Big Business Comes to Aid of China
Over the last few weeks, the American business community has crossed a Rubicon in pursuit of its deepening relationship with the Chinese government.
For the first time, American corporations have waged an intensive Washington lobbying campaign in seeming support of China on an issue that has no direct connection to trade, investment or other economic matters in which the U.S. business community has an obvious interest. The effort has succeeded for now, but its troubling ramifications may haunt the business community in years to come.
The issue concerns Taiwan. This fall, the House of Representatives began moving toward passing a bill called the Taiwan Security Enhancement Act. The legislation would reaffirm and strengthen America’s support for the defense of Taiwan. It would require the U.S. government to establish direct, secure communication links with Taiwan’s armed forces, for use in an emergency, such as an attempted invasion by China.
The Clinton administration, arguing that the 1979 Taiwan Relations Act already gives Taiwan the protection it needs, opposes the bill as unnecessary. As The Times reported last summer, the administration already has quietly broadened the U.S. military relationship with Taiwan over the last three years, authorizing the Pentagon to conduct the kind of strategic dialogue with Taiwan’s armed forces that had not been permitted since the United States recognized the People’s Republic of China.
The administration’s arguments did not win over the House International Relations Committee, which voted, 32 to 6, on Oct. 26 to approve the Taiwan legislation and bring it to the House floor. China attacked the bill as an infringement on its sovereignty and claimed, with customary hyperbole, that passage of the legislation would represent a revival of the U.S. defense treaty with Taiwan that had existed before 1979.
Enter the U.S. business community.
In the past, American companies had paid obeisance to a general principle on questions of China policy: They became involved in issues immediately connected to their business with China, but they steered clear of other foreign policy questions, including Taiwan.
To be sure, in the mid-1990s, American business leaders often argued that the Chinese regime was not so repressive as critics charged. But such ventures into the political realm could be rationalized: After all, Congress and the Clinton administration had linked extension of China’s trade benefits to improvements in human rights, and so the business community was merely seeking to preserve commerce with China.
When both houses of Congress approved resolutions in 1995 calling on the Clinton administration to permit Taiwan President Lee Teng-hui to visit this country, corporate America didn’t get involved in the dispute.
This fall, Big Business abandoned its reticence. As the Taiwan bill was about to be called to the House floor, the business community weighed in heavily with the Republican leadership to oppose the bill. Business representatives urged that the bill should, at a minimum, be delayed until next year. And in the end, the House leaders decided to do just that.
Robert Kapp, president of the U.S.-China Business Council, explains that timing was one factor: The business community doesn’t want Congress to irritate China at a time when Washington and Beijing are trying to negotiate a deal that would bring China into the World Trade Organization.
More broadly, Kapp says, “The American business community understands that a stable, mutually respectful and continually communicative relationship between the United States and China is an essential prerequisite to the realization of American economic and commercial relations” with China. That is a remarkably expansive argument, one in which the U.S. business community seems to assume a broad responsibility for all aspects of U.S. ties with China’s Communist government.
There was considerable lobbying on the other side of the Taiwan legislation, too. The bill was pushed by the Washington firm of Cassidy & Associates, which, Justice Department files show, is now being paid $1.95 million a year by the Taiwan Research Institute, an organization with close ties to Lee and the ruling Nationalist Party.
The Cassidy firm was first retained in 1994 and helped persuade Congress to endorse Lee’s visit the next year. Its Taiwan contract will expire on June 30, 2000, and it seems fair to ask whether the lobbyists are now proving their worth to their clients by pressing for the new legislation. A Cassidy representative, Gerald Warburg, refused to discuss the issue.
But the lobbying against the Taiwan bill by the business community represents the larger change. What’s next? Will American business oppose specific arms sales to Taiwan? Will American CEOs defend China’s policies in Tibet or its crackdown on Falun Gong, all in the supposed interest of making sure that U.S. ties with China remain “stable?”
When American business lobbied Congress on China policy in the past, one could believe that corporate America was not doing China’s bidding, but rather was protecting its own interests. This distinction is not so clear any more.
Jim Mann’s column appears in this space every Wednesday.
