WASHINGTON-The telecommunications industry is preparing to mount a fierce lobbying campaign to support renewing most-favored-nation trade status for China.
The debate on China MFN, which has become a ritual this time every year, takes on added significance in light of allegations being probed by the Justice Department and Congress that China tried to influence U.S. elections and trade policy through massive campaign donations and by gaining access to classified government data.
The Telecommunications Industry Association, which represents top U.S. wireless telecom suppliers like Motorola Inc., Lucent Technologies Inc., Qualcomm Inc. and others, plans to flood Congress with letters and make courtesy calls on lawmakers to convince them to vote for China MFN renewal in coming weeks.
In last year’s letter to Capitol Hill, TIA and the Electronic Industries Association reported $1.7 billion in electronic product exports to China in 1995, a 33 percent jump compared with the previous year. The telecommunications sector accounted for $870 million, up 36 percent from 1994, according to TIA and EIA.
Motorola, and to a lesser extent Lucent, have made inroads into China in recent years.
Overall, the United States exported $57.8 billion in goods to China in 1995. But the United States imported far more from China than it exported and now has a huge multibillion dollar trade deficit with China. Indeed, the trade imbalance with China is the largest among all U.S. trading partners and, together with Japan, accounts for the lion’s share of the total U.S. trade deficit.
“U.S. companies cannot afford to cede this market to their overseas competitors,” TIA and EIA stated last June. A similar letter is being readied to be delivered to congressional members.
President Clinton, whose policy of constructive engagement with China has failed to gain improved human rights in that country, is nonetheless expected to ask Congress to renew China MFN trade by June 3.
Clinton adopted the policy, which seeks to de-link human rights from trade, after promising not to coddle Chinese leaders during his campaign against former President Bush in 1992. Bush supported engaging China rather than isolating the huge Asian nation, whose vast progress in marketplace modernization has not translated into democratic political reforms.
Congress has 30 days to debate and vote on China MFN. Last year, a move to revoke favorable trade treatment for China was defeated 286 to 141.
This year’s vote should be much closer.
Already, lawmakers have begun to position and re-position themselves. After hinting recently about limiting China MFN to a shorter duration-possibly three to six months-House Speaker Newt Gingrich (R-Ga.) abruptly shifted his stance to support unconditional renewal of most-favored-nation trade status for China.
Gingrich, following a visit to Asia, said Hong Kong officials informed him that uncertainty over MFN would be problematic and destabilizing when Hong Kong reverts to Chinese rule July 1. As a result, Gingrich says he now supports renewing MFN for China.
But Rep. Bill Paxon (R-N.Y.), GOP campaign committee chairman and arguably Gingrich’s most loyal lieutenant, said he will no longer support China MFN.
“After four years of a `constructive engagement’ policy, what do we have to show for it? A Chinese regime which thumbs its nose at the United States and places its heel on the neck of freedom,” Paxon said in a May 12 letter to Clinton.
Opponents of China MFN also believe that China should be denied membership in the World Trade Organization until it show progress on human rights and other fronts.
Last Tuesday, Sens. John Chafee (R-R.I.) and Max Baucus (D-Mont.) introduced legislation to make China MFN permanent.
“We need to look toward a day where this annual MFN roller coaster will be replaced by a stable, long-term economic foundation between these two superpowers,” said Baucus.
Paxon noted that in addition to failing to improve its human rights record, China continues to export nuclear material and missile technology to countries with terrorist ties, like Iran and Pakistan. He also raised questions about illegal foreign contributions linked to Beijing; whether China will rein in democratic freedoms when Beijing takes control of Hong Kong; and China’s provocative and harsh treatment of Taiwan and Tibet, respectively.
“Denial of MFN to China would be at best a blunt, imprecise instrument, but it would send a message to China that the United States believes in something more than the blind pursuit of trade,” Paxon said.
