[Congressional Record Volume 142, Number 99 (Monday, July 8, 1996)]
[Extensions of Remarks]
[Page E1218]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         DISAPPROVAL OF MOST-FAVORED-NATION-TREATMENT FOR CHINA

                                 ______
                                 

                               speech of

                             HON. JACK REED

                            of rhode island

                    in the house of representatives

                        Thursday, June 27, 1996

  Mr. REED. Mr. Speaker, the issue of most-favored-nation [MFN] status 
for China comes at a time when we are seeking to define the future of 
our relationship. While we are searching for ways to further a mutually 
beneficial relationship to inspire a more open China, we are also 
becoming increasingly more anxious. Like many of my colleagues and 
constituents, I have become increasingly disturbed with China's 
contentious conduct. Nuclear proliferation, expropriation of our 
intellectual property, smuggling of assault weapons, and China's huge 
trade surplus with the United States are reasons for serious concern 
and contemplation about our future relations with this nation. However, 
revoking MFN would not directly address these issues. Rather, it would 
result in the exclusion of American companies and workers from this 
rapidly growing market, sour our economic relationship with China, and 
severely diminish our ability to work for reform in other areas. Thus, 
I rise in opposition to House Joint Resolution 182, which express 
disapproval of MFN status for China.
  We must initially recognize that MFN is a misnomer. MFN status is not 
a gift we bestow upon our most illustrious friends and neighbors. It is 
the normal trading status that is accorded to most other nations. So 
when we talk about extending MFN to China, it is the same status that 
we extend to a host of other regimes including Iran and Iraq. Thus, MFN 
is not a great favor from the United States that we reserve for only 
our traditional allies. Consequently, revocation is not a truly 
effective tool when trying to balance United States interests against 
those of China.
  And make no mistake about it, substantial U.S. interests are at 
stake. In order to make the trade balance with China more equitable, we 
need to break down barriers and start producing and selling in China, 
and renewal of MFN is the best way to achieve this goal. United States 
exports to China have grown from $2 billion in 1978 to nearly $60 
billion in 1995.
  This is not to say that we can tolerate the illicit trade and 
commercial activity that China perpetrates. There is no excuse for 
ripping off our businesses' copyrights, and we need to take proper 
retaliatory action. I supported the President's proposal to increase 
tariffs on 2 billion dollars' worth of goods, as well as the recent 
accord that was reached with China. China must play by the rules of our 
other trading partners.
  The United States also needs to counter proliferation issues with the 
procedures that are readily available. I wrote to the President months 
ago urging him to invoke sanctions under the nonproliferation treaty. I 
was sadly disappointed the administration chose to accept the excuse 
that China's actions were not sanctioned by the state, and, therefore 
the United States could not invoke these sanctions. The administration 
should press much harder and put the burden of proof on the Chinese 
Government.
  I am no apologist for China's abysmal human rights record--it must be 
improved. Yet, experience has shown that this issue is a tricky point 
of leverage. Revoking MFN status for China is not an effective way of 
persuading the Chinese Government to improve its record in this area. A 
better way is to unleash free markets in China. We need to stay engaged 
with China and not only make it more open to our markets but also our 
ideas and principles. The power of ideals and symbols should never be 
underestimated. That is what happened in Eastern Europe and the former 
Soviet Union: people reached a point where they could communicate their 
common desire for freedom, and the old, authoritative regime had no 
more legitimacy.
  We must recognize that remaining engaged in China will help us 
address issues of mutual concern, such as fighting proliferation. We 
have found that a policy of engagement with other nations works. 
Indeed, the collapse of the Soviet Union was not a result of 
disengagement. I believe that we must refocus our efforts in addressing 
the above issues with China, not by taking the pressure off but by 
picking our shots.
  We should move beyond the debate of MFN status. There may be more 
potential leverage in the issue of China's admittance into the World 
Trade Organization [WTO]. China is pressing hard to get into the WTO 
and they are trying to agitate for special exceptions as a developing 
country. This would be unacceptable. While China might argue that it is 
a Third World country and it has a lower standard of living, there are 
not many Third World countries that have a $30 billion trade surplus 
with us, persistently rip off United States products, and threaten our 
friends in the area with nuclear weapons.
  The United States must continue to pressure China to meet the 
standards that the international community expects of a mature, 
regional power of the first order. We must draw a line with China, but 
MFN is not that line. Revocation of MFN would only hinder our ability 
to influence China on issues of concern, and possibly undermine the 
progress we have made with China. Mr. Speaker, I urge my colleagues to 
oppose House Joint Resolution 182.

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