[Senate Hearing 106-744]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 106-744

 
                     GIVING PERMANENT NORMAL TRADE
                  RELATIONS STATUS TO COMMUNIST CHINA:
                   NATIONAL SECURITY AND DIPLOMATIC,
                    HUMAN RIGHTS, LABOR, TRADE, AND
                         ECONOMIC IMPLICATIONS


=======================================================================



                                HEARINGS


                               BEFORE THE


                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE


                       ONE HUNDRED SIXTH CONGRESS


                             SECOND SESSION


                               __________

                          JULY 18 AND 19, 2000

                               __________



       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate


                    U.S. GOVERNMENT PRINTING OFFICE
67-840 CC                 WASHINGTON : 2001



                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                  (ii)

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

                             July 18, 2000

Abrams, Elliott, President, Ethics and Public Policy Center......     5
Bosco, Joseph, Professional Lecturer, Asian Studies Program, 
  Georgetown University School of Foreign Service; and Senior 
  Fellow and Independent Research Scholar, the Atlantic Council 
  for the United States..........................................     7
Gill, Dr. Bates, Senior Fellow in Foreign Policy Studies; and 
  Director, Northeast Asian Studies, Brookings Institution.......     9
    Prepared statement...........................................    12



                             July 19, 2000

Bauer, Gary, President, American Values..........................    34
    Prepared statement...........................................    36
Becker, George F., International President, United Steelworkers 
  of America.....................................................    41
    Prepared statement...........................................    43
Qing, Dai, Chinese Dissident, Beijing, People's Republic of China    46
    Prepared statement...........................................    48

                                 (iii)

  


                     GIVING PERMANENT NORMAL TRADE



                  RELATIONS STATUS TO COMMUNIST CHINA:



                         NATIONAL SECURITY AND



                        DIPLOMATIC IMPLICATIONS

                              ----------                              


                         Tuesday, July 18, 2000

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 2:47 p.m., in 
Room SD-419, Dirksen Senate Office Building, the Hon. Jesse 
Helms, chairman of the committee, presiding.
    Present: Senators Helms, Grams, Chafee, Biden and Feingold
    The Chairman.  The meeting will come to order.
    Those who are familiar with the lights on the clock or 
understand why there has been nobody here for awhile, we just 
had an important vote doing final passage in the Senate.
    Senator Biden will be here in just ten seconds. And the 
other members of the Committee will be here quickly as well.
    This is the first of two consecutive days of hearings by 
the Foreign Relations Committee, and we will address proposed 
legislation to bestow permanent normal trade relations, as they 
describe it, upon Communist China.
    This afternoon's hearing will be based on a discussion of 
the foreign policy and the national security implications of 
China PNTR. Tomorrow, we will examine the human rights, labor, 
trade and economic implications.
    And we have excellent panels, this one in particular. And 
we welcome you, gentlemen. And I have a few observations to 
offer in my opening remarks. And I hope Senator Biden will, as 
well.
    The national security implications of giving permanent 
normal trade relations to China, whatever that turns out to be, 
directs us forthwith to the nub of the matter.
    As members of the United States Senate, we have no higher 
responsibility than the protection of the security interests of 
America, and we will be remiss if we stand idly by as this 
legislation is enacted amidst a dream of increased imports and 
exports.
    Now, whether a permanent normal trade relations with 
Communist China will lead to a boom in exports for America is 
an open question. I happen to believe it will not.
    But what we are obliged to consider is whether granting 
permanent normal trade relations to China will or will not 
serve the national interests of the United States and the 
American people. There is convincing evidence, I think, that it 
will not.
    Will PNTR lead to a moderation of China's dangerous 
proliferation of weapons to its fellow criminal regimes around 
the world? According to the intelligence community, despite 
years of normal trade relations with China, Beijing's 
proliferation of these weapons continues unbridled.
    Will PNTR induce China to back off from its increasingly 
belligerent threats toward Taiwan? Will China pull back its 
missiles aimed at Taiwan's throat? Despite years of normal 
trade with China, Beijing's belligerence toward Taiwan has 
grown worse and worse.
    Will permanent normal trade relations cause China to work 
with its neighbors toward a constructive solution to the 
Spratley Islands problem, rather than continue its current 
policy of unilateral land grabs? Again, despite years of normal 
trade with China, Beijing's behavior in this area has not 
improved one iota.
    Now, ladies and gentlemen, these are questions that matter. 
And given that China's behavior on all of these fronts has 
worsened over the past 20 years of normal trade relations, are 
not the answers to these questions a cacophony of, ``No. No. 
No. No''?
    It seems to me to be regrettable that many in this town 
have deluded themselves into believing that a trade deal with 
China will somehow transform that Communist dictatorship into a 
normal government that behaves itself.
    But most disturbing are those who want to prevent Congress 
from even addressing these national security questions during 
the PNTR debate for fear that it might complicate what amounts 
to a single-minded dollar-driven crusade to make certain that 
this trade deal is approved by the United States Senate. And I 
am--for one, I am going to do my best to keep that from 
happening.
    These questions will be addressed before the Senate casts 
its final votes on whether or not to continue to grant 
Communist China's dictators permanent normal trade relations.
    So first I turn to my distinguished colleague, Senator 
Biden.
    Senator Biden.  Thank you, Mr. Chairman.
    Today's hearing on the national security implications of 
granting China PNTR is incredibly worthwhile, and I hope that 
the Majority leader will eventually permit the Senate to debate 
the granting of China PNTR. We ought to schedule that debate 
before the session ends in August.
    But in the meantime, while we all wait on the Majority 
leader, I applaud the Chairman for going ahead with today's 
hearing and another one that is scheduled for tomorrow.
    I, for one, am quite ready to adjoin this issue. And I am 
frustrated that we are not doing that on the floor of the 
Senate.
    Looked at one way, granting permanent normal trade 
relations to China has little to do with our national security. 
PNTR for China does not lift any sanctions on China. It does 
not increase their access to controlled U.S. technology. It 
does not increase their access to our markets. And that is 
because the U.S. already grants China normal trade status on an 
annual basis. And we have done that every year since 1979.
    Granting permanent normal trade relations to China is all 
about opening their markets to U.S. goods and investment from 
my perspective. And trade concessions are all one-way in this 
deal.
    They drop tariffs. They drop non-market barriers. They 
agree to increased protection of our intellectual property 
laws, which they are not doing now.
    We agree only to forego an annual vote on China's trade 
status. An annual threat to deny China normal trade relations 
has never offered us an effective leverage to encourage greater 
Chinese compliance with international norms in the areas of 
human rights, international security, and trade.
    And I might add, we can pass this tomorrow. I came here the 
exact same year the Chairman came. We came together. And the 
interesting fact is when we want to end trade relations with a 
country, we have no problem doing that, by a vote in the United 
States Congress, the United States Senate.
    This is not like making a fundamental shift in our policy 
toward--like the Supreme Court, putting five new people on the 
Supreme Court. It has changed. We can't go back and say, 
``Whoa, whoa. Wait. We don't like the way''--the Chairman might 
say, ``Yes. They're too liberal. We want to change our mind'' 
or I might say, ``They are too conservative.''
    This, you can change literally overnight if you want to do 
it.
    But we talk about normal permanent relations as if it means 
something--permanent means something. All it means is unless we 
vote otherwise, they maintain the status, as opposed to having 
to do it every year.
    The annual vote was a trigger we never pulled. It was a gun 
loaded with blanks. And it had no silver bullets in it either.
    So on balance, the nuts and bolts of getting China in the 
World Trade Organization and opening their markets would appear 
to have little to do with our national security.
    But looked at in another way, granting permanent normal 
trade relations has everything to do with national security, in 
my view. And why is that?
    First, granting China permanent normal trade status would 
put our relationship on a more firm foundation and begin to 
build trust, and determine whether or not international norms 
are prepared to be kept by the Chinese and determine whether or 
not they are ready to move into a family of nations and 
understand there are certain basic, basic elements that one has 
to sign onto in order to be in the game.
    China attaches great significance to getting permanent 
normal trade relations and membership in the World Trade 
Organization. They want to be a member of the club.
    Our support for their membership demonstrates that we do 
not intend to keep them weak or to blackball them or to keep 
them out. It says, ``You are in, but you've got to keep the 
standards. You have got to keep the standards,'' that they are 
not keeping now in many cases.
    Denying China permanent normal trade status, however, could 
have the opposite effect. It will convince China's leaders that 
we want to keep them weak and backward; and that we hope to 
contain them through our economic coercion.
    Second, getting China into the World Trade Organization, a 
rules-based organization, will subject China to multilateral 
pressures on trade and, over time, enhance their respect for 
the rule of law, or they will not be in.
    Change will come slowly. China will always be governed by 
its self interest, as all countries are; and as long as this 
geritocracy dictatorship that exists in China today is in 
place, fundamental change is not likely to take place.
    But one thing does move on--time. I say to the panelists, I 
ran for the United States Senate when I was 28 years of age. I 
got elected when I was 29. I wasn't legally, constitutionally, 
eligible to take office.
    I could not do what southern and border states used to do, 
and that is have the reigning Senator step down for me to be 
sworn in ahead of others, so we would have seniority, because I 
did not turn 30 until three weeks later. And I had to be 30 to 
be sworn in.
    And I said during that--at the end of that campaign, Mr. 
Chairman, they listed all the promises those who won election, 
who won that year for any office, had made. And there was one 
sentence in the promise I made. ``I promise I will get older.'' 
That is the only one.
    Well, I want to tell you the only thing I know for certain 
is that geritocracy cannot last much longer. The actuarial 
tables are not working their way.
    And so, getting China in the World Trade Organization, a 
rules-based organization, is going to subject them to multi-
national pressures on trade; and over the time, they will 
either become a member of the group of nations that are 
considered to have a basic system in place, or they will not.
    China will come slowly. And China will always be governed, 
as I said, by self interest. But we want China to recognize the 
ways in which it benefits by coming in contact with those 
international norms.
    Over time, it seems to me, that is the best way to get 
China to clean up its act.
    The third point I will make is a reason why this relates to 
our national security. Granting China permanent normal trade 
status will help promote stability across the Taiwan Straits, 
in my view.
    The Chairman and I are good friends, and we truly are. We 
have--we look at the same glass, and we are seeing it--I will 
not suggest who looks at it full or empty, but we are seeing 
the same glass. There is no argument, that it is three-quarters 
full or one-quarter empty. And that is the difference in our 
perspective.
    I happen to think that the effect on Taiwan will be 
positive, not negative. That is because China's entry into the 
World Trade Organization will facilitate Taiwan's entry into 
the WTO. And this will encourage investment and trade, reducing 
the likelihood that either side will act in ways which would 
endanger peace and security.
    And as the old saying goes, it will diminish the likelihood 
of the Chinese, mainland China, deciding to kill the goose that 
lays the golden egg. They have had two golden eggs. They have 
got one now, and there is only one left.
    It will also provide a venue for Chinese and Taiwanese 
officials to meet and resolve economic differences through 
peaceful negotiations, setting a good precedent for solving 
tougher political issues. That is why Taiwan's president, along 
with all our Asian allies, supports China's entry into WTO.
    So, Mr. Chairman, I look forward to hearing our 
distinguished witnesses, and I hope they will focus their 
remarks on granting or withholding permanent normal trade 
relations as it will affect our national security.
    I, obviously, am interested in anything else they have to 
say, as well. But we all know that we have a serious issue with 
China in the areas of nonproliferation, human rights and trade.
    It seems to me that is not the question. The question is 
whether denying permanent trade relations, thereby denying the 
United States the commercial benefits to China's accession to 
the World Trade Organization will enhance or decrease our 
national security.
    I am of the view, at least going into this hearing, that it 
will enhance it, not diminish it. And I thank the Chairman for 
his time. I took a little longer than I usually do. But it is 
important issue for both our perspectives.
    The Chairman.  Well, Joe and I kept his promise together. 
Did we not?
    Senator Biden.  Yes, we did.
    The Chairman.  That one promise. We could not help 
ourselves. [Laughter.]
    The Chairman.  This afternoon, we welcome first a long-time 
friend. And we worked together many times on many issues, the 
Honorable Elliott Abrams, president of the Ethics and Public 
Policy Center.
    And we are also joined by Joseph Bosco, an adjunct 
professor at Georgetown University, and senior fellow at the 
Atlantic Council; and Dr. Bates Gill, director of Northeast 
Asian Studies at the Brookings Institution.
    We welcome all three of you gentlemen and appreciate your 
patience. This hearing was first scheduled this morning, but 
the people decided differently about where the committees could 
meet.
    Anyway, Elliott, we will be glad to hear from you first.

   STATEMENT OF ELLIOTT ABRAMS, PRESIDENT, ETHICS AND PUBLIC 
                         POLICY CENTER

    Mr. Abrams.  Mr. Chairman, thank you very much for inviting 
me here today.
    I want to make one argument to the Committee today, and it 
is this: That the national security threat posed by China and 
the human rights situation in China are two sides of the same 
coin.
    As President Reagan reminded the students at Moscow State 
University in his famous speech there in 1988, ``People do not 
make wars. Governments do.''
    Our concern in China is not with the people or with the 
nation. It is with the regime. And until that regime changes, 
the threat posed by China will not change fundamentally.
    Now, this is a pretty simple point, but I think we often do 
ignore it. We sometimes call forgetting about human rights a 
kind of realism. We view a concern with human rights as a 
luxury sometimes that we can least afford when facing a 
powerful dictatorship. But that is just the occasion when human 
rights most deserves our attention.
    Donald Kagan of Yale University in his book, On the Origins 
of War and the Preservation of Peace, explained why.

          In states where there is direct or representative 
        democracy, it is not possible to exclude issues of 
        morality from consideration, for that is how the 
        ordinary citizen thinks about affairs, both foreign and 
        domestic, and the politicians cannot afford to ignore 
        their feelings.

    Democracy is itself a kind of safeguard against aggression. 
And conversely, the dictatorial regime is always illegitimate, 
and any system that has no peaceful means to legitimize its 
leaders is inherently unstable. Those leaders will always be 
tempted to use foreign adventures as a means of boosting 
nationalism and their own popularity.
    I was Assistant Secretary of State for Human Rights under 
President Reagan; and in his speech to the General Assembly in 
1986 at the U.N., he said:

          Respect for human rights is not social work. It is 
        not merely an act of compassion. It is the first 
        obligation of government and the source of its 
        legitimacy. It is also the foundation stone in any 
        structure of world peace. All through history, it has 
        been the dictatorships and the tyrannies that have 
        surrendered first to the cult of militarism and the 
        pursuit of war. Countries based on the consent of the 
        governed, countries that recognize the unalienable 
        rights of the individual do not make war on each other.

    Now, that last claim about democracies and war has been 
subjected to analysis by political scientists, and no doubt 
they have been able to find some partial exceptions. But the 
insight, I think, stands; and it is really centuries old. There 
is a powerful link between a country's internal arrangements 
and its external affairs. And we ignore that link at our peril.
    China is not an exception to that rule. The regime in 
Beijing is today ideologically bankrupt. I doubt that there are 
ten convinced Communists remaining in the ranks of the Chinese 
Communist Party. The regime tries to legitimize its power 
through economic progress; progress, which in turn further 
undercuts its own ideological legitimacy, and tries to 
legitimize its power through an assertive foreign policy as the 
Soviet Union did. It tries by demonstrating its might and its 
growing power on the world scene, both to stoke nationalistic 
feelings at home and to deter any potential domestic 
opposition. Shows of force, massive increases in spending on 
military power, threats against Taiwan are examples, intended 
for a domestic, I think, as much as a foreign audience. A 
democratic government in Beijing, trying to win the next 
elections, would be forced to show the people that it will not 
undertake risky foreign adventures and will not waste money on 
excessive military spending. The present regime, reeling from 
its own sense of illegitimacy, instead uses military matters to 
shore up its hold on power. Threats against Taiwan are the 
foreign side of the crackdown on Falun Gong, two sides of the 
same coin again. Force as a substitute for consent, legitimacy, 
respect for human rights.
    I therefore hope that the Committee will keep human rights 
very much in mind when thinking about the security challenge 
posed by China. There is a strong link between that regime's 
domestic and its foreign policies. Trade deals that enhance the 
regime's power without furthering the cause of human rights 
increase the danger to us. Political reform in China ultimately 
lessens the danger to us. Our security problem arises from the 
fact that political reform is likely to be a slow and lengthy 
process, so that in the short run the regime gets richer and 
more powerful and may divert those resources toward its 
military.
    Put another way, if more trade leads to economic change and 
wealth, and undercuts the legitimacy of the regime while 
increasing the resources available to it, is it not logical to 
think they will use those resources in a desperate effort to 
stay in power?
    As the gap grows between China's freer and freer economy 
and its Communist political arrangements, the possibility of a 
real confrontation grows with it. And that is why I believe we 
must, as a national security matter, promote political reform 
and respect for human rights in China just as strongly as, and 
at the same time as, we promote trade and economic reform.
    As President Reagan put it, this is not social work. It is 
a critical national security issue.
    I thank you again, Mr. Chairman, for the honor of appearing 
here today.
    The Chairman.  Thank you, and well said.
    Mr. Bosco.

STATEMENT OF JOSEPH BOSCO, PROFESSIONAL LECTURER, ASIAN STUDIES 
 PROGRAM, GEORGETOWN UNIVERSITY SCHOOL OF FOREIGN SERVICE; AND 
 SENIOR FELLOW AND INDEPENDENT RESEARCH SCHOLAR, THE ATLANTIC 
                 COUNCIL FOR THE UNITED STATES

    Mr. Bosco.  Mr. Chairman and members of the Committee, I 
appreciate the opportunity to appear before you today.
    A few weeks ago, Georgetown University's Asian Studies 
Program--
    The Chairman.  Mr. Bosco, if you would, pull your mike a 
little closer.
    Mr. Bosco.  Yes.
    The Chairman.  Thank you, sir.
    Mr. Bosco.  A few weeks ago, Georgetown University's Asian 
Studies Program commemorated the 50th anniversary of the 
outbreak of the Korean War, the forgotten war.
    The most important of the many painful lessons of that 
conflict was the need to convey clearly to potential 
adversaries America's commitment to our own security interests 
and those of our friends and allies.
    Historians blame Secretary of State Acheson's speech in 
January 1950 for triggering the war, because he did not include 
South Korea within the West's security perimeter. That was seen 
as a green light for North Korea to invade the South with 
impunity and carry on its ``One Korea'' reunification policy.
    Acheson argued in his memoir that he had not explicitly 
said that we would not defend South Korea or Taiwan and that he 
had invoked the United Nations Charter as their protection 
against outside aggression. That was the term he used, 
``outside aggression.'' We might retroactively describe that 
policy as one of ``strategic ambiguity.''
    But the principle of international law he declared for 
Korea and Taiwan was and is important. Military attack by one 
established self-governing part of a divided nation against the 
other self-governing part constitutes ``outside aggression.'' 
And that is precisely how the United Nations judged North 
Korea's invasion of the South, and Communist China's 
participation in the war.
    For too long, that critical lesson of the Korean War has 
been forgotten or ignored. The international community has been 
silent as Beijing proclaims its presumed right to incorporate 
Taiwan by force, which it repeated again during Secretary 
Cohen's visit a few days ago.
    When North Korea crossed the 38th Parallel, it transgressed 
what was intended as an interim line on a map drawn only five 
years earlier, and yet the world rightly condemned it as a 
violation of South Korea's sovereignty.
    How much more serious would be a Chinese attack across the 
Taiwan Strait, 100 miles of open seas between Taiwan and the 
Mainland, a vital international waterway, after a half-century 
of separate governmental coexistence?
    In 1995 and 1996, we saw a small hint of the international 
repercussions if China were to reignite the civil war that 
ended 51 years ago. When Beijing launched its missiles, they 
closed not only Taiwan's ports, but the entire Taiwan Strait, 
as international flights and ocean shipping were halted or 
diverted, trade was disrupted, and insurance rates and other 
costs soared.
    That was a clear violation of the United Nations Law of the 
Sea Convention, which prohibits non-peaceful uses of 
international straits, as well as of the U.N. Charter, which 
outlaws both the use and the threat of force.
    What, then, of current American policy on Taiwan? China 
wants to bring Taiwan under its control by force, if necessary. 
But it does not want war with the United States.
    In December 1995, Chinese officials directly asked their 
American counterparts how Washington would react if China 
attacked Taiwan. Instead of a clear and direct deterrent 
response that would have put the matter to rest, the answer 
they got from the world's only superpower was, ``We don't know, 
and you don't know. It would depend on the circumstances.''
    So naturally Beijing keeps probing to find the right 
circumstances that will free it to attack Taiwan. Its list of 
pretexts for a military action continues to grow, including not 
only Taiwan's declaring its independence, but also simply 
taking too long to accept Beijing's rule under its ``one China 
principle.''
    Washington should give Beijing the same bottom line message 
North Korea has today. Force is not just frowned upon. It is 
unacceptable. That, after all, was the original basis for 
switching recognition from the Republic of China to the 
People's Republic of China, and for admitting the P.R.C. to the 
United Nations as a peace-loving state.
    What does all this have to do with PNTR? The key words are 
``permanent'' and ``normal.'' The prospect of normal trade 
relations defers rash action by Beijing, and that leverage will 
obviously be lost when the bill becomes law unless appropriate 
conditions are attached in some form or another.
    As for the normality of our relations with China, the 
prospect of war over Taiwan and China's proliferation of 
nuclear and missile technology to Pakistan, North Korea, Iran, 
Libya and other rogue states speaks for itself.
    In its military doctrine and strategic planning, China 
considers America its primary potential enemy. On the very day 
Secretary Cohen arrived in Beijing, the headline in China's 
official press read, ``U.S. Threat to World Peace.''
    The Secretary, himself, noted a pattern of confrontational 
Chinese rhetoric and warned of a danger of serious 
miscalculation.
    Clearly, Chinese and American perceptions of international 
reality diverge dramatically, despite 20 years of engagement. 
Is it realistic then to expect normal trade relations with a 
country with which we have such abnormal security relations?
    Whatever the fate of PNTR, the United States needs to avoid 
another war by miscalculation. Only strategic clarity will 
ensure peace and--regional peace and stability.
    The House vote demonstrated that for this administration 
and for this Congress trade trumps human rights. The question 
the Senate will decide, given China's reckless proliferation, 
its aggression toward Taiwan and its threats to the United 
States, is whether trade also trumps America's national 
security.
    Thank you, Mr. Chairman.
    The Chairman.  Thank you very much.
    Dr. Gill, we welcome you.

 STATEMENT OF DR. BATES GILL, SENIOR FELLOW IN FOREIGN POLICY 
   STUDIES; AND DIRECTOR, NORTHEAST ASIAN STUDIES, BROOKINGS 
                          INSTITUTION

    Dr. Gill.  Thank you very much, Mr. Chairman and members of 
the Committee, for allowing me this opportunity to present 
these remarks to you on our future security relationship with 
China.
    I want to focus most of my remarks on questions of 
nonproliferation and arms control. My remarks will consist of 
three parts.
    Let me begin by considering where I think our relationship 
is going with China. I am very pleased that we have this chance 
to critically review this question because, from my view, we 
have devoted too few resources in the past to understanding the 
many challenges and opportunities which China places before us. 
And I do not think this can continue.
    We are at the threshold of a very new and fundamentally 
different relationship with China, especially with regard to 
our security relations. These will be more complex and 
difficult in many ways than ever before, presenting both new 
challenges, but also, I believe, new opportunities to us, to 
shape external and internal policies.
    Assuming the PNTR status and World Trade Organization 
membership will occur for Beijing, China will be more compelled 
than ever before to accept global norms. China will have an 
increasing stake in the status quo, which supports the stable 
flow of goods and services, and will likely be less inclined to 
disrupt the regional and international environment.
    But at the same time, I think these developments also mean 
that China is likely to become more technologically and 
economically capable. And it will be better equipped than in 
the past to pursue its own national security agenda.
    Secondly, as a result of opening to the outside world, on 
the one hand, there will be a growing cadre of better educated, 
Westernized and pragmatic leadership elites in China. This is 
going to lead to a more pluralistic society. It is going to 
lead to more cooperative foreign policies, and it will further 
enfeeble one-party rule in China.
    But we must be clear, Mr. Chairman, that future generations 
of Chinese leaders will also be more confident, and they will 
seek to translate China's power into the realization of its 
national interests.
    Thirdly, let me talk about arms control. I think we are at 
the end of a remarkable decade, Mr. Chairman.
    China has moved from an outside opponent of arms control 
and nonproliferation to becoming a member of all major 
multilateral arms control and nonproliferation treaties. The 
United States and China have reached a number of important 
bilateral agreements, which overall have curtailed Chinese 
proliferation activities.
    And China has taken upon itself unilateral, unprecedented 
steps to put in place a steadily growing logistical and policy 
infrastructure to better implement its policies. But, again, we 
know that difficult issues lie ahead.
    China's nuclear force is undergoing in an important 
modernization program, which is going to present us with an 
entirely new strategic situation in ten to fifteen years. For 
the first time, I would argue, we are going to face a China 
that has a truly credible nuclear deterrent.
    On our bilateral nonproliferation agenda, I think we are 
down to the hard cases right now, Mr. Chairman. China will only 
with great reluctance fully close its sensitive military-
technical relationship with Pakistan, which is a quasi-ally for 
Beijing. As Doug Paul has written, Pakistan is ``China's 
Israel,'' with all the pluses and minuses that that entails.
    China will increasingly link its arms control and 
nonproliferation cooperation to things it finds strategically 
important such as Pakistan, such as our arms sales to Taiwan 
and, increasingly, our decisions to move forward with the 
national missile defense.
    Now, given this more complex environment, what tools do you 
think we should employ then to deal with this problem? I would 
like to look at what has succeeded in the past and see how it 
can be applied in the future.
    Successful U.S. policies to moderate Chinese activities of 
security concern, and particularly with regard to 
proliferation, have largely resulted from the combination of 
four principal factors. Now, it is difficult to make these all 
work in concert, but the more we can, the better.
    First, increasing China's integration into the 
international community, especially with regard to 
participation in multilateral internationally-agreed-upon arms 
control and nonproliferation commitments.
    The steady opening of China to the outside world over the 
past 25 years has had an undeniably positive effect on 
moderating China's approach to its foreign policy generally and 
to its proliferation and arms control policies in particular. 
Has it come as far as I would like to see? Of course, not. But 
I think the trend is absolutely clear to anyone who takes a 
good look at it.
    As I said, further integration of China as a stakeholder in 
the international order, through granting PNTR and bringing it 
into the WTO, will undoubtedly have positive results for U.S. 
interests.
    Secondly, we should assure that we have multilateral 
support, especially among our friends and allies, as we attempt 
to curb Chinese activities of concern. Such an approach is far 
more likely to result in success than unilateral actions, which 
will end up isolating the United States rather than isolating 
China.
    As Mr. Biden pointed out, China's leadership covets 
international legitimacy. If we work hard with our allies to 
assure our China policy is backed by allies and other 
international friends, I think we can multiply our effect in 
Beijing.
    Thirdly, we need to consider the extension of appropriate, 
tangible bilateral incentives to China in return for moderating 
its activities of security-related concern.
    We are the most important bilateral relationship China has. 
Everything that they want--socioeconomic modernization, 
international legitimacy, growing Great Power status, and 
national reunification--cannot possibly be realized in the face 
of a hostile relationship with the United States. We should try 
to take advantage of this need for China to have a good 
relationship with us at every turn.
    And finally, Mr. Chairman, the fourth important factor is 
exercising a credible, well-crafted, bipartisan sanctions 
policy. I believe that under certain conditions, our sanctions 
policy can work in moderating and reversing Chinese 
proliferation activities.
    But first and foremost the sanctions must be credible. 
Chinese decision makers have to believe that we will actually 
implement them.
    When the sanctions under consideration are too sweeping or 
create divisiveness in Congress or have the potential to 
significantly damage other U.S. interests, such as business or 
trade concerns or alliance relationships, China knows that 
these threats are not credible. The annual threat to withdraw 
most favored nation status is a perfect example of this.
    On the other hand, sanctions imposed on China in 1991 and 
1993 for its missile sales and the threat of sanctions in 1996 
for its ring magnet sales to Pakistan were effective in getting 
China to accept a number of bilateral and multilateral 
commitments. That is because these sanctions or the threat of 
them enjoyed broad support at both ends of Pennsylvania Avenue.
    I also believe that sanctions should not be mandatory. This 
does not assuage certain domestic concerns about sweeping 
burdens on American businesses, and it also might undermine 
prospects for other promising channels to shape Chinese 
security policies.
    I think the case of Senator Brownback's amendment last year 
to suspend certain sanctions against India and Pakistan in 
order to avoid mandatory sanctions inconsistent with U.S. 
interests is instructive.
    Let me turn to the future, in conclusion, Mr. Chairman. How 
do we translate these factors for success into a more effective 
security policy and legislation toward China?
    First of all, I think we have to expect that our security 
relationship with China will enter a more complex and difficult 
period. But nevertheless, a continuing approach of engagement, 
including PNTR status for China, leavened with a far greater 
degree of pragmatism and a more well-informed sense of what can 
and cannot be achieved with China, still holds out the best 
prospects.
    These are difficult choices, maybe not the ideal choices. 
But of the ones we have, this still holds out the best 
prospects for shaping favorable decisions and directions in 
Chinese domestic, foreign and security policies.
    Secondly, Mr. Chairman, I believe our policies need to cope 
with these more complex challenges by increasing our 
intelligence, research and analysis resources to better assess 
and monitor China's proliferation activity.
    It makes no sense to allocate a comparatively small amount 
of resources to understanding China, considering the enormous 
challenges and opportunities it presents to us.
    Lastly, Mr. Chairman, let me turn to what I have termed the 
hard cases of Chinese proliferation concern. I think we need to 
do more to assure that the four key factors noted above are 
working in concert.
    Looking specifically at sanctions legislation, it is 
probably unwise to craft mandatory sanctions; and sanctions 
should avoid as much as possible undermining the other three 
important factors I have noted for success: drawing China in, 
support from friends and allies, and appropriate incentives.
    I would like to close with a few words, Mr. Chairman, on an 
issue of immediate concern to this Committee. And that has to 
do with China's proliferation activity with Pakistan.
    I believe the President should exercise his discretion to 
impose sanctions if the allegations recently reported in the 
New York Times are indeed accurate.
    To avoid such sanctions, China should be fully forthcoming 
in investigating the allegations we have made, and should take 
public steps to put in place a regulatory and export control 
framework related to missile technologies, which they have not 
done yet, and fully clarify the extent of its missile-related 
nonproliferation commitments.
    I also think that we should avoid expending any further 
political capital with China to have it join the Missile 
Technology Control Regime at this time.
    Thank you very much, Mr. Chairman.
    The Chairman.  Thank you, sir, very much.
    [The prepared statement of Dr. Gill follows:]

                  Prepared Statement of Dr. Bates Gill

                            I. INTRODUCTION
    Allow me to begin by thanking you. Mr. Chairman, and the members of 
this distinguished Committee, for the opportunity to speak on the 
critical question of our future security relationship with China.
    In the context of the forthcoming Senate vote on permanent normal 
trade relations (PNTR) status for China, I have been asked to provide 
my assessment of our security relationship with that country. As an 
analyst for more than 15 years of U.S.-China security relations, 
especially with regard to questions of nonproliferation and arms 
control, I will focus my remarks mostly in this specific area of 
concern.
    My formal remarks consist of three parts. First, I will discuss the 
future evolution of our security relations with China, arguing that we 
have entered a fundamentally more complex era of both opportunities and 
challenges. Second, I will consider what general U.S. policies toward 
Beijing have proven successful in the past, and how they might be 
modified, strengthened and refined for our future security-related 
dealings with China. Third, I will propose several policy 
recommendations for our future security relationship with China.

  II. FUTURE U.S.-CHINA RELATIONS: COMPLEX PROBLEMS CALL FOR COMPLEX 
                                 TOOLS
    Mr. Chairman and members of the Committee, we should welcome this 
chance to critically review our security relationship with China. To 
start with a very practical concern, our country has devoted too few 
resources toward understanding and appropriately responding to the many 
challenges and opportunities which China places before us. 
Unfortunately, in the absence of more reasoned and informed debate, 
China policy is too quickly politicized, resulting in either breezy 
optimism on the one hand, or over-the-top alarmism on the other. 
Neither serves U.S. national security interests.
    This cannot continue if we are to uphold U.S. national interests 
while maintaining a generally stable relationship with China. We are at 
the threshold of a fundamentally different era with China where our 
future security relationship will be far more complex and potentially 
difficult than ever before, presenting at once both new challenges but 
also unprecedented opportunities to shape China's internal and external 
policies in ways favorable to U.S. interests.
    This point can be quickly illustrated through a few powerful 
examples. Assuming that PNTR status will be approved, and that China 
will enter the World Trade Organization (WTO) in the near future, China 
will be compelled more than ever to open its doors to the outside 
world, and with it the flow of global norms, best practices, corporate 
governance and accountability, rules-based behavior, regulatory 
frameworks, and enforceable requirements to live up to international 
standards. China will have a growing stake in the status quo which 
supports the free and stable flow of goods and services, disinclined to 
disrupt the regional and international environment from which it 
benefits considerably. However, these developments also mean that China 
is likely to become more technologically sophisticated and more capable 
economically, meaning it is better equipped than in the past to pursue 
its own national security agenda. Alternatively, we should not dismiss 
another--though in my view, less likely--scenario: a China that 
mismanages the transition to greater openness and becomes less stable 
internally would also pose a more complex security problem for the 
United States.
    Moving on to consider socio-political developments in China, we 
should expect that as a result of its opening to the outside world, 
there will be a growing cadre of better educated, more Westernized, 
less polemical, non-ideological, and pragmatic elites coming to the 
fore in China. We should welcome this development, especially as it may 
lead to a more pluralistic society, pragmatic, cooperative foreign 
policies, and further enfeeble one-party rule in China. But future 
generations of Chinese leadership will be increasingly confident, 
seeking to translate China's growing power into realization of Chinese 
national interests which may run contrary to ours. This is likely to be 
true whether we are talking about a ``democratic'' China or otherwise, 
as the foreign policies of other Great Power democracies such as 
Russia, India, or even France often illustrate.
    In the area of arms control and nonproliferation, over the past 
decade China went from an outside opponent of arms control and 
nonproliferation, to becoming a member of all major international arms 
control and nonproliferation treaties. At the bilateral level, the 
United States and China have reached important agreements which overall 
have significantly curtailed Chinese proliferation activities. Also, 
China has taken a number of unprecedented unilateral actions, putting 
in place a nascent, but steadily growing logistical and policy 
infrastructure on arms control and export controls in order to better 
implement and monitor its commitments.
    On the other hand, there will be still some very difficult 
discussions ahead. Generally speaking, China has made the ``easy 
choices,'' choosing to go along with arms control and nonproliferation 
commitments which were either low-cost, for which the incentives were 
worth the concession, or which they deemed to be clearly in their 
national interests. In the future, tougher questions of Chinese 
national interests will likely limit further cooperation. For example, 
having sensed its strategic vulnerability, especially with regard to 
its current ICBM force, China's ongoing nuclear weapons modernization 
will proceed over the next 10 to 15 years to present us with a far more 
qualitatively and quantitatively capable Chinese force. China will 
deploy an all-mobile, solid-fuel missile force, build a larger number 
of strategic missiles, possibly with multiple warheads. China will also 
likely continue to stonewall progress in Geneva, insisting that the 
Conference on Disarmament take up discussions to ban outer space 
weapons (code for constraining our national missile defense plans).
    On our bilateral nonproliferation agenda, we are also entering a 
new era. While the past 10 to 15 has seen encouraging progress, we are 
now down to the ``hard cases.'' These will be more difficult to resolve 
for several reasons. First, rather than being simple questions of 
undesirable transfers which China could halt at relatively low cost, 
Beijing will link future cases more than ever to their larger national 
security concerns. China will only with great reluctance fully close 
its sensitive military-technical relationship with Pakistan--a quasi-
ally for Beijing--owing to China's strategic concerns with India. In 
addition, China will more openly link its arms control and 
nonproliferation cooperation to U.S. arms sales to Taiwan, a matter of 
enormous strategic interest to China. It is also clear that China will 
link its arms control and nonproliferation policies to our national 
missile defense decisions.
    In addition, the nature of Chinese proliferation activity is 
changing from the transfer of complete platforms and systems--such as 
missiles--to the transfer of technologies, subsystems, technical 
assistance, and production support--all far more difficult to monitor 
and verify.
    In sum, Mr. Chairman, we will enter a fundamentally different era 
requiring greater resources, deft diplomacy, and seriousness of purpose 
to achieve our national security interests while maintaining a stable 
relationship with China. It will be a period characterized by 
complexity and contradiction. Under these conditions, simplistic, 
black-and-white understandings of U.S.-China relations--whether seeing 
China as a ``strategic partner'' or a ``peer competitor''--may be 
politically elegant, but are strategically foolhardy. At best, such 
naivete holds out the false hope for easy answers when there are none. 
At worst, such simplistic nescience leads us down potentially dangerous 
paths for U.S. interests. In this new environment, we need to expand 
and refine our policy options, not boil them down to pat answers. A 
more diverse, flexible and sharpened set of tools is needed.
   iii. u.s. security policy toward china: what works, what does not
    Given these uncertainties, challenges and opportunities, what tools 
should we employ to handle a far more complex security relationship 
with China, and seek to stabilize, moderate and even reverse Chinese 
activities of concern? To start, we should consider what has worked, 
and what has not.
    Simplistic, single-factor analysis on this question gets us 
nowhere. Successful U.S. policies to moderate Chinese activities of 
security concern, and in particular proliferation, have resulted from a 
combination of four principal factors. It is well-nigh impossible to 
orchestrate all four to act in perfect unison. But the more these 
factors can work in concert, the better the results. These factors are:
First: Increasing Chinese integration in the international community 
        overall, including specific participation in multilateral, 
        internationally-agreed-upon arms control and nonproliferation 
        commitments.
    This general point seems obvious, but it is too often lost 
nevertheless. The steady opening of China to the outside world over the 
past 25 years has had an undeniably positive effect on moderating 
China's formerly contrarian and provocative approach to its foreign 
policy generally, and to its proliferation and arms control policies in 
particular. Has this process come as far as I would like to see? No. 
But the trend is absolutely clear to anyone who takes a good look.
    Further opening of China and its continued integration as a 
stakeholder in the international order--such as through PNTR and WTO 
membership--will undoubtedly have positive results for U.S. interests. 
That does not mean we will not have difficulties with China. We 
certainly will. But specific policies to moderate Chinese security-
related actions will be far more successful when embedded in an overall 
approach which draws China in rather than shuts China out. This is the 
number one weapon we have to moderate Chinese security policy, and we 
should exploit it at every turn.
Second: Assuring we have multilateral support, especially among our 
        friends and allies, to curb Chinese activities of concern.
    Such as an approach will have a far greater impact than unilateral 
actions on our part which may end up isolating us, rather than 
isolating China. China's leadership covets international legitimacy, 
and probably recognizes they have little to offer in the international 
marketplace of ideas, except to convey an image of good international 
citizenship. By doing the hard work to assure we have support in our 
China policy from our friends, allies, and other international actors, 
we not only multiply our effect on image-conscious leaders in Beijing, 
but can avoid taking actions which damage relations with our most 
important international supporters.
Third: Extending appropriate, tangible bilateral incentives to China in 
        return for moderating its activities of security-related 
        concern.
    The United States remains by far the most important bilateral 
relationship China has. China's principal national security goals--
socio-economic modernization, international legitimacy, growing Great 
Power status, and national reunification--cannot be fully realized in 
the face of an unstable or hostile relationship with the United States. 
Indeed, either in order to avoid a significant downturn in U.S.-China 
relations, or with the prospects of improved relations in mind--such as 
through successful summits--China has taken a number of steps to 
improve its proliferation record: establishing a national export 
control system for nuclear- and chemical-related exports; cutting off 
cruise missile transfers and new nuclear cooperation with Iran; joining 
the Zangger Committee; agreeing to adhere to the original guidelines of 
the Missile Technology Control Regime; cutting off its ballistic 
missile sales to Syria. We should take greater advantage of China's 
desire to have a stable relationship with the United States by making 
very clear that the relationship will suffer should China take certain 
actions, and by holding out the real possibility of stability and 
mutual benefit when Chinese security-related policies do not challenge 
fundamental U.S. interests.
Fourth: Exercising a credible, well-crafted, and bipartisan sanctions 
        policy.
    Under certain conditions, U.S. sanction policies have worked in 
moderating or reversing Chinese proliferation activities. First and 
foremost, the sanctions must be credible. Chinese decision makers must 
believe that we will actually implement them. When the sanctions under 
consideration are too sweeping, create divisiveness in Congress, or 
have the potential to significantly damage U.S. interests (such as 
business and trade concerns or alliance relationships), China will not 
find the threat of sanctions credible. For example, the annual threat 
to withdraw most-favored nation status from China was rarely taken 
seriously in Beijing. On the other hand, sanctions imposed on China in 
1991 and 1993 for its missile sales, and the threat of sanctions in 
1996 related to Chinese ring magnet transfers to Pakistan, were 
effective in moderating Chinese activities (adhering to MTCR, joining 
the Zangger Committee, establishing a regulatory framework to monitor 
nuclear-related exports) because the sanctions enjoyed broad support at 
both ends of Pennsylvania Avenue.
    Furthermore, the record indicates that for sanctions to work, they 
should be well-crafted: based on solid evidence, targeted as much as 
possible against the offending entities, and not on mandatory hair-
triggers. Not only does this assuage some U.S. domestic concerns by 
eschewing sweeping burdens on American business and trade interests, 
but sends the right message to China to express well-founded American 
concerns, while not undermining prospects for other promising channels 
to shape Chinese security policies. The case of Senator Brownback's 
amendment last year to suspend certain sanctions against India and 
Pakistan--and avoid mandatory sanctions inconsistent with U.S. 
interests--is instructive here.
    At the end of the day, realism, prudence, and Constitutional sense 
tell us that sanctions imposed against another state, and particularly 
a state with the geopolitical importance of China, should ultimately be 
political decisions reached under the authority of the President to 
conduct foreign affairs.
    Realistically speaking, it is nearly impossible to orchestrate all 
of these factors flawlessly at once, but the more it can be done, the 
better. It is equally true that policies and legislation which weaken 
any off these factors--by running contrary to multilateral agreements, 
unduly threatening the interests of allies and friends, offering few or 
no incentives, and wielding improbable, divisive, and inflexibly 
punitive sanctions--will dramatically diminish the possibilities of 
Chinese compliance. Moreover, because we are now down to some of the 
``hard cases'' with China, it becomes all the more important that we 
work to coordinate, harmonize, and sharpen these four critical factors 
in order to achieve maximum effect.

               IV. FUTURE SECURITY POLICIES TOWARD CHINA
    How to translate these factors for success into effective security 
policy and legislation vis-a-vis China? I will briefly outline a few 
thoughts which address some immediate concerns.
    Limited engagement: Overall, Mr. Chairman, we should expect our 
security-related relationship with China to enter a more complex and 
difficult period. Nevertheless, a continuing engagement approach, 
leavened with greater pragmatism, a humble understanding of the 
complexities involved, and a well-informed sense of what can and cannot 
be achieved with China still holds out the best prospects for shaping 
favorable directions in Chinese domestic, foreign, and security 
policies. We have significant capacities to foster positive change in 
China, and we should continue to do so through the engagement approach, 
such as approving PNTR. On the other hand, we should not oversell the 
prospects for change, and we need to be more cognizant of problems 
which lie ahead. Working closely with friends and allies, we can elicit 
the best results from opportunities in China, while realistically 
hedging against potential problems.
    Increased intelligence and analytical resources: New and complex 
challenges and opportunities demand greater resources devoted to 
intelligence and analysis on China. For example, the more complex 
nature of Chinese arms control and nonproliferation policies--more 
closely linked to Chinese national security concerns. and involving 
more in the way of ``software,'' rather than hardware transfers--
constrains our ability to understand and respond effectively to these 
``hard cases.'' As such, our intelligence, research and analysis 
resources should be considerably increased to better assess and monitor 
China's proliferation activity, as well as Chinese security-related 
decisions, commitments, and actions more generally. It is difficult for 
me to understand why we continue to allocate a comparatively small 
amount of resources toward understanding China, considering the 
enormously important challenges and opportunities that country poses 
before us.
    China's strategic modernization and U.S. missile defense: In coming 
years, we face an unprecedented strategic situation with China: a far 
more capable nuclear weapons power with a more credible, increasingly 
ready, and highly survivable strategic deterrent. As we move forward 
with our National Missile Defense (NMD) plans, we need to more fully 
integrate this new reality into our thinking. The current debate on 
these questions--either a form of NMD or stable relations with China--
strikes me as wrongheaded. Rather, our aim should be to achieve both.
    Responding to Chinese proliferation: Looking at the current ``hard 
cases'' of Chinese proliferation concern, we need to do more to assure 
that the four key factors noted above are working in concert. Looking 
at specifically at sanctions legislation, it is unwise to craft 
mandatory sanctions, and any sanctions should avoid as much as possible 
undermining the other three important factors for success: drawing 
China in, support from friends and allies, and incentives.
    As an alternative, I would suggest the establishment of a 
commission to annually review China's proliferation record--perhaps 
akin to the commission Senator Byrd has suggested recently--which would 
assess progress in China's proliferation record and make 
recommendations to the President. The report would provide greater 
detail and analysis than currently available in either the CIA's semi-
annual publication on proliferation or the State Department's annual 
report on arms control and nonproliferation compliance. The system 
could be structured such that the President would need to respond to 
the recommendations, either by seeking to put them in place, or 
explaining in detail his or her policy choices contrary to the 
recommendations of the commission.
    Because of its immediate interest to the Committee, I will close 
with a few words on China's proliferation activity with Pakistan. The 
President has at his disposal a range of sanctions options, and he 
should exercise his discretion to impose them in one form or another if 
the allegations recently reported in the New York Times are accurate. 
To avoid such sanctions, China should take public steps to put in place 
a regulatory and export control framework related to missile 
technologies, and fully clarify the extent of its missile-related 
nonproliferation commitments. We should not expend further political 
capital with China to have it join the Missile Technology Control 
Regime at this time.
    Thank you very much Mr. Chairman and members of the Committee.

    The Chairman.  Now, we go to questions. And, Joe, I decided 
today, maybe five or six minutes the first round, that we 
should try that.
    I have a bunch of questions I want to ask. Now, Elliott, 
you were Assistant Secretary of State for Latin America in an 
era in which the region moved from being largely undemocratic 
to mostly Democratic, in part because of your good efforts.
    Now, am I right to conclude that relying only on trade, 
free trade absent U.S. diplomatic pressure, would not have 
worked in frustrating or facilitating, or one or the other, 
democratic transitions in these countries? Yes or no?
    Mr. Abrams.  Well, I think you are right, Mr. Chairman. We 
did not have free trade as something to hold out in some of 
those cases.
    The Chairman.  Right.
    Mr. Abrams.  We were just using pressure for human rights 
improvements, and it worked. Trade was not the magic key in 
those cases.
    The Chairman.  Then why is China different today than from 
those cases then?
    Mr. Abrams.  Well, I think the trade does have the effect 
of pushing an economic opening along--I think we saw that in or 
we have seen it in a lot of countries--but not if it is taken 
alone.
    And I would say in that sense that China is not different. 
That is, if it looks to the Chinese government or to the 
Chinese people that we are only interested in trade, then it is 
not going to facilitate an opening to human rights except over, 
you know, a--maybe over a 50-year period.
    That is why I think there needs to be some conditioning of 
the grant of PNTR or at least simultaneous demand for human 
rights improvements, or the message--the message can actually 
be a negative one.
    The message that can get through to the government is, ``We 
are going to go ahead with the trade. We only care about the 
trade. We do not care about the human rights.'' And then we are 
going to get human rights setbacks that make the situation more 
dangerous.
    The Chairman.  So you have made exactly the point that I 
was leading up to.
    I wonder how many people over in the House who voted so 
readily for this thing have ever talked or heard from Harry 
Woo, who has described some of the awful situations going on in 
that country. And it is not by the people. It's by the 
government.
    Anyway, China's transition from a Communist dictatorship to 
Democracy--and I cannot imagine that that is going to happen--
will no doubt be beneficial to the security of the Asia Pacific 
region and indeed the United States.
    Now, which is more important to that security--and I ask 
this question seriously--PNTR or standing up for Taiwan as a 
model? And that is what Taiwan is, a model for how a Chinese-
governed society can move from one-party dictatorship to a 
Democracy. Which is the one?
    Mr. Abrams.  Given those two choices, I have no trouble 
saying standing up for Taiwan. If the Congress does not approve 
PNTR, there will still be trade with China. There may even be a 
substantial increase over the years in trade with China. China 
will join the WTO. It would not be that huge an event as a 
change in the status of Taiwan.
    If the United States were to abandon Taiwan, if that model 
of a democratic Chinese republic were to be destroyed, I think 
it would be a far, far graver setback to the hope for political 
change on the mainland.
    The Chairman.  And I would want to factor in Tibet in this 
whole equation, too.
    I want to ask both of you gentlemen to address that 
question. Mr. Bosco.
    Mr. Bosco.  Yes, Mr. Chairman. I certainly would agree with 
the statements that have been made by Mr. Abrams that Taiwan is 
clearly a model for a Chinese civilization to have evolved 
through a democratic system successfully and peacefully. And 
one would hope that China would some day follow that model.
    Dr. Gill.  Your first question, Mr. Chairman, is a very 
interesting one to pose. But we have an entirely different 
historical relationship in this hemisphere with our neighbors 
in South America and, of course, their own historical 
background being largely of European descent, has already 
introduced into the region a more fertile bed, I would say, in 
which democracy could grow through other things besides trade.
    It is a tougher nut to crack with China. I do not think we 
have the same sort of relationships, nor does it have the same 
historical underpinnings for that to succeed.
    Given those conditions, I think, in many ways we are more 
limited. We cannot apply the same types of policies to try to 
shape the building of democracy in China. But I think that 
trade is an excellent tool.
    I know you asked the second question as an either/or one. 
But I know that you are aware, of course, that when it comes to 
having to forge policy, our goals should be both.
    Our goals should be to have those tools available to us to 
bring change to China, the best ones we have--and I think PNTR 
is among them--and make sure that we continue to defend and, I 
would say, promote Taiwan as a model, just as you suggest. Our 
goals should be both, sir.
    The Chairman.  Mr. Abrams, if I could go back to you for 
just a moment: Can I assume then that it is your view that this 
is not the time to give PNTR to China?
    Mr. Abrams.  I serve as Chairman of the U.S. Commission on 
International Religious Freedom. The Commission actually voted 
unanimously on this, so although it is mixed by party and 
religion, we voted nine to zero to suggest to Congress that 
before PNTR be granted, a series of human rights measures be 
voted by Congress so that we avoid what we would view as a 
danger, that a terribly wrong message would be sent to or 
received by, not just the regime, but by the people of China, 
that we are uninterested in religious freedom in China.
    Because if we did that, I think you can see real setbacks 
in human rights there. So our view would be that those human 
rights steps have to be taken in advance or simultaneously; and 
that PNTR, the Commission voted, should not be voted absent 
those human rights measures.
    The Chairman.  I agree.
    Senator Biden.
    Senator Biden.  Thank you, Mr. Chairman.
    In my limited experience in the Senate, I have observed 
that almost all complicated questions we have to address--and 
this is complicated because if you think of the basic premise, 
we all agree on, is, one, there is going to be trade with 
China. There should be trade with China.
    Two, we should do something about the human rights, to the 
extent we can effect it. We should deal with proliferation to 
the extent we can effect it.
    And, three, we should be making it clear that we mean what 
we say about Taiwan. I mean, everybody for or against permanent 
trade relations with China agrees on those three things.
    And so, usually, what happens is legitimately we look at 
what the perception will be of our actions. The former 
Secretary makes the point that it is reasonable to conclude 
that if we grant it permanent trade relations, that those 
seeking religious freedom in China would say, ``Look, they have 
given up on us. They obviously are condoning this 
administration,'' and it would be very depressing.
    I am sure there is some truth to that. Conversely, the 
point is made by Mr. Gill if we, in fact, deny it, the 
perception in China will be we are trying to encircle them. We 
are trying to isolate them. So perceptions matter; I 
acknowledge that.
    But it seems to me that--and I am going to ask you all to 
comment on this when I finish. It seems to me that as one who, 
along with the Chairman, had attempted in the past to deny Most 
Favored Nation status, the yearly review of China, that it has 
become a hollow exercise, that the perception that we give when 
we say it is a yearly undertaking, knowing that we constantly 
grant it, it makes it a hollow reed.
    It communicates that we really do not mean what we are 
about. We are really not concerned about their violation of 
human rights. We are really not concerned about their 
proliferation, because we never use the weapon, the blunt 
instrument that is available to us.
    And, so, I have come to the view that the yearly review, in 
fact, creates the wrong impression. With it there, and not 
employing it, the implication I would say is reasonable for 
people to draw in China, including the leadership, ``Do not 
worry about the United States. We can do what we want.''
    So I have backed off that. And I have come to the view that 
permanent trade relations solves the one perceptual problem 
about isolation, and does not prevent us from doing what we 
need to do anyway.
    My criticism of the administration is for not imposing 
sanctions as they exist now, now. We have laws on the books--we 
do not need the Thompson Amendment. We have on the books enough 
rationale to impose sanction-specific, company-specific 
sanctions on China for their recent activities with Pakistan. I 
think we should do that.
    That does not go to changing legislation. That goes to the 
will of the administration, the balance they make.
    The third point that I would make is that I do believe--and 
this is a place again where the Chairman and I disagree in 
degree. I do believe becoming a member of an international 
organization that has basic rules of the road and behavior 
moderates and/or ameliorates the conduct of the country 
joining, or else they do not join--I mean, they join, and they 
essentially are expelled or become persona non grata. So, I do 
think being a part of WTO has an impact upon--may have an 
impact upon--Chinese behavior in the next two decades.
    Having said all that, Mr. Gill, the thing that concerns me 
the most is China and national missile defense.
    In your testimony, you say that the current debate pitting 
national missile defense against stable relations with China is 
wrong-headed, and you say your aim would be to try to do both. 
How do you? Elaborate on that for me. How do you do both of 
those things?
    Dr. Gill.  I think it would take several steps. One would 
be diplomatically oriented; and that would try to bring a 
greater degree of strategic reassurance to China through a 
continued dialogue.
    The way things are going right now with China on this 
question is quite poor. I do not think this administration has 
much credibility at the moment in China, not only because it is 
toward the end of its term; but also because many in China 
recognize that this President is unable to deliver certain 
promises, especially with regard to China.
    So it is quite possible that a new administration that can 
build up a more credible and strategically reassuring 
relationship with China might be more successful in this aim. 
But that is the diplomatic front, and it is very difficult to 
quantify.
    But more important, in terms of numbers, an effort to have 
both a stable relationship with China and have a national 
missile defense would likely mean that we would have to have a 
relatively limited system in place. Perhaps we could even 
consider what some have described as a boost phase intercept 
program, which would not pose the immediate threat, which China 
now sees in the C1 and C3 approaches that the President is 
considering.
    But at some point, there would have to be limits placed on 
it. And in return, we would see that China also places limits 
on its ongoing nuclear weapons modernization program.
    I would not want to put the term ``ABM'' on it. But it 
would have a similar type of structure.
    Senator Biden.  My time is up, Mr. Chairman.
    And I thank the panel.
    The Chairman.  Thank you, sir.
    Rod, Senator Grams.
    Senator Grams.  Thank you very much, Mr. Chairman.
    Gentlemen, thank you very much for participating.
    I have a brief statement. I respect the analysis that this 
administration has not been aggressive enough in pursuing 
proliferation by China and other countries.
    I also believe we have plenty of laws on the books to 
sanction countries which violate international agreements, and 
I think we should use those laws if warranted.
    I am concerned that supporters of the Thompson legislation 
have communicated that those of us who oppose the approach of 
this legislation do not care anything about nuclear 
proliferation and are simply pawns of the business community.
    Others have said that we oppose it because one of the 
sponsors has held up legislation that we strongly support. That 
is not the case.
    Now, to clarify my own position, I just want to say, I do 
not support this legislation solely on its merits. And I simply 
do not believe any version will accomplish its purpose; and if 
I thought it would end Chinese proliferation, I would support 
it, despite the opposition.
    Mr. Gill, I wanted to direct the first question to you. In 
your testimony, you discussed four factors that you said should 
work together to achieve success in China. You note that 
mandatory sanctions are not consistent with those four factors.
    I believe the Thompson bill further politicizes these 
sanctions by providing expedited consideration in Congress to 
reverse any Presidential decision not to sanction. So I would 
ask you: Do you support this annual review by Congress?
    Dr. Gill.  I have seen some of the versions of the Thompson 
bill, which are put forward here. And I would generally agree 
with you, Senator, that there are a lot of problems with the 
bill as currently crafted. And in particular, I think we ought 
to be--
    Senator Grams.  Even the revised version?
    Dr. Gill.  Even the one that was put out on Friday.
    The reason I am concerned with the revised version is 
because it has the expedited, accelerated process to bring it 
to the floor. It is an accelerated process, which does not 
allow ample debate and hearing; and, which I find striking, has 
the possibility to actually overturn an administration's 
decision even on the basis of national security, to waive 
sanctions against a target country. It seems we are getting a 
little bit into some Constitutional problems there, as well.
    There ought to be a mechanism where pressure can be brought 
to bear on administrations to think more carefully about 
proliferation. I think that is certainly true. But I do not 
think that as currently crafted this accelerated version is the 
way to go about it.
    Senator Grams.  I agree with Senator Biden when he said 
sufficient laws are on the books. Are there sufficient laws on 
the books that would allow any administration to sanction 
Chinese proliferation? And if so, why would we need to pass 
this new legislation, even if the end product provides more 
discretion?
    Dr. Gill.  Absolutely. There are plenty of tools and 
mechanisms our President can use. There is no doubt about that.
    I think the reason for the bill in its initial crafting was 
as a means to bring Congress more intimately into the process 
and bring pressure to bear on the President to take the actions 
that Congress thinks that the President should.
    That would be the sole new accomplishment that this bill 
would provide. It would weave Congress--I would say entangle 
Congress--more intensely into the sanctions decision.
    But in terms of whether or not we can punish China, I do 
not think this bill adds anything new.
    Senator Grams.  Dr. Gill, I thought Senators Warner and 
Byrd's Commission to review China's proliferation record that 
we passed on the DOD authorization bill was a preferable 
approach to the Thompson bill. How does this fit in with your 
four factors, the Warner/Byrd Commission?
    Dr. Gill.  I note in my formal remarks my support for the 
establishment of a similar type of commission, perhaps the one 
that has already been noted by Senator Byrd. But I also suggest 
that perhaps a structure could be woven into this new 
commission that would compel the President to react in one way 
or another to the findings of the commission. In other words, 
so that the findings do not just simply float out there without 
any response from the President.
    Namely, perhaps it could be structured so that the 
President would have to either take recommendations from the 
commission with regard to sanctions, or explain in a public and 
detailed way why the President felt that those actions should 
not be taken.
    I think that is a step closer to what the Thompson bill 
would like to achieve, and that is bringing some greater 
pressure to bear on the administration, but it is not as far as 
the bill would envision.
    Senator Grams.  And, Dr. Gill, I build on what Senator 
Biden said and also agree with you, that we would be more 
successful addressing concerns with Chinese proliferation by 
trying to draw China in rather than trying to shut them out.
    How do you view this legislation? Would it shut out China? 
Is it a political exercise rather than legislation to 
accomplish its goal? Would this create barriers to further 
progress with China?
    Dr. Gill.  Well, nothing in the bill would envision 
formally shutting China out of anything. I mean, of course, we 
do not see them getting kicked out of international 
organizations as a result of any proliferation activity.
    But what I think is important is, of course, if the bill 
remains targeted on China, certainly that's sending a very 
strong message. And, of course, if, as the bill makes possible, 
sanctions can be sweeping enough to include sanctions against 
governments and sweeping economic and other types of embargoes 
against China, then certainly this is going to result in 
shutting China out rather than drawing it in.
    I would just turn again to the record of the past ten 
years. Not a perfect record, lots farther to go with China, but 
if you put your baseline in Chinese proliferation activity ten 
years ago, there has been remarkable progress. And it cannot be 
a coincidence that that has occurred at the same time that 
China has increasingly integrated itself in international 
society.
    Senator Grams.  Thank you, Mr. Chairman.
    The Chairman.  Senator Chafee.
    Senator Chafee.  Thank you, Mr. Chairman.
    Mr. Abrams, in your testimony you stated that political 
reform in China ultimately lessens the danger to us, and that 
trade deals that enhance the regime's power without furthering 
the cause of human rights increases the danger to us. I was 
wondering if you could elaborate. Are we talking about economic 
danger, military danger, or what on those two statements.
    Mr. Abrams.  I was thinking of military danger. The point I 
made later in the testimony is that one can envision a 
situation in which enhanced trade and economic activity enrich 
the regime and give it more resources, and undercut it; because 
they are beginning to change China in ways that make the modern 
economy incompatible with the Communist political system.
    But there is going to be a period of danger there where 
they have got the resources. They are desperately hanging on. 
Their ideology is completely shot, and they may need to show 
some overseas adventures to build nationalism and to try to 
prove their legitimacy to the people of China that way. That is 
the fear.
    Senator Chafee.  And what particularly would constitute an 
overseas adventure? Is Taiwan the obvious example?
    Mr. Abrams.  Taiwan is the obvious one, although I suppose 
one could point to others in Southeast Asia. One thinks back to 
the Spratley Islands or their relations with Vietnam and India, 
which have at times been difficult. Taiwan is the best example 
though.
    Senator Chafee.  I wonder if you could look into your 
crystal ball. Considering that PNTR might be, as you said, 
aimed primarily at building up China's domestic strength, can 
you predict the fate of the forces of democracy if PNTR is 
passed. Can you look into the future a little bit?
    Mr. Abrams.  Well, that is a very difficult question. If 
PNTR is passed without any human rights moves on our part, I 
think we can predict--more than predict--I was going to say we 
could predict a downturn in the human rights situation in 
China. We do not have to predict.
    Oddly enough to some people, since the House voted PNTR for 
China, there has been a downturn in the human rights situation 
inside. There has been an actual downturn--it was a very bad 
year for religious freedom in China. But it has gotten worse in 
those weeks since the House vote.
    I think the probability is we would see more of that. And 
that is what worries me about an unmixed message. And, I think 
the problem of voting PNTR with no attention to human rights is 
it is an unmixed message. The message that can be received in 
China is, ``We are worried about trade and money. We want to 
make money. We are not worried about human rights in China. 
Just go to it.''
    I think if they receive that message in the government, 
they will go to it. There will be more repression over the 
coming year or two even than we have seen in the last year or 
two, and the last year or two have been bad.
    Senator Chafee.  Mr. Bosco or Dr. Gill, do you care to 
comment?
    Mr. Bosco.  Well, it is interesting. I wanted to tie in 
with something that Senator Biden stated.
    He talked about the aging of the Chinese elite, the 
geritocracy and how things would be better with the newer 
generation.
    But we have actually been hearing an argument like that for 
at least 20 years and--
    Senator Chafee.  They, too, are keeping their promise to 
grow older? [Laughter.]
    Mr. Bosco.  Precisely. They have promised to grow older as 
well, but, you know, the gentleman in charge of the massacre at 
Tiananmen Square was a man named Li Peng, who is still in the 
government. But I can remember back in the decade before 
Tiananmen; Li Peng was pointed to as one of the new generation 
that was going to change China. And we can see the blood on his 
hands.
    So I am not sure that the aging process is going to be the 
solution to the problem. I think China needs to see some 
limits, some constraints on its behavior, particularly 
internationally.
    Obviously the United States is the main player on the 
international scene. Unless we start drawing some lines and 
hopefully lead other nations to join us in that approach, I 
think China will see green lights all over the place, and will 
tend to move aggressively where it thinks it can proceed and 
succeed.
    Dr. Gill.  Senator, the biggest knock on analysts like me 
is that we stress how complex things are, and we do not want to 
boil it right down to the brass tacks.
    Well, I will not disappoint on that, I am afraid, because 
simply hoping that the older leadership is going to disappear 
is wrong.
    To become a leader in China under the current regime, you 
have to accept certain understandings. You have to deal with 
your country in certain ways.
    So the change that we are talking about, I do not think 
ought to be touted as a top-down change. Change in China is 
going to have to come from within and within the society 
itself.
    I do believe that is happening. We are not going to get the 
leaders in Beijing to step down. That is ridiculous. It is not 
going to happen.
    We are going to have to foster change from within. PNTR, 
membership in WTO, and opening up China to the outside world is 
the way that is going to happen.
    I lived in China 15 years ago. I can tell you this country 
is dramatically, dramatically changed. And it is not a simple 
coincidence that it occurred while opening to the outside 
world. There is great change occurring in China. We should be 
doing all we can to foster it and make it go faster.
    Senator Chafee.  Thank you very much.
    The Chairman.  Thank you, Senator.
    Thank you, gentlemen.
    Elliott, Mr. Bosco, and Dr. Gill, the thing that bothers me 
most about this is there has been an absence in the debate, not 
here this afternoon, but throughout, of what principles really 
need to survive.
    I am old enough to remember when a fellow named Chamberlain 
went over to Munich and sat down with a fellow named Hitler, 
came home and said, ``We can work with this guy. We are going 
to have peace in our time.''
    Since I have been in the Senate, I have worked with dozens 
of Chinese young people who have come here to go to college. 
And believe you me, they understand what is going on back home. 
And they have told me things that I suppose they would dare not 
say when they are home.
    But nevertheless, I think there are voices crying out for 
decency and honor. But Harry Wu has sat there, exactly where 
you are sitting, and I have not heard one of the people who 
have contacted me from big business to say anything about Harry 
Wu.
    Indeed, I have asked some of them what they think about 
Harry Wu's estimation and assessment of what is going on. They 
do not even know who he is.
    And I tell you Prime Minister Chamberlain came back with 
what he thought was a deal with Adolph Hitler, because he 
thought they were going to do business with him. It is as 
simple as that.
    That is what bothers me; because I was raised to believe 
that you do not take a political prisoner out of a cell, after 
you have examined and categorized his kidneys or his liver or 
his heart, take him out to a field and blow his brains out and 
put him in an operating room nearby, and then sell those organs 
at $40,000 a piece to people who want to buy them, provided 
they have the $40,000 in cash. They are doing a landslide 
business.
    Now, how can we say, ``Well, we are going to do business 
with these folks?'' That is the thing that puzzles me now. And 
I respect all of my colleagues who feel differently about it; 
but I just do not understand why we do not learn from history.
    What I think, furthermore--and then I will conclude this 
sermon--is that we ought to be leaders in terms of bringing 
civilization to China, because what they have and what Harry Wu 
has sat there and described is not civilized conduct.
    Let me ask you a question that gets me off of that track. 
The press has reported that China continues to ship dangerous 
missile technology to Pakistan. Gentlemen, is it fair to assume 
that Pakistan's military regime will mount the nuclear arms it 
tested two years ago on these missiles? What do you think about 
that? [No response.]
    The Chairman.  Do not all answer at once. [Laughter.]
    Dr. Gill.  I believe that as Pakistan comes to grips with 
the problems entailed with having a nuclear weapons force--
command and control issues, solves the always/never problem, 
meaning they will always go off when you want them to and they 
never will when you do not, yes, they will proceed to arming 
those missiles.
    The Chairman.  Mr. Bosco, do you agree?
    Mr. Bosco.  Yes. I think they will utilize the technology 
that is available to them as they have in the past.
    The Chairman.  It sounds like it is unanimous there, and up 
here too.
    The Chinese have stated repeatedly that they do not intend 
to keep Taiwan out of the WTO after they get in. Do you think 
that they will honor this commitment?
    Mr. Abrams.  I think it is possible that they will honor 
it, yes, because I think the question is: Is it in their 
interest to have Taiwan in? And it is not politically and it 
probably is economically, so there will be some debates in 
Beijing.
    But I think it is possible that they might; it would be 
nice to have that pinned down a lot more certainly before we 
act.
    The Chairman.  Exactly. Exactly.
    Mr. Bosco.  I am slightly more pessimistic than Mr. Abrams 
is.
    Taiwan, as we know, was prepared to enter the WTO long 
before China was prepared. The deal was made that China's 
wishes would be respected and it would be admitted first. But 
the understanding, of course, was that Taiwan would be admitted 
either relatively simultaneously or shortly thereafter.
    What I have been detecting in some of the comments out of 
Chinese folks visiting our think tanks and some of their press 
comments is that China is seriously considering attaching 
conditions to Taiwan's entry into WTO.
    That is, not only would Taiwan have to be considered to be 
a custom territory of China or a special autonomous region or 
some kind of a special status to show that it is subservient, 
in effect a province of China, but they have been suggesting 
that President Chen must make an explicit concession on the 
``one-China principle'' before WTO accession can be made 
available to Taiwan.
    This is a very serious, I would think, reneging on the 
original understanding and, therefore, it is critical that the 
commitment be pinned down.
    The Chairman.  All right.
    Dr. Gill.  I think overall China will not block Taiwan's 
entry into the WTO, but I would expect that there will be these 
kinds of conditions in various forms which would politically 
serve to make clear China's understanding of Taiwan's 
relationship to the mainland.
    The reason I believe that ultimately we will see 
membership, is that it has been China that has been trying the 
hardest to open up trade links, direct trade links between 
Taiwan and China; and that it has been typically Taiwan that 
has resisted, and perhaps wisely so, knowing how that might 
entangle them. But I think I would agree with Mr. Abrams that 
they recognize the economic and political benefits of that.
    The Chairman.  Let me jump around geographically just a 
bit. North Korea, do you know of one thing that China has done 
to encourage North Korea to get off the dime and stop this 
business of trying to be a Communist power? Has anybody heard 
anything that China has done?
    Mr. Abrams.  I would have to say no, Mr. Chairman, but I 
would have to add that North Korea's policy toward the United 
States has been so successful for North Korea that it seems to 
me if I were an objective observer in Beijing, I would simply 
be saying to the North Koreans, ``You have a very smart foreign 
policy team. You have the Americans in the palm of your hand. 
Keep at it.''
    Mr. Bosco.  Well, we do know that, of course, that China 
was involved in the development of North Korea's nuclear 
program in the first place, so--
    The Chairman.  You bet.
    Mr. Bosco [continuing].--that is a very discouraging note.
    The Chairman.  Yes, sir.
    Mr. Gill--Dr. Gill.
    Dr. Gill.  The Chinese play these cards extremely close to 
their chests, and I would say our own administration is unable 
to come up with concrete evidence. And yet, I cannot believe 
that North Korea's missile test over Japan was viewed kindly in 
Beijing.
    I also believe that during Kim Jong Il's visit to Beijing 
shortly prior to the recent summit with the South, they got 
some pretty clear messages from Beijing, ``Take it easy. We do 
not want the Americans coming over that line again. And let us 
work towards some kind of more smooth resolution of differences 
on the peninsula over time.''
    The Chairman.  Is that a hunch of yours, or do you have 
some--
    Dr. Gill.  I have no concrete evidence of that.
    The Chairman.  Senator Grams.
    Senator Grams.  Thank you, Mr. Chairman.
    Dr. Gill, I believe you had mentioned this in your 
statement or one of your previous answers, about the working 
relation between China and the United States or this 
administration--that you had no confidence or trust in it. Did 
you say something like that?
    Dr. Gill.  Credibility.
    Senator Grams.  Credibility. And I would like to ask this 
of the other members of the panel too, Mr. Bosco and Mr. 
Abrams.
    But in that regard, Dr. Gill, why are we rushing now to act 
at the end of this administration when a new administration 
could be far more aggressive in administering and enforcing our 
laws and may object to this legislation, which could tie their 
hands in some ways? Your response?
    Dr. Gill.  On the PNTR question?
    Senator Grams.  No, on the Thompson legislation, not on 
PNTR.
    Dr. Gill.  Right. In my view, the best outcome on the 
Thompson approach would be probably not the bill as it is 
currently seen, but rather taking the message that the bill is 
trying to deliver. And that is trying to find better ways to 
have the administration deal with proliferation problems.
    So overall, I do not think we should rush forward to 
achieve the Thompson legislation. There is no need to.
    I think the message is coming through pretty clearly, and 
we could probably find other means to have the administration 
act more directly on--
    Senator Grams.  This administration or the next?
    Dr. Gill.  Well, this and next, if the legislation were 
passed in this administration's term.
    Senator Grams.  Mr. Bosco.
    Mr. Bosco. I agree with your point that this 
administration, I think you suggested, has been relatively 
favorable to China. And I think that has been part of the 
problem that I have tried to describe in terms of the situation 
with Taiwan, that I think Beijing has felt that it could move 
the situation in a much more favorable cast toward Taiwan by 
pressuring, cajoling or however facilitating its relations with 
this administration. And at one time, of course, it was 
described as a strategic partnership.
    I think there is a danger that given the fact this 
administration will only be in office for the next several 
months, China may want to take advantage of whatever 
opportunity that presents before it leaves office.
    Senator Grams.  Do you think the Thompson bill, though, 
would tie the hands of the next administration in any way?
    Mr. Bosco.  Frankly, I have not studied the Thompson bill, 
so I cannot answer that question.
    Senator Grams.  Mr. Abrams.
    Mr. Abrams.  I would only add, Senator, I share your 
concern of before about the problem of the no national security 
waiver, in particular. It is, whether it is a constitutional 
problem or not--and I think it may well be--I think it is a bad 
policy.
    This is the way the Executive branch and the Legislative 
branch are set up. I do not think that it wants to put in such 
legislation that there is no waiver, because it is just 
impossible to proceed with any circumstances that might arise. 
Well, I am just not sure that they would want to do that.
    Senator Grams.  Mr. Abrams, I will come back to you. Do you 
support China-specific sanctions when there are other countries 
which also proliferate? The last round broadened it to two more 
countries, although it is still called the China 
Nonproliferation Act. But should not more countries be included 
as well?
    Mr. Abrams.  I suppose the answer to that is yes. China is 
certainly more important than some of the others due to human 
rights.
    Senator Grams.  Given human rights, religious persecution 
and political persecution--
    Mr. Abrams.  Yes, so I--
    Senator Grams  [continuing].--by 10 or 100.
    Mr. Abrams  [continuing]. And proliferation is part of--I 
think it would help us if we, actually, if we have more--
    Senator Grams.  Mr. Bosco, would you like to comment?
    Mr. Bosco.  I certainly would take a strong position 
against the proliferation by anybody. I think the 
administration has been somewhat lax in its--
    Senator Grams.  Would this bill be better off it was--
    Mr. Bosco.  As I indicated, I have not actually read the 
bill, sir.
    Senator Grams.  Dr. Gill.
    Dr. Gill. I am reminded of the argument that opponents of 
gun control make: that there are plenty of laws on the books. 
We do not need more laws. We need better enforcement.
    So I think, as a general rule, a notion of more sanctions 
legislation, and especially sanctions legislation which imposes 
mandatory triggers, meddles with the Constitutionally mandated 
ability of the President to conduct foreign affairs and, as I 
understand it, it is beginning to get into our capital markets 
as well. We are better off not doing it.
    Senator Grams.  Thank you, Mr. Chairman.
    The Chairman.  Well, I have listened to the earlier 
discussion about the Thompson bill, and I think it may be 
premature to speculate on what it can take because of its 
constant revision.
    As of today, I--I suspect that we would all agree that 
proliferation by China, particularly of deadly chemical and 
nuclear-tipped missiles, all of this is a threat to the United 
States. I think we all would agree with that.
    Now, the existing laws that deal with proliferation were 
meant to enhance the administration's leverage in dealing with 
countries like China.
    Unfortunately, this administration has spent all of its 
time covering up instances of proliferation, apologizing to 
China and dodging the existing laws that are on the books.
    The President himself said the other day that he, quote--
and this is the President talking about himself--he said, ``I 
fudged the facts to avoid implementing U.S. law.''
    Now, come on. You know, how do we go blindly into this? But 
that is neither here nor there.
    Take, for example, the fact that the CIA has said with 100 
percent certainty that China gave nuclear-tipped M11 missiles 
to Pakistan, but the MTCR law has never been implemented for 
that transfer, not once.
    So the fact that some laws exist, some--and that they are 
on the books does not obscure the fact that those laws are 
being ignored or even broken.
    Now, Senator Thompson is working to refocus the 
administration on its legal obligation to pursue Chinese 
nonproliferation, and he is well within his Constitutional 
authority to do so. And I applaud Senator Thompson for it.
    Now, finally, the best speeches that are never made are the 
ones when I am driving home from, you know, after trying to 
make a speech. I have a policy at this point and every hearing 
over which I preside to say: Is there something that you would 
like to add or be willing to add to what has been said here 
this afternoon, any contradiction of what somebody else has 
said or whatever?
    How about you, Elliott?
    Mr. Abrams.  I would add, Mr. Chairman--excuse me--that the 
Commission on International Religious Freedom spent a long time 
addressing the question of PNTR for China.
    In our annual report, the report--first, it was released 
May 1st. It is quite striking, if you think about it. It is 
five to four Democrats on that Commission, under a Democratic 
administration, but we unanimously oppose the grant of PNTR for 
China without pre-conditions, without insisting on advances in 
the area of--or at least promises in the area of religious 
freedom, for fear that we would be sending the wrong message to 
the government of China and to believers in China, that we were 
abandoning them.
    The Chairman.  Right.
    Mr. Abrams.  And I would just reiterate, I hope that in the 
Senate--I tried to make this argument in the House, but we did 
not persuade enough people. I would hope that we can persuade 
some more Senators that this ought to be at the forefront of 
their attention as they consider PNTR.
    The Chairman.  I guarantee you this Senator is going to 
help in any way he can.
    Mr. Bosco.
    Mr. Bosco.  Just one observation, Mr. Chairman. And that 
point is made repeatedly that by bringing China into the 
international organizations, we have the effect of moderating 
its behavior.
    If one looks at China's behavior as a member of the 
Security Council of the United Nations, the prospect is not 
that the organization changes China, but the danger is that 
China changes the organization. And I hope that if China enters 
WTO, we do not see that kind of thing occurring.
    The Chairman.  Thank you.
    Dr. Gill.
    Dr. Gill.  Thank you, Mr. Chairman. I am not sanguine about 
our future with China. It is going to be a very, very difficult 
relationship, no doubt about that. And in many respects, as 
China grows stronger, our ability to bring change there is 
going to be constrained.
    But given the toolbox that we have, and given the enormous 
interest we have in making those tools work, we have to think 
in a very complex and careful way about how to bring about 
those changes.
    In my view, opening up China, while not a perfect solution 
for every question we have, is the best answer that we have, of 
the choices we have. And while I know that you oppose it, and I 
respect you for it, I believe that we should proceed with PNTR 
for China. Bringing it into the international community, of our 
options, is probably our best choice.
    The Chairman.  Well, I pray that--well, we will see.
    Thank you very much for coming, and I appreciate it so 
much.
    By the way, the Senators that are involved in the 
conference committees and others of our committees are trying 
to get legislation reported out. So there are going to be a 
multitude of letters written to you with questions, and I would 
appreciate it if you would answer those questions of others.
    Thank you, again.
    Mr. Abrams.  Thank you, Mr. Chairman.
    Dr. Gill.  Thank you.
    Mr. Bosco.  Thank you.
    [The responses to the Committee's additional questions 
follow:]

   Responses to Additional Questions Submitted for the Record by the 
                               Committee

                  QUESTIONS SUBMITTED TO JOSEPH BOSCO
    Question. how do you respond to the argument that China is 
basically an inward-looking country that conducts a purely defensive 
foreign policy and does not have expansionist claims that would 
constitute a threat to regional and world peace?

    Answer. It depends on the definition of ``inward-looking.'' 
Communist China defines ``internal'' in the broadest possible terms, 
claiming the right to ``recover'' any piece of territory ever ruled for 
any period of time by any Chinese emperor, ruler, or government over 
the 3000-year history of China. The People's Republic of China asserts 
the right to take Taiwan by force because it says it acceded to all the 
territory once ruled by the Republic of China (never mind that the ROC 
still governs Taiwan). But the PRC also invaded Tibet and East 
Turkestan (now Xinjiang Province) which enjoyed independence or 
autonomy when the ROC ruled the mainland. Similarly, Beijing asserts 
that the Spralley and Paracel island groups are also Chinese territory, 
noting that they are located, after all, in the South China Sea. It has 
shown its willingness to use force to prosecute those claims, despite 
the competing claims of at least four other states.
    In addition to its use of force in the Korean War (for which it was 
condemned as an aggressor by the United Nations), and the seizure of 
Tibet and East Turkestan, in its relatively short history the PRC has 
also managed to engage in wars with the Soviet Union, India, and 
Vietnam and was deeply involved in Vietnam's war against the United 
States as well as the violence in Cambodia.
    China's development of significant missile, air, and naval forces 
for power projection throughout East Asia are a growing concern to its 
neighbors, not to mention its proliferation of missile and nuclear 
technology to North Korea and Pakistan which have themselves become 
threats to regional peace and security.
    Beijing asserts that all its military moves are purely 
``defensive'' and concerned with its own security. But, as Henry 
Kissinger once said of the Soviet Union, it seeks absolute security for 
itself at the expense of the absolute insecurity of its neighbors. 
China's goal is to become a world economic power and to utilize that 
wealth, as it is already doing, to become a world military power. Its 
strategic doctrine clearly portrays the United States as its main rival 
and potential enemy and it seeks to displace American power in Asia.

    Question. Is sharing a theater missile defense system--a purely 
defensive system--with our democratic friends in Asia really 
provocative to Communist China? Which is more important to Asia's 
security--PNTR, or theater missile defense?

    Answer. Yes, by Communist Chinese standards--and the same argument 
was made by the Soviet Union, now Russia, and many in the West agree--a 
defensive system against its missiles, which it says are purely for 
retaliation, means it loses its retaliatory deterrent. They would then 
be subject to our preemptive missile attack with no means to respond, 
and thus would not have been able to deter our attack in the first 
place. That argument has some plausibility if the only scenario to be 
considered is an initial United States missile attack on China. The far 
more likely scenario, however, is a confrontation over Taiwan, 
triggered by some Chinese military move against the island followed by 
an American response. At that point, to deter our coming to Taiwan's 
defense, China wants to play its missile card against the U.S.--as it 
already did during the 1996 Taiwan Strait missile crisis, warning of 
``a sea of fire'' if the Seventh Fleet entered the Strait (it didn't) 
and an attack on Los Angeles. In that context, our missile defense 
would eliminate China's ability to blackmail the U.S. into passivity 
and that is what is ``really provocative'' to Beijing, because they 
consider our defense of Taiwan an interference in their ``internal'' 
affairs. The problems all flow from the concessions made by the West in 
accepting the ``one China'' myth.
    To the extent a U.S. missile defense system neutralizes China's 
missile threat against Japan, Taiwan, and other neighbors, as well as 
the United States, Beijing is very unhappy about it.

    Question. Wasn't China largely responsible for the 1998 nuclear 
tests by India and Pakistan, in giving technology used in developing 
nuclear arms to Pakistan? Wasn't democratic India, in fact, driven to 
test its nuclear arms?

    Answer. When India detonated its nuclear device in 1998, it 
specifically mentioned the threat it perceives emanating from China. 
That threat takes two forms: (1) China's own nuclear weapons and 
missiles targeted at India, with which it has already waged a major 
border war, and (2) the technology China has provided Pakistan, which 
has fought several wars with India since their joint birth in 1948. 
Though India's nuclear test preceded Pakistan's, it followed Pakistan's 
successful test of long-range missile technology acquired from China, 
an event that greatly worried the Indians.

    The Chairman.  We stand in recess.
    [Whereupon, at 4:09 p.m., the hearing was adjourned]


                     GIVING PERMANENT NORMAL TRADE



                  RELATIONS STATUS TO COMMUNIST CHINA:



                    HUMAN RIGHTS, LABOR, TRADE, AND



                         ECONOMIC IMPLICATIONS

                              ----------                              


                        Wednesday, July 19, 2000

                               U.S. Senate,
                    Committee on Foreign Relations,
                                           Washington, D.C.
    The committee met, pursuant to notice, at 2:30 p.m. in Room 
SD-419, Dirksen Senate Office Building, Hon. Jesse Helms, 
chairman of the committee, presiding.
    Present: Senators Helms, Feingold, Wellstone, and Kerry.
    The Chairman.  The committee will come to order, and we 
welcome all the folks who are here today. That indicates you 
are interested in a very important proposal facing the Senate 
and the House of Representatives. The House has already voted. 
I might add that in addition to the death of a distinguished 
member of the Senate, Senator Hollings had a death in his 
family. And he was supposed to be a witness. And Joe Biden, the 
ranking member, lost a very good friend of his, the Mayor of 
one of the major cities in his state. So we have been crippled 
a little bit by sadness. But we will proceed anyhow. We will 
take no action today, but I have discussed it with the 
leadership of the Senate. And since we--well, not vote on 
anything, even though there is an objection filed in the Senate 
against meeting of committees, this one will not be violative 
of the Senate's rules.
    Today the Foreign Relations Committee holds its second 
hearing on legislation to grant permanent normal trade 
relations to Communist China. Our purpose today is to consider 
how PNTR will impact China's behavior in human and labor rights 
and China's record in failing to abide by its trade and 
economic agreements with the United States, agreements already 
in effect. Now, this debate is not merely about how to increase 
exports to China or about maintaining dialogue with China. It 
is about what America stands for as a nation. The United States 
is not France. Morality is still an integral part of America's 
identity. America's foreign policy interest and America's 
influence in the world.
    So I believe personally and as a Senator that jettisoning 
the leverage of the Jackson-Banock amendment on Communist China 
undercuts American efforts to defend the fundamental principles 
of freedom.
    Now, I do not believe the American people will countenance 
a foreign policy which looks the other way--looks the other way 
when the Chinese dictatorship tries to censor the Internet with 
American companies' help; when the Chinese dictatorship throws 
into jail members of the China Democracy Party with no 
semblance whatsoever of due process; and when the Chinese 
dictatorship detains and tortures thousands of harmless 
followers of the Falun Gong spiritual movement.
    So when the Chinese dictatorship brutalizes the underground 
Christians and Roman Catholic priests by arresting, torturing 
and in some cases throwing them out of the windows, when a 
Chinese dictatorship occupies and suppresses Buddhist, Tibet 
and Muslim, Chin Jong, when the Chinese dictatorship permits no 
labor unions except those labor unions which they can control, 
when the Chinese dictatorship subsidizes state enterprises with 
the confiscated savings of low income workers, when the Chinese 
dictatorship permits rampant piracy of the intellectual 
property of American citizens, that is to say our software, our 
videos, our CDs.
    Now then, opinion poll after opinion poll has shown that a 
majority of Americans oppose giving normal trade status to a 
dictatorship with almost no rule of law in the political realm 
and precious little in the economic realm--even after years of 
so-called reforms.
    The American people instinctively know what the foreign 
policy experts just cannot seem to grasp: That China's 
government will not be a civilized actor in the world unless 
and until it respects civil liberties and basic freedoms for 
working people and allows a true free enterprise system to take 
root.
    Now, to discuss these matters, we are delighted to welcome 
today's witnesses. We have a distinguished American, Mr. Gary 
Bauer of American Values who has spoken out courageously for 
victims of Chinese communist tyranny, fighting to exercise 
their God given rights to freedom of worship and expression.
    Mr. George Becker is a major leader in organized labor as 
President of the United Steelworkers. And we are pleased that 
he could and would rearrange his plans to be with us here 
today. And finally, Ms. Dai Qing, a proponent of greater 
liberties in her native China who comes to tell us why she 
believes that so-called PNTR is a good thing.
    As I say, Joe Biden had the death of a friend, the Mayor of 
one of his--I think his home city. And he felt that he better 
go there. So he will not be here today. Gary Bauer is here. So 
Mr. Bauer, we will hear from you first. We welcome you. I hope 
you are not out of breath.

      STATEMENT OF GARY BAUER, PRESIDENT, AMERICAN VALUES

    Mr. Bauer. A little bit, Senator, but it is great to be 
here.
    The Chairman.  Well, it is great to have you.
    Mr. Bauer.  I hope we did not hold you up. Mr. Chairman, 
with your permission, I will submit a prepared statement for 
the record.
    The Chairman.  Which will be made a part of the record.
    Mr. Bauer.  Fantastic. What I would like to do is just take 
my five or six minutes to talk about what I think is the core 
issue anytime we are talking about China and about trade and 
about related issues. First of all, let me say it is a real 
honor to testify before the Senate Foreign Relations Committee.
    This committee has been a central player in the last four 
or five decades in forming American policy and helped to do it 
all during the Cold War with the Soviet Union. And the 
committee has a great history that it can be proud of, of being 
right on a whole lot of issues. So hopefully you will be right 
about this issue too.
    About eleven years ago, all of us sat in our living rooms 
and our dens and we watched these incredible pictures on 
television coming out of China. We watched students and 
housewives and workers gather in Tiananmen Square. And what at 
the beginning was a relatively small demonstration that the 
authorities in Beijing tried to ignore at first, as we all know 
while Beijing waited hoping that the crowd would dissipate, it 
did the exact opposite.
    Over several days, the crowd got larger. Workers began to 
join in, others, dissidents, intellectuals, et cetera. And the 
people in the crowd began to sign petitions and to insist in a 
variety of ways on the basic human rights that people all over 
the world want and that people in the United States take for 
granted, the right to vote, the right to worship as you see 
fit, the right to have a job, the right to decide what size 
your family is going to be.
    As the crowd got larger and larger, Beijing could no longer 
ignore what was going on as we all know. And so they sent the 
People's Liberation Army into Tiananmen Square.
    I remember thinking at the time--and I would just point out 
to some of the Senators that anytime you see an Army with the 
word liberation in its title, it almost always is an oppressor 
army. If they say it is the liberation army, its purpose is to 
be the exact opposite. And, of course, that is what the 
People's Liberation Army was being sent into Tiananmen Square 
to do that day.
    I remember some of the images. Some of them have become 
famous. That gentleman standing in front of the tank. An 
incredible picture of the spirit of one individual. I remember 
how relieved I felt when the driver of the tank blinked first 
and took the tank over to the right. And then I remember how 
shocked I was to see this one guy move to the right and put 
himself in harm's way.
    We did not find out what happened to him and what happened 
to that particular tank crew. But we do know that the People's 
Liberation Army went on and entered the square. And they 
ordered the people in the square to leave immediately. They 
refused. They ordered them again and they refused. This 
happened repeatedly. Until eyewitnesses said that on one of 
those occasions, the Army said leave now or we will shoot.
    And then something extraordinary happened. Eyewitnesses say 
that many people in the square reached into their pockets and 
they did not pull out guns, but they pulled out copies of our 
Declaration of Independence. And they waved copies of our 
Declaration of Independence in the faces of the People's 
Liberation Army before that army opened fire and killed 
hundreds, and by some estimates, thousands of people in that 
square.
    Incidentally, Beijing still insists that this event did not 
take place. That there was no shooting in Tiananmen Square. 
This is a classic sign of a totalitarian government, the big 
lie technique. It just denies a fact that people saw clearly 
with their own eyes, believing that if they repeat a lie often 
enough that the truth will be forgotten.
    Well, I remember thinking about it at the time, what an 
extraordinary thing that was. Here were these Chinese citizens, 
most of whom have never been to the United States.
    And yet, when they were faced with the possibility of their 
own death, they waved copies of our Declaration of 
Independence. Not the Canadian Bill of Rights, not the 
Brazilian statute of rights or the Italian constitution, but 
our Declaration of Independence.
    And I think the reason they did that as we all know is that 
the declaration, and particularly the second paragraph of it, 
has been a beacon of liberty for people all through the world. 
The paragraph that begins ``We hold these truths to be self-
evident, that all men are created equal, endowed by their 
creator with certain unalienable rights''.
    I think that the current debate we are having over PNTR for 
China has very little to do with China and has very little to 
do with trade. It is rather a debate about the United States, 
about who we are, about what we believe, and about whether or 
not those words that those Chinese students were willing to die 
for in fact would be the words that guide American foreign 
policy towards China.
    China derisively says the words do not mean anything to us, 
that we are a money bags democracy and that money will trump 
everything. I believe the words do mean something to us.
    One final comment. Many--some on this committee, certainly 
many in Washington perhaps many in the audience today would 
argue that trade with China will change China. I would argue 
that trade with China has already changed the United States. It 
is making us forget who we are and what we believe.
    In fact, it has created a China lobby in the United States 
which is a very powerful force and has led good American 
companies, led by good American capitalists to become 
apologists for Beijing's violations of human rights, for their 
military policies, for their threats on Taiwan and for a host 
of other things.
    China always uses trade as a weapon in their foreign 
policy. I would advocate that we use trade to reflect on those 
deeply held values.
    Finally, if the Senate insists on passing PNTR, I would beg 
you to add provisions dealing with human rights and with the 
proliferation of weapons of mass destruction. I think we must 
do that given our role in the world. And I think if we did do 
that, it would be a healthy sign that our foreign policy is 
back on the right track. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Bauer follows:]

                  Prepared Statement of Gary L. Bauer

                       ``DEMOCRATIC ENGAGEMENT''
                A CHINA POLICY ROOTED IN AMERICAN VALUES
    Mr. Chairman, last October, the People's Republic of China 
celebrated the 5Oth anniversary of Communist rule with a robust and 
nationalistic display befitting its Communist tenets. A half-century 
after the Communists came to power, and following more than a decade of 
so-called ``constructive engagement'' by the United States, China 
remains a dictatorship, a tyranny of a single-class elite over a 
population of more than one billion fellow human beings.
    Obviously, China has changed from what it was a generation ago 
during the horrors of the Cultural Revolution and Mao Zedong's Great 
Leap Forward, but it still is an authoritarian, autocratic, one-party 
dictatorship. There is no getting around this irrefutable moral fact.
    Yet the glamorous portrait of China presented to us today by 
corporate lobbyists and the foreign policy elite of both parties is one 
of a big, bustling capitalist wonderland populated by millions of 
aspiring entrepreneurs. Every one is busy running around making money, 
buying, selling and producing things. The Chinese people supposedly are 
happier than ever.
    This portrait of China is willfully delusional. In our eagerness to 
do business--to open the ``China market'' to trade and investment--we 
have, literally, traded away our principles. Based upon an undefined 
precept commonly called the ``third way'' we are rushing to a mushy 
center where values are amorphous, principle looses meaning, and vision 
is lost in a smog of confusion and contradiction. Such a course opens 
doors to misunderstanding and miscalculation and widens the possibility 
of needless conflict.
    The Communist government of China has a well-deserved reputation as 
one of the most coercive and repressive regimes on earth. Hundreds of 
thousands of people languish in Communist jails and prison camps merely 
because they dared to practice their Christian, Buddhist or Islamic 
faith. International human rights organizations have documented 
hundreds of thousands of cases of arbitrary imprisonment, torture, 
house arrest or death at the hands of this Communist government.
    Even as we meet here today--even as corporate America lobbies 
Congress on behalf of granting China permanent most favored nation 
trade status--Catholic and Protestant Christians are being arrested. In 
recent months, we have witnessed a brutal crackdown against Falun Gong, 
a harmless Buddhist sect. And so it goes. Indeed, China's communists 
took to heart its Party's 1938 Articles of Subordination, which state: 
(1) the individual is subordinate to the organization; (2) the minority 
is subordinate to the majority; (3) the lower level is subordinate to 
the higher level; and (4) the entire membership is subordinate to the 
Central Committee. Whoever violates these articles of discipline 
disrupts Party unity. Today these principles form the basis of a strict 
political/social regimen commonly applied to even the slightest form of 
dissent whether real or perceived. Minorities in China whether 
political, racial or ethnic must not only shut-up they must put-up as 
well.
    Millions of others have been persecuted for so-called ``crimes'' 
such as advocating political pluralism and the ideals of democracy. 
They have been beaten, jailed arbitrarily, sentenced without appeal. 
This continues today, right now, even as the trade delegations come and 
go and American CEOs sip champagne with the oppressors in the Great 
Hall of the People.
    Meanwhile, the people of Tibet have been driven from their 
homeland, imprisoned and trampled upon by a forced relocation program 
that is little better than genocide and is certainly comparable to the 
brutal ethnic cleansing that Slobodan Milosevic carried out in Bosnia 
and Kosovo. A Milosevic, who by the way, continues to be propped up by 
Beijing with hundreds of millions of dollars in aid and China's 
unrelenting political support in forums such as the U.N. Security 
Council.
    In China today, particularly in rural areas of the country, 
expectant mothers are subjected to the Communist regime's odious 
program of forced abortions and a hard and unforgiving policy toward 
``excess'' children. Abandoned children, especially baby girls, are 
packed into orphanages, sold, or simply left somewhere to die. As a 
result, international organizations now report an incredible imbalance 
in numbers of men over women in the Chinese population.
    And even as the Clinton administration continues to pursue a policy 
of so-called ``constructive engagement,'' the President's own State 
Department reports that all public dissent against the party and 
government has been effectively silenced by threats, intimidation, 
exile, house arrest, and imprisonment. Ten years after Tiananmen 
Square, the State Department could not identify a single active 
political dissident in a country of 1.2 billion people. This is a sad 
phenomenon all too common to repressive regimes. In this year's annual 
report on human rights, the State Department concluded that China's 
``poor human rights record deteriorated markedly throughout the year.''
    Yet the proponents of ``constructive engagement'' accuse critics of 
China's dismal human rights record of being hopelessly naive moralists, 
of lacking a hardheaded, pragmatic realism. We are all too familiar 
with the main argument of corporate America and the China lobby: that 
trade with China will change China, that international commerce will 
inevitably result in political liberalization--that the internet, 
computers and cell phones will bring freedom.
    Mr. Chairman, what is needed here is a little ``constructive 
clarity,'' rather than ``constructive engagement,'' for it is the 
supposed realists who are either hopelessly deluded as to the true 
nature of the Communist regime in China or who refuse to come clean 
with the American people regarding the challenges and potential threats 
which may lie ahead.
    The Communist autocrats in Beijing are practicing a kind of 
``market Maoism.'' They are perfectly content to pursue a ``selective 
engagement'' on the economic side, exploiting trade and gullible 
American businessmen to advance their national strategic goals, while 
maintaining an oppressive one-party political control. Trade alone will 
no more resolve the great contest between freedom and oppression in 
China than it did in the Europe of the 1930s or in the Soviet Union in 
the detente era of the l970s. The Communist Chinese are proving that it 
is possible to have at once a limited market economy and political 
dictatorship. This is a potentially volatile type of oil and water 
mixture that the Chinese leadership and the United States may come to 
regret. Absent the checks and balances that a democratic system offers, 
an energized capitalistic engine in the hands of China's communists or 
military could prove troublesome.
    The private owners of web sites in China have been barred from 
documenting foreign news. And just this Friday a new government agency 
was set up in China to stamp out ``harmful information'' on the 
Internet. Trade with China isn't changing them nearly as much as it is 
changing us--making us forget who we are, where we came from, and what 
we stand for in the world.
    In our foreign relations, we need a policy that embraces our most 
cherished values--values that include basic human rights as well as 
commerce and free trade. Our foreign policy must have a greater moral 
purpose than the corporate bottom line. It is imperative that U.S. 
policy toward China first be based on a realistic assessment of the 
nature of Chinese communism.
    The Communist Chinese do not seek trade for its own sake, for the 
economic benefits it brings or because they wish to improve the lives 
of the Chinese people. Instead, trade is simply another piece in the 
overall national strategy. Trade is another weapon in the arsenal. The 
Communists are following philosopher Sun Tzu's advice that the best war 
is the one you win without fighting a single battle.
    If one looks at some of the historical rhetoric of China's 
communists if becomes clear that the ``new'' China continues to follow 
a path rooted in Mao Zedong's confrontational approach toward the free 
world and disdain for individual liberty and democracy. Mao stood 
firmly on the side of the Panamanian's ``just'' opposition to American 
engagement of the Panama Canal and today America's influence over the 
canal is lost and its facilities are now managed by a Chinese company.
    Yet we continue to make trade with China the major yardstick of our 
relationship. Such a policy is not driven by a realistic view of China, 
the nature of its regime and its international ambitions. It is 
opportunism, the chance to make a quick buck. It lends support to what 
the Chinese Communists contemptuously believe, that we are just a 
``moneybags democracy,'' moralizing about human rights on one hand 
while profiteering on the other.
    Ultimately, the China debate is not about China--it is about us. 
What kind of a people are we? This is the fundamental question posed by 
our current policy toward China. Are we willfully subsidizing China's 
arms race? Can we in good conscience buy goods produced by slave labor? 
Can we invest in companies intimately bound to a dictatorial government 
that inflicts terror on its own people? Have we put our most cherished 
ideals on the auction block?
    In a report to Congress last year, the Pentagon declared: ``The 
Chinese realize that attaining recognition as the preeminent political 
power in Asia will require the weakening of U.S. political influence in 
the region.
    China's military leadership is preparing for war with the United 
States. This is an uncontradicted reality. Such conflict, perhaps war 
is not inevitable however--not over Taiwan or any other issue if 
America wisely manages relations between the two powers. The present 
policy of trade at any price--evidenced by President Clinton's drive 
for speedy congressional approval of permanent normal trade relations 
and WTO membership for China--is little better than appeasement 
however, and holds promise for disaster.
    The Middle Kingdom aspires to be, and is becoming, a global 
superpower. By virtue of its geography, population, economy and 
military might, China already is the dominant power in Asia.
    Trade relations notwithstanding, China and the U.S. have competing 
national interests. China wants to drive U.S. power out of the Western 
Pacific and thereby reduce America's allies--Japan, South Korea and 
Taiwan--to the status of vassal states. Driven by a militant 
nationalism, Beijing views the U.S. presence in the Western Pacific as 
a continuing historical humiliation and part of Washington's strategy 
to keep China from fulfilling its destiny as a world power. There is 
nothing new in this position. By undermining U.S. relations with Japan, 
the world's second largest economy, marginalizing South Korea and 
Taiwan, China strikes not only at key elements of the free world's 
economy but at its political cohesion as well.
    For this reason the interests of China and the U.S. dramatically 
diverge. Because these competing interests are geo-strategic, no level 
of trade will neutralize them. As many have observed, everything 
changes but geography. Indeed, China seeks trade to advance its 
geostrategic objectives. China's economy is highly dependent on the 
infusion of capital from abroad via trade and foreign capital 
investment. China must have such foreign investment in order to sustain 
the level of economic activity necessary to support its national 
military and strategic goals.
    Although China is secretive to the point of paranoia about its 
military capabilities, the objectives of its planning are obvious to 
American intelligence agencies and the Pentagon. America's power in the 
Pacific is sea-based. Consequently, China is frantically acquiring the 
means to neutralize American maritime power.
    It is buying nuclear submarines and nuclear guided missile 
destroyers from Russia, along with advanced anti-aircraft, radar and 
command and control fire systems. China's engineers are adept at 
turning dual-use technologies acquired through trade with the West to 
military applications. China has reverse-engineered Exocet anti-ship 
missiles, and purchased Russian SSN-22 ``Sunburn'' supersonic anti-ship 
missiles and S-300 anti-aircraft missiles. Beijing recently concluded a 
deal with Moscow to produce the latest Russian jet fighters as 
platforms for its growing missile capability.
    China recently took delivery of the first of four nuclear missile 
equipped destroyers purchased from Russia. A second destroyer is 
undergoing security tests now. Its newest Kilo-class submarine equipped 
with the latest generation Russian long-range anti-ship cruise missiles 
joined the fleet earlier this year. China has deployed 200 ballistic 
missiles opposite Taiwan to threaten that island democracy and 
continues to add 50 missiles a year. In a recent report the Pentagon 
said these offensive missiles pose an immediate threat to Taiwan's 
security.
    These and other arms initiatives suggest that in the event of a 
confrontation in the Taiwan Strait and South China Sea, the U.S. Navy 
would face serious problems. China's military planners do not believe 
that they have to worry much about a land war with the U.S. China is 
not Iraq. China only has to checkmate American sea and air power in the 
Western Pacific to achieve its strategic objectives.
    By brandishing their growing missile capability, the Communists 
seek to threaten and intimidate not only Taiwan, but also Japan, South 
Korea, Indonesia, Malaysia, Singapore and other countries in the 
region. In effect, Beijing seeks to hold every one of our military men 
and women in the region hostage to missile attack. High-ranking Chinese 
military officials even have hinted at nuclear attacks on the United 
States itself.
    Perhaps the most disturbing aspect of the Communist Chinese arms 
race is that we are subsidizing it by our one-sided trade policy that 
has provided Beijing the hard currency to pay for its missile program. 
And because of security lapses, China has been able to steal what it 
could not simply buy on the open market. The bipartisan congressional 
Cox Report detailed the scale and seriousness of China's espionage and 
its legal acquisition of military technology from a slumbering America.
    This pillaging of our intellectual capital continues unimpeded 
because there is today in America an entrenched and powerful China 
lobby made up of big corporate interests, politicians and government 
bureaucrats. This lobby continues to foster the conceit that, without 
vigorously asserting our own national interests, trade alone will 
guarantee China's good behavior and that commerce will lead China to 
democracy.
    Of this conceit I ask, ``Where is the evidence?''
    Where is the evidence that China's ruling thugs are any less 
autocratic today than they were a decade ago? Where is the evidence 
that our trade deficit with China, which has grown from $12.7 billion 
in 1991 to more than $60 billion today, has done anything to moderate 
the Communists' attitude toward basic human rights? The China lobby has 
no answer, for there is no evidence that the current policy is having 
any of the results claimed for it.
    Oh, China is happy to welcome the transfer of high-speed 
supercomputer technology in the name of free trade--computers, 
incidentally, that permit the Communists to test nuclear weapons based 
on stolen U.S. designs without having to actually explode devices. 
Beijing is delighted to allow Boeing, Lockheed, Loral and Hughes to do 
business in China. But suggest allowing anything like the free flow of 
information by means of the Internet and the door slams shut to 
American entrepreneurs.
    In fact, it is not an exaggeration to speak of China's military as 
the Peoples Liberation Army, Incorporated. Hundreds of Chinese 
companies doing business in the United States are controlled entirely 
or in part by the PLA, Inc. China has no independent, private business 
sector as we understand it. All business enterprises in China are, to 
greater or lesser degrees, entities of the state. PLA Inc., is not just 
the so-called military-industrial complex as it is understood in this 
country. It is a network so vast and intricate that our own 
intelligence experts can only begin to trace its reach or monitor its 
activities. It has, with the advent of income generating capabilities, 
become a sort of self-perpetuating management unit. It is taking on a 
life of its own, financing and developing its own self-interests on a 
scale, which may become unmanageable if left uncontrolled by China's 
``civilian leadership''.
    PLA Inc., runs hundreds of factories in China, many located in 
prison camps where cheap slave labor undercuts the costs of American 
manufacturing. Dozens of PLA companies doing business in the United 
States exist for no other reason than to conduct industrial espionage, 
to acquire military applicable technology and transfer it China.
    The latest Communist gambit to exploit America involves the bond 
market. Thanks to China's fundraising in the U.S. bond market, the PLA 
has succeeded in taking billions of dollars out of America. Are we 
subsidizing China's military arms race? Are American investors paying 
for the missiles aimed at our 35,000 military men and women stationed 
in South Korea? We do not know for certain, for there has been no 
systematic effort to ``follow the money'' in the sale of Chinese bonds 
in this country.
    Many of these bonds, which are totally unsecured save by the 
promise of the Communist government in Beijing, are turning up in U.S. 
pension funds, mutual funds and other investment portfolios. It seems 
an inescapable conclusion that American pensioners and investors are 
unwittingly helping finance China's offensive arms race.
    At least two state pension funds--the enormous California Public 
Employees Retirement System and the Texas Teacher Retirement System--
have invested in Chinese bonds sold by companies linked to the PLA. Are 
the hard-working public employees of California and the teachers of 
Texas unwittingly underwriting China's arms build-up?
    The Cox Report only lit the fuse on the potentially explosive issue 
of China's bond schemes. Increasingly, China is using U.S. capital 
markets, not only as a source of funding for its arms buildup, but also 
to cloak the efforts of its front companies in acquiring U.S. 
technology.
    China's most conspicuous threats, however, have been reserved for 
Taiwan, a democracy and a long-time friend and ally of the United 
States. Taiwan, of course, poses no military threat to China. Only 
Taiwan's intolerable example of democratic self-government represents a 
threat to the Communist dictatorship on the Chinese mainland.
    The United States should make it unambiguously clear to China that 
it will use any and all means necessary to help Taiwan defend itself 
against Communist aggression. This was the policy of every American 
President, Republican and Democrat, before the current Administration.
    Since the 1996 crisis, the Clinton administration has stepped up 
pressure on Taiwan to enter into ``interim agreements'' with the 
Communists with the view toward the eventual reunification of the 
island with the mainland. This is intolerable! Taiwan is a free society 
of 22 million people. It is unthinkable, and a betrayal of our most 
sacred ideals, even to suggest that free people would be pressured by 
the United States into exchanging democracy for rule by a Communist 
dictatorship.
    The U.S. went to war with Yugoslavia to guarantee self-
determination for 1 million Kosovars. Will we abandon to the tender 
mercies of Beijing's Communists the 22 million free people of Taiwan? 
God forbid! It would be one of the greatest betrayals in history.
    What, then, should our policy be in China?
    I do not believe that we can, or should even try, to isolate China. 
Neither do I seek some kind of crusade against China. America does not 
need crusades abroad. But we do need principles, a moral framework for 
our policies, and this is what has been lacking in our relationship 
with China.
    I am neither a protectionist nor an isolationist. I believe in free 
and fair trade among nations. Trade is a good and beneficial thing. I 
would follow the example of Ronald Reagan who, while avoiding 
protectionism, did not view trade and commerce as ends in themselves. 
The business of American foreign policy is not business. It is justice, 
freedom and security, not only for us, but for all peoples.
    As for trade it must follow foreign policy, not lead it around by 
the nose. Trade and diplomacy go hand in hand. But if we must choose 
between our profits and our principles--our principles must prevail. 
They must not be negotiable.
    I would pursue a two-track approach to China.
    First, I would ensure that we have the military means to defend 
America, our troops overseas and our allies. To checkmate China's 
growing missile threat we need to deploy an anti-missile defense system 
to protect our soldiers, sailors and airmen stationed in the Pacific. 
This defensive umbrella should include our friends in the region--
Japan, South Korea, Taiwan. We have the technical means to do this 
today. All that we lack is the political will.
    Second, we should pursue a policy of ``democratic engagement'' with 
China. Our policy should be based on America's historical principles 
and ideals, and not just corporate greed.
    A country, like an individual, must have integrity. A great nation 
cannot live a double life, affirming justice at home while tolerating 
evil abroad. We cannot be loyal to our principles at home and 
unfaithful to them abroad. We must have the moral integrity to remain 
true to our democratic principles everywhere in the world. Freedom 
belongs to the Chinese people no less than it does to Americans. Our 
Founders proclaimed to the world universal truths, that all men are 
created equal and endowed by the Creator with unalienable rights to 
life, liberty and the pursuit of happiness.
    For China, this means that trade and commercial concessions must be 
conditional--conditioned upon minimum standards of civilized behavior 
toward its own people and its neighbors in Asia. Chinese investment in 
the U.S. should be strictly monitored and severely limited. No more 
doing business with Chinese corporations that are fronts for the 
People's Liberation Army. Most Favored Nation trade status is our high 
card, our most powerful leverage over China's Communist leaders. Yet we 
are prepared to throw it away without obtaining anything from China in 
return.
    To promote freedom and democracy in China, human rights issues must 
be addressed openly and repeatedly. Top U.S. officials should meet 
regularly with pro-democracy and pro-freedom leaders in exile from 
China, Hong Kong and Tibet. We should restore the rigorous system of 
monitoring technology transfers that was instituted by Ronald Reagan, 
but which has been all but swept away by the current administration's 
rush to trade with China.
    I do not propose that we ``turn our back on China,'' as some have 
misrepresented my position. Nor do I seek another Cold War. I do 
propose, however, that our approach to China be grounded in a larger 
moral purpose than mere profits, that it reflect the most cherished 
ideals for which our nation long has stood as a beacon of freedom and 
democracy and as a shinning city on a hill.
    What does history ask of us at this moment? Only that we use, not 
squander, the great opportunities God has bestowed on us, that we honor 
the freedom that other Americans have won for us. It requires only 
faithfulness to our ideals and values. Thank you.

    The Chairman.  Thank you, sir. Mr. Becker, we are delighted 
to have you here. You may proceed, sir.

STATEMENT OF GEORGE F. BECKER, INTERNATIONAL PRESIDENT, UNITED 
                    STEELWORKERS OF AMERICA

    Mr. Becker.  Thank you, Mr. Chairman. First, I would like 
to complement Mr. Bauer on his testimony. I will try not to 
touch on too many of the same spots that he did. First of all, 
I represent the United Steelworkers of America, an industrial 
union of some 750,000 members in the United States and Canada, 
the majority of which are in the United States. We view PNTR 
with China in a most critical fashion. It is going to have a 
long-term effect on our union. And we believe it is devastating 
to the national interest an the ideals and values that we hold 
very near and dear in the United States.
    I want to make one point very clear. We are not a 
protectionist union--unless you would consider protection our 
ideals, our morales, our family, and our communities to be 
protectionist. In this regard, we certainly are protectionists. 
We are a trading union, and we believe in trade on a global 
basis. If you would look at the makeup of the plants which we 
represent, most of them are trading companies.
    But we part company when we turn a blind eye and we let our 
leaders turn a blind eye and worship at the alter of the bond 
and stockmarket and consider that bottom line profits are what 
really matters in the United States. And we believe that we 
need to have a very cohesive foreign policy, but that trade and 
the well-being of industrial America should not be sacrificed 
on those short-term profits or for foreign policy.
    Both administrations, the Democrat and the Republican 
administration, have carried the water of the multinationals in 
this endeavor to do this. On PNTR, this is not a trade 
agreement. This is an agreement for financial institutions and 
for multinationals to allow them to build factories in China 
and export the goods back to the United States. They are 
looking for cheap labor. They are looking for the absence of 
environmental controls. They are looking for the maximum 
profits. And they would go from any country to country that is 
going to offer them the maximum return in that regard.
    China has never lived up to any agreement that has been 
negotiated yet with them. They have violated everyone. And I 
think it stretches the imagination to believe that they are 
going to honor this one.
    Second, on PNTR itself, all of the arrangements or all of 
the agreements have not been negotiated. One of the most 
critical ones dealing with subsidies has not even been 
concluded. Manufacturers do not know what is going to happen 
with subsidies, how this is going to be treated, whether it is 
going to be state owned corporations that are going to have to 
live up to the general application of subsidies or not. And 
this could make a success or failure out of the agreement. And 
I do not see how anyone could seriously consider this until 
they know what is actually in the agreement, what is going to 
happen.
    The second part, I would like to touch on China itself. 
When you look at most of the members of our union, most of them 
have either served in the military or they have had family 
members that served in the military. I have been in the 
military twice, at the tag end of World War II and a back end 
during the Korean conflict.
    This is the same communist China that we fought and tens of 
thousands of our sons and daughters sacrificed their lives to 
keep Korea from falling under the communist influence back in 
the 1950s. Nothing has changed. China continues to condemn and 
be the enemy of our democracy in this country. They are 
ideologically opposed to us. They spread the weapons of mass 
destruction openly and spread nuclear proliferation to North 
Korea, to Pakistan, to Iraq and Iran.
    Today--today--we have tens of thousands of youngsters that 
are at-risk around China because of the saber rattling that 
takes place within that regime. The more powerful they become, 
the more arrogant and more aggressive they become as a nation.
    They are a rogue nation. As Mr. Bauer said, they torture 
and kill their own people. They persecute those who believe in 
the Christian faith. They traffic in women and children. They 
have over a thousand slave labor camps run by the military in 
China. Ninety-nine of those camps are listed by Dunn & 
Bradstreet as key manufacturing facilities. This is what we 
face.
    Trade unionists who try to share in the wealth that they 
helped create in China in factories are repressed. At the very 
least, they are fired or beaten, receive harsh prison sentences 
or they are killed. They simply disappear. Summary executions 
still take place in China.
    Harry Wu, who is a leading dissident from China, spent over 
19 years in slave labor camps. He is a steelworker. Many of 
those years were spent in camp--I think it is camp number five, 
I cannot say absolutely sure with that. But they produce steel 
as a prisoner that he spent this time in there. Nothing has 
changed with China.
    I want to mention one other thing here. I made these. I do 
not know exactly how to distribute these. I have had for many 
years a copy of the Saturday Evening Post, a May 30th issue, 
1942. And it shows--this was right after World War II started. 
And it showed the alignment of the nations, the access and the 
allies and the resources they had to fight that war.
    It is a caricature of six people around the table: Uncle 
Sam, John Bull and Joe Stalin. And it shows the steel that they 
held. The cards are showing the amount of steel that those 
countries produce. 130 million tons of steel is what was 
produced by the allies. 59 million tons of steel was produced 
by the axis.
    And they were saying in effect--this was in 1942 in May--
that the war was over. We held the winning hands. And then we 
list the things that the steel made that was absolutely 
necessary to fight a war at that time.
    And this turned out to be true. We have the industrial 
capacity to be able to fight and win that war. We are losing 
that industrial capacity today. In the steel industry, in the 
electronics industry, in textiles across the board. These are 
the plants that are leaving the United States for other 
countries.
    I think we need to consider this. I know the world has 
changed. I know the need for precious metals and other 
industrial based products maybe is not quite as vital in the 
minds of many. But I would question--I would question--about us 
stripping the industrial capacity of the United States and 
being sent to other countries and let industrialists do that.
    In conclusion, I would say that China has not changed. This 
is the same China that we face all along. It is still 
controlled by the communist leaders. Harry Wu has charged the 
United States in testimony before many committees that we are 
giving that nation the wealth and the technology to keep those 
people enslaved. And by pulling them close to our bosom with 
PNTR, we are making a legitimate nation out of them. We are 
making them our partner. We are holding them up as somebody who 
has earned the right to be a trading partner of the United 
States. I think that is the wrong message that we should be 
sending. Thank you.
    The Chairman.  Thank you, sir, Mr. Becker. I believe you 
had a prepared statement.
    Mr. Becker.  Yes, I do.
    The Chairman.  It will be printed in the record.
    [The prepared statement of George Becker follows:]

                  Prepared Statement of George Becker

    Mr. Chairman, Members of the Committee. I want to thank you for the 
invitation to appear before you today on the important issue of 
Permanent Normal Trade Relations with China. For the members of my 
union, the United Steelworkers of America, and indeed, for workers and 
farmers across this great country, this is one of the most important 
issues that they will face with long-term repercussions. It is my 
deeply held belief that approval of PNTR would be devastating to our 
national interests and the values and ideals we hold dear.
    Let me start by saying that the members of organized labor--
contrary to the impression painted by the press and free trade 
ideologues--embrace world trade. Many of the products made by the 
members of my union and others in organized labor are exported around 
the globe. But, we part company with those who pray at the altar of 
free trade, blind to the reality that other nations aren't interested 
in free trade, they're interested in protecting their markets while 
they take ours.
    Too often, administrations--Republican and Democrat--have viewed 
trade negotiations as a tool of geopolitics--divorced from the 
potential impact that these agreements might have. From the North 
American Free Trade Agreement to the Caribbean Basin Economic Recovery 
Act to other trade deals, our negotiators have too often traded away 
jobs and our productive capacity because of some short-term political 
imperative: shoring up a failing economy or political leader. These 
decisions put the Good Housekeeping seal of approval on multinational 
investments in foreign countries--creating jobs overseas at the expense 
of workers here at home.
    All of this, and more, is evident in the PNTR fight. It's simply 
ludicrous to believe that we should have normal trading relations with 
a rogue nation like China. Doing so will only strengthen the current 
leadership's hold on their people. PNTR isn't just about trade--we 
already are trading with China and no one is arguing that we should 
close our borders to China's products. PNTR is about our basic values 
and ideals and whether we think they are important enough to fight for 
and promote--even if others are willing to sacrifice freedom, democracy 
and our long-term prosperity to the push for short-term profits.
    There can be no question that China does not abide by international 
norms. They jail and execute those who publicly disagree with their 
leadership. They routinely violate religious freedom. They engage in 
forced abortions to ensure compliance with their family planning 
policies. They have oppressed the freedoms of the Tibetan people--
seeking to relocate ethnic Chinese so as to destroy their religion and 
culture. Human rights and labor rights--the foundation of a free and 
fair society--are brutally suppressed.
    They engage in the proliferation of weapons of mass destruction--
putting not only our allies at risk, but our own people.
    Our own State Department, in the midst of this year's debate on our 
relationship with China, admitted that things have gotten worse, not 
better. That, during the very same years we embraced constructive 
engagement, China continued to retrench and retreat in promoting basic 
human rights and freedoms.
    A more recent in-depth investigation of 16 factories in China that 
produce goods from some of the largest U.S. companies clearly 
demonstrates that contractors there continue to systematically violate 
the most fundamental human and worker rights, while paying below 
subsistence wages.
    In other words, U.S. companies are milking a system that does not 
allow for dissent and where anyone trying to form an independent union 
will be fired, arrested and imprisoned without a trial for five (5) to 
eight (8) years.
    Just ask Liu Dingkui. He was arrested in January 1999 for 
organizing a demonstration of 500 steelworkers demanding back wages 
from the state-owned Peijiang Iron and Steel factory in Jiangyou City. 
While recent, this is nothing new in the People's Republic of China. 
Harry Wu, the famed Chinese democratic activist who spent 19 years in 
prison, told our members recently that thousands of the prisoners he 
was sentenced with were actually steelworkers, because the prison they 
were serving in was in fact a Chinese steel mill.
    China should not be rewarded for this sort of repression--yet 
that's just what Congress appears poised to do.
    My opponents argue that granting PNTR will bring about change. That 
eliminating the annual debate will bring certainty to our relationship 
and transform conflict into cooperation. In their view, simply being 
there, setting up plants and expanding investment and trade will yield 
the results our people and, indeed, the Chinese people, are so 
desperate for.
    There simply is no evidence to support that contention. This is a 
rogue nation whose leaders are bent on protecting their power and 
privilege, not sharing it with their people. At the very time when the 
spotlight is on China--during this debate--China has moved backwards, 
not forwards. They have viewed the expansion of a non-violent religious 
movement, the Falun Gong, as a threat and have issued prohibitions on 
their activities. They have jailed numerous leaders of the movement. 
They are prepared to do whatever is necessary to quell dissent. They 
threaten Taiwan.
    Time has not obliterated the image indelibly etched in our minds of 
that brave young student who stood in the path of that tank in 
Tiananmen Square. We must not let his actions--or those of countless 
others who have called for free speech, freedom and democracy--be 
forgotten.
    There are some, however, who argue that we must put our economic 
interests first. That America stands alone in trying to advance our 
ideals and we will be left behind by our competitors as they take 
larger and larger shares of China's market.
    I reject the notion that our values--the values that have made this 
country so great--should be traded away on the auction block of 
commerce.
    Let me take issue with another argument head on. We're told that 
the rule of law is fundamental to the maintenance of free trade. 
Indeed, our industry has advocated the use of trade sanctions in recent 
years if the Chinese failed to abide by their commitments on market 
access and intellectual property.
    A nation that fails to enforce the most basic rule of law--the law 
governing the treatment of its people's most basic human rights--simply 
cannot be trusted to abide by the rule of law covering our business 
interests. China has proved that time and time again, yet we continue 
to trust them.
    After China signed an intellectual property agreement with our 
country, it engaged in wholesale violations. Rather than enforce the 
agreement--one that China had committed to--we let them off the hook 
and reached a new agreement.
    What makes anyone believe that China will live up to the accession 
agreement--in spirit or letter--once it has been granted permanent 
preferential trading status. And we know that many of our companies, 
and our politicians, will be reluctant to enforce China's commitments 
for fear of admitting that the opponents were right, or for basic fear 
of Chinese reprisals.
    Whether a country offers its people basic human and labor rights 
isn't just a moral issue, as important as that issue is. It's also an 
economic issue. Workers who can't bargain for, higher wages to reward 
their hard work, productivity and ingenuity, won't become the middle-
class consumers who can buy the products they produce, let alone the 
ones that we produce.
    Workers who can't freely associate, bargain collectively and strike 
won't see their wages increase as their economy matures. As a result, 
we will find ourselves competing against unfairly priced products, 
putting downward pressure on our wages and pressure on even more 
companies to relocate to take advantage of dirt-cheap wages. We simply 
provide more fuel to the race to the bottom on wages and working 
conditions.
    For the members of my union, this isn't some academic issue--it's a 
monumental threat to their security. China has the largest steel 
industry in the world and it's modernizing rapidly--much of it at 
government expense!
    During the last steel crisis, 40 percent of our market was captured 
before our trade laws were utilized to mitigate the problem. We still 
haven't returned to pre-crisis production levels and steel imports are 
once again on the rise.
    China poses a long-term threat to the vitality of our domestic 
steel industry. I believe that maintaining and enhancing our steel 
industry isn't simply an exercise in maintaining employment, it's a 
basic component of national security. Ten years from now, I don't want 
our nation to be unable to supply needed defense weaponry because we 
don't have the steel capacity in this country. That may happen. Already 
over 25 percent of our steel consumption comes from foreign suppliers.
    And, the issue is broader than just steel. Our entire manufacturing 
base is at risk. We're currently losing manufacturing jobs at the rate 
of 500,000 per year. PNTR--and the underlying accession agreement with 
China--will only accelerate this trend as companies relocate their 
plants and equipment to China. We saw that in NAFTA. That trend will 
continue--and grow--if PNTR passes.
    This debate transcends partisan politics. Members of Congress from 
both political parties and various ideologies have taken differing 
sides in this debate. I am proud to appear before you today--for this 
is a debate that cannot occur in China. Your hearing is testament to 
what makes our country great: adherence to the democratic ideals of 
freedom of speech and liberty.
    Those focused simply on economics must recognize that democracy 
breeds growth and opportunity. A country that fails to respect the 
basic rights of the people doesn't respect the rights of our 
businesses. China has failed to abide by the trade agreement it has 
signed. Despite promises of market access and the protection of our 
interests, our trade deficit with China continues to skyrocket. They 
sell us $85 billion more than they buy from us.
    Granting China PNTR would eliminate the leverage we have to promote 
human rights and the rule of law. So treating them the same as every 
other country is both immoral and impractical.
    No one advocates stopping trade. But expanding trade while 
abandoning the leverage we have is a recipe for disaster for us and for 
the Chinese people. We will subsidize the continuation of the 
leadership's intolerance and repression and simply fortify China's 
leaders.
    We do have leverage. America welcomes Chinese products to our 
shores with more than 40 percent of all Chinese exports coming here. 
China can't afford to abandon trade with the U.S., and we're not 
advocating that. Our greatest tool is the leverage of our market. If we 
stand up, they will open up. If we give in, we jeopardize the lives and 
liberties of countless Chinese. And, in turn the lives and livelihoods 
of our people.
    Mr. Chairman, Members of the Committee, I hope that the Senate will 
reject PNTR and will continue to have an annual examination of China's 
conduct. It's the right policy.
    Thank you allowing me to be here today. I would be happy to answer 
any questions you might have.

    And last but not least, Ms. Dai Qing. We welcome you, Madam 
and you may proceed. Will he help you interpret? Is that your 
purpose? Very well. You may proceed.

  STATEMENT OF DAI QING, CHINESE DISSIDENT, BEIJING, PEOPLE'S 
                       REPUBLIC OF CHINA

    Ms. Dai Qing.  Thank you, Mr. Chairman. I just arrived here 
from Beijing, and I lived in Beijing eleven years ago, before 
the Tiananmen crackdown. I used to be a national newspaper 
reporter and a columnist; then I lost my job. I was arrested 
and stayed in prison for ten months. And now I cannot, you 
know, I call myself a freelance writer and environmentalist; 
but actually, since eleven years ago, all my books are banned 
in China. I have no chance to publish in China.
    And right now, actually, I am jobless in my country. I am 
in the United States as a guest of the Goldman Environmental 
Foundation in California.
    I am going to give my statement. I think I would rather use 
my language, use Chinese. And Mr. Hai Pei will help me to 
translate into English.
    The Chairman.  If you will hold just one minute. We have so 
many young people here today and we welcome you. Now, did you 
understand that she is going to deliver the rest of her 
testimony in Chinese and it will be interpreted by the 
gentleman to her left.
    Mr. Wellstone.  Although, Mr. Chairman, the first part of 
her testimony in English was superb.
    The Chairman.  Yes, sir.
    Mr. Wellstone.  Better than our Chinese.
    Mr. Hai Pei I thought interpretation was not necessary.
    The Chairman.  You may proceed.
    Ms. Dai Qing.  What language? Chinese or English? Chinese.
    First, I am thankful for being invited here today along 
with the two gentlemen to my right who are very concerned about 
China's environment and China's human rights condition and 
labor rights.
    At first, I have to say that in general, China's human 
rights condition today is still very much regretful. Although 
at the top level, there have been no substantial policy changes 
per se, there have been substantial changes in terms of human 
rights among common people.
    To say that China's environment and human rights conditions 
are better today, I am comparing that to the period when Mao 
was still alive and those periods before 1978. One of the 
reasons I think China can be so authoritarian is because China 
was very isolated.
    It is not the only reason, but the most important reason. 
It is the basic reason.
    To a large extent, what the gentleman just said about 
Tiananmen Square is true. And even today the Chinese government 
will not alter its official statement on the facts of what 
happened there.
    The reason this--the Tiananmen massacre--can happen in 
China is because it is a one party country.
    The human rights conditiona in China are very bad, not only 
the political and environmental rights that we are championing, 
but also including what the Chinese communists say are the 
basic survivability rights of the people. Those rights and 
those conditions are also very bad. And that is due to a large 
extent to its own policy.
    We just want to ask why. You know, all the years. It is 
almost half a century. You know, in China we have a peaceful 
situation. So, why today does the Chinese government still say 
we have to feed the people, rather than expand other human 
rights. No person hungry in this country. So this is the basic 
right.
    But my argument is all the years past, the Chinese ordinary 
people have had some problem to be hungry. So this is because 
dictatorship in this country.
    I want to tell you why China to this day is still an 
authoritarian country and how it is maintained until today. It 
is a government not by election, but by arms. And what it did 
very first is abolish private ownership and therefore have the 
whole resources at their command.
    With this total command of resources of the society, it 
maintains a large military Army which is obedient to the wishes 
of the party. And then it uses the military and police force to 
control the society in general.
    What I just described were the characteristics of China 
under Mao, China under Deng Xiaoping is changed. And that also 
includes China and Jiang Zemin now.
    What is important to me is not how are we going to bring a 
few good fellows like Harry Wu or others to have power in the 
government, but rather more important to deconstruct that 
structure that maintains authoritarian government in the first 
place.
    The path to that deconstructed China will go through the 
nourishment and encouragement of private ownership and the 
private economy and then leading up to a civil society.
    The civil society with independent benefits, independent 
voices and independent ideas strong enough to limit 
dictatorship.
    And therefore, PNTR could play a pivotal role in forming a 
civil society in China. I do not agree with the gentleman to my 
right who said that trading with China will only make those few 
rich, especially those bureaucrats. I think that trading with 
China will make many other middle class people richer.
    With trade, China now is open to all sorts of influences 
and new sources and new views, not only just businessmen, but 
political activists, environmentalists, as well as 
entrepreneurs and scholars and all that.
    I like the idea that the United States Congress has this 
annual review on China's human rights, and I wish it could be 
done on a daily basis if you wish. However, I think that it 
would be much better that in addition to reviewing China's 
human rights condition that we can engage in China and include 
China in the international community so that all these new 
ideas and influences can facilitate social change.
    It will be to the interests of the United States and China 
to have a better, engaging relationship.
    I want to say more about that. People think this is a very, 
very simple, a very small thing. But I just want to let you 
know because I live in Beijing. You see, in downtown Beijing, 
in the most crowded district that we call Wang Fu Jing, there 
is a McDonald's there. The authorities want to, you know, 
please another Hong Kongese entrepreneur, and they ordered the 
McDonald's to leave. And then, you know, all of the Chinese 
people watched this case. When the Americans invest in 
something they depend on the law to protect it. But McDonald's 
is only a company. In China, no one is there to protect the 
people or companies from the government. That is what we saw in 
this case.
    Also, environmentalists in China just want to show our 
thanks to you, the American government, because you are the 
first country to withdraw financial support from the Three 
Gorges projects. What your government announced was that if 
your American government does not want to use the taxpayers' 
money to destroy your own rivers, why should you spend the 
money to destroy other countries' rivers.
    Right now other developed countries in Europe, they just 
want to get 70 billion U.S. dollars from this project. But the 
U.S. is the first one to pull out.
    This gentleman to my right just mentioned the Korean War, 
but you do know that the ordinary people did not want that war. 
Even some of Mao Zedong's very close comrades were against the 
war. We went to war only because China has a one person 
dictatorship. This kind of political system led us to this 
terrible, sad war between our two nations.
    But, you know, historically, since the Opium War in 1840, 
the United States has been the only country that wants to have 
normal trade with China.
    So, we really do not want to hurt the feelings of the 
ordinary people. I really hope that you support the PNTR, to 
show the Chinese people your spirit, that you are a strong 
country; but also that you value human rights, labor rights, 
and everything you stand for. Thank you.
    [The prepared statement of Ms. Dai Qing follows:]

                     Prepared Statement of Dai Qing

    My name is Dai Qing. I reside in Beijing, the People's Republic of 
China. I came to the States a week ago for a short-term visit as a 
guest of the Goldman Foundation. Currently, I am a freelance writer and 
environmental activist. However, before 1989, I was a reporter and a 
columnist in a national newspaper. After the crackdown of the 1989 pro-
democracy movement, I was jailed for ten months. I lost my job and my 
income. My writings have been completely banned in China. I am 
currently under constant surveillance of the state police.
    There is no doubt that the Chinese civilians today enjoy little 
freedom of speech and legal protection. Neither do they have freedom of 
assembly and right of protest. They are given few opportunities to 
participate in decision-making regarding politics, economy, culture, 
and environment. Independent political and religious beliefs can lead 
to criminal prosecution.
    Indeed, the question in front of us is not how bad human rights in 
China are. Rather, the issue confronts every responsible human being is 
that of finding the most effective means of improving human rights and 
encouraging democracy and freedom in China.
    Promoting engagement and trade is, I believe, among the most 
powerful means of changing China.
    Following are a few major points, which I believe to be the key 
issues in understanding PNTR and the future of China.
    Firstly, PNTR will help to reduce governmental control over economy 
and society; secondly, PNTR will help to promote the rule of law; and 
thirdly, PNTR will help to nourish independent political and social 
forces in China.
    Let me elaborate these arguments.
    First, history has demonstrated that the biggest ally of communist 
dictatorship has been isolation. During those years when China was cut 
off from the rest of the world, the communist party was able to 
completely suppress the civil society, and to establish a totalitarian 
state on the its ruins. The state founded its powerful military and 
police forces, as well as a party organizational network entrapping 
every single individual in the society. Millions of people were 
persecuted, executed, starved to death and deprived of the most basic 
human rights. Few people were able to even utter a word of defiance.
    Such a monopoly was possible mainly because the party-state 
controlled all resources, especially economic resources. As a byproduct 
of the economic reforms of the past two decades, the Chinese people now 
have a chance to break such total control of the state. PNTR, by 
engaging China into the modem world, will greatly help the still 
vulnerable private sector in the Chinese economy, and thus to reduce 
the state control over economy and society.
    Second, PNTR will encourage more foreign investment into China. 
Foreign companies do not only introduce contemporary management methods 
to the Chinese people; they also bring about the need for the rule of 
law into a society in which the legal system has long been subjected to 
the arbitrariness of the party-state. Labor rights, accordingly, will 
also come to people's attention. In fact, it is general knowledge in 
China that companies owned by investors from the industrialized nations 
are paying far more attention to the rights of their employees. As a 
result, employment in such companies is highly desirable. This in fact 
has put continually increasing pressure on the government to meet 
international standards in trade and in some other issues as well.
    Third, PNTR, with its implication of openness and fairness, will 
further promote an open and engaging atmosphere in China, politically 
and socially. In the past two decades of economic reform, with the slow 
but steady recovery of the civil society, independent NGOs are now 
persistently emerging in China. Such organizations are now spreading in 
many fields, including women's rights, religion, environment, etc. They 
are changing the landscape of Chinese politics. They represent the 
future of China. The conservative forces within the Chinese government 
view them as products of westernization and openness. They will be 
facing a real danger of becoming the casualty of a trade war between 
the United States and China.
    I understand that some people in the United States worry that the 
increased wealth generated within China by further international trade 
development will help to strengthen the Chinese government. In fact, 
any one who has basic knowledge would know that poverty, instead of 
wealth, would provide legitimacy to the communist party. With prevalent 
poverty in today's China, the Chinese government has run a successful 
propaganda campaign when it argues that the right of economic survival 
overrides other human rights.
    The Chinese people are looking for positive support from the 
international community, especially the industrialized world. PNTR, in 
the eyes of average Chinese, provides a positive solution. It sends the 
Chinese people a powerful and positive message, that the most powerful 
industrialized nation today will work with the Chinese people to build 
a new world order. Whether or not granting PNTR to China, therefore, 
does not only means more or less import and export to the Chinese 
people, but also indicates whether the people of the United States 
accept them as equal partners in the new world of a new century.
    I also understand that many people in the United States want to 
hold on PNTR as a means to maintain international pressure to the 
Chinese government. Doubtlessly, international pressure is one of the 
crucial factors for a better future of China. However, international 
pressure will be severely undermined if PNTR, the means and the symbol 
of openness, is taken away.
    Thank you for your attention.

    The Chairman.  Thank you. I think, if I understand the 
translation, you believe that PNTR will help nourish the 
independent political and social forces in China, is that 
correct?
    Ms. Dai Qing.  Yes.
    The Chairman.  And also that it will help reduce government 
control and promote the rule of law. Now, I am not going to 
debate you because you are one of the most dynamic witnesses we 
have had since I have been the Chairman of this committee. And 
I just wish you folks could have seen the dynamism of this 
lady. But tell me how you think this will happen. Because it 
has not happened with any of the other influx of money and 
everything else to the present rulers of China.
    Ms. Dai Qing.  I am sorry, Mr. Chairman, can you repeat 
that?
    The Chairman.  I tell you what I am going to do. I am going 
to wait and try and phrase it a little bit better. But thank 
you very much. Suppose we take about seven minutes on the first 
round.
    Mr. Bauer, three members of the Helms team on the Foreign 
Relations Committee staff traveled to China last January and 
met with the underground Catholic bishop in Shanghai. Now, the 
80 year old gentleman was under constant surveillance and was 
forced to live in squalor. Now, this is not hearsay. This is 
what my people saw. He was interrogated by internal security 
police both before and after my representatives managed to 
visit with him.
    And my question is, one of them, why do you think China's 
autocrats feel so threatened by a harmless elderly man, a 
Catholic priest, seeking to train priests and conduct worship 
that they see the need to harass him?
    Mr. Bauer.  Mr. Chairman, I think it is for the same reason 
that tyrants get so upset when their people read the 
Declaration of Independence. Anybody that believes that we are 
created by God and that we have as a matter of birthright the 
right to vote, the right to free expression, that each 
individual is unique and distinct--I think that is what 
threatens tyrants always. And certainly all major religions 
teach that each of us is a unique creature of God.
    The Chinese also see what happened in Eastern Europe and in 
the Soviet Union generally when the church was so outspoken for 
individual liberty. One Chinese leader was quoted as saying in 
a government newspaper referring to religious belief in China, 
``We will strangle the baby in its crib.'' That was a little 
play on words, but the meaning of it was quite clear. They see 
religion generally as being a threat to their ability to 
manipulate the people and to believing that they have no rights 
other than the rights that the government gives them.
    I believe religious belief is a much greater threat to the 
Chinese government than building more McDonalds in Beijing or 
whatever.
    The Chairman.  So that we will not appear to be--
    Ms. Dai Qing.  I understand that perfectly well, thank you.
    The Chairman.  Very well. Proceed. We ought to ask this 
question to you and Mr. Becker at the same time. What do you 
think of the view--and I would appreciate your comment as a 
matter of fact--of the view that the presence of American 
businesses in China will expose the Chinese leadership to the 
American concepts of openness and transparency and respect for 
workers and steadily spread those concepts throughout the 
Chinese society. I guess I am asking do you agree with that 
statement.
    Mr. Becker.  Absolutely not, Mr. Chairman.
    The Chairman.  And if you do not, say why.
    Mr. Becker.  Businesses never advance those thoughts. Those 
thoughts have been advanced through law in the United States 
and regulation. We have had to fight like hell for all of the 
rights that we have in labor in the United States. You track 
business when it goes to other countries and see how they act. 
They go to the lowest common denominator.
    State of the art plants in the United States where we have 
the best of conditions, the best safety conditions that you can 
have. When those same plants build down in the McKeladors in 
Mexico, they revert back to what the Mexican standards are. 
They do not carry their standards down there.
    Put another way, Mr. Chairman, they are not going to China 
or to Indonesia or they will not go to Vietnam in order to 
increase the environmental controls in that country or to try 
to raise the cost of labor in those countries. They are going 
there to take advantage of the lowest prices they can possibly 
get. That is the creed of management. And it is offset in the 
United States by the regulation and law that we have in this 
country.
    The Chairman.  Do you agree with that, ma'am?
    Ms. Dai Qing.  First, I want to say something about 
religion. May I?
    The Chairman.  Okay.
    Ms. Dai Qing.  In China, the government hates anything that 
organizes people, because it wants to control the whole society 
directly. So not only religion, but even environmental NGOs, 
the government does not really like.
    So it tries to destroy every organized person. This is 
because the legitimacy of the government comes, not from the 
power of the vote, but from the power of arms. So, not only 
religion is repressed, but recently, the whole social system is 
becoming stronger and stronger.
    You know, there are examples of religious people being 
repressed. But you do not mention that there are also examples 
of growing religious freedom. Where I live, in Beijing, I have 
many friends and they go to church and they are very 
prosperous. In some families, they have a maid to clean or do 
some work for the family. If the girl goes to church, she is 
considered a perfect candidate for a maid. It is becoming more 
and more common in Beijing and other cities.
    The Chairman.  Let them respond to you. Okay. Go ahead.
    Mr. Bauer.  Well, China obviously is a very large country 
and almost anything you say about it is true someplace. There 
certainly is more religious liberty and more believers in China 
than there were 30 or 40 years ago or 20 years ago.
    But, Mr. Chairman, as you point out and as your staff 
found, those that insist in worshiping by their own beliefs and 
preaching by their own beliefs without running those by the 
government are horrendously oppressed in that process. Some 
Chinese families have to baptize their children in rivers at 
night because they cannot get permission to baptize them any 
other way.
    Mr. Chairman, if I could just say one thing about your 
question. Whatever the presence of American companies 
accomplishes from a positive point in China, I am afraid the 
tradeoffs in the other direction are much more severe. Many 
American companies find that in order to get the prized license 
or permission to build a plant or to do business in China, they 
have got to become partners with the Chinese government and the 
control of the Chinese people.
    So a company that wants to build a factory in China might 
have to agree to allow the secret police to enter the factory 
to check whether anybody is reading bibles during their lunch 
hour or whether a female employee might be pregnant with an 
unauthorized second child. So the American corporations in some 
cases become partners in the oppression of the Chinese people.
    The Chairman.  We will address that a little bit later. Do 
you agree with that?
    Mr. Becker.  I would like to take a little different twist 
with that if I possibly could rather than directly with the 
religion. We are not--as a trade union movement in the United 
States, we are not against the Chinese people.
    The Chairman.  Of course not.
    Mr. Becker.  What we have insisted is that the trade 
agreements of the United States contain some basic human 
rights, environmental protections and trade union rights. Trade 
union rights often are the cornerstone of democracy. That is 
where the seed of democracy is sewn amongst the workers. And it 
spreads from there.
    Workers have to have the right to be able to share in the 
wealth they help create. If they are kept compressed, if they 
are kept pushed down, to where they cannot do that, to share in 
this, then this becomes a comparative advantage for China and 
their trade relations throughout the rest of the world. And 
this is what we are talking about. Because somehow or another, 
we have to compete with them in some form or fashion.
    But my point really is that democracy if it starts within 
the trade union movement, within the workers movement, and that 
is what collapsed communism in Eastern Europe, starting in 
Poland and it spread throughout the rest of the Eastern 
European nations and finally into Russia. That is what will 
work in China if anything does. And when you sew those seeds of 
democracy, that is also democracy for religious freedoms and 
for women and all the other things really that we are talking 
about here today.
    The Chairman.  Very good. Let me see. On the basis of--
    Mr. Wellstone.  Russ came first.
    The Chairman.  Well, he was here first.
    Mr. Wellstone.  Seniority?
    The Chairman.  Well, you three figure out who goes first. I 
am not going to call on anybody.
    Mr. Kerry.  I am first in seniority.
    Mr. Wellstone.  No, no. You came here first. Senator 
Feingold came here first.
    The Chairman.  Senator.
    Mr. Feingold.  Well, on second thought.
    Mr. Kerry.  Mr. Chairman, I am not going to take my full 
time and I have to go to another meeting. So I apologize. But 
Russ said he believes deeply in the seniority system here.
    Mr. Feingold.  That is because I get to be here for a 
while.
    Mr. Kerry.  Let me if I can just make a couple of comments. 
First of all, let me welcome all of our witnesses. I 
particularly welcome Gary Bauer and George Becker who represent 
very important and extraordinarily legitimate points of views 
on these issues. And it may surprise some to hear this, but I 
greatly enjoyed much of what Mr. Bauer was espousing in the 
course of his campaign. I thought he was one of the most 
articulate people in the entire race.
    And while we do not agree on everything, and he and I have 
sat before previously privately and talked about these things, 
we need to find a way to meld a significant value component of 
what he is talking about with some of the things that on both 
sides of the aisle that we try to do here.
    Mr. Bauer.  Thank you, Senator.
    Mr. Kerry.  And, George, let me just say I had such 
admiration for the position you are taking in terms of this 
important stand on human rights. And I think that Ms. Dai Qing 
agrees with you completely in terms of where you are trying to 
go. It is just a question of a different view about how we are 
going to get there, in a sense.
    I completely agree with your view about the impact of the 
trade union movement on the post-Communist block world in 
Eastern Europe. Obviously, Lech Walesa and others were just 
prime examples of the way in which the trade movement managed 
to change things.
    But it was there and it was the organizing tool. It is not 
in China today. And so we are left, as Ms. Dai Qing is telling 
us, looking for other avenues, for other ways to promote this 
vital change.
    Now, I do not know if you have been to China. I guess I 
first went there in the late 1980s and more recently have been 
there. What a dramatic change in just the years that I have 
been going there. And it is not as long as people who are much 
more expert than me.
    But I have seen a place where few people would engage with 
foreigners, where you had to get permission to move off your 
street to go work somewhere, where there was such a complete 
and total lock on any kind of movement, freedom, choice of 
work, et cetera.
    Today, one of the great changes in China is the number of 
people who are spontaneously and wilfully moving to the coastal 
communities to seek work where the work is without any need for 
permission and so forth.
    Many of the American and international companies building 
in China are building to American standards in terms of the 
environment, in terms of working conditions, et cetera.
    Now, are the salaries the same? No, they are not. But they 
have never been the same in almost any country in the world. 
Nor were they the same between Massachusetts and Georgia and 
South Carolina when we lost the textile industry, the shoe and 
the leather industry, because of labor costs and because of 
these transitions that take place.
    The real question here is even in the years where we had an 
annual review, which has been every year up until now, can 
anybody tell me that the annual review has produced the kind of 
change that we say we want to have in the long run here?
    You know, China is a dictatorship. It is authoritarian. We 
do not like it. We want it to be a democracy. We long for a 
change. But the question before us is going to be how best to 
achieve that. And I just want the committee to have this on the 
record.
    This is what Ms. Dai Qing said. She said her parents 
struggled for a new China, for a democratic system, and against 
the corruption of the old order. But when the new China 
appeared, so did dictatorship, injustice and corruption. She 
said she felt very sorry for her mother and father and the 
party's first generation of idealists.
    Now, much of her writing is banned inside China today. 
After Tiananmen massacre, she was arrested and detained for ten 
months. She has been an enormous critic of the Three Gorges 
Dam; she wrote this brilliant book about the dam. It has been 
banned inside China. Her parents were both executed during the 
occupation by Japan, her father was executed when she was three 
years old. She grew up among the top elite as the adoptee of 
her father's friend, Marshall Ye Jung Jing. And she earned a 
degree in missile engineering.
    She has worked on China's program of intercontinental 
missiles. And after the turmoil of the cultural revolution, she 
assumed the cover of a writer while she was spying in Europe 
for military intelligence. So she has been there, done that, 
understands the system.
    And I do not think it is an accident that so many people 
like Dai and Harry Wu and others who are at the forefront of 
resistance, of change, of seeking a change, are saying that 
opening up to standards and being involved in the broader 
context in their judgment is going to bring about change.
    Now, for me, I think it is important to listen to those 
folks who are on that front line. None of us have all the 
answers here. I think we could have negotiated a better 
agreement. And I have said that to my colleague Paul and 
others. And I hope in the future we are going to find a way to 
put these other issues much more on the table. But for the 
moment, this is the one we have in front of us. And my sense is 
that we need to keep moving down this road.
    So, Mr. Chairman, that is my statement. I appreciate--you 
wanted to respond, George. I see you begging for the 
microphone.
    Mr. Becker.  Please do. Well, I know that you are anxious 
to leave or that you have to leave.
    Mr. Kerry.  I am not anxious to leave. I have to leave to 
be part of this dialogue.
    Mr. Becker.  Well, you have to leave. And there is a couple 
of points. I am not saying, Senator, that the most favored 
nation that we have, the annual review, is one iota better than 
what we have got now. The fact is they are both completely 
inadequate. When you say that we could have negotiated a better 
agreement, I do not know how we could have negotiated a worse 
agreement. This is the marketplace of the world. China is 
running a $70 billion deficit with the United States right now 
in trade. That is under the most favored nations. By the most 
conservative estimates, it is going to skyrocket after PNPR 
comes into effect.
    The question is they want our market. They want our trade. 
And the only thing we have to offer is our market. That was the 
time to do the bargaining. That was the time to get the 
environmental controls, the human rights controls, and to get 
something for trade union rights for workers so that they could 
improve their lot in life. That was the time to get it.
    Once we sign up with PNTR, we are out of the action. And 
they can take our jobs. They can take our industry at any time 
that they want. We are defenseless in the face of that.
    Mr. Kerry.  Mr. Chairman, I do not want to abuse the time. 
First of all, let me correct myself. I misspoke. I did not mean 
Harry Wu. I meant Martin Lee. But secondly, let me respond to 
what you just said.
    This agreement does nothing to alter one good or goods 
coming into the United States. There is no change in any tariff 
on any goods coming into this country. It is a one way 
agreement. The only reduction in tariffs are reductions by the 
Chinese so that our goods can go into there.
    Now, it does not change the goods coming into this country. 
If you did not pass this, they still have MFN. And given the 
record of the last 20 years, Congress is almost certain to pass 
it one more time here. And those goods and the trade deficit 
will continue to grow. There is no evidence whatsoever that the 
Congress of the United States is prepared to revoke it, 
particularly this year. If it did not do it after Tiananmen, 
what on earth is the rationale for their doing today what they 
would not do then in terms of not granting MFN? So there is 
nothing that is going to change in that balance.
    Mr. Becker.  The will of the Senate. The will of the 
Senate. You can stop it dead in its tracks. And you can tell 
them to renegotiate this agreement. You can tell them that we 
want the human rights and that we want the environmental 
controls. And that we want trade union rights within that 
agreement, in the core agreement, or you do not get our 
markets. It is as simple as that. But until we take that stand, 
we are not going to get it, sir.
    Mr. Kerry.  I very much respect your view. And we need to 
find a way to fight for those things. Mr. Chairman, thank you.
    The Chairman.  You are quite welcome, sir. Now who?
    Mr. Feingold.  Thank you, Mr. Chairman. I would like to 
thank the Chair for holding this hearing. I have never, just 
like the Chairman, supported the notion that trade issues 
should be divorced from human rights and other concerns. It is 
my firm belief that a number of factors must be weighed when 
considering the nature of our trade relationships with other 
countries. And for that reason, I think this is a very timely 
and valuable hearing. And I am concerned about the possibility 
that the Congress will abandon its annual review of China's 
trade status. And I did also enjoy Mr. Bauer's remarks and 
would like to ask him a question.
    The supporters of PNTR claim that increased economic 
openness will sort of inexorably lead to increased civil and 
political openness. And China has been engaged in significant 
international trade for some time. Between the U.S. and China, 
trade has increased from $4.8 billion in 1980 to $94.9 billion 
in 1999.
    Has there been any indication, Mr. Bauer, that this 
relationship has led to increased political openness and 
tolerance in China?
    Mr. Bauer.  Senator, very little. In fact, if you look at 
our own State Department reports, in an administration that has 
been very sympathetic to more trade with China, those reports 
indicate that if anything, things have worsened in the last 
five to eight years on almost every measurement that we can 
point to.
    I think it was just two years ago, that the State 
Department came out with an incredible statement that they 
could not identify one active dissident in China in a nation of 
1.4 billion people. You would almost have a dissident by 
accident with that many people. No, I think the evidence is 
quite the opposite. And quite frankly, historically it just is 
not true that more open economic activity will lead to more 
political freedom.
    In fact, the most dramatic example of the opposite is Nazi 
Germany. There was a great rebirth of economic activity when 
the Nazis took power. But the exact opposite on political 
liberty. Political liberty is being withdrawn.
    So there is nothing fore ordained about this, nothing 
certain about it. And I think that the only reason that the 
increased economic activity would lead to more political 
liberty is if a price of that economic activity is pressure 
from a democracy like the United States on these sorts of human 
rights and national security issues. And it seems to me by 
giving them permanent NTR, we are taking away that pressure at 
the very time we ought to be increasing it.
    Mr. Feingold.  Thank you for that answer. And Ms. Qing, I 
certainly admire you. And am curious do you think that--just 
how seriously do you think that the regime in Beijing takes 
this annual Congressional debate on China's trade status? And 
would the level of attention or concern or recognition of it 
change if we did not have these annual discussions and votes?
    Ms. Dai Qing.  I think the trade issue is terribly 
important to the Chinese leaders. You know, saving face is 
very, very important, not only for the everyday Chinese people, 
but especially, for the Chinese leaders.
    When you criticize them they take it seriously, and they 
react. So, I just want to give an example in China that is 
really terrible. This is the garment issue. In this case the 
Communist Party leadership, the social political system, the 
proletarian dictatorship, case Marxism and Leninism as the 
leading theory, leads to terrible conditions. So if you--if you 
Americans or others--can very strongly criticize it, it will 
end it.
    But, you know, eleven years ago the Communist leaders 
themselves tried to remove the bad working conditions in the 
garment industry using the law, the national constitution under 
the party's regulation. It did improve somewhat.
    I think the annual criticism and the annual check is very 
good for us, for the political prisoners or political 
dissidents. I myself, I benefit from your strong criticism and 
negotiations on human rights issues. But, I think very little 
of that benefit spreads out to the ordinary people, the whole 
of society.
    Mr. Feingold.  Are you saying, ma'am, that it would be 
better if this committee and Senators did not criticize the 
human rights record of China?
    Ms. Dai Qing.  I do not mean do not criticize. We 
appreciate your support and your help, but for the ordinary 
people, for the people that are not being held by the police, 
the ordinary people, they just hope the whole society changes 
bit by bit, bit by bit. They just want to earn a living. They 
just want to have their own voice.
    I think criticism is good for political dissidents. But to 
just do the annual check and critize will do very little for 
the whole society.
    Mr. Feingold.  Mr. Becker, are you aware of any cases in 
which U.S. investment has led to real improvements in labor 
conditions in China? And what impact do you think do you think 
further U.S. investment in China will have in labor conditions 
and labor activism in China?
    Mr. Becker.  I would like to lead into that by commenting 
on what was said just a second ago about this harsh criticism. 
First of all, what makes anybody believe that China is going to 
live up to the accession agreement, either in spirit or in the 
letter of the law, when they have not enforced any of the other 
agreements. And what makes us believe that we are going to be 
able to stand up to that kind of anger from the Chinese? If we 
criticize them or if we try to force them to live up to that, 
we know we are going to get the same kind of response that we 
got on other areas that we criticize the Chinese that is going 
to be the anger and the threats. I do not believe that anybody 
else believes that our politicians and our companies are going 
to be able to stand up against that. This is why agreements up 
to this point in time have not been enforced against the 
Chinese.
    But to get to the other aspect of this, as far as companies 
going into China, the companies go into China. They build there 
and they export back to the United States. Sure, there is 
wealth created in China and it may be--I do not know at what 
levels it would be distributed.
    But the workers themselves do not have the freedom to share 
in this. They do not have the right to make demands like they 
do in the United States and be able to share in the wealth and 
the prosperity that they help create. And any kind of concerted 
activity on their part to do this is met very harshly by the 
government. This is why the slave labor camps are filled in 
China and we know that. And the military runs those.
    And we see--they just announced today I think Ford is going 
to build a factory in China. I mean, is this a trade agreement? 
No. This is not trade back and forth. And that is what this 
agreement protects. It protects the companies and the financial 
institutions. I should have said that to Senator Kerry. There 
is some meat to this, but the meat to it is to protect the 
companies and the finance arrangements going over there. It is 
not a trade agreement back and forth. There is no way that we 
can compete against Chinese goods coming into the United States 
made under the conditions that they are currently made. We have 
to break that mold. And to us the only way to break that mold 
is to put guts into the trade agreements themselves. And that 
touches then on the human rights and the environmental 
regulations and the trade union rights.
    Mr. Feingold.  Thank you, very much. Thank you, Mr. 
Chairman.
    The Chairman.  If you will, spare me a couple of minutes 
here. I think one thing needs to be made clear. Before I came 
to the Senate in 1973, I had an interest in young people, 
including a great many Chinese young people who were studying 
in this country or otherwise here.
    After I came to the Senate, I must have worked with 300, 
more than 300 young Chinese people whom I love dearly. Now, 
this is not--those of us who oppose this arrangement with 
China, we are not worried about the people of China. We are 
worried about the dictators of China who run China and who will 
not let the people have freedom to do and say what they need to 
do.
    In other words, we want the people to be free and we do not 
think this is going to help. Because heretofore, and in just a 
few minutes I am going to talk about this chart that I had the 
folks draw up about the trade agreements between the United 
States and China, a record of broken promises, not by the 
people of China. By the government of China, the rulers of 
China. So I just wanted to make that point. And thank you, 
Paul.
    [The information referred to by the Chairman follows:]


     Major U.S.-China Trade Agreements: A Record of Broken Promises
------------------------------------------------------------------------
             Agreement                        Failures to Comply
------------------------------------------------------------------------
1979 Agreement on Trade Relations    Large and increasing trade deficits
 Between the United States and        with China
 China
------------------------------------------------------------------------
1992 Memorandum of Understanding on
 Market Access
    Eliminate certain trade          New barriers in place of those
     barriers.                        removed
    Make trade regime more           Ambiguity in deciphering
     transparent.                     regulations
    Eliminate trade substitution     New import substitution
     laws.                            implementation
    Remove discriminatory standards  Unsound and unevenly applied SPS
     restrictions.
------------------------------------------------------------------------
1992 Memorandum of Understanding on  Newly established laws, but lack of
 Intellectual Property Rights         enforcement
------------------------------------------------------------------------
1995 Memorandum of Understanding on  Ineffective action on pirated
 Intellectual Property Rights         products, and insufficient market
                                      access
------------------------------------------------------------------------
1996 Chinese Intellectual Property   Increase of pirated products into
 Rights Action Plan                   China
------------------------------------------------------------------------
1997 Agreement on Textile and        Persistent illegal Chinese textile
 Apparel Quotas                       transshipments
------------------------------------------------------------------------
1992 Memorandum of Understanding     Inadequate cooperation by Chinese
 and 1994 Statement of Cooperation    authorities
 on Prison Labor Exports
------------------------------------------------------------------------


    Mr. Wellstone.  Absolutely, Mr. Chairman. To the panelists, 
thank you. And Gary, I agree with what my other colleagues have 
said about you and your important voice in our country.
    Mr. Bauer.  Thank you.
    Mr. Wellstone.  Mr. Chairman, we are going to have 
apparently another round to ask some questions. Apology, I want 
to make a very brief statement because it is important for me 
to explain my position as a Senator, especially given the fine 
testimony of Dai Qing.
    This is a really important hearing. And we are dealing with 
issues of labor and trade and human rights and religious 
freedom. And, Mr. Chairman, I do not think it is just important 
for the Senate Foreign Relations Committee. I do not it is just 
important for the Senate itself. I think these are issues that 
are important and should be discussed in the kitchens and 
living rooms of people around the country.
    My father, who was born in the Ukraine and lived in Russia 
and lived in Harbene and lived in Peking and spoke fluent 
Chinese, would be the first to say that when the most basic 
human rights and freedoms of others are infringed or 
endangered, we are diminished by our failure to speak out or to 
act on our beliefs. But when we embrace the cause of human 
rights, we reaffirm one of the greatest traditions of American 
democracy.
    Mr. Becker, you know, I think people are realizing in our 
country that we cannot separate how well we do as citizens, how 
well we do as workers, from the plight of workers in other 
countries around the world. And you have been a towering figure 
in the labor movement and I thank you for your very, very 
strong voice.
    Mr. Chairman, I want to say this to Dai Qing especially. 
The issue before us is not whether or not we have trade with 
China. We have trade with China. It is not about whether we 
have an embargo. We are not going to have an embargo. We are 
not even discussing whether China should enter the WTO. This 
has all gotten kind of confused.
    The question for the Senate is whether or not we or do not 
reserve for ourselves the right to annually review trade 
relations with China. And I think that in turn becomes a 
question not of whether China's going to be part of the world 
economy. It is a huge country. It will be. The question is 
under what terms does China become a part of the world economy? 
What will the rules be? Who will decide those rules? Who will 
benefit? And who will be harmed by them?
    And I do not think, Mr. Becker, or any of you here, for you 
to say that in this new global economy, you want to make sure 
that the global economy works also for human rights and the 
environment and wage earners and producers. That is forward 
looking. That is not backward looking.
    This bilateral agreement, Mr. Chairman, that was negotiated 
by the United States and China last November and the PNTR 
legislation currently before the Senate provides discouraging 
answers to the questions that I just raised.
    Our bilateral agreement, anyone can examine this, contains 
page after page after page of protections for the United States 
investors. It is a virtual wish list for multinational 
corporations operating in China and for those who want to move 
there. But it contains not one word about human rights, Gary, 
not one word about religious freedom. Nothing on labor rights 
and nothing on the environment.
    Now, it has been said that the United States could not have 
demanded such things, Mr. Chairman, because we concede nothing 
in our deal with China. This is far from the truth. With PNTR, 
the United States would give up annual review of China's MFN 
trading privileges as well--as well--as our bilateral trade 
remedies.
    I think we could have negotiated a different deal with 
China. One that would have better reflected the priorities of 
the American people. And I think the reason we could have done 
that is that China absorbs 40 percent. We absorb--the United 
States--absorbs 40 percent of China's exports.
    So here is my question. Last year, the State Department's 
report on human rights violations was brutal. And yet, in our 
agreement with China, we extracted no concessions with regard 
to human rights.
    Nor did we obtain any concessions with regard to religious 
freedom. Yet, the report of the United States Commission on 
International Religious Freedom, commissioned by our Senate and 
our House of Representatives, recommends that we delay PNTR 
until China makes substantial improvement in allowing its 
people the freedom to worship.
    And they lay out a number of different benchmarks that 
should be met. We demanded no concessions from China on their 
persecution of labor organizers. Yet, any effort to form an 
independent labor union in China is meet with firing, arrest--
this is true--and imprisonment without trial, usually for three 
to eight years in a labor camp. And we obtained no concessions 
from the Chinese on complying with their existing commitments 
on forced prison labor.
    Mr. Chairman, I do not know if this is really so much about 
we are going to have more exports to China. I think what we are 
going to have on present course is we are going to have more 
investments. And what we are going to see instead is that China 
is going to become an export platform attracting foreign 
manufacturers, paying wages as low as three cents an hour. 
Walmart is over there right now paying 13 cents an hour or 14 
cents an hour.
    Well, Mr. Chairman, I want to ask unanimous consent that my 
full statement be included in the record.
    The Chairman.  Without objection.
    Mr. Wellstone.  And I would like to conclude this way to 
stay within my time limit. I think we need a more forward 
looking approach to the challenges of this global economy. I 
refuse to be called a protectionist. I refuse to be labeled as 
looking backward over the retrograde. I am looking forward. And 
there is absolutely nothing wrong with people in our country 
and for that matter people throughout the world saying we are 
in a new global economy. Just as 100 years ago we evolved into 
a national economy. We wanted to make sure it worked for 
people. We want to make sure this global economy. We are being 
told that we live in a global economy and that is true. But the 
implications of living in a global economy I think are seldom 
recognized. To me, Mr. Chairman, if we are living in a global 
economy and we care about human rights, the we can no longer 
concern ourselves just with human rights at home. If we live in 
a global economy, we are concerned about human rights 
throughout the world. If we truly care about religious freedom, 
we can no longer just be concerned about religious freedom at 
home. We have just been told we live in a global economy. We 
care about religious freedom in other nations.
    If we truly care about the right of workers to organize and 
bargain collectively and earn a decent living for themselves 
and their family, then we can no longer just be concerned about 
labor rights at home. And if we truly care about the 
environment, we can no longer concern ourselves just with 
environmental protections at home. We have to concern ourselves 
with environmental protections around the country.
    It is interesting and it is 20 more seconds. If you look at 
the polling data, the American people by a fairly large margin 
want us to maintain our right to review trade relations, normal 
trade relations, with China. And 83 percent of the people in 
our country support inclusion of strong environmental and labor 
and human rights standards in trade agreements.
    But you know what? I do not think that they have really 
been consulted in this debate. And that is why this hearing is 
so important. I just wanted to be clear about what my position 
is as a Senator.
    And on the floor of the Senate, I am committed, and I know 
you are, we are going to have amendments on human rights. We 
are going to have amendments on the right of people to practice 
their religion. I am going to have an amendment on the right of 
workers to organize in our own country labor law reform. And we 
are going to have amendments that deal with environment 
protection and we should.
    And I say that out of hope for China. I am not a China 
basher. I do not want to have a Cold War. That is not what I am 
about. But I do feel strongly about these issues. Thank you.
    [The prepared statement of Senator Wellstone follows:]

              Prepared Statement of Senator Paul Wellstone

    Mr. Chairman, thank you for calling this timely hearing on the 
human rights, labor, trade, and economic implications of Permanent 
Normal Trade Relations (PNTR) for China.
    I strongly believe that these issues must be fully and thoroughly 
discussed and debated--not only in the Foreign Relations Committee and 
on the floor of the United States Senate, but in the kitchens and 
living rooms of every American family. The issues we are examining 
today affect all Americans in many important ways.
    People engaged in human rights issues have long understood this 
basic truth: that Americans can never be indifferent to the desperate 
circumstances of exploited and abused people in the far reaches of the 
globe. When the most basic human rights and freedoms of others are 
infringed or endangered, we are diminished by our own failure to act. 
But when we embrace the cause of human rights, we reaffirm one of the 
greatest traditions of American democracy.
    Fortunately, this truth is now reaching a larger public. A rapidly 
growing number of working families and their union representatives have 
come to understand that their own well-being depends to a considerable 
degree on the welfare of people they've never met, living halfway 
across the planet.
    One of the, public figures most responsible for this remarkable 
shift in attitudes is President George Becker of the United 
Steelworkers of America, who we are very fortunate to have testifying 
before the Committee today. I want to extend my warmest welcome to 
President Becker, a towering figure in the American labor movement.
    President Becker has been at the forefront of advocacy for labor 
rights around the globe. President Becker was there in Seattle last 
November, alongside tens of thousands of union members, demanding that 
workers oversees be allowed to organize and bargain collectively. And 
President Becker has been extremely farsighted in his work with the 
environmental community to ensure that the global economy works for the 
environment.
    As President Becker has recognized, this is the urgent challenge 
that we cannot escape or ignore: how do we make the global economy work 
for human rights--at home and abroad? How do we make the global economy 
work for working families--at home and abroad? And how do we make the 
global economy work for the environment--at home and abroad?
    This is why China's integration into the world economy looms so 
large in our consciousness. China is like no other country. The size of 
its population will give it a preponderant influence on the evolution 
of the global economy. And the character of its government gives us 
cause for alarm over the direction the global economy may be taken.
    But let us be clear. The issue before Congress is not whether we 
trade with China: we will continue to expand our trade relations 
regardless of whether Congress passes PNTR. The issue before us is not 
whether we talk to the Chinese or engage the Chinese government; we 
will continue to do so regardless of PNTR. There has been no suggestion 
of boycotting China, or isolating China, or walling them off from their 
economic partners.
    The question, really, is not even whether we integrate China into 
the world economy. The question is on what terms do we integrate them. 
What will the rules be? Who will decide those rules? Who will benefit 
from those decisions? And who will be harmed by them?
    The bilateral agreement negotiated by the U.S. and China last 
November, and the PNTR legislation currently before the Senate, provide 
discouraging answers to those questions. Our bilateral agreement 
contains page after page of protections for U.S. investors. It is a 
virtual wish list for multinational corporations operating in China, 
and for those who wish to move there. But it contains not a word 
concerning human rights, nothing on religious freedom, nothing on labor 
rights, and nothing on the environment.
    It has been said that the U.S. could not have demanded such things 
because we concede nothing in our deal with China. This is far from the 
truth. With PNTR, the U.S. would give up annual review of China's MFN 
trading privileges, as well as our bilateral trade remedies.
    Annual MFN review has not been used as it should have been. But it 
remains our best leverage over China's behavior on human rights, and on 
labor rights. And it remains the only remaining leverage in our trading 
relationship to promote important non-commercial values.
    Our bilateral trade remedies have not been used as they should have 
been, or as they were intended. But Section 301, for example, remains 
our only explicit remedy against China's violation of core labor 
standards.
    I believe we could have negotiated a different deal with China, one 
that better reflects the priorities of the American people. I believe 
we still can. We have what China wants. The U.S. absorbs over 40 
percent of China's exports. China desperately wants to eliminate the 
annual MFN review process, not only to free itself from external 
pressure on issues it considers to be sensitive, but also to attract 
foreign investment with guaranteed access to the U.S. market. And China 
wants to join the World Trade Organization (WTO), which requires U.S. 
consent to the report of the WTO Working Party on China's accession.
    In exchange for these concessions to China, however, we extracted 
no concessions with regard to human rights. Yet this year's annual 
report by the State Department says that China's human rights 
performance continued to worsen in 1999.
    Nor did we obtain any concessions with regard to religious freedom. 
Yet the Report of the U.S. Commission on International Religious 
Freedom flatly recommends delaying PNTR until China makes ``substantial 
improvement'' in allowing its people the freedom to worship, as 
measured by several concrete benchmarks.
    We demanded no concessions from the Chinese on their persecution of 
labor organizers. We extracted no concessions on reforming their labor 
laws to allow free and independent union organizing, as the 
International Labor Organization has recommended. And we obtained no 
concessions from the Chinese on complying with their existing 
commitments on prison labor.
    Notwithstanding our failure to take any of these steps to improve 
the lives of millions of Chinese, it is said that PNTR and China's WTO 
membership would benefit Chinese workers and ordinary citizens. Yet 
Chinese dissident Harry Wu points out that exponential increases in 
trade and investment over the past 20 years have coincided with a 
deterioration of China's record on human rights. And WTO membership has 
resulted in no noticeable improvement in the records of other countries 
such as Burma, Cuba, and Colombia.
    Instead, absent any minimum standards for human rights, labor, or 
the environment, the most likely scenario is for China to become an 
export platform attracting foreign manufacturers with wages as low as 3 
cents an hour. The tens of millions of Chinese expected to lose their 
jobs as a result of this deal would join a ``floating population,'' 
already numbering in the tens of millions, exerting downward pressure 
on wages and working conditions. Even in U.S.-controlled factories, a 
recent report by the National Labor Committee documented payment of 
below-subsistence wages and violations of fundamental worker rights by 
U.S. companies and their contractors in China, often in open 
collaboration with repressive government authorities. Any attempt to 
form an independent union in China is met with firing, arrest, and 
imprisonment without trial, usually for three to eight years in a hard 
labor camp.
    And what about the effects of PNTR on American working families? 
Unfortunately, many of the concessions we chose to demand from China 
will make it easier for U.S. corporations to relocate there, taking 
advantage of weak Chinese labor and environmental standards, and export 
back to the United States in competition with American workers.
    As emphasized by recent articles in the Wall Street Journal and 
Washington Post, the trade agreement with China is much more about 
investment than exports. Indeed, the International Trade Commission 
(ITC) has found that the trade deal with China will actually increase 
our bilateral trade deficit with China.
    Most alarmingly, rock-bottom wages in China threaten to act as a 
magnet for employers seeking to avoid organizing efforts by American 
workers. Already, half of all U.S. employers threaten to shut down 
operations whenever employees choose to form a union. And studies have 
shown that threats by employers to move jobs to Mexico increased 
dramatically following passage of the North American Free Trade 
Agreement (NAFTA) in 1993.
    It is commonly argued that our country as a whole benefits from 
current trade policies, but no one can deny that the benefits are 
distributed unequally. Even free trade economists now conclude that 
trade policy is the single largest cause of growing inequality since 
1979, accounting for 20 to 25 percent. While the loss of good-paying 
manufacturing jobs is being matched by additional employment in the 
service sector, the new jobs pay less on average and have fewer 
benefits.
    If the welfare of American working families were really a top 
priority of our trade policies, trade initiatives such as PNTR would be 
accompanied by legislation that makes it easier for American workers to 
organize and bargain collectively, at the very least. To restore some 
of the bargaining power lost by workers due to PNTR and other trade 
policies, to help spread the gains from trade more broadly, and to 
promote unionization of new jobs in the service sector, we must 
strengthen the right of workers to organize and bargain collectively.
    We need a more forward-looking approach to the new challenges of a 
global economy, not the same old trade and investment model that PNTR 
embodies. There's ample evidence that our trade policies over the past 
20 years are a major reason why inequality has reached record levels in 
America, and why inequality has risen dramatically within and between 
nations over the past couple decades.
    We are forever being told that we now live in a global economy, 
which is certainly true. But to me the implications of this development 
are seldom recognized. It means that if we truly care about human 
rights, we can no longer concern ourselves only with human rights at 
home. If we truly care about religious freedom, we can no longer 
concern ourselves only with religious freedom at home. If we truly care 
about the right of workers to organize and bargain collectively and 
earn a better living for themselves and their families, we can no 
longer concern ourselves only with labor rights at home. If we truly 
care about the environment, we can no longer concern ourselves only 
with environmental protections at home.
    To those who argue that global markets will take care of 
themselves, or that they can never be tamed, I point to the lessons of 
our own economic history. At the end of the last century, America 
underwent the wrenching transition from a collection of local markets 
to one national economy. Today we are making a similar transition from 
a national economy to a global one.
    In this country, however, we made the national economy work for 
working people by setting minimum standards for labor, the environment, 
public health, and consumer safety. We managed to write rules for the 
domestic economy that reflect values other than just the narrow 
commercial interests of big business. Why should those values be 
banished from the rules of the global economy? Can it really be 
impossible to make the global economy work for working people?
    Of course not. But it all depends on who's writing the rules, 
because the rules determine who the winners and losers will be. Right 
now, the way those rules are written is not very democratic at all. We 
simply cannot afford to let decisions such as PNTR be made by a small 
circle of trade specialists and special interests.
    Surprisingly, large majorities in survey after survey support these 
objectives. Americans oppose eliminating annual reviews of China's 
human rights and trade record by a margin of 65 to 18 percent; 67 
percent oppose China's admission to the WTO without further progress on 
human rights and religious freedom; and 83 percent support inclusion of 
strong environmental and labor standards in future trade agreements.
    But the American people have hardly been consulted in this debate. 
If they had been, I think it unlikely that PNTR would be favored by 
such large margins in the House and Senate.
    Mr. Chairman, I believe the PNTR legislation before the Senate is a 
step in the wrong direction. We must do better. And I believe we still 
can.

    The Chairman.  Well, you have listened quietly, Gary. 
Before we get to another line of questioning, do you have 
anything you want to offer?
    Mr. Bauer.  Just to say to Senator Wellstone that eloquent 
and passionate as always, Senator, it is great to be on the 
same side with you on this issue.
    You know, I think that the question that needs to be 
asked--
    The Chairman.  Will you pardon me just a minute? I have had 
printed--the young people who are visitors here who cannot see 
this chart here, I have had copies made of the text of that. 
And if you would like one, it is a major U.S./China Trade 
Agreement: A Record of Broken Promises. Have you passed them 
out? All right. You may proceed.
    Mr. Bauer.  Senator Wellstone, I think the question that 
needs to be asked that is on the other side of the debate is is 
there no amount of oppression? Is there no amount of crackdown 
on religious liberty and on basic human rights that would 
change their view on normal trade relations with China? 
Certainly, I believe that everybody in this debate has good 
motives and are hoping to accomplish long term the same thing.
    But can it be that no matter what happened inside of China, 
there would be those here in Washington who would argue that it 
ought to be business as usual. There are clearly more 
dissidents in the camps today than there were yesterday. And 
there will be more tomorrow than there is today. You can go 
down every way we measure a civilized nation. In the last ten 
years the measurements have gotten worse.
    What is it that Beijing would have to do that would lead 
our opposition in this debate to say, ``You know what? I think 
you are right. I think we need to slow down a little bit here 
and perhaps use this incredible ace in the hole that we have 
which is the American marketplace, the Chinese government 
desperately needs this marketplace. They cannot duplicate it 
anyplace in the world.''
    What would it take for our opponents to say, ``You are 
right? We ought to use this wonderful ace in the hole in order 
to get changes in China?'' I presume there would be something 
that would lead them to say this is too much for even them to 
swallow. I think we passed that line a long time ago.
    One final point. As you well know, Senator, at least a 
third, perhaps half of the trade we do with China is not with 
the people of China, but it is with companies controlled by the 
People's Liberation Army. So you are not trading with the guy 
standing in front of the tank. You are trading with the guy 
that was driving the tank. America has always stood with the 
people standing in front of those tanks, not with the guys 
driving them. It is a matter of great shame, I think, that 
right now we seem to be siding with the driver of those tanks.
    The Chairman.  Mr. Becker, do you have anything?
    Mr. Becker. Just a very brief comment on that. I do not 
think that anybody is in disagreement at all about the need for 
human rights for the people of China. The question really is 
how do we help bring that about? What can we do to help advance 
that? We had an excellent opportunity in negotiating this trade 
agreement, something that they are vitally interested in, 
something they have to have to advance their society at all. 
And we have thrown that away under the PNTR.
    I would like to point to this exercise that we have here 
that they cannot have in China, a hearing like this that we can 
debate the issues that are important. The fact that we can sit 
here, three of here, that have different viewpoints and have 
the freedom to be able to express them before this assembly. 
And I think that is really what that is about.
    And you carry a terrible weight, the Senate. This has 
passed the House. That last stop is in your hands to be able to 
hold that back. And if it does not pass the Senate, it is going 
to be renegotiated. It is going to give our leaders an 
opportunity to take another look at this. And we are going to 
work like hell to make sure that they take the right look. And 
I want to thank you very much for this.
    The Chairman.  Good. Now, let me say to you, lady. And this 
is not a windup because he has got his questions. I have been 
Chairman of this committee for quite a long time. And I do not 
recall a more dynamic, interesting witness before since I have 
been Chairman.
    Mr. Wellstone.  And I have not been Chairman of this 
committee a long time, but I agree with him.
    Ms. Dai Qing.  I have a question for you. Of all the 
political dissidents and some present independent voices from 
the government, particularly in China, we have the same radio 
you have. We have the same concerns you have; and we have 
suffered abuse, human rights abuses by the government. But why 
do all the dissidents--I cannot say all, but most of the 
dissidents in China, those who live in China--why do they 
support PNTR?
    They support PNTR even though we know of all the things the 
radio mentions, most of the things they mention, we know they 
really happened. And while the policy of the government has 
changed very little, the whole society changes everyday, every 
minute.
    There is an ancient story that the wind and the sun had a 
contest to see who could be the first to get a man's jacket 
off. The wind blew, and blew, and blew; no matter how hard the 
wind blew, the man just held the jacket closer and tighter. But 
the sun, the sun just kept shining down on the man as he went 
along his way; and then, eventually, the man took the jacket 
off.
    So, PNTR and a very good relationship with the United 
States can be just like the warm sunshine. The whole society 
will change. And then it will force the Communist Party to 
change its policy.
    Mr. Wellstone.  Was the question for me? Do you want me to 
answer?
    The Chairman.  Well, let me proceed if I may. I think I am 
the only one in this room who remembers the Prime Minister of 
England, Great Britain, who in the 1930s, he had an idea of 
making peace with Germany and with Adolph Hitler.
    So Mr. Chamberlain went to Munich and he sat down with the 
Chancellor of Germany. And he came back to London with a great 
display for the press and they gave him great play and 
everything, peace in our time.
    And he said, we are going to have peace in our time because 
he told me.
    Well, you know the rest of that. He was wrong. And thank 
the Lord there was a guy named Winston Churchill who came along 
and said we will fight them in the streets. We will fight them 
in the fields, et cetera, et cetera, et cetera.
    Now, I want you to describe for me, ma'am, the prison 
conditions that you experienced when you were arrested for 
expressing your beliefs. And I believe that was just a few 
years ago in 1989, was it not? What were the conditions of the 
prison in which you were held? Do you understand?
    Ms. Dai Qing.  Yes. It depends on the Chinese law. The 
police only can detain people for 24 hours. If not enough 
evidence is collected they let the person go. But in my case 
the police detained me for ten months, no trial, no 
prosecution. And at the end ten months, when no evidence had 
been collected, they let me go.
    But the prison where they detained me is very famous in 
China. The Soviets helped the Chinese government to build it, 
along with industry support. It is a political prison. Only 
political prisoners are detained there.
    The Chairman.  Do you believe--and I ask this respectfully. 
Do you really believe that the United States can have a normal 
trade relation with a nation whose government locks up people 
like you, that charges folks disseminating information on 
democracy by way of the Internet, charge them with crimes 
against the state, country or regime as in China and insist 
upon putting puppets in as religious leaders in Tibet--and I 
must confess that I am a good friend of the Dali Lama--and 
eliminates the legitimate leaders of Tibet and a regime that 
exports goods made in a system of forced labor camps, all of 
which your government does.
    Now, this is not an indictment of the Chinese people. That 
is what you want to overthrow and change and get a democracy 
and you want a constitution sort of like the United States and 
maybe other countries have and so forth.
    But I do not understand, Paul--we can be informal here. I 
do not understand these leaders of big business, many of whom 
are friends of mine, who have contacted me and with almost 
excessive force demanded that I go along with this thing and I 
cannot do it. I am their friends. I have been their friends. 
But I disagree with them. And I shall not support this because 
I do not think it is good for your people. And that is the ups 
and downs of it.
    But in any case, Neville Chamberlain was beguiled by Adolph 
Hitler. I do not see how. But he did not bring peace in our 
time. It was the lives of American boys and French and various 
others, British, who gave their lives to make peace in our 
time. You may go.
    Mr. Wellstone.  Well, I do not think that it is so much a 
question. I mean, I think that the panelists I wanted to 
respond to Dai Qing's question to me and I think all of you.
    I wanted to say to you, Dai Qing, that your question was if 
you feel so strongly about this, why is it that those of us in 
China like me who live this--and it is a very fair question--
have a different position?
    And I wanted to say a couple of things. Again, I wanted to 
make this point because I think it has become--I do not know 
that this is the reason, but I want to say this. I think at 
least in our country there has been some confusion. At one 
point even in your testimony, you said, look. I would not mind 
if China's record was reviewed everyday. It is not so much the 
review I am opposed to.
    I think some people think that those of us who say we ought 
to maintain what little leverage we have are saying that we do 
not want to have trade and we are not. Or are saying that we 
want to have an embargo and we do not. Or saying that we want 
to isolate China and we do not. Or saying that we want to bash 
China and we do not. So first of all, I think sometimes the two 
things get confused.
    My second point which I mean to say this out of respect is 
I want to say to you that there are also people--Harry Wu's 
name was mentioned. I was going to--you know, Senator Kerry 
corrected himself. I was going to say Harry Wu was very 
strongly in favor of at least trying to have some of these 
amendments and conditions attached to this agreement. And he 
thinks we ought to annually review.
    Wei Jingsheng is someone whom I have come to love. I mean, 
Wei Jingsheng is you and Wei Jingsheng is part of the same--I 
mean, I have such admiration for both of you. I mean, Wei spent 
how many years? Twelve years, fourteen years in prison for his 
writing.
    Ms. Dai Qing.  Seventeen.
    Mr. Wellstone.  Seventeen years. And I want to say to you 
because I do not want you to think that what I say is just 
abstract overly intellectual. I have spent so much time with 
Wei. You know, I consider him to be a close friend. And I am 
moved by what he says. And in our country, a lot of people like 
Wei who have the freedom to speak out, they say do not give up 
annual review. At least make it clear to the government that 
you care about these issues still, especially given the fact we 
have had 20 years of more and more economic activity, more and 
more trade, more and more United States companies going to 
China and lots has hanged. Senator Kerry said that. I agree.
    But you know what has not changed? The human rights record 
has not gotten any better according to our own reports and our 
own commission on religious persecution chaired by, I think, 
Rabbi Saperstein, said we have looked at the whole question of 
whether or not people practice their religion. And we believe, 
our recommendation, Senate, is do not give up your right of 
annual review. So I want you to know that my position is--it is 
a thoughtful position and one that I also feel strongly about.
    The Chairman.  Is that your final answer?
    Mr. Bauer.  I would just add one thing, Senator Wellstone. 
You probably have heard Wei talk about the fact that when he 
was in prison and most favored nation status would come up here 
in the United States Congress, the prison authorities would 
come to Wei's cell and they would offer him anything that he 
wanted if he would sign a statement in favor of most favored 
nation status, currently being at that time debated in the 
United States.
    If there is a sizeable body of opinion among Chinese 
dissidents against normal permanent trade relations, in all due 
respect to Dai Qing, I just do not think we would be hearing 
about it. I do not think that we are going to hear their views 
unless they are in the United States free to speak. And as you 
have pointed out, Senator Wellstone, many of those that are in 
the United States free to speak in fact take the position that 
you and Senator Helms have on the issue.
    The Chairman.  Yes, sir.
    Mr. Becker.  If I could, just a real small point on that. I 
believe that the annual review of the most favored nations 
status has become a terrible embarrassment to the United 
States. The State Department runs this, compiles this, on an 
annual basis before this goes before the Congress to be debated 
and approved on a continuance on an annual basis. I think it 
has become extremely difficult for the administration to 
pretend that everything is getting better in China when the 
record shows it is wrong. I think it is an embarrassment. I 
think that is what they want to get behind them. I just wanted 
to put that out.
    Incidentally, I wanted Senator Kerry to know, I did not 
tell him this. I have been to China myself too.
    The Chairman.  I will tell him. Last but not least.
    Ms. Dai Qing.  I think Wei Jingsheng and other dissidents 
in this country, maybe including you, you are so urgent, so 
impatient for change in China. But, you know, this is because 
you have such strong expectations; you want things to be 
better.
    But we should be very, very patient. It is difficult, 
because almost everyday I feel so angry in China because of the 
police. The police just a few days ago, the police stopped me 
when I tried to visit my friend Bao Tong. You have known Bao 
Tong. The police stopped me and detained me three hours in the 
office. I am so angry.
    But I know we must be very patient, because China is not a 
European country. European countries, in the 1920s and 1930s, 
they enjoyed democratic systems of government. They had a 
limited duration of communist rule. But in China, we have had 
2,000 years of this kind of thing, dictatorship. And the 
communists only use communism as the name. The oppression is 
the same.
    Of course, maybe one day something will change immediately. 
I will be very happy, because I will have my basic job, and I 
will be able to publish. But I would hate another revolution. 
We have to nurture the whole social change bit-by-bit. And I 
really hope that you American politicians will not only see 
that the communist leaders did lots of very, very bad things, 
but will see that they are not the same as Mao Zedong.
    There are two aspects to a dictatorship. One is the emperor 
itself. Another is all the people who are so loyal to the 
emperor, who worship the emperor. Mao Zedong was a hero--we are 
a loyal people. But now, among the Chinese people, even though 
he has the same position as Mao Zedong, no one thinks Jiang 
Zemin is a god in their heart. They do not worship him like 
they worship Mao Tse Tung. So, there has been social change.
    The Chairman.  Thank you, very much. If there will be no 
further business to come before the committee, we stand in 
recess. Thank you, very much all four of you. And we will 
recess.
    [Whereupon, at 4:19 p.m., the subcommittee was adjourned.]
    [A response to an additional question submitted to Mr. 
Bauer by Chairman Helms follows:]

    Question. PNTR is allegedly supposed to promote political freedom 
through the free flow of ideas. But Communist China is dead set against 
the free flow of ideas. In a recent hearing in this Committee, the 
Broadcasting Board of Governors testified that China spends as much on 
jamming the Voice of America and Radio Free Asia as the U.S. Government 
spends on broadcasting into China. Should we be giving PNTR to a 
government that jams our own sources of free media?

    Answer. I oppose PNTR for China for a number of reasons: concerns 
about national security, the repression of basic human rights, 
religious persecution among them. But China's consistent jamming of 
America's media is one of the most troubling realities of the current 
U.S.-China relationship. China's brutal repression of basic information 
is a troubling, terrible reality. Any ongoing dialogue with the 
communist dictators of that regime must include a push for a lifting or 
a consistent receding of the media jam. Abraham Lincoln famously said, 
``Let the people know the facts and the country will be saved.'' 
China's war with free expression is one of the worst violations in a 
host of terrible examples of repression.

    [A statement submitted by Senator Hollings follows:]

                Statement Submitted by Senator Hollings

    Mr. Chairman, thank you for allowing me to testify before your 
Committee this afternoon. I strongly oppose the proposal to extend 
permanent Most Favored Nation status to China. This is perhaps the most 
important international trade issue since NAFTA, and if my colleagues 
take a closer look, they will see that the truth behind the two issues 
is the same. Like NAFTA, this is yet another attempt by the 
Administration to sell an investment agreement by talking about 
exports.
    This legislation is not about trade with China. Of course we will 
trade with China. Rather this debate is about the terms of trade with 
China and more specifically about U.S. investment in China. Two recent 
newspaper articles highlight this concern directly. On the day after 
the House of Representatives vote on PNTR, the Wall Street Journal 
published a front page article entitled ``Congress's Vote Primes U.S. 
Firms to Boost Investments in China'' An economist with Morgan Stanley 
is quoted stating, ``[t]his deal is about investment, not exports. U.S. 
foreign investment is about to overtake U.S. exports as the primary 
means by which U.S. companies deliver goods to China.'' Rockwell 
International confirmed that saying, ``In China, that's the direction 
we're going.''
    Moreover, this investment has a direct impact on American 
manufacturing workers. Frequently they lose their jobs when their 
companies shift production to China. The New York Times highlighted 
this trend earlier this month with an in depth story on the Zebco 
fishing reel company--in Tulsa, Oklahoma--and its efforts to move 
production facilities to China because, according to the company, U.S.-
based production did not yield an ``adequate profit.'' The company says 
that they can produce in China and deliver fishing reels to the U.S. 
for one-third less than it costs to manufacture them in the United 
States. The company recently announced that they would shift some 
production to China and the workers feel that more layoffs are coming.
    Its no wonder that Americans--who should feel safe, as they 
invariably have during previous times of prosperity--do not. They are 
afraid. Just look at Business Week's cover story from April 24: 
``Behind the Anxiety Over Globalization.'' The article points out that 
even in the current period of economic growth, American workers are 
falling prey to their worst fear--that of losing their jobs. Allan 
Mendelowitz, of the U.S. Trade Deficit Commission, sums up the 
uneasiness: ``Workers used to feel safe when the economy was doing 
well, but today they always feel they can be laid off, and 
globalization is part and parcel of that.''
    The Economic Report of the President, released in February, is 
quick to praise the robust economy, but barely mentions a fact that 
many of us find intolerable--roughly 1 million American workers lose 
their jobs each year due to the disparities of international trade. 
Whether it be because the jobs were shipped abroad where labor is 
cheaper, or because U.S. firms were forced to close because they could 
not compete with inexpensive imports, the fact remains that these are 1 
million American families a year that are not being adequately provided 
for.
    Furthermore, even firms that choose to stay in the U.S. are using 
the threat of job losses against their own employees. Many companies 
routinely tell employees that they will move production out of the 
country if the employees unionize or fail to meet production quotas. 
The result is a legacy that Administration would just as soon forget: 
``Global Anxiety.''
    I would like to contrast Global Anxiety with another Presidential 
legacy, that of Franklin Delano Roosevelt. In his recent Pulitzer 
Prize-winning book Freedom from Fear, David Kennedy discusses one of 
FDR's ``four freedoms,'' which were central to his political philosophy 
and were the driving force behind his policymaking. Kennedy shows how 
FDR was able to reassure Americans and make them feel secure, as he 
created the greatest legacy in American history.
    The contrast with the Clinton Administration is stark. During a 
time of political upheaval and widespread economic uncertainty, FDR 
offered Americans peace of mind. Conversely, even in this period of 
sustained growth, the trade policies of the current Administration rob 
our workers of this precious commodity. Freedom from Fear has given way 
to Global Anxiety.
    Global Anxiety will continue to infect America's workforce as long 
as the Administration insists on exporting U.S. jobs abroad. It is time 
for a policy change, and Congress should take the lead by refusing to 
extend Permanent MFN to China at this time. Currently, China profits 
much more from our trade relationship than we do, and granting 
Permanent MFN will only serve to worsen an already unfair situation. 
While the U.S. might experience a marginal increase in exports by 
taking this step--imports from and investments in China will soar. The 
price in job losses will be enormous and the trade deficit will 
continue to expand. American workers cannot afford this tradeoff.
    Our trade deficit with China has reached appalling levels--even 
Secretary Daley has called it unacceptable. And it continues to grow 
every year. The value of U.S. imports from China almost doubled between 
1994 and 1998, jumping from $38 billion to over $71 billion. Of course, 
exports also rose during that time, but only from $9 billion to $14 
billion. The result is trade deficit that has exploded by almost $30 
billion in four years! And Secretary Daley, in recent testimony before 
the Commerce Committee, refused to say whether that deficit would 
decline as a result of this agreement. Moreover, the International 
Trade Commission, essentially an arm of the Administration, believes 
that the trade deficit will increase as a result of this deal.
    The Administration is misleading when it talks of exports. Despite 
moderate increases in exports to China in the past few years, China 
receives a mere 5 percent of total U.S. exports. This is roughly the 
same percentage of exports that we send to Belgium and Luxembourg! 
Meanwhile, China maintains a $68 billion trade surplus with the United 
States. As we listen to the Administration pat itself on the back over 
a paltry increase in exports, American imports continue to finance 
China's economic boom!
    To know the whole story, we have to look at what products comprise 
the export increase. What we find is that many of the goods that the 
U.S. ships to China are in fact inputs that will be assembled by low-
cost Chinese labor and re-imported by the U.S. as finished products. 
The numbers are clear. From 1997 to 1998, the value of American exports 
to China of products designated for assembly and reimportation grew by 
a dramatic 979 percent. Over the past ten years, the percentage of 
China's exports generated by foreign-affiliated firms has risen from 15 
percent to almost 50 percent. According to Morgan Stanley, the U.S. 
accepts more that one-fourth of China's exports. Others put the figure 
at closer to 40 percent. Essentially, China, continuing in the great 
tradition of Mexico with NAFTA, is a gigantic export platform.
    China not only exports billions of dollars worth of merchandise to 
the U.S., it also exports its unemployment. More and more U.S. 
companies--like Zebco--are relocating their production facilities to 
China to take advantage of the cheap labor and minimal labor and 
environmental standards. It is estimated that 600,000 Americans were 
laid off in 1996 alone due to trade with China--a year when our trade 
deficit with China was a mere $40 billion. For the sake of our workers, 
the U.S. cannot afford to continue to let the trade deficit with China 
spiral out of control, yet that is exactly what will happen if Congress 
votes for MFN.
    The Administration plays down the importance of the deficit, 
arguing that America maintains a firm hold on the hi-tech sector. It 
claims that China will continue to export low-cost consumer goods to 
the U.S. but will import American hi-tech products, leaving the higher 
paying hi-tech industry jobs in the U.S. Unfortunately, the statistics 
tell a different story. Instead, America's trade deficit with China in 
computers rose by 100 percent between 1996 and 1998, while the deficit 
in electronics increased by 50 percent in the same time frame. We now 
import more advanced radar products from China than we sell to China. 
In short, the alleged comparative advantage that the U.S. holds over 
China in the hi-tech industry is a myth.
    Though the exploding trade deficit and the job losses are reason 
enough not to grant China MFN, there are other compelling reasons as 
well. Most importantly, despite continued admonishment by the U.S., 
China's government has not made a good faith effort to improve its 
human rights record. On the contrary, repression has increased in China 
throughout the 1990s, and particularly since the Clinton Administration 
ended the link between trade status and human rights record. Currently, 
every known political dissident in China has been either exiled or 
jailed. In addition, the Chinese government continues to maintain 
forced labor camps, and even to export goods produced in these camps to 
the United States, despite a specific promise to end this practice. 
Withholding preferential trade status is perhaps the most effective 
leverage our government has over the Chinese, and it would be foolhardy 
to terminate it by granting Permanent MFN.
    Extending permanent trade status to China does not make economic or 
political sense. The last thing the United States needs is a higher 
trade deficit with China and the resulting job losses. Encouraging 
trade is important, but not when it is accomplished at the expense of 
American workers. Also, considering China's unwillingness to improve 
its human rights practices, now is not the time to end our major source 
of leverage in this area.
    Global Anxiety is real. Our constituents feel it, even if we do 
not. Over the past decade we have passed several trade measures that 
have accomplished little, other than to cause more job losses for 
Americans. It is time for Congress to take a stand by voting for the 
welfare of our workers over the false promise of ``Free Trade.''

                                    

      
