New Openness Could Flower in Deal's Wake

TIMES STAFF WRITER

In the fond hopes of its champions, the new U.S.-China trade accord will be far more profound than a rule book for commerce between two large nations.

Some observers argued Monday that China's formal entry into the world's economic club--for which the deal paves the way--could change its behavior in far-reaching ways, by giving rise to new internal pressures for democratic reforms and by binding Beijing more tightly to an international legal system that it has long disdained.

Clearly, the deal, which must still be approved by Congress, would reinforce the position of key Chinese political reformers, notably President Jiang Zemin and Premier Zhu Rongji.

But it also might strike a more subtle blow for change. The accord would legitimize foreign participation in China's fledgling Internet industry, for example, and it seems certain to increase the presence of foreign employers on Chinese soil. These developments would further open the traditionally closed Chinese system to Western cultural influences.

"I would rank this next to the diplomatic normalization breakthrough of 20 years ago," declared Minxin Pei, a scholar at the Carnegie Endowment for International Peace. "By signing the agreement, the U.S. signaled that the process of fully including China in the international community is now completed."

Many economists believe that economic freedom and political freedom tend to reinforce each other, that a rigidly autocratic China could not survive in the presence of increasingly open markets. Free markets bring with them freedom of movement and cultural influence--not to mention the prospect of a growing class of educated citizens in a more modern society.

China "will open its markets and, therefore, open its country even more to the outside world. . . ," Samuel R. "Sandy" Berger, President Clinton's national security advisor, told reporters traveling with Clinton in Turkey. "This reinforces the momentum toward internal reform that has been going on in China."

For now, however, the most optimistic visions remain reflections of faith rather than reality.

Nothing is certain with a regime that has repeatedly cracked down on dissidents and jealously guarded its independence. The ultimate outcome would depend on how rigorously Chinese officials enforced the trade agreement, which poses an ominous threat to entrenched bureaucracies and state-controlled industries.

While the deal would slash Chinese barriers to business and investment from abroad, it could also widen the already yawning U.S. trade deficit with China. U.S. negotiators agreed to phase out restrictions on Chinese textile and apparel imports early in the next century, raising the likelihood of an ensuing import wave.

U.S. exports to China could increase by $3 billion to $11 billion a year under the agreement, said Greg Mastel, a trade analyst at the New America Foundation think tank in Washington. But additional Chinese apparel sales in the United States could eclipse that number.

"What will it do to the trade deficit? It'll widen," Mastel said Monday.

Mastel and some others said that the initial details of the agreement sounded promising but that the gulf between what appears on paper and what actually happens in the Chinese marketplace could prove telling.

"There's going to be terrific resistance [within China]--passive resistance, overt resistance, sabotage, everything else," said James R. Lilley, U.S. ambassador to China during the Bush administration. "But we've got to push ahead.

"We've now got the framework in which we can slug it out. . . ," he continued, referring to the World Trade Organization's formal procedures for settling economic tiffs between trading partners. "I suppose it's a major move in the right direction."

Some experts believe that if the United States and China had failed to reach agreement, relations between the two countries would have soured further than they had already after the North Atlantic Treaty Organization's accidental bombing of the Chinese Embassy in Yugoslavia last spring.

House Rules Committee Chairman David Dreier (R-San Dimas), predicting congressional consent to Monday's deal, said the agreement "will provide improved regional stability and promote the kind of reforms and open society that the Chinese people seek."

Under the agreement, for example, China would allow American companies to invest in the Internet. Scholars say that could diversify the flow of information and foreign influence inside the country.

So could China's agreement that foreigners could own as much as 50% of its telecommunications firms, even if that provision falls short of the 51% majority foreign ownership sought by U.S. negotiators.

"Over the long term, China's membership in the WTO could increase pressure for greater openness, more press freedom, enhanced rights for workers and an independent judiciary," the New York-based Human Rights Watch said in a statement.

For all that, even some of the deal's greatest enthusiasts in the Clinton administration stopped short of overselling its noneconomic benefits. When a reporter shouted a question to Berger about whether the accord would have an impact on such delicate political concerns as arms control and relations with Taiwan, the national security advisor was quick to draw the line.

"No, this agreement is a trade agreement," Berger responded. "It does not deal with issues of arms control or issues of Taiwan."

Later, in a conference call with reporters, U.S. Trade Representative Charlene Barshefsky recalled that China's premier, behind the closed doors of the negotiating room, had cautioned that his country's emergence as a bona fide market economy is still more than a decade away, even with the major new reforms he has championed.

Zhu became "thoughtful, very thoughtful," Barshefsky recalled. "He said: 'We're not going to get to a market economy in five years. In 12 years, I think so."

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Times staff writers Edwin Chen and Jim Mann contributed to this report.

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