Permanent Trade Status for China Clears Congress

The Senate on Tuesday resoundingly approved legislation meant to expand trade between the United States and China, culminating a lengthy congressional debate with a major victory for U.S. business interests.

Passage of the landmark bill marks the most significant step in U.S. policy toward China since the two countries opened diplomatic relations in 1979.

The measure now heads to President Clinton, who strongly supports it. His signature will make it law--and cement his presidency’s free-trade legacy. In 1993, the first year of his first term, Clinton won congressional approval of the North American Free Trade Agreement that created a common market with Canada and Mexico.

The bill to permanently normalize trade relations with China passed the Senate, 83 to 15, with eight Republicans and seven Democrats opposing it. The House approved it in May in a more closely contested vote, 237 to 197.

The measure helps set the stage for China’s entry into the World Trade Organization, the Geneva-based group that polices global trade rules. The bill will grant China the open-door trade status that the United States extends to most other countries.

Business leaders hailed the policy shift as sending an important signal at a time when economic globalism and its effects have come under increased criticism from some quarters.

“This historic trade legislation clearly is a setback for the forces of protectionism and reestablishes important bipartisan support for global expansion” of trade, said Jerry Jasinowski, president of the National Assn. of Manufacturers.

But the bill’s foes accused lawmakers of knuckling under to pressure from big business while ignoring the potential negative consequences of expanded global trade on U.S. jobs and wages.

“Congress has sold out to corporate interests and betrayed the concerns of working Americans,” said Joan Claybrook, president of the consumer advocacy group Public Citizen.

Congress this year also approved a measure to increase trade with sub-Saharan Africa, Central America and the Caribbean Basin, and may move to ease a decades-old trade embargo against Communist-ruled Cuba. The Clinton administration, meanwhile, reached another trade pact with former adversary Vietnam.

But it remains uncertain whether the momentum from these efforts and the China bill will yield new trade initiatives when the new Congress and administration take office next year--such as granting the president broader authority to negotiate trade pacts.

Much depends on the November elections. Republican presidential nominee George W. Bush is seen as a more ardent advocate of free trade than Democratic nominee Al Gore. Although both endorsed the China trade bill, Gore has backed arguments that future trade accords should include greater protections for U.S. workers and stiffer environmental regulations.

In the congressional elections, a Democratic takeover of the House would almost assuredly install as speaker Rep. Richard A. Gephardt (D-Mo.), who opposed the China trade bill and generally sides with union concerns about such legislation.

Clinton, savoring one of his final legislative victories, said the China trade measure would help the United States exert more influence on the Asian giant. “The more China opens its markets to our products, the wider it opens its doors to economic freedom and the more fully it will liberate the potential of its people,” the president said.

But many remain deeply skeptical of claims that expanded trade relations will make Beijing’s communist regime a better world citizen.

Sen. Robert C. Byrd (D-W.Va.), an opponent of the bill, complained that even as Congress debated the trade bill this year China made threatening gestures toward the democratic regime of Taiwan and continued to repress religious leaders. He said China behaves “like the Bobby Knight of the international community”--a reference to the recently fired Indiana University basketball coach often derided as a bully.

‘We Hit a Home Run’

Sen. Max Baucus (D-Mont.), a leading proponent of the bill, conceded to reporters that China is “still a volatile country . . . struggling to find its future.”

But Baucus said Congress had done the right thing by opening the door for U.S. private enterprise to compete in a market of 1.2 billion people. “We stepped up to the plate, and we hit a home run,” he said.

The bill, in effect, scraps a year-to-year review of China’s trade status that has been in place for two decades. That review has given critics a forum to berate Beijing’s record on human rights and the proliferation of weapons. That, in turn, has strained U.S.-China relations.

Clinton introduced the legislation after his administration reached a deal with China last November to encourage foreign investment and lower trade barriers for an array of U.S. products, from telecommunications and financial services to agriculture and automobiles. The accord was meant to smooth China’s entry into the WTO.

The administration and Republican congressional leaders, in a rare display of bipartisanship, teamed to shepherd the bill through the treacherous politics of a closely divided House and a slow-to-act Senate.

The House vote last spring came amid a fierce lobbying duel between organized labor and big business. To help win passage, the administration pledged to launch the most intensive bilateral trade enforcement program ever. And centrists of both parties attached side agreements to the final legislation.

One such provision would establish a federal commission to monitor China’s record on human rights and labor standards. Another would create mechanisms to limit damage to U.S. domestic industries caused by sudden surges of Chinese imports. A third would reinforce the understanding that Taiwan too will soon enter the WTO.

In the Senate, where passage seemed assured from the start, union lobbyists were barely heard. But the Senate GOP leadership made clear it was in no hurry to act on a measure that split key Democratic constituencies.

The main question in the Senate was whether the bill would be amended, meaning it would return to the House for another, potentially trickier, preelection vote. Seventeen amendments, including one to crack down on Chinese-sponsored proliferation of weapons of mass destruction, were defeated or shelved over the last two weeks as the White House and business lobbyists waged a nuanced campaign of encouraging long debate but no amendments--a strategy meant to give opposing senators such as Byrd and Jesse Helms (R-N.C.) their due but steer the bill toward a favorable outcome.

“We were certainly mindful of the differences in Senate rules and procedures and wanted to make sure that no senator thought that the administration was taking passage in the Senate for granted,” said Steve Ricchetti, the White House deputy chief of staff and point man on the issue.

California’s two Democratic senators, Barbara Boxer and Dianne Feinstein, supported the bill in Tuesday’s vote.

Trade bill advocates acknowledge that U.S. industries have much work ahead of them to take advantage of the potential opportunities of Chinese markets.

Gov. Edward T. Schafer (R-N.D.)--who is leading a business delegation from his state to China this week that includes makers of beef jerky, pasta, popcorn and dried potato flakes--said trade will not mushroom overnight. “The Chinese like to build relationships first. I was there in April with [Agriculture Secretary] Dan Glickman. We heard often from them, ‘We will be friends first and trading partners next.’ ”

High-Tech Seen as Big Winner

Dave McCurdy, president of the Electronic Industries Alliance, predicted big benefits for high-tech and telecommunications firms, especially those accustomed to dealing with the Chinese. But he cautioned that, for U.S. firms not yet established in China, benefits will not come instantly. “It’s not going to be turned on like a light bulb,” McCurdy said.

Lon S. Hatamiya, secretary of California’s Trade and Commerce Agency, said the trade bill’s passage “will be a tremendous boon to California’s industrial base.”

He said that in anticipation of improved access to Chinese markets California opened a second trade office in the country earlier this year.

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Times staff writer Jonathan Peterson contributed to this story.