[Congressional Record Volume 142, Number 82 (Thursday, June 6, 1996)]
[Senate]
[Pages S5910-S5911]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    CHINA MOST-FAVORED-NATION STATUS

  Mr. GRASSLEY. Mr. President, earlier today the Senate Finance 
Committee heard testimony on the issue of most-favored-nation trade 
policy for China. As you know Mr. President, the President of the 
United States, President Clinton, on May 20 announced that China would 
be granted most-favored-nation status for another year. This is an 
annual determination made in the case of China. For the other 100 and 
some nations that have most-favored-nation trade status with us it is 
more on a permanent basis. It does not have to be annually like it is 
for China.
  I might say, too, for the benefit of my colleagues that there are 
only about five or six countries that would be called major trading 
partners, or potential major trading partners that do not have most-
favored-nation status. So I am not sure that the terminology is very 
good when it really kind of refers to normal trading status between the 
United States and any other country. But it has been titled like this 
for decades. So it sounds like maybe really more than what it really 
is. But the President made that decision.
  I wanted to announce my support of the President's decision. So we 
are going to enter a period of time here where Congress debates whether 
or not the President is right to have granted most-favored-nation 
status to China, and also we will do that through a resolution of 
disapproval of the President's action. So if the resolution of 
disapproval does not pass the Congress then, of course, the President's 
actions will stand. If it would pass Congress by a majority vote but 
the President would veto, which you would assume that he would, then 
presumably unless there are votes to override--which means two-thirds 
majority--that the President's action would still stand.
  So I think it is fair to assume that regardless of the annual 
exercise we go through, regardless of the motion of disapproval being 
approved, in the final analysis there will not be a two-thirds vote to 
override the President's actions. So China will have most-favored-
nation status for another year.
  I personally believe--and I support, of course--that the President's 
decision should and will be upheld. But there is a lot of sentiment 
against China on Capitol Hill, and recent developments in our 
relationship with China has not helped China's chances of success in 
fighting the motion of disapproval.
  Most recently on trade issues in regard to China our United States 
Trade Representative announced sanctions against China to the tune of 
$2 billion. These sanctions will take effect on June 17 unless China 
comes into compliance with the bilateral agreement on intellectual 
property rights that was reached in 1995. In response to our own 
Government's announcement of sanctions against China, they in turn said 
that they would levy 100 percent tariffs on many U.S. exports. These 
include agricultural products such as cotton, beef, chicken, and 
vegetable oils.
  So it appears that we could be on the verge of a trade war with one 
of our major agricultural export markets. I want to reflect on this 
issue by briefly discussing how we got into this position, and what it 
means for China's chances on MFN.
  Mr. President, as you know, the Clinton administration's position on 
how to deal with China has never been very clear. In fact, I suppose 
you could put it in a class with a lot of other issues that the 
President has taken positions on in the past. He has changed his view 
on this one as well.

  In addition, since he has been President, I can say he has had no 
long-term view on what a relationship with China ought to be. Some have 
said that the President seems to make policy according to the last 
person he has spoken to on a given day. That has been a very general 
comment about the President. But it is one, if you look at specific 
actions on China, that I think you can apply even more specifically to 
our China policy.
  In 1992, when he was a Presidential candidate, Bill Clinton harshly 
criticized the Bush administration for being soft on human rights in 
China. Candidate Clinton vowed at that time to condition China's most-
favored-nation status on--these are his words--``respect for human 
rights, political liberalization, and responsible international 
conduct.''
  That is what the President said was wrong with President Bush's 
position on China.
  Just 2 years later, President Clinton favored separating human rights 
from most-favored-nation status, and he favored that year granting 
China MFN status, as the Bush administration had done, and as the 
Reagan administration had done. And it even goes back beyond that.

[[Page S5911]]

  While the President was changing his mind, there was not any evidence 
whatsoever that China had altered its behavior to satisfy President 
Clinton's very own standards that he had enunciated in 1992 on the 
issue of MFN. Recently the contradictions and rhetoric have become more 
pronounced, and the consequences even more important.
  Our lack of a tough and clearly defined policy toward Beijing has 
created a new atmosphere in China. It is an atmosphere in which China 
decided that it can ignore its responsibilities to the world community.
  So my question to you is this: Does this administration have 
credibility in dealing with China? I think that lack of credibility is 
part of the reason that we have problems not only with our government 
toward China but also within the United States of whether or not our 
policy toward China is right. This constant changing of policy does not 
send a very clear signal to the American people of the benefits of MFN, 
or the importance of continuing MFN for China. You see some of this in 
China's action--its attempt to intimidate Taiwan prior to its election 
through so-called military exercises. China has allegedly sold nuclear 
materials to Pakistan, but denies knowledge of doing so. Now it has 
blatantly violated its intellectual property rights agreement with the 
United States. Do you think that China would behave in this manner if 
they really took the President's rhetoric seriously? Our own United 
States Trade Representative has announced sanctions due to China's 
breach of the intellectual property rights agreement. I support these 
sanctions, and I have not found any opposition to these sanctions. The 
credibility of the United States and our ability to enforce future 
agreements would be very much on the line and questioned if we did not 
impose these sanctions. However, if we had had a more consistent policy 
toward China in the last few years, I think this situation on the 
intellectual property rights could have been avoided. Unfortunately, 
Congress will have to debate China's most-favored-nation status with 
its looming trade dispute as a backdrop. For many Members it will be 
difficult to go home and justify voting for MFN while China openly 
violates existing trade agreements. So I am afraid that the vote may be 
very close.
  Mr. President, it is important to consider the implications of not 
extending most-favored-nation status at this time.
  In 1995, United States exports to China totaled about $12 billion. 
Those exports would be jeopardized. Tariffs on products coming into the 
United States from China would also be raised significantly. This 
amounts to a tax, of course, on our American consumers, so American 
businesses and consumers will suffer.
  The MFN debate is no ideological exercise. It affects business. It 
affects jobs for Americans. It affects consumer costs. So we are 
talking about pocketbook issues in dealing with MFN. There is at least 
one area that will suffer if MFN is revoked. It is of interest to my 
State of Iowa. That is agriculture. Those of us from agriculture States 
know how especially important this debate is. It is very important.
  Is the Chair speaking of the 10-minute thing?
  The PRESIDING OFFICER. Yes.
  Mr. GRASSLEY. I thought I yielded to the speaker without losing my 
right to the floor; I was protected.
  The PRESIDING OFFICER. Unanimous consent was granted.
  Mr. GRASSLEY. OK. Then I should have objected to the unanimous 
consent request. But the unanimous consent overrode the unanimous 
consent I had to have my right to the floor.
  The PRESIDING OFFICER. That is true.
  Mr. GRASSLEY. I ask for 5 more minutes.
  The PRESIDING OFFICER. Is there objection? The Chair hears none, and 
it is so ordered.
  Mr. GRASSLEY. Those of us from agriculture States especially know how 
important the debate on MFN is. China has a population of 1.2 billion, 
which is one-fifth of the world population, but it has only 7 percent 
of the world's arable land. So China will continue to import large 
amounts of its food needs. The good news for the American farmer is 
that the diet of the Chinese people is changing rapidly. Meat 
consumption is growing 10 percent per year there, or a staggering 4 
million tons annually. So value-added exports will play a very 
important role in China's future and in the agricultural exports of our 
country to China.
  The potential for growth over the coming decades is extremely high. 
We are going to have a 75-percent increase of exports to Asia, and 50 
percent of that increase by the year 2000 is going to be with China. So 
by the year 2030 this is going to be a very important market for 
America and particularly for American agricultural.
  It also relates very well with our new farm program. This program 
will have a declining amount of appropriations for agriculture to a 
phaseout by the year 2002. So farmers will earn more from the 
marketplace, and our ability to export is very important in 
accomplishing this. China, of course, will play a very important role 
in these exports.
  So I think our policy toward China must be one of aggressive 
engagement. We need to continue to negotiate agreements with the 
Chinese on trade and other matters as well. We must work to bring China 
into the world community of nations, and I believe that these actions 
will ultimately bring about real reform within China. Granting most-
favored-nation status should be a part of that policy.
  We had a debate in the Finance Committee a few weeks ago about how 
misleading the term MFN is. It is not something special. As I have 
already said, it is something that is granted to all but a handful of 
nations. But with that said, we must still vigorously enforce all of 
our agreements with China. Trade agreements are not worth the paper 
they are written on if we are afraid to take appropriate measures of 
enforcement.
  There is a real old saying in the Western United States of ``keep 
your door unlocked, but if you do, keep a shotgun behind the door.'' I 
think that is how I see our activities with China. You have to be open 
with them, but we have to be prepared to make sure that they stick to 
the agreements as well. So we have the WTO accession negotiations with 
China coming up. That gives us an opportunity to discuss with the 
Chinese all of the concerns raised in the MFN debate. We can also use 
the imposition of 301 sanctions to accomplish our goal.

  That is a much better environment than the MFN debate for bringing 
China to the table and around to the international norms that they say 
they agree with, the international norms of trade agreements being 
followed, the international norms of human rights that are in the 
United Nations Charter, the international norms of rule of law, and you 
can name a lot of others. China says that they accept them. A lot of 
people who do not want MFN status say since China does not meet these 
international norms all the time, we should not grant MFN. But these 
other environments are the place for those issues to be discussed.
  I yield the floor.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Parliamentary inquiry, Mr. President. Is this morning 
business?
  The PRESIDING OFFICER. It is, indeed, with 10 minutes allotted for 
each speaker.
  Mr. DOMENICI. I yield myself the 10 minutes.

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