House Rejects Bid to Downgrade Trade Ties With China

After a debate that reflected a growing disquiet with the direction of America’s multibillion-dollar commercial relationship with China, the House of Representatives on Wednesday rejected an annual attempt to sever normal trade ties with Beijing.

The margin of the vote, 264 to 166, was about the same margin as last year, but the debate itself differed radically, in tone and focus.

The fight to suspend normal trade relations with China has become an annual event on the House calendar since Beijing’s 1989 government-ordered crackdown on pro-democracy student demonstrators in Tiananmen Square.

Proponents of the suspension, an ad hoc coalition of members pushing for improved human rights and tighter controls on the proliferation of weapons of mass destruction and on opponents of free trade, spent much of their time during Wednesday’s debate attacking inequities in the huge Sino-U.S. trade relationship.

“You can’t forget about human rights and the other issues, but the debate this year stands on trade alone,” said Rep. Nancy Pelosi (D-San Francisco). “You can argue the progress in other areas, but trade is a quantifiable failure, and no one can hide it.”

She was referring to the United States’ large, growing trade deficit with China, a figure that this year is expected to exceed $60 billion and shows no signs of decreasing.

Pennsylvania Democrat Ron Klink added: “Imagine a giant Chinese vacuum cleaner sucking $60 billion out of our economy. That’s 2 million jobs lost in small towns all over the country. It’s going to get worse.”

With U.S. exports to China totaling $12.8 billion last year, the overall trade imbalance is now about 5 to 1.

Opponents of the resolution and senior U.S. trade officials welcomed Wednesday’s vote as a reaffirmation of President Clinton’s policy that engaging China, rather than trying to punish it by withholding routine trade preference, is the way to help end Chinese human rights abuses and contain their proliferation of weapons of mass destruction.

“The result shows that members understand the importance of normal trade relations with China,” said Rep. Robert T. Matsui (D-Sacramento).

But Matsui and others expressed worry that a worsening trade deficit could alter the dynamics of the debate in years to come. “Frankly, I’m concerned,” he said. “The Asian financial crisis has created a situation where exports have slowed considerably. We’re going to have to do more to open up Chinese markets. We have to let the Chinese know they have to do more.”

U.S. Trade Representative Charlene Barshefsky, the point person in the administration’s efforts to do just that, agreed, although she said Wednesday’s vote reflected a sentiment that withholding normal trade privileges was not the way to fix the trade imbalance. Speaking after the vote, she said China’s wish to win a permanent trade preference was “virtually inconceivable without substantial market openings in the form of commercially meaningful agreements.”

While the U.S. imposes an average 2% tax on Chinese goods imported into the United States, Chinese tariffs on U.S. imports average nearly 20%. Although these Chinese tariffs have dropped from a high of 40% five years ago, U.S. trade officials note that, in key areas important to the United States, such as autos and chemicals, prohibitive tariffs in effect close China off as a potential market.

Even representatives in traditionally pro-trade farm states, which see China as a lucrative market, have registered disenchantment with China’s reluctance to open up to foreign competition.

Rep. Douglas Bereuter (R-Neb.), a consistent supporter of the trade status for China, recently introduced a bill calling for increased tariffs on Chinese imports if Beijing continues to maintain high trade barriers.

Despite these concerns, the importance of China as a growing economic and political force led a majority of representatives to reject the idea of suspending ties.

As the House debate unfolded, Clinton signed into law legislation that changes the classification of countries enjoying routine trade ties with the U.S. from the “most-favored-nation” status, or MFN, to “normal trade relations”--a description that more closely reflects the reality of the status.

Only a handful of countries, including Libya, Iraq, Cuba and Afghanistan, do not enjoy normal trade ties with the United States.

Noting China’s cooperation in containing North Korea’s nuclear weapons program and in trying to defuse the nuclear crisis in South Asia, Rep. Lee H. Hamilton (D-Ind.) said “political cooperation and economic cooperation go hand in hand.”

“You can’t declare economic warfare against China and expect China to play by our rules on human rights and nonproliferation,” he added.