[Congressional Record Volume 142, Number 62 (Tuesday, May 7, 1996)]
[House]
[Pages H4433-H4434]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        RENEWAL OF MFN FOR CHINA

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Wisconsin [Mr. Roth] is recognized during 
morning business for 5 minutes.
  Mr. ROTH. Mr. Speaker, this Congress is about to enter its annual 
debate on the renewal of China's Most Favored Nation status. The need 
for renewal has existed since the United States first granted MFN to 
China back in 1980. It has been a difficult debate ever since 1989 and 
the events at Tiananmen Square. There is good reason to believe that 
the debate this year will be very difficult. This is because of two 
particularly large problems affecting the debate.
  First, there are the policies of the Beijing Communist leadership. 
That government's disregard for international obligations on 
nonproliferation, intellectual property rights, trade, human rights, 
and on Taiwan mandate an effective response.
  Second, there is a lack of leadership on the part of the 
administration. The policy has been ad hoc, dependent on domestic 
pressures, as Robert Zoellick testified before our committee last week 
when he said:

       In an effort to please all constituencies, the 
     administration has squandered our strength, failed to achieve 
     its aims, and demonstrated weakness to both China and to 
     others in the region.

  Because of these problems, I fear that Congress will lose sight of 
the critical point, and that critical point is just this: Our policy on 
MFN for China should take these problems into account, but it must not 
be determined by them.
  Rather, our decision on MFN must be determined by one thing and that 
one thing is, what is best for the United States? It is my view, 
though, that there are four basic reasons why extending MFN is in the 
best interests of our country.
  First, revoking MFN would harm U.S. workers, U.S. businesses, and 
U.S. investment. Changes made in China's MFN status will curtail assess 
to the Chinese market. Huge levels of trade and investment will still 
occur, but it will be other nations, not the United States, that will 
be making the investments, and we will lose all of our control and 
leverage. The effect will be losses of U.S. trade, U.S. investment and, 
quite frankly, many U.S. jobs.
  The size of this potential hardship must be recognized by us in 
congress as

[[Page H4434]]

we debate this issue. This issue cannot be debated solely on emotion 
but must be based on reason.
  United States companies have already committed to invest some $26 
billion in approximately 20,000 projects in China. United States trade 
with China already supports over 200,000 high-wage American jobs. But 
this is just a start. Over the next 25 years, China's economy is 
projected to expand to almost $6 trillion That is almost 10 times the 
size of China's economy in 1994.
  Now, China's modernization plans call for imports of equipment and 
technology of approximately $100 billion per year. Infrastructure 
expenditures amounting to as much as $250 billion are projected through 
the remainder of the 1990's.
  China's biggest import markets are in the areas of United States 
strength. Consider this: In both quality and price, the United States 
is in the lead for these markets: areas in aircraft, electric power 
systems, telecommunications equipment, computers, agricultural 
chemicals, and medical equipment.
  Politics, unfortunately, could stop the United States from gaining 
tens of billions of dollars of new exports and hundreds of thousands of 
new jobs. This is already happening. Just the other day, Airbus took a 
$2 billion contract from Boeing, based solely on politics. The 
president of China's aviation industries put it well when he said, and 
I quote:

       We'd like to make our decisions based on technical and 
     commercial factors, but governments and statesmen are 
     involved. We can't control that.

  Mr. Speaker, the second reason why revoking MFN would harm United 
States security interest in the region, let me say this, China is the 
emerging great power in that region, both economically and politically. 
There is no reason to think that its government can be deposed or 
ignored or strong-armed. It must be dealt with as a belligerent but as 
a great power.
  I ask, Mr. Speaker, that the rest of my statement be entered into the 
Record.
  This means engagement.
  To go the other way, to adopt a policy of confrontation with China--
which is what removing MFN does--would isolate the United States in 
Asia rather than isolate China.
  As Henry Kissenger recently wrote:

       In a confrontation with America, China would appeal to 
     Asian nationalism and make the American military presence in 
     Asia a bone of contention. And it would be able to enlist the 
     economic cooperation of Japan as well as of the other 
     industrial nations of Europe and the Western Hemisphere, all 
     eager to seize the opportunities that we might abandon.

  In addition, the futures of both Taiwan and Hong Kong are to be 
considered.
  With Hong Kong to revert in a year, with Taiwan relying on China for 
$20 billion a year in trade, and with the Taiwanese having invested $25 
billion in China, we need to treat these relationships carefully.
  Reason 3: Revoking MFN will not improve human rights conditions or 
nonproliferation and trade policy in China.
  As the Heritage Foundation recently wrote, history shows that China 
is far more oppressive against its people when isolated from the 
outside. This was clearly the case during the cultural revolution.
  Human rights improvement is a long-term process that will require a 
long-term China policy.
  The same is true on nonproliferation and trade. China needs to 
understand that it must meet its international responsibilities if it 
wants to attain international respectability.
  The United States will have to use effective levers to achieve this.
  A strong, clear, and coherent China policy is needed. Our goals will 
not be achieved in these areas otherwise.
  MFN is simply the wrong lever. It was not designed for these goals, 
and it will fail miserably if used this way.
  Reason 4: MFN is normal treatment that all our partners grant, and 
will continue to grant, to China without condition.
  MFN is a misnomer. In reality it means that a country is treated in a 
nondiscriminatory manner on tariffs. It is the norm that rules.
  In this respect, all our OECD partners grant such treatment to China. 
They do so without condition.
  No official in any of those countries, to my knowledge, has suggested 
that this situation even be reviewed, much less altered.
  The United States currently grants MFN to every country in the world 
except seven countries. These are Afghanistan, Cambodia, Cuba, Laos, 
North Korea, Vietnam, and the former Yugoslavia.
  There are 17 others, including China, that currently receive MFN 
conditionally.
  These 17 do not include Iran, Libya, Iraq, Syria, or Sudan. All these 
rogue states get MFN. Why is this?
  This is because our MFN law is built on the cold war. The Jackson/
Vanik amendment, enacted in 1974, was intended to pressure the former 
Soviet Union into allowing Jews to emigrate.
  It was not designed to today's issues with China.
  Mr. Chairman, I hope that my colleagues will find these reasons for 
extending MFN convincing. In conclusion, though, I urge that we 
consider two other needs during the coming debate.
  First, that China is too important for today's United States policy.
  This administration keeps drawing lines in the sand, and then backing 
off. They are running out of credibility, and pretty soon they will run 
out of beach.
  We need a coherent, long-term, and bipartisan China policy.
  Second, the world has changed dramatically since 1974. The law on MFN 
has not. We may need to reform this law.
  Let's look at how it can be used for today's issues.
  Why should rogue regimes supporting international terrorists be 
treated better than countries like the Ukraine, Armenia, Bulgaria, and 
Romania? Mr. Speaker, I think this needs review.

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