Congress Likely to Kill Deal Between Port, Chinese Firm

Driven by fears of a rising Chinese military threat, congressional conferees have agreed to kill an industrial development project aimed at bringing hundreds of new jobs and millions of dollars in revenues to the Port of Long Beach, port officials say.

Lawmakers have agreed to include language in the annual defense authorization bill that would bar Cosco, the China Ocean Shipping Co., from leasing new terminal space on the redeveloped site of the former Long Beach Naval Station, according to port officials.

Conservative foes of the project have argued that Cosco, a port tenant for 17 years, could use the new, larger site for intelligence-gathering operations on the U.S. mainland.

Port officials, the Clinton administration and their pro-trade supporters have fought hard against such allegations for two years. But they have lost ground in the debate recently amid controversies over the export of U.S. satellites to China and alleged Chinese contributions to U.S. political campaigns.

The language to bar Cosco was inserted at the urging of Sen. James M. Inhofe (R-Okla.).

Specifically, it would rescind the president’s authority to approve the lease. Under current law, Clinton has authority to approve the deal if the FBI and Pentagon certify that the Chinese presence poses no national security threat.

Only last month, port officials were optimistic that they could prevail when House and Senate conferees met to work out conflicts between differing versions of the spending bill. They believed that they had powerful support from port-state lawmakers, unions, the U.S. Chamber of Commerce and other pro-trade groups.

But now, “we’re just very, very frustrated,” said E. Del Smith, lobbyist for the port.

In part, Smith faulted the administration for not pushing harder. A Pentagon report certifying that Cosco poses no security threat has not yet been submitted to Congress, depriving port advocates of one salient argument, Smith said.

Preoccupied with the Monica Lewinsky scandal, “the administration is catatonic on a number of things,” he said. Staff work “has just come to a standstill.”

Long Beach officials warned that the Chinese may react swiftly with harsher treatment of U.S. trade concerns.

Already, they said, the Chinese have indicated that they may reject pending proposals by two huge U.S.-based shippers, Sealand and APL, to build new facilities in China. Officials from those companies could not be reached for comment.

“This has ramifications way beyond the city and port of Long Beach,” said Randel Hernandez, chief of staff for Long Beach Mayor Beverly O’Neill. “This action would destroy efforts by U.S. companies to expand and open markets in China.”

Among other things, Hernandez said, the move would undermine Congress’ intentions to close military bases in a way that would convert the sites to civilian use as quickly and efficiently as possible.

The conferees are expected to meet again later this week to iron out three or four other issues before signing off on the conference report.

Officially, the Port of Long Beach issue is not decided, congressional aides say. But Cosco’s advocates acknowledged that their chances of winning a reversal are not good, while foes voiced confidence.

“We’re optimistic,” said Gary Hoitsma, press secretary to Inhofe. “We’re going to do everything we can. . . .”

Long Beach officials have predicted that if Cosco were shut out of a deal with them, the shipping concern could easily strike a deal with the nearby Port of Long Angeles to occupy a new, federally subsidized space on its territory.

But Hoitsma warned that foes of Cosco would come back next year to bar any deal like that, as well.

“This ought to send a message,” he said.

Under the arrangement, the conferees will recommend language barring Cosco, in exchange for Inhofe’s agreement to withdraw another proposal that would have prevented the administration from closing any military bases without the explicit consent of Congress.

The administration and other lawmakers were strongly opposed to that idea, considering it an infringement on administration prerogatives.

Inhofe is influential in the conference because he serves as chairman of the Senate Armed Services subcommittee on military readiness. In that position, he has special say over the section of the bill that deals with this issue.

Cosco has been negotiating for two years to expand into a new terminal that the port would build and lease to it. Advocates have warned that the site may go unoccupied for some time if the deal falls through.