WASHINGTON-Just when it seemed the United States and China had patched up differences enough to renew talks on World Trade Organization membership and on a landmark wireless trade pact, the Clinton administration last week disclosed China may have sold medium-range missiles to Pakistan in possible violation of technology-transfer laws.
The revelation, coming after months of U.S. cajoling in the aftermath of NATO’s fatal bombing of the Chinese embassy in Yugoslavia, potentially complicates Chinese WTO membership negotiations and U.S.-Sino telecom trade overall.
The United States could impose trade sanctions against the Chinese firm involved in the incident. China downplayed the U.S. intelligence report, while tacitly cautioning the United States against pursuing the matter.
The Associated Press quoted Chinese Foreign Ministry spokesman Sun Yuxi as saying, “I think the relevant report is playing the same old tune, and it can only further undermine Chinese-U.S. bilateral relations, which already have been damaged.”
But it is precisely this type of flare-up that can rattle a relationship as fragile as that between the two nations.
For the wireless industry, which would benefit much from lucrative trade opportunities in a Chinese market of 1.2 billion people, it has been a frustrating roller-coaster ride for the past five months.
In April, Chinese Premier Zhu Rongji offered to significantly remove wireless telecom services barriers in hopes President Clinton would support Chinese WTO membership. But Clinton balked, sending Zhu home empty-handed and humiliated. That soured relations between the two countries. Then it got worse.
Allegations of U.S. satellite technology transfers to China and Chinese nuclear spying and the NATO bombing in May, which killed three Chinese journalists, sent U.S.-Sino relations into a tailspin.
During the recent Asia-Pacific trade summit in Aukland, New Zealand, President Clinton’s meeting with Chinese President Jiang Zemin effectively jump-started stalled U.S.-Sino trade talks.
Official bilateral trade negotiations were set to resume last Thursday.
In a briefing last week with New Zealand Prime Minister Jenny Shipley, Clinton struck a cautiously optimistic note.
“On the Chinese-WTO talks, we have re-engaged and each side will now do whatever it thinks is right,” said Clinton. “You know, I don’t totally control the timetable there, but I’m neither optimistic nor pessimistic about it. I am satisfied that we have re-engaged and we will do the best we can to just deal with this on the merits. We only had one or two issues before us when we couldn’t quite get there in Washington. I still think it would be a better thing for China and a better thing for the world if they were in the WTO, but that is, of course, ultimately a decision that they have to make, not me. But we’re talking, we’re working, and I feel good about it.”
Congress would weigh in on any Chinese WTO membership deal by voting on whether to make normal trade relation status with China permanent.
But getting Congress to approve China WTO membership will be no easy matter, given next fall’s elections. Far-left Democrats with labor sympathies and far-right Republican protectionists are reluctant to concede any trade benefits to China, which already enjoys a huge trade surplus with the United States.
