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ADMINISTRATION LOBBIES CONGRESS FOR CHINA MFN TRADE STATUS

WASHINGTON-The Clinton administration aggressively lobbied Congress last week for most-favored-nation trading status with wireless export-rich China, with officials warning that doing otherwise could destabilize the communist Asian giant and hurt Hong Kong as well.

A vote is scheduled in the next two weeks. The outcome could determine whether China will entertain greater wireless exports into its huge, virtually untapped $50 billion telecom market.

Motorola Inc. and Lucent Technologies Inc. already have made inroads into China. America invested $12 billion in China last year, contributing to the unprecedented $40 billion U.S. trade deficit with China.

The Telecommunications Industry Association, the top U.S. lobbying group of telecom manufacturers, vigorously endorses renewal of China MFN trade status. Another priority market for TIA, India, is undergoing reform that could open that populous nation to U.S. wireless exports.

But just as it appeared the White House had shifted the momentum in favor of China MFN trade, Secretary of State Madeleine Albright told Senate lawmakers the United States is investigating whether supercomputers sold to China are being used for nuclear weapons testing.

The U.S. restricts the export of high technology to non-allies, but relaxed the policy in 1995.

Opponents of China MFN-religious groups, organized labor and lawmakers across the political spectrum-say the administration’s policy of constructive engagement has failed and that the United States will lose all its leverage with China on human rights, nuclear weapon nonproliferation, Hong Kong and Taiwan.

Clinton himself has acknowledged as much, but said in letters last week to House Speak Newt Gingrich (R-Ga.) and House Minority Leader Dick Gephardt (D-Mo.) that revoking normalized trade with China would be detrimental to both countries as well as to Hong Kong. Hong Kong reverts from British to Chinese rule on July 1.

“Further change in China is necessary and inevitable but will not come overnight,” said Clinton.

The White House said Hong Kong would take a hit of $30 billion in lost trade and face the elimination of 85,000 jobs if the United States turns its back on China.

As such, Albright, testifying before the Senate Finance Committee, said the benefits of engaging China outweigh the risks in the long term. All but a handful of countries enjoy MFN trade status with the United States today.

“Severing normal trade relations is such an extreme step that it would … propel us downhill toward hostility and confrontation,” said Albright. “This would severely damage America’s strategic interests.”

Complicating matters is the mounting ill will in the GOP-led Congress over China’s allege role in the Clinton soft-money campaign fund-raising scandal. The FBI and Congress are investigating claims that China tried to influence American elections and U.S. trade policy through huge donations to the Democratic National Committee.

Meanwhile, Defense Secretary William Cohen told an Asian-American group that refusal to renew China MFN trade status would undercut U.S. foreign policy in Asia and hurt global diplomacy in the process.

The debate over China MFN also has served as a platform for the expected 2000 Democratic presidential contest between Gephardt and Vice President Gore.

Associated Press dispatches were integrated into this report.

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