Chances Improve for U.S.-China Trade Agreement

In a surprise turnabout, prospects for an unprecedented trade deal between China and the United States have improved over the last few days as the surprisingly broad scope of Chinese trade concessions has gained notice in Washington.

Business leaders vowed Wednesday to continue pressure on the White House, following President Clinton’s belated efforts Tuesday to support an accord after shying away from one last week.

Chinese concessions on motion pictures, grain imports, insurance, banking and telecommunications have stunned some observers, emboldening congressional advocates of a deal despite strong opposition.

In an interview, House Rules Committee Chairman David Dreier (R-San Dimas) said a “commercially viable” pact, with business support, might pass Congress, despite China’s starring role in controversies concerning espionage, illegal transfer of military technology, human rights abuses and campaign improprieties.

“If they come up with a good deal, I’m convinced that we have a very good chance of getting it passed in the Congress,” Dreier said.

The deal being negotiated between the Clinton administration and Chinese officials might fit that description, Dreier said, although he chided the White House for failing to push harder to complete it.

Advocates of a plan that would bring China into the World Trade Organization had hoped it might be completed last week, when Chinese Prime Minister Zhu Rongji visited Washington. But Clinton, who previously has pushed for free trade, declined to endorse a deal at the time, reflecting White House qualms about appearing too close to China. The latest controversy involving Beijing centers on allegations that China stole nuclear secrets from U.S. laboratories.

Even as White House wariness seemed to block a broad deal, some members of Congress have come forward to support one. Moreover, business leaders are stepping up their endorsement and showing their dismay at Clinton’s equivocating.

One government official--disputing new accounts that Clinton torpedoed a deal last week--maintained that the White House approach allowed the administration to “test-market the deal,” adding that “the reviews have been pretty positive, although the risk obviously is China back-pedaling.”

As prospects for the trade pact appeared to be sinking, about 100 business leaders scolded White House officials at a meeting Monday for failing to seal an accord.

“It was tense, I won’t deny that,” Myron Brilliant, an Asia official at the U.S. Chamber of Commerce, said of the session with Clinton economic aide Gene Sperling and U.S. Trade Representative Charlene Barshefsky.

Finally, Clinton on Tuesday phoned Zhu, who had left Washington for meetings in New York, in a bid to sustain Chinese enthusiasm for an accord. The two leaders subsequently issued a statement agreeing to “move intensively” to wrap up a deal.

The administration said it will dispatch Robert Cassidy, assistant trade representative for China, to meet with his Chinese counterpart in Beijing on April 22 to pursue an agreement.

The business community was “very, very encouraged by the president’s phone call to Zhu as a signal that we are in fact going to close” a deal, Brilliant said.

Chinese officials offered surprise concessions in a number of areas. On movies, for instance, they offered to increase the annual quota from 10 to 50. They also offered to allow foreign major ownership and operation of movie theaters.

China also said it would slash tariffs on grain imports and autos, lift limits on foreign companies selling insurance, and phase out geographical restrictions on where insurers may operate. Foreigners would be allowed to own up to 49% of a telecommunications firm; currently, such ownership is largely prohibited. Further, U.S. banks could establish branches throughout China, eliminating geographic restrictions now in place.

“I think with this deal the [political] support would be overwhelming,” said Nicholas R. Lardy, a prominent China specialist at the Brookings Institution, who is less skeptical about the likelihood of a deal after learning of China’s concessions.

“You could go item after item after item on that list--there were many things that surprised me greatly,” Lardy said.

In recent days, business interests ranging from meat exporters to the U.S. Chamber of Commerce have expressed support for the deal.

Congressional backers of a trade accord also have been vocal.

“I want to be absolutely clear on one very important point: It is in our national interest for China to become a fully participating member in the World Trade Organization,” Sen. William V. Roth Jr. (R-Del.), chairman of the Senate Finance Committee, said earlier this week. “In fact, until it is, the term ‘World Trade Organization’ is a misnomer.”

The Geneva-based WTO is the official referee of world trade, and China’s membership in that 132-member body would strengthen reform elements within China as well as tie its giant, emerging economy to a broad range of international rules.

Although many in Congress might support China’s membership, the issue of routine treatment for China sparks a vehement and unusually varied backlash. Organized labor, for example, views China as an unfair international competitor, exploiting its labor force and abusing the environment.

“There are a whole host of people who are upset for a good half-dozen reasons or more,” said Minority Whip David E. Bonior (D.-Mich.), who predicted that a U.S.-China trade pact would be a tough sell on Capitol Hill. “The human rights and labor pieces are the big points. The big question is whether they will keep their word. They’ve offered market access before and didn’t keep their word.”

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Times staff writer Janet Hook contributed to this report.