The China Trade Vote: A Deal Even Trade Hawks Can Love
By Clyde Prestowitz
23 May 2000
The Wall Street Journal
(Copyright (c) 2000, Dow Jones & Company, Inc.)
Tomorrow, Congress will decide whether to grant Permanent Normal Trade
Relations (PNTR) to China in conjunction with China's bid to join the
World Trade Organization. As a former U.S. trade negotiator, I have
often been critical of U.S. trade deals that gave too much and got too
little. But in the case of China, careful review can lead to only one
conclusion: It is time for Congress to do the U.S. a favor by voting
To appreciate why, it is important to understand two things. First,
Congress won't be voting on China's accession to the WTO. That decision
is not for the U.S. to make. Entry is up to the WTO's member nations,
each of which has been conducting individual negotiations with China on
the terms of its membership. The U.S. concluded its deal with China
several months ago; China cleared its final hurdle last week when it
reached an accord with the European Union.
Second, Congress will not be deciding whether to grant normal trade
relations to China. The U.S. has been granting that status for nearly
20 years. The issue now is whether to make these trade relations
The vote is all the more important in light of China's imminent WTO
membership. WTO rules require members to extend normal trade relations
to each other permanently. Consequently, if the U.S. doesn't extend
PNTR it will be in violation of WTO rules; China, for its part, won't
be obligated to grant the U.S. the improved treatment it will be
extending to all other WTO members.
This is where Congress can do us a great favor. The rules governing
trade between China and the U.S. have been extremely unequal over the
past 20 years. Our yearly renewal of normal trade relations means China
has enjoyed the same low tariffs, minimal quotas and easy market access
that Britain, Japan, Germany and other major U.S. trading partners
enjoy. U.S. enterprises, in contrast, have suffered high tariffs,
heavy-handed regulation and extensive restrictions in China. In short,
the U.S. has been giving more than it has been getting, and Congress
has repeatedly blessed the arrangement.
Last fall, as part of its efforts to join the WTO, China agreed to new
trade rules with the U.S. Usually skeptical of such deals, I have
concluded that this is the best trade deal I have ever seen. The U.S.
would give up nothing. We would continue to treat China's trade the way
we always have -- no better, no worse. But the Chinese would grant
concession after concession -- reducing tariffs, removing onerous
regulations, opening distribution channels, and accepting binding
dispute-settlement procedures. We would be nuts not to take this deal,
particularly given that China will be granting these concessions to all
other members of the WTO upon its accession.
Opponents of PNTR argue that annual reviews of normal trade relations
are needed to pressure China on human rights, the environment and labor
conditions. This is a fallacious argument, for three reasons.
First, there is no evidence that the annual reviews have had any impact
on China's human rights, labor or environmental policies. Last year the
State Department reported a worsening of human-rights conditions in
China, even as we were reviewing trade relations. The Chinese make it a
point of honor not to be swayed by the annual reviews.
Second, the opponents blindly disregard the very rationale for granting
PNTR. By opening up trade with China, we can promote economic
development and interdependence that will undermine authoritarian
measures and lead to greater economic and political freedom. Such a
process can only work over time, which negates the argument for annual
threats to suspend trade relations.
Finally, China has become so important to the performance of the U.S.
economy that everyone (especially the Chinese) knows it is unlikely we
will actually suspend trade relations. This has made the whole exercise
a charade. Worse, it has rendered U.S. companies vulnerable to reverse
leverage. The Chinese use the annual reviews to pressure U.S. companies
for extra technology transfers and other concessions, on the grounds
that supplies from the U.S. may be interrupted by dint of congressional
Beyond all this, there is a final, most important reason to grant China
PNTR. For 30 years the U.S. has worked to bring China more fully into
the community of nations, and to promote both economic development and
a more liberal society. The policy has been working. Anyone who saw
China in the early 1980s and compares it with today must be amazed.
Bicycles and drab Mao suits have morphed into traffic jams and bright
fashions; the freedom and the range of individual choices available to
the average person has expanded exponentially. After years of
estrangement, China is asking to join the international community. To
turn it down at the very moment it is moving in the direction we have
desired would be a tragic and historic mistake.
It is true that China is far from the democratic society we would like
to see. Those who voice concern over the lack of human rights in China
are justified in doing so. But we shouldn't treat China differently
than we have other countries in similar circumstances. Over the past 50
years, both Korea and Taiwan were governed by authoritarian regimes
that received U.S. support despite their disregard for human rights and
democracy. Kim Dae Jung, the current president of Korea, was tortured
by one such regime. U.S. policy was to engage in behind-the-scenes
promotion of liberalization through economic development, education of
students in the U.S., and fuller membership in multinational
Today, Korea and Taiwan not only have vibrant economies, but vibrant
democratic governments. It can work in China, too, if Congress just
seizes this opportunity.
Mr. Prestowitz, a trade negotiator during the Reagan administration, is
president of the Economic Strategy Institute, a Washington-based think