House Votes to Remove China’s Trade Benefits : Tariffs: The move to end most-favored-nation status is a rebuff to Administration policy. It faces a veto.

In a surprising new rebuff to the Bush Administration’s China policy, the House voted Thursday both to take away most-favored-nation trading benefits for the government in Beijing and to impose tough human rights conditions on any extension of those benefits next year.

The House actions, which one backer said are designed “to send a message to the angry old men” in China’s leadership, call into question the future viability of the $18-billion-a-year American trade with China. The Chinese leadership has vowed to retaliate against American exports if the United States strips Beijing of its low-tariff trade benefits.

The two votes marked the first time since the United States restored diplomatic relations with Beijing 11 years ago that Congress has endorsed an effort to make American trade with China conditional on human rights factors. The Bush Administration had strongly opposed both House measures.

The vote to deny trade benefits to China this year--and thus to raise U.S. tariffs on Chinese goods--faces an almost certain presidential veto. The 247-174 House margin, while large, was less than the two-thirds majority needed for a congressional override.

However, the separate action imposing conditions on China’s trade benefits for the following year, beginning next June, passed the House by a veto-proof margin of 383 to 30.

“American companies (now operating in China) would start making other arrangements” if this provision of the bill becomes law, predicted Roger W. Sullivan, president of the U.S.-China Business Council.

“One businessman in our group calls this the ‘one-year plant-closing notification bill for China,’ ” added Sullivan, whose council represents American companies doing business in China.

The Senate has been awaiting final House action before it votes on China’s trade status. Senate Majority Leader George J. Mitchell (D-Me.) has said he favors taking away China’s most-favored-nation trade benefits.

Under language sponsored by California Rep. Nancy Pelosi (D-San Francisco) and approved by the House on Thursday, China would not get the trade benefits next year unless the Chinese government accounts for and frees all citizens jailed during the 1989 pro-democracy demonstrations at Tian An Men Square.

The House bill also would deny most-favored benefits to China next year unless it takes some steps to ensure religious freedom. And the measure would strip China of the trade benefits unless the President can assure Congress that Beijing is abiding by the agreement it signed in 1984 to preserve the special status of Hong Kong.

Chinese representatives had no immediate comment.

Most-favored-nation trading privileges allow a country to export its goods to the United States under the same low tariff rates that are permitted to most other U.S. trading partners. President Jimmy Carter first extended most-favored status to China in 1979 and, until this year, China easily won annual renewals of these benefits.

Last spring, Bush announced that he was extending China’s benefits for another year without any conditions. The President explained that acting otherwise would hurt American businesses, workers and consumers. He also praised what he called China’s “modest steps” to ease human rights restrictions inside the country.

In June, while the legislation was pending before Congress, the Chinese leadership suddenly reversed course and permitted Fang Lizhi, China’s most famous dissident, to leave his yearlong confinement inside the U.S. Embassy in Beijing for a new home and freedom in Britain.

More recently, China has supported U.S. efforts to isolate Iraq. While saying that it opposes military intervention in the Middle East by the superpowers, China supported all the U.N. Security Council resolutions condemning the Iraqi invasion of Kuwait and establishing an international embargo against Iraq.

The Bush Administration had hoped these recent Chinese moves would dampen sentiment in Congress to strip China of its trade benefits. But on the House floor Thursday, many lawmakers made clear that their desire to take a stand against China’s suppression of the democracy movement outweighed these other considerations.

Noting that the United States still denies most-favored-nation benefits to the Soviet Union, Rep. Marty Russo (D-Ill.) thundered: “What does (Soviet President Mikhail) Gorbachev have to do to get MFN status? Massacre his students in Red Square?”

A few Congress members, including Rep. Dan Rostenkowski (D-Ill.), pleaded with the House to continue the trade benefits to preserve American influence over the Chinese government and to reward China for its help to the United States on foreign policy questions like Iraq and Cambodia.

But others argued that the United States should stop ignoring human rights problems in China because it is no longer as strategically important as it was in the 1970s and 1980s, when American policy-makers sought to enlist Beijing’s help in efforts to contain the Soviet Union.

“The Cold War is over,” Rep. Edward J. Markey (D-Mass.) said. In the past, he said, the United States played “the China card” against the Soviet Union. “Now, in 1990, when we turn over the China card, it’s a deuce,” Markey said.

BACKGROUND

Beijing’s bloody military crackdown in June, 1989, on demonstrators in Tian An Men Square abruptly reversed the steady warming in U.S.-China relations. Americans who previously overlooked political repression by China’s Communist government now urged U.S. retaliation for the killings and pressure for human rights. President Bush suspended high-level political contacts with Beijing and helped cut off international loans. But Bush decided last May to continue most-favored-nation tariffs, saying that raising them would only hurt the Chinese people and American business and consumers.