[Congressional Record Volume 142, Number 84 (Monday, June 10, 1996)]
[House]
[Page H6094]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         MFN FOR CHINA: TIME TO STAND FOR RECIPROCITY IN TRADE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio [Ms. Kaptur] is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, tomorrow it is my understanding that the 
Subcommittee on Trade of the House Committee on Ways and Means will be 
holding hearings on the very important issue of China and the renewal 
of most-favored-nation trade status with China. I am here this evening 
to enter remarks in the Record because the committee scheduled these 
hearings very quickly, without much public notice, and is allowing no 
Member of Congress to testify on this very important issue.
  If I had been allowed to testify tomorrow, I would be one Member of 
Congress who would state that I strongly believe that this issue 
deserves more than a perfunctory hearing largely closed to the public, 
and to the membership, because a new course in our relations with China 
must be struck; a course that reflects the rule of law and benefits the 
wider populace of both our great nations rather than the base material 
interests of a few who trade off that closed marketplace.
  Congress has been voting annually on China and its preferred trade 
status since 1974 when Jackson-Vanik was signed into law, which tied 
the internal politics of nonmarket economies to their external trading 
relations with the United States. Jackson-Vanik was a good idea in 
1974, and it remains a good idea today if anybody would bother to go 
back and read it.
  The amendment provided a classic carrot-stick approach to policy. The 
carrot was the U.S. market. The stick was taking away any nation's most 
favored trading status if it hurt us or it did not live up to our 
highest ideals. While China has been gorging itself these many years on 
the carrot of our marketplace, somewhere along the line we lost the 
stick to effect change in regard to China's attitudes and policies 
toward our country and toward the citizens of both our nations.
  Every year since 1974, President after President, from President Ford 
to President Clinton, have stood before this Congress and the American 
people to assure us that our trading relations with China will improve 
if China's most-favored-nation status is renewed for just 1 more year. 
This, of course has not happened.
  If we refer to this chart here, over the past decade alone the United 
States has recorded a 1,000 percent increase in our trade deficit with 
China. Just this year alone, it is projected to be even higher than 
ever in the past, over $40 billion of additional debt, another record.
  Thirty-three percent of China's exports come here to this market. One 
out of every three products they send someplace else in the world ends 
up on our shelves. At this pace, China will surpass Japan in the next 2 
to 3 years as the nation with which we possess the largest trade 
deficit in the world. And of course, as our trade deficits have been 
getting larger and larger every year, the pull-down on our wage levels 
is greater and greater very year and the erosion of our manufacturing 
base greater and greater every year as we watch it replaced with 
service jobs that pay so much less.
  If we look at what is happening, however, under China MFN it 
effectively says to China they have a 2-percent tariff rate to get into 
our market, but guess how much China's tariff rate is against our 
goods, even with MFN? Thirty to forty percent. Thirty to forty percent. 
What kind of a deal is it for our country where we lower our barriers 
to their goods, but they refuse to lower their barriers to ours? What 
kind of a deal is it for us?

  China is a closed command economy with tariff rates much higher than 
our own and, beyond that, exchange rates which they manipulate that 
actually increase the price of our goods into their market by over 50 
percent. We know, beyond the exchange rates, beyond tariff barriers, 
our own U.S. Trade Representative has stated in a report that there are 
so many nontariff barriers that China also employs to prevent our goods 
from going into that land, and also is known for other trade abuses 
involving arbitrary standards, testing, labeling, certification. Their 
government procurement process remains largely closed to foreign 
competition. They engage in export subsidies, theft of intellectual 
property, and they employ an array of barriers to our services and 
foreign investment.
  There is no question who benefits from the renewal of China MFN. It 
is not the American worker. It is companies like Wal-Mart that employ 
700 different contract shops, that employ people in China at 10 cents 
an hour to make everything from toys to Nike shoes that they then send 
back into our market, and our people's prices are not lowered. Forty 
percent of our own apparel industry, for example, has been wiped out, 
out of this country, replaced by Chinese production, and it is as 
though nobody here in Washington has even been hit with a brick bat 
over the head.
  Let me say that in the days ahead I will be putting in the Record 
additional information about what China MFN actually means to our 
country and the people of China. It is time to stand for the rule of 
law and reciprocity in trade.

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