign producers could show each year in Chinese movie theaters (20), when foreign banks could start dealing in Chinese currency (two years after it joins the trade organization) and what equity foreign telecommunications companies could hold in Chinese mobile phone services (49 percent).

The pact would establish a tariff on truffles for 2004 (25 percent). It dictates when foreign insurers can begin selling policies in Dalian (no later than 2002).

The agreement looks more like a work in progress than a polished communique. In part because negotiators were racing to complete the agreement in November before the meeting of trade ministers in Seattle, many sensitive areas were settled by 11th-hour scribbling in the margins.

One notation made sure that foreign financial leasing services would be allowed to operate as soon as China let domestic companies engage in such leasing.

And at the last minute, the Americans apparently agreed to shorten the period for treating China as a nonmarket economy, to the 15 years from 20.

Washington has had a hard time enforcing earlier trade accords with China when commitments and timetables were vague. And the bureaucracy and regional governments have sometimes been slow to comply with pacts signed in Beijing.

This time, Charlene Barshefsky, the United States trade representative, decided to leave little to chance, supporters of the agreement said.

"If you don't have that kind of detail, three years later you will discover loopholes," said Mickey Kantor, Mr. Clinton's former chief trade official who is now a trade lawyer.

 

[5] To Aid Trade Bill, Democrat Creates Plan for Rights Panel

The New York Times May 4, 2000, Thursday, Late Edition - Final SECTION: Section A; Page 8; Column 1; Foreign Desk By JOSEPH KAHN WASHINGTON

With supporters of a China trade bill scrambling for every vote, a Michigan Democrat in the House is planning to introduce legislation this week that he predicts will rescue the Clinton administration's top remaining foreign policy goal from potential defeat.

The legislator, Sander M. Levin, said today that he is putting the final touches on a proposal to establish a commission with powers to review human rights, labor policies and development of the rule of law in China. After weeks of test-marketing in Congress, Mr. Levin said his proposal for parallel legislation to the trade bill could recruit enough fence-sitting Democrats to tip the balance in favor of the administration. The bill would set up a commission consisting of nine members of each house of Congress, five presidential appointees and a full-time staff. The body would study China issues and advise both Congress and the White House on legislation or administrative steps, including United States policy on lending by the World Bank. That would keep pressure on Beijing to comply with its trade commitments and improve human rights, Mr. Levin said.

Opponents of extending permanent normal trade relations have dismissed Mr. Levin's proposal as a fig leaf, saying the commission would have no real powers of enforcement. Both the Clinton administration and the Republican Congressional leadership had kept their distance.

But Democrats, Republicans and administration officials are now saying that the Levin proposal attracts more votes for elevating China trade relations than it loses, especially among uncommitted Democrats. House vote counters said the Levin commission had helped recruit at least 15 Democratic yes votes, badly needed ones if the administration is to reach the minimum 70 Democratic supporters it claims it must have.

Republican leaders say they can produce 140 to 150 votes for the trade bill, but will rely on Democrats to push the total over the 218 necessary to pass the House. The House vote is scheduled for late May. Approval in the Senate is seen as certain.

"I think the Levin proposal will be responsible for 15 votes and maybe more," said Robert T. Matsui, the California Democrat who is leading the effort to round up Democratic votes in the House. "It gives me what I need."

Commerce Secretary William M. Daley, who is leading the administration's lobbying effort on the bill, today called Mr. Levin's proposal "an extremely good plan." Representative Bill Archer, the Texas Republican who heads the Ways and Means Committee, also spoke favorably about the idea at hearings on China trade.

The China trade measure also got a lift today when House and Senate negotiators agreed on details of a bill to give African and Caribbean countries wide-ranging trade benefits aimed at helping their ailing economies. The House could vote on the compromise as early as Thursday.

As many as half a dozen House Democrats have suggested that they would not vote for the China measure until the House first passed the Africa trade bill.

Meanwhile, the Clinton administration announced plans to beef up the team the government employs to police compliance with trade accords, with special emphasis on china. Mr. Daley said the administration would ask for $22 million in extra spending for trade enforcement and export promotion. Some of that money would pay for new personnel who would focus specifically on whether China meets its market-opening obligations after it enters the World Trade Organization.

Mr. Levin designed his proposal to resemble the Helsinki Commission, a joint commission of Congress and the White House set up in 1976 to monitor human rights in the Soviet bloc. The idea is to give members of Congress sway over China policy even if it agrees to sacrifice its annual review of that nation's trading rights, a step that's necessary if American companies are to benefit fully from concessions China made in its bid to join the W.T.O.

"This is something that should be an important part of our trade policy - a way to shape globalization," Mr. Levin said.

House Majority Leader Dick Gephardt had his own plan for setting up an investigation and enforcement body for trade with China with the authority to mandate sanctions if China failed to live up to its trade obligations or to international labor standards. But the Clinton administration firmly rejected any proposal that would have the power to mandate sanctions, calling that inconsistent with America's obligations under W.T.O. rules. Mr. Gephardt has said he will vote against the China trade bill.

Critics say Mr. Levin's proposal is a watered down version of Mr. Gephardt's and does not deserve broad support.

But it has elicited enthusiasm among some Republicans. Representative Doug Bereuter, a Nebraska Republican who has been working closely with Mr. Levin, said he planned to present it to the House Republican leadership for their blessing. He said the commission could sway several undecided Republicans to vote for the China bill.

 

[6] Corporate Greed Fuels Trade Deal

The New York Times May 11, 2000, Thursday, Late Edition - Final SECTION: Section A; Page 31; Column 1; Editorial Desk By James P. Hoffa; James P. Hoffa is president of the International Brotherhood of Teamsters. WASHINGTON

Americans are being bombarded in an expensive and sophisticated public relations campaign intended to convince them that giving China permanent normal trade status is essential to our long-term economic prospects. But permanent normal trade status for China has little to do with helping American workers and everything to do with the quest for profits by corporations that know no flag.

Even after a decade of economic expansion, real wages for blue-collar Americans are down, pensions are being cut and jobs are being lost in the name of so-called free trade. Since the North American Free Trade Agreement was signed in 1993, for example, hundreds of thousands of manufacturing jobs have been lost. American workers should not be asked to compete with foreigners who are not paid a living wage or who work in inhumane conditions. That is why the Teamsters and other unions have joined human rights activists, environmentalists, and religious and consumer groups that vigorously oppose giving China the trading privileges it has not yet earned.

Those who support granting permanent normal trade status argue that while China is not perfect, the only way to change it is to welcome it fully into the world economic community. This means admitting China to the World Trade Organization and ending the yearly review that allows Congress to hold the country accountable for its abysmal human rights and labor record.

Today in China, political opponents are imprisoned without trial and religious groups are persecuted. Similarly, many Chinese who fight for basic civil rights or for a voice in the workplace are jailed. This means that many of the products made in China and sold in America are essentially produced by people who have no say in their working conditions.

Moreover, since 1992 China has not complied with the terms of bilateral agreements with the United States on issues like prison labor and intellectual property rights. Why should we trust them now?

Supporters of the upgraded trade status will try to tar my union and other opponents as backward-thinking, self-interested protectionists. But the Teamsters are pro-trade. We recognize that the jobs of thousands of our members are based on expanded trade. But we also know that thousands of our members have lost jobs because of it, and the earnings of many more have been depressed because of competition based on paying the lowest wage to workers who have no say in their conditions and pay.

There are also those in Congress who think we can grant China permanent normal trade status and still address rights abuses through a joint congressional-presidential commission. But what good will the findings of such a commission do without the power to act on them? Toothless proposals will do nothing to end China's human rights abuses.

If the United States replaces the annual review of China's record withpermanent normal trade status, it will squander its leverage for promoting basic freedoms in China. We must reject this trade policy, built for and by multinational corporations, in favor of one resting on democratic values and the promise of raising living standards for all.

 

[7] Trade Deal Will Hurt China's Hard-Liners

The New York Times May 19, 2000, Friday, Late Edition - Final SECTION: Section A; Page 27; Column 1; Editorial Desk By Samuel R. Berger and Gene Sperling; Samuel R. Berger is the national security adviser. Gene Sperling is President Clinton's national economic adviser. WASHINGTON

As Congress takes up the bill that would establish permanent normal trade relations with China, the question before it is not whether China's human rights record is good or whether the deal by itself will cure it. The question is, in addition to the overwhelming economic benefits, will its passage increase the chance of positive change in China?

We believe it will, not out of faith that increased trade always brings freedom, but because the specific concessions China is making in order to enter the World Trade Organization will move China in the right direction. The divisions within China are clear. Those advocating W.T.O. membership and closer ties with the United States are the same leaders pushing a more daring transition from a command-and-control to a market economy. They realize that if they open China to global competition, they risk unleashing forces beyond their control -- temporary unemployment, social unrest and demands for freedom. But they have concluded that without competition, China will not be able to build a modern, successful economy.

The opposition is the entrenched state-owned manufacturing sector and those Communist officials clinging desperately to one-party control over how people work and live. They know that if China slashes protective tariffs to get into the W.T.O., more of its state enterprises will go. The government's ability to control workers and their loyalty will diminish. There will be more internal pressure for political change.

Last year alone there were more than 120,000 labor disputes across China over demands for openness and accountability. In some places, the government has cracked down. In others, it has responded by giving people a greater say, holding local elections and letting workers take grievances to court. That is how real change can begin. How would we be encouraging it by handing a humiliating defeat to reformers seeking normalized trade and a huge victory to the stalwarts of a state-dominated economy?

If China enters the W.T.O. and we approve permanent normal trade relations, the resulting greater participation of American telecommunications companies will also make telephones and the Internet more accessible for Chinese citizens. Right now only 12 percent of Chinese have phones; fewer than 1 percent have Internet access. No matter how hard Chinese officials try to stuff the information genie back into the bottle, an explosion in information technology will lead to an explosion of idea sharing in China. But if we reject permanent trade ties, our information industries will be denied access. How would that help Chinese citizens seeking new ideas and tools for political activism?

Finally, as Martin Lee, the leader of Hong Kong's Democratic Party has said, participation in the W.T.O. would bolster those in China who understand that the country must embrace the rule of law. Economic activity in China is mostly based on vague and unpublished rules that maximize the arbitrary power of party officials. To join the W.T.O., China must publish key rules, making it easier for citizens to advance on the strength of their ideas, not their connections.

Of course, W.T.O. membership does not guarantee China's leaders will choose political reform. But by accelerating economic change, it will force them to confront that choice sooner, and will make the imperative for the right choice stronger. If we reject the trade deal and undercut the reform-minded leaders who have risked their reputations for greater openness, we will increase the likelihood of the wrong choice.

Certainly, establishing permanent normal trade relations is not by itself a human rights policy toward China. Change will come through a combination of internal pressure and external validation of China's human rights struggle. We have to maintain our leadership in the latter, even as the W.T.O. contributes to the former. That's why we sanctioned China under the International Religious Freedom Act last year, and why last month we sponsored a U.N. Human Rights Commission resolution condemning China's human rights violations.

Those who oppose the trade deal have little vision of how a no vote would further reform in China other than maintaining our annual vote to threaten to close our market to Chinese goods (at considerable cost to millions of American families). Yet, after 20 years, this ritual has become just that, a ritual. Even when our relationship was at its lowest point, after the Tiananmen massacre in 1989, this process has affirmed our trading relationship with China. A human rights commission like that proposed by Representatives Sander Levin and Douglas Bereuter could be much more effective.

We do not know what path China will take. All we can do is make the decisions most likely to push China in the direction of economic and political reform. It is hard to see how freezing the status quo, empowering hard-liners, slowing the economic transition, and keeping American companies out of China will increase respect for human rights or lead to a more open society.

 

[8] From the Trade Debate: Democracy and Economics, Idealism and Politics

The New York Times May 25, 2000, Thursday, Late Edition - Final SECTION: Section A; Page 11; Column 1; Foreign Desk By The New York Times WASHINGTON

Following are excerpts from the House debate today on the trade bill that would grant permanent normal trading relations with Beijing, as transcribed by The New York Times.

THE MINORITY LEADER, RICHARD GEPHARDT OF MISSOURI -- This debate is testament to what makes the United States the greatest country that's ever existed in the history of the world based on the ideals of freedom: freedom of expression and freedom and liberty of religion and political speech.

These ideals are what cause me to finally be against this bill. This debate would not happen in China. This freedom of expression that we are exercising on this floor and outside this building and in rooms all over this country in the last days would not happen in a country like China. In fact, if you insisted on speaking against the policy of the government, you would be arrested. . . .

Some would argue that this is just about trade. I would remind them that our greatest export is not our products and our services. Our greatest exports are our ideals and our values. Getting acceptance of these ideals is also vital for trade. A country that fails to respect basic rights of people will not respect the rule of law. And without the rule of law in China the rights of our businesses will not be accepted.

China has not obeyed the agreements that they have made with us on trade. We've been promised access; we haven't gotten it. We've been promised protection of intellectual property; we haven't gotten it. Our trade deficit is now $85 billion with China, the highest of any country in the world. We export more now to Singapore, a nation of 3.5 million people, than we export to China, a country of 1.3 billion people. The track record is poor on compliance with treaties. Let's not reward them before we get them to comply.

 

THE SPEAKER OF THE HOUSE, J. DENNIS HASTERT OF ILLINOIS -- While there is one bill being debated here today, there are actually two debates going on, two questions that have to be answered: one, is granting this status to China in the best interests of the United States and the American people? And two, is granting this status good for the people of China. I believe the answer to both is yes.

Among other things, this debate is about American economic security. American negotiators have reached a tough but fair agreement for China's entry into the World Trade Organization. It is, in fact, a one-sided agreement, China gets nothing from us they don't already have. And we get lower tariffs and easier access for our exports going to China. And who makes those exports? American workers do.

Regardless of whether we grant normal trade status to China, the Chinese market is opening. Someone is going to have the opportunity to sell to this vast new market. The question is who will be there when the door opens? Will it be the United States or will it be Europe and Japan? There will be new and larger markets for farm commodities and manufactured goods in China. Who will produce those products: American farmers and American workers or European farmers and European workers? This vote today is about whether American firms set the ground rules and standards for business in China.

The potential for American economic growth is huge. If we pass this legislation, U.S. agricultural exports to China would increase by $2 billion every year. That means American farmers will be selling more corn and more wheat and more citrus and more soybeans. Last year, the wireless telephone market in China was $20 billion. By 2003, that market will be up to $45 billion. Our high-tech firms would thrive in the Chinese marketplace.

It's clear that passing this legislation is in the best interest of American economic security and that's why Alan Greenspan supports it. And that is one reason why we should vote yes. . . .

 

DAVID BONIOR, DEMOCRAT OF MICHIGAN -- We're told we need this trade deal to open up the vast markets for American goods. But these Chinese workers can't even afford to buy the products they make themselves. How are they going to buy our cars? Our cell phones? Our computers?

You can have free markets without free people, but it doesn't often come to a good end -- Chile's Pinochet, Indonesia's Suharto. We should have learned the lessons of Nafta -- jobs lost in food processing, in consumer products and high tech, 100,000 good auto worker jobs lost forever since Nafta.

And where are those men and women today? Oh, they're working. They're working in nursing homes, at gas stations, at convenience stores, and making a fraction of what they once earned. And the jobs they used to have? They're now performed by workers making pennies on the dollars in Mexico's economic fire zone called the Maquilladora.

But harsh as life can be in Mexico, China is far worse. It is a police state. . . .

The advocates of this trade deal tell us that prosperity is a precondition for democracy. And with all due respect, they're wrong. They have to grow together. . . .

CHARLIE NORWOOD, REPUBLICAN OF GEORGIA -- Every year, every year I've been here, we are asked to approve normal trade for China based on existing and potentially other progresses with these three concerns in mind: jobs, bombs and Bibles.

We are told every year that if we'll just extend normal trade for one more year, that jobs in this country will not be adversely affected. My district has lost manufacturing jobs to cheap Chinese labor every year I've been in Congress. And there are others of you who fit in that category. This is not just cheap labor, my friends. This is also slave labor.

We are told if we just will extend normal trade for one more year we won't have to worry so much about Red China dropping nuclear bombs on us because they're going to be much friendlier. Our relationship is going to be greatly improved.

Yet every single year that I've been in Congress, China has increased its nuclear arsenal with technology stolen from us and increased its threats to use them against American cities if we dare oppose their invasion of our allies.

We are told that if we extend normal trade relations for just one more year, the human rights in China will surely get better. The Christians will not be jailed for having Bibles, and Muslims will not be jailed for having the Koran, the Tibetans won't be jailed for simply following their traditional religion.

Yet every year that I've been in Congress, persecution of anyone in China who believes in a higher authority has gotten much worse. All of these things, all of them are worse after five years of what we have described as normal trade relations with China. . . .

 

THOMAS M. DAVIS, REPUBLICAN OF VIRGINIA -- I rise in strong support of this rule and for the resolution.

You know, for America this agreement is a one-way street. Our markets are already open to the Chinese. If there's going to be job loss, we've seen it in terms of some of these low-wage markets that have already moved to the Pacific Rim and to China and these other areas.

What this does for the first time, and by adopting P.N.T.R., China's markets are now going to be more accessible to American companies, American products: 1.2 billion Chinese. America only has 5 percent of the world's consumers. China is the largest -- second-largest -- economy in the world; 100 million Chinese today making $40,000 a year annually. A middle class that is burgeoning and growing, and this is going to increase the pressures for democratization inside of China.

China already joins the W.T.O. regardless of what we do here today. That already happens. The question is: Are American products, are American corporations, are American workers going to get the W.T.O. preference by our granting P.N.T.R. and does America get the benefits of the World Trade Organization tribunals for resolving trade issues that we don't get if we just go on to an annual basis? Under P.N.T.R. the answer is yes. . . .

 

[9] Rounding Out a Clear Clinton Legacy

The New York Times May 25, 2000, Thursday, Late Edition - Final SECTION: Section A; Page 1; Column 3; Foreign Desk By DAVID E. SANGER WASHINGTON

With his victory today on trade with China, Bill Clinton has finally defined his imprint on American foreign policy: the president who cemented in place the post-cold-war experiment of using economic engagement to foster political change among America's neighbors and its potential adversaries.

It is a path he chose in 1993, when 10 months into his presidency he defied his party and pushed through the North American Free Trade Agreement with Mexico and Canada. At the same time, he reversed course on China, despite his 1992 campaign criticisms of his predecessor for "coddling dictators," and concluded that denying China trading rights as a weapon to change its behavior was a policy doomed to failure. Today, eight months from the end of his presidency -- and with even fewer Democrats on his side -- he convinced a Congress skeptical about trade and even more suspicious about China that normalizing trade relations was the best bet for encouraging political reform in the world's most populous nation.

And he persuaded them that rejecting the trade bill would bolster hard-liners in Beijing who are convinced that America's secret agenda is to contain China's power, economically and militarily.

It will be years before anyone knows if the economic roll of the dice behind today's vote, or the strategic one, will pay off. On paper, the accord promises vast new openings for American agricultural goods, telecommunications equipment and Internet providers, among others. But history suggests that as soon as China's tariffs come down, new bureaucratic barriers will magically appear.

As in the Nafta debate, the economic benefits were undoubtedly oversold. China is already at work on ways to slow the promised influx of American competitors in its market, at least until it can figure out what to do with the tens of millions or even hundreds of millions of workers, mostly in state-owned industries, whose livelihoods are threatened by the country's promise to open its markets to the world.

But in the end, Mr. Clinton ultimately prevailed because he was able to sell a long-term vision of how America could use its economic power to change, and perhaps undermine, the nature of one-party rule in China. And his opponents in the floor debate -- both those who feared the loss of American jobs and those who fear China's rising power -- offered no real alternative, no convincing strategy of how America would expand its presence in China or attempt to open up its political system.

"This was never a fight about the nature of the problem in China. It was a fight about the nature of the solution," Samuel R. Berger, Mr. Clinton's national security adviser, said in an interview this morning as the final House debate was getting under way. "It's about whether we best deal with China in a punitive way or by a combination of promoting internal change and external validation of that change."

That Mr. Clinton won the China argument at all is remarkable. Few countries evoke such deep emotions in Congress and among political activists.

"More people are imprisoned today for their beliefs than at any time since the Cultural Revolution" in 1966-76, said Nancy Pelosi, a California Democrat and long-time opponent of trade relations with China.

While it is impossible to verify Representative Pelosi's count -- the number of political detentions in China is kept secret by the government in Beijing -- administration officials do not deny that the crackdown on the Falun Gong religious group has sent imprisonments soaring.

Dana Rohrabacher, a California Republican and defense hawk, charged that America's trade with China was simply building up Beijing's nuclear capacity, and compared Mr. Clinton's engagement policy to Neville Chamberlain's failed effort to moderate Germany's behavior in the 1930's. "You don't make a liberal by hugging a Nazi," he said.

But in this debate, Mr. Clinton's approach to trade was as divisive as his approach to China. Despite America's incredible prosperity, trade policy still runs like a huge geologic fault through the Democratic party. For seven years now Mr. Clinton has argued endlessly that international economic development ultimately offers economic opportunities for workers in the world's most innovative economy.

Yet he has convinced few.

Labor unions fought fiercely against him -- and a pained Al Gore -- arguing that "economic engagement" was simply a code word for moving American jobs to China.

Just compare today's vote tallies with the battle over Nafta. In 1993, when the American economy was just crawling out of a recession and unemployment had yet to fall, Mr. Clinton got 102 out of 258 Democrats to vote for the free trade accord with Mexico and Canada -- or 39 percent.

Today he persuaded far fewer Democrats: 73 out of 211 voting on the bill, or 35 percent. In one of the great turnabouts of modern times, it was the House Republicans -- who impeached Mr. Clinton last year -- who saved his foreign policy legacy today, voting overwhelming for the China deal 164 to 57.

The decline in Democratic support is all the more notable since this may have been, in President Clinton's words, the "most one-sided trade deal in history." While Nafta required huge openings of the American market -- threatening American tomato farmers and car-parts makers -- the accord to usher China into the World Trade Organization put all the market-opening obligations on Beijing. China got no reciprocal trade openings, just an agreement to let them into the organization that sets the rules for world trade.

"This is one of the conundrums that all of us have had to wrestle with," said Gene Sperling, the head of Mr. Clinton's National Economic Council who helped negotiate the deal struck with China in November, an accord that Congress indirectly approved today. "Despite the growth in our economy, despite the record-low unemployment, you see nothing but increased anxiety about globalization, technology and trade. It's everywhere."

In the end, though, Mr. Clinton's success in twisting arms had little to do with the bill's economic merits. He won over the undecided using a bit of Lyndon Johnson-style vote-buying -- one congressman got a zip code for a small town, and two others got a natural gas pipeline near El Paso -- and a large dose of Richard Nixon's geostrategy.

Like Nixon and all the presidents who followed him, Mr. Clinton has become an engagement enthusiast. And while economic interdependence was the course advocated by George Bush, Mr. Clinton has become a far more articulate proponent than Mr. Bush ever was.

So if he leaves office with a Clinton Doctrine, it is this: Doing well for American business can, under the right conditions, do good for the cause of liberalization and democracy in authoritarian corners of the world.

"We know that trade alone will not bring freedom to China or peace to the world," Mr. Clinton said late this afternoon in the Rose Garden, before celebrating what clearly will be one of the last legislative victories of his presidency. "We will have more positive influence with an outstretched hand than with a clenched fist." It is a doctrine Mr. Clinton has subscribed to only when it is politically convenient -- Cuba, for example, is still a notable exception.

Now the hard part -- making the leap from economic openings to political progress -- will be left to Mr. Clinton's successor.

China's record of compliance with trade accords is poor (though Europe and the United States don't do much better). There is little doubt that, once a member of the World Trade Organization, Beijing will use its clout there to work against the international regulation of labor and environmental rights that Mr. Clinton says are so necessary.

And while China's intelligentsia sees the pressure to open China's markets as a huge lift to economic and political reform -- and to the country's embattled chief reformer, Prime Minister Zhu Rongji -- the opposition to true market opening will be fierce.

China's real political constituencies are its wildly inefficient, often bankrupt state-owned enterprises. As foreign competition pours in, many will go belly up. When the workers demonstrate, the country's insecure officials may well decide to crack down, with echoes of Tiananmen Square that would inevitably inflame American opinion.

"No one said this would be an easy path or a short one," said Charlene Barshefsky, the United States trade representative, who led the China negotiations. "There will be setbacks, lots of them. But we've tried the other means of effecting change in China and they have failed. This has a chance, a good chance."

 

[10] Chinese Express Joy and Relief at Passage of Trade Bill

The New York Times May 25, 2000, Thursday, Late Edition - Final SECTION: Section A; Page 10; Column 3; Foreign Desk By ERIK ECKHOLM BEIJING

News that the House voted to grant China permanent normal trade status with the United States was generally greeted with joy here today, tempered by worries about the wrenching economic changes that are expected as China frees up its markets to outsiders.

"That's fantastic," said Zhang Linan, 24, an accountant, as he heard the news on the way to work. "I think it will be a boost for our economic development and personally it means more choices for us." But the government, in its first official reaction, expressed "severe concern and dissatisfaction" about conditions that the House attached to the bill, including a new annual review of human rights, calling it an unacceptable effort to "interfere in China's internal affairs and damage China's interests."

Many Chinese have placed enormous hopes on membership in the World Trade Organization, with its rules for market opening, as a force for dismantling inefficient state industries and modernizing the country. The trade bill's passage was expected to help China's entry to the WTO.

And since most people yearn especially for cooperation with the United States, which they see as the world's economic and cultural leader, defeat of the trade bill would have been seen as a stinging betrayal.

"It's so good that it passed," said Luo Hui, 36, a computer programmer. "If Congress hadn't passed this law, it would have been a shock, a setback, a big international incident. Now we can get on with business."

While the government felt obliged to object to intrusive conditions the House attached to the trade bill, the top leaders were undoubtedly pleased with its passage. President Jiang Zemin and Prime Minister Zhu Rongji have staked their prestige on China's entry into the global trading regime and on closer economic ties with the United States.

The official statement, issued by the Ministry of Foreign Trade and Economic Cooperation, said "it was wise of the House of Representatives to pass" the bill to normalize trade relations. "The resolution of this issue will benefit the healthy and stable development of Sino-American bilateral trade on a basis of equality and reciprocity."

At the same time, the government put a strong protest on the record. The conditions included in the bill, the official statement said, are "unacceptable to the Chinese government."

The news from Washington should speed along what is already a remarkable revival in Chinese-American relations since the bombing of China's embassy in Belgrade last year, during the NATO campaign against Yugoslavia. Still, foreign policy experts warn of pitfalls ahead.

"Before the trade vote in Congress, two big problems threatened Chinese-American relations, trade relations and Taiwan," said Xiong Zhiyong, dean of the Foreign Affairs College here. "Now there's only one."

 

[11] China Clears Last Hurdle On Path to Trade Group

The New York Times September 15, 2001, Saturday, Late Edition - Final SECTION: Section B; Page 1; Column 5; Foreign Desk By JOSEPH KAHN WASHINGTON

The United States, Europe and China removed the last remaining obstacle blocking China's admission to the World Trade Organization tonight, as the Bush administration scrambled to show that its engagement in international affairs was undiminished by terrorist attacks.

The agreement means that China's entry to the trade body will be formalized as early as Monday and will take effect early next year. That will complete a quest that the Communist government began more than 15 years ago, when Beijing accelerated efforts to overhaul its command-and-control economy and open its market to the outside world. Negotiators in Geneva agreed on Saturday morning, their time, that a dispute about the differing status of European and American insurance companies in the China market did not have to be fully resolved before China could enter the W.T.O.

Though negotiators had initially suspended talks over how to resolve the dispute after the terrorist attacks in New York and Washington, Bush administration officials said they made a renewed push to finalize China's entry later in the week.

"We're showing that the United States and Europe can work together in this environment to get China into the W.T.O. and that we're not paralyzed by this," said Robert B. Zoellick, the United State trade representative.

Mr. Zoellick and Pascal Lamy, the European trade commissioner, worked to seal the China agreement this week as part of a broader effort to lay the groundwork for an international trade summit meeting scheduled for Doha, Qatar, in early November, administration officials said.

Some experts have questioned whether the Doha meeting will take place, given the fact that it is supposed to be held in the Middle East at a time when American retaliation for the terrorist attacks may have occurred or be under way. But Mr. Zoellick said both he and his European counterpart had redoubled their efforts to make sure that meeting, if it did take place, did not dissolve into squabbles, as a similar summit meeting in Seattle did in 1999.

"It's really more important than ever that the U.S. demonstrate leadership on international economic issues even as we focus on security issues," Mr. Zoellick said.

Under the agreement on China's accession, European and American insurance companies would be granted access to China's domestic insurance market based on separate terms Europe and the United States reached with China last year. The deal between China and the United States had given a significant edge to American insurers, and an effort to reconcile those terms with Europe's agreement had cast doubt on whether China would win admission soon.

The accord appears to favor American International Group, the American insurance giant, which has special access to the China market because it is allowed to operate there without local partners.

After China enters the W.T.O., European companies could still seek the same access that American International has. But the issue is not finally resolved, meaning that Europeans may end up suing China for the rights through the trade organization's dispute-resolution process.

China also reached a final accord with Mexico this week, which was the only other remaining obstacle to joining the trade body.

President Bush is scheduled to visit China next month for a conference of Asian leaders and a state visit with President Jiang Zemin. Administration officials were determined to help China realize its goal of joining the trade body before that time.