Normalizing Trade Is Win-Win Scenario
Later this month, Congress will consider legislation to grant China permanent normal trading relations status based on an agreement negotiated last November. China now has normal trade relations subject to annual review.
In the bilateral agreement, China made significant concessions across virtually every economic sector and committed to decrease tariffs:
* On U.S. agriculture products such as citrus, wheat, corn and rice, from 31% to 14% by January 2004.
* On industrial products ranging from furniture to medical equipment to elevators, from 24.6% to 9.4% by 2005.
* On autos from an average of 80% to 100% down to an average of 25% by 2006.
China also will participate in the Information Technology Agreement and eliminate tariffs on computers, semiconductors and related products by 2005; open its telecommunications sectors, including Internet services; and expand investment and other activities for financial services firms.
Additionally, China will open up distribution services, such as repair and maintenance, warehousing, trucking and air couriers. The agreement preserves safeguards against dumping and other unfair trade practices. No matter how you look at it, this benefits the United States.
Unfortunately, many people have confused this month’s vote with a vote to approve China’s joining the World Trade Organization. But China is likely to join the WTO within the next year or so--with Taiwan following--regardless of its trading status with the United States. WTO membership will be decided by the WTO’s working group and a two-thirds vote of the WTO membership as a whole.
Under WTO rules, only the countries that have nondiscriminatory trade practices--permanent normal trading relations status--are entitled to receive the benefits of WTO agreements. If Congress does not grant China this status, our country would be effectively shut out of China’s vast markets, while Britain, Japan, France and all the other WTO member nations would be allowed to trade with few barriers.
For California, America’s No. 1 exporting state, this is especially important. More than one-quarter of California’s trillion-dollar economy depends on international trade and investment, and for two decades California-China trade relations have grown dramatically. California exports to China topped $6 billion in 1998, generating more than 100,000 California jobs.
Those who argue against granting permanent normal trading status to China generally say that other issues--such as China’s record on compliance with past trade agreements or human rights--should be the criteria Congress uses. But isolating the Chinese from the main global trading body of nations also isolates them from the rules and regulations of that body. The WTO provides tools to bring a recalcitrant nation into compliance. For example, there are provisions that allow a country to block imports of goods made with prison labor, maintain its own export control policies, use its own trade laws or withdraw all benefits including normal trading status when involved in a national security emergency. And, frankly, in the eight years that I have been witnessing and participating in these annual debates, I have not seen a single instance in which the debates have resulted in improving human rights. The real catalyst for change in China will not come from reprisal or isolation from the West but rather from open interaction and involvement.
As I read history, political pluralism, respect for human rights, labor rights and environmental improvements follow a country’s interactions with others and achieving a level of economic development and well-being. This has been the case elsewhere in the region, including Taiwan.
In an effort to address some of the concerns on these issues, Rep. Sander Levin (D-Mich.) and Rep. Doug Bereuter (R-Neb.) have suggested legislation that would include a commission made up of executive and legislative branch officials who would review China’s conduct on labor and human rights; enhance measures to monitor China’s compliance with trade pacts; and clarify laws designed to head off import surges. I believe this approach can and should proceed along a parallel track with the resolution on permanent trade relations.
Giving China permanent normal trading status and drawing the Chinese into the international trading community helps sow the seeds of positive change.
