China Trade as a California Issue

Next week’s vote in Congress to extend permanent trading privileges to China will be of particular significance to California, a state on the front lines of transpacific trade. The economic benefits to California of open trade with China can be counted in billions of dollars in exports and imports. There are many arguments against China trade, but most are disingenuous or unconvincing. California’s congressional delegation will be judged on whether it takes the interest of its constituents into consideration in the coming vote.

As a condition to China’s entry into the World Trade Organization, Washington and Beijing struck a far-reaching trade deal obligating China to open its markets and commit to economic reforms. To implement the deal under WTO rules, Congress must grant China a permanent normal trading relation status, or PNTR. A vote today in the House Ways and Means Committee will give an early reading on the final vote next week.

Few dispute the economic value of the agreement. For Southern California, it means immediate doubling of film exports to China and tougher protection for U.S. intellectual property, including movies, sound recordings and computer software. It means new markets for farmers and new clients for Los Angeles engineering and design firms. And it means new business for the ports of Los Angeles and Long Beach and for LAX. Shipments from and to China through those ports grew from $5.5 billion in 1990 to nearly $35 billion last year.

The opponents’ key argument is that China does not deserve the PNTR because it violates human rights. Yet Congress has extended trading privileges to China every year, despite the 1989 Tiananmen Square massacre. Congress has been tying the China trade issue to an annual review of human rights, a practice it can continue even if it grants the PNTR.

Spearheading the opposition is organized labor, which sees free trade with China--and every other country--as a threat to U.S. jobs. This argument is rooted in the unions’ protectionism, not in economic reality. The United States is the most prosperous country in the world precisely because it is so open. The vibrant economy has created far more jobs than have been lost to imports.

The argument that Americans shouldn’t trade with China because it poses a security risk in its neighborhood is also unconvincing. The United States can both trade with China and uphold security commitments to Pacific allies. Moreover, a prosperous China, one that is a member of the world trading community and bound by its rules, poses less of a risk than a backward one playing by its own rules.

It took courage for Rep. Xavier Becerra (D-Los Angeles) to resist threats from labor unions and decide to vote for the PNTR. He did it for the best of reasons: Granting the permanent status would benefit his constituents and engage rather than isolate China.