Every June, the president must request a special waiver of law to grant most favored nation (MFN) trade status to China.
There is considerable support in Congress for denying unconditional renewal of MFN for China because of China's violation of our trade agreements, China's proliferation of weapons of mass destruction, China's human rights abuses, and their threats to freedom in Taiwan, Hong Kong and Tibet.On all these fronts, the situation has deteriorated since President Clinton unlinked trade from human rights in 1994.
We can all agree that the U.S.-China relationship is an important one and that we can have a brilliant future with the people of China politically, economically, diplomatically and culturally. However, I also believe that in our international relationships, we must strive to make the world safer, people freer and trade fairer.
Some people argue that trade should not be linked to violations of human rights and proliferation. I disagree. However, even if we consider the U.S.-China relationship solely on economic grounds, China should not receive unconditional MFN for the following reasons:
- Most products made in America are not allowed into the Chinese market. The Chinese government only allows into China a limited list of U.S. products, primarily telecommunications, fertilizer, aerospace, some engineering, and grain, and bars market access for most other U.S. goods and services.
- While proponents of unconditional MFN emphasize the growth in U.S. exports to China, they ignore the unprecedented growth in China's exports to the United States. U.S. exports to China have tripled in the same time that Chinese exports to the United States have grown elevenfold. The U.S. trade deficit with China has increased from $10 million in 1985 to $35 billion in 1995. The United States is China's largest export market, with more than one-third of their exports coming to our country. Less than 2 percent of U.S. exports are allowed into China.
- The huge trade deficit, which is expected to exceed $41 billion in 1996, does not include money gained by China in the illegal smuggling of AK-47s and other weapons into the United States by the Chinese military. The trade deficit also does not include the economic loss from China's piracy of U.S. intellectual property, which cost the U.S. economy $2.4 billion in 1995 alone. The production of stolen intellectual property in China is primarily for export. China's annual domestic consumption capacity of CDs is only 7 million units, but its CD production capacity is 150 million units, which China illegally exports to the rest of the world.
China's piracy of our intellectual property robs American workers of jobs and undermines our global competitiveness. Economists and labor force specialists tell us that the future of our economy is our intellectual property.
- In addition to lack of market access and piracy of our intellectual property, the Chinese are demanding that American businesses transfer technology and production to China at an alarming rate. As a result, we are not exporting American products, but American jobs. For example, Boeing shut down a plant in Wichita, Kan., which produced the rear fuselage and tail sections for 737s. Those plane parts are now being produced by workers in Xian, China, who earn $50 a month.
The Chinese government will not walk away from the U.S. market access which they so desperately need. While the president has the power and the business community has the money, we in Congress have the floor and the debate will go forward.