Insider : Tussle Over China Trade Benefits Not Business as Usual This Year : * Both sides in debate over linking commerce with human rights push for end to stalemate.
The wrangling has gone on for nearly five years and now it is showdown time for the American policy on trade with China.
As in every spring since 1990, business executives are converging on Washington to ask the President to preserve China’s trade privileges in this country.
Human rights activists, deploring Chinese repression, are calling for limits on Beijing’s trade benefits. Some Chinese dissidents are likewise seeking sanctions against China. Emissaries from Hong Kong are pleading that its dependence on trade with China should not be forgotten.
Yet this is not just another year.
The decisions over the next few weeks by the Clinton Administration and Congress about whether to continue China’s most-favored-nation (MFN) status as a U.S. trading partner will have more lasting impact than in any previous year. Forces on both sides of the debate are now pushing to end the five-year stalemate.
The American business community is appealing to the Administration to once and for all “de-link”--that is, to stop making trade with China conditional upon human rights improvements. “The time has come to do what we ought to do, to renew (China’s trade benefits) permanently,” argued Sen. Max Baucus (D-Mont.).
Human rights groups and organized labor, by contrast, want the Administration to break with precedent and raise the duties on at least some Chinese goods sold in the United States.
“I think partial revocation (of China’s trade benefits) is in the cards,” Jeff Fiedler of the AFL-CIO’s Food and Allied Services Trades said. China says that any such action would deal a serious long-term blow to relations with the United States.
These two approaches are not mutually exclusive. In fact, the Administration is studying both.
Some officials have hinted that, in an effort to forge a compromise, the Administration could impose at least a few sanctions on some Chinese goods over the coming year and at the same time remove many or all of the conditions for renewal of China’s trade privileges in future years. The Administration’s decision will stand unless Congress overrides it.
“The debate will be about whether we are going to de-link without taking some partial step” on sanctions, said one Administration official recently. “Because if the Chinese haven’t made the sort of progress (on human rights) we’re looking for, then we lose credibility, including with the Chinese.”
The stakes in the China dispute are enormous.
A coalition of U.S. business groups claims that cutting off China’s trade benefits would threaten $9 billion in American exports to China and as many as 171,000 jobs here. Labor leaders counter that such jobs estimates are vastly inflated and that China, with $30 billion in exports to the United States last year, has much more to lose in a trade cutoff.
More broadly, the outcome of the trade dispute could well determine whether the United States seeks to use its trade leverage to try to ease political repression elsewhere in the world.
Mike Jendrzejczyk, Washington director of Human Rights Watch (Asia), said he worries that a decision to extend trade privileges to China would weaken U.S. human rights policy toward other nations in Asia, such as Indonesia.
That viewpoint is shared by many Chinese dissidents. “International pressure is very important,” said Wang Juntao, one of the architects of China’s 1989 democracy demonstrations, who visited Washington last week.
Wang, who was just released after serving nearly five years in a Chinese prison, reported that “every year, my prison conditions improved when there was an MFN debate in this country. And after the MFN decision was made, my prison conditions would backslide.”
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Several factors have combined to bring the controversy on China’s trade status to a climax this spring:
* Under the Clinton Administration, for the first time, it is official U.S. policy to require China to improve its rights policies if it wants its trade benefits renewed.
* American businesses are more threatened than in past years by restrictions on trade because China’s economy grew by a startling 13% last year. The Chinese government has fueled the competitive anxieties of U.S. businesses by hosting large business delegations from Germany and other European countries.
* To an unprecedented degree, China has defied the United States on human rights. Cases in point: its roundups of dissidents and its icy treatment of Secretary of State Warren Christopher in Beijing in March.
China has enjoyed most-favored trade status since 1980, the year after the United States formally granted diplomatic recognition to the Communist regime in Beijing. These benefits mean that Chinese goods sold in this country carry the same low tariffs enjoyed by most other nations.
Only a handful of countries, such as North Korea, are denied most-favored status. Countries without it must export goods to this country under Depression-era tariffs that are prohibitively high.
Throughout the 1980s, China’s benefits were extended annually and without controversy. Then in 1989 came the bloody crackdown by Chinese troops on young demonstrators around Tian An Men Square. The toll was at least 1,000 lives.
Afterward, congressional Democrats sought to demand improvements in China’s human rights, trade and arms control policies in return for renewal of China’s trade benefits. President George Bush repeatedly vetoed such legislation.
During the 1992 presidential election campaign, Clinton accused Bush of “coddling dictators” and said that he favored attaching conditions to the trade benefits.
After taking office, Clinton gave China one more year of most-favored privileges. He also adopted an executive order setting conditions China would have to meet if it wanted the benefits again in 1994.
For example, the Beijing regime was asked to make “overall significant progress” in releasing political prisoners, in its conduct toward Tibet and in its handling of Voice of America broadcasts into China, which have been routinely jammed.
Over the last year, as China’s economy boomed and the Chinese leadership balked at meeting the American human rights conditions, the U.S. business community grew increasingly nervous.
Likewise, officials in Clinton’s National Economic Council and the Commerce and Treasury departments made it plain that they were worried about the impact of a cutoff of most-favored status on American companies. Some leading congressional Democrats served notice that they wanted the President to change course.
“I supported the President’s executive order last year on MFN, in part because I believed it would facilitate a more stable relationship with China while preserving broad congressional backing,” said Rep. Lee H. Hamilton (D-Ind.), chairman of the House Foreign Affairs Committee.
However, Hamilton said, “whatever leverage MFN conditionality has provided in the past year, its application in this next phase would probably be counterproductive. It is time to de-link.”
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In fact, Administration officials face several decisions over the next few weeks. They must first decide whether to tell the American people that China has made the progress on human rights described by Clinton’s 1993 order.
In fact, the Administration has launched a secret, intensive diplomatic campaign to get China to make more concessions on human rights, U.S. officials say. While Administration officials refuse to acknowledge it, they have reportedly dispatched a special emissary to take charge of these last-minute negotiations.
The secret talks seem to have produced at least one result: Over the weekend, China released a prominent dissident who had been jailed as one of the principal organizers of the 1989 Tian An Men Square demonstrations.
If the Administration finds insufficient progress in China, it will have to decide whether to revoke trade benefits, impose partial sanctions or take no action at all. Partial sanctions could involve raising duties by a small amount on all Chinese goods or raising them substantially on some kinds of goods--for example, anything made by China’s state-owned enterprises or by the People’s Liberation Army.
Clinton must also decide the terms of renewing China’s trade benefits next year and in the following years.
Finally, Clinton will have to win support in Congress for his policy toward China. And that may not be easy.
“There has been 25% turnover in the House since the last election,” observed Hamilton. “The new members of Congress do not accept, as a given, the importance of U.S.-China relations. They are quick to see the irritants in the relationship.”
China Imports From U.S. (in millions of U.S. dollars)
1983: 2,753
1984: 3,837
1985: 5,199
1986: 4,718
1987: 4,836
1988: 6,633
1989: 7,864
1990: 6,591
1991: 8,003
1992: 8,895
China Exports to U.S. (in millions of U.S. dollars)
1983: 1,713
1984: 2,313
1985: 2,336
1986: 2,633
1987: 3,030
1988: 3,399
1989: 4,414
1990: 5,314
1991: 6,192
1992: 8,590
Source: Direction of Trade Statistics Yearbooks 1989 and 1992; and Quarterly Reports for September and December, 1993; March 1994. Figures for 1992 compiled from Quarterly Reports and rounded.
