[Congressional Record Volume 143, Number 62 (Tuesday, May 13, 1997)]
[Senate]
[Pages S4394-S4395]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. Chafee):
  S. 737. A bill to authorize the extension of nondiscriminatory 
treatment (most-favored-nation treatment) to the products of the 
People's Republic of China; to the Committee on Finance.


                  china trading relations legislation

  Mr. CHAFEE. Mr. President, today I am joining with Senator Baucus to 
introduce legislation authorizing the President to extend most-favored-
nation, or normal trading relations, status to China on a permanent 
basis.
  Since 1989, Congress has engaged in an annual, and very public, 
debate about the extension of MFN to China. These debates have been 
highly charged. But over the years, the repetition of this debate has 
carried a heavy price tag, with little to no positive results to show 
for it.
  In fact, the constant debate as to whether or not the United States 
should continue normal trade relations with China has come at great 
expense to the overall health of the bilateral relationship between 
these two great and powerful nations. And that, in turn, has had real--
and negative--repercussions for the United States, its citizens, and 
even the Chinese people themselves. We need to look toward a day where 
this annual MFN rollercoaster will be replaced by a stable, long-term 
economic foundation between these two superpowers. It is toward that 
end that we are introducing this legislation.


 conditioning mfn in order to influence china's behavior has not worked

  China has received MFN treatment every year since 1980. In 1989, 
however, after the brutal suppression of demonstrators at Tiananmen 
Square, some legislators proposed trying to influence Chinese behavior 
by threatening to revoke China's MFN status, starting this cycle of 
highly charged--and often political--debates.
  But is MFN an effective tool for influencing Chinese behavior, as 
those legislators hoped? No. We saw that all too clearly in 1993, when 
President Clinton attempted to condition further renewal upon 
improvements in human rights. Were there improvements during that time? 
No. Finally, in 1994 the President came to the conclusion that 
retaining MFN, rather than threatening its removal, ``offers us the 
best opportunity to lay the basis for long-term sustainable progress in 
human rights, and for the advancement of our other interests with 
China.''
  It is clear that revoking MFN is not an effective tool for promoting 
change in China--a fact other nations recognized long ago. Therefore, 
we should begin removing MFN entirely from the debate, and eventually 
render it permanent.


   annual mfn debate overall has not been productive for the united 
                       states-china relationship

  Not only is MFN status a poor tool for spurring change in China, but 
the annual debate itself has contributed to poor United States-China 
relations. By focusing solely on the renewal of MFN, we in the United 
States have found ourselves distracted from the larger, critically 
important issues involving the United States-China bilateral 
relationship. Indeed, I believe that for the past 8 years, the ability 
of the two nations to work together productively has been partly 
paralyzed by the ongoing MFN debate.
  Progress on important matters--both those in which we and China have 
a common interest, such as stability in Asia, and those in which our 
two nations do not see eye to eye--such as international involvement in 
human rights--has not been helped by the continuing controversy over 
MFN. The Chinese, who, as history has shown, tend to react negatively 
to public confrontation, have been less open to working with the United 
States to address issues of common concern. The United States, which 
must continue to deal with China as an emerging superpower, has been 
forced on the defensive when dealing with the Chinese.
  This state of affairs cannot continue indefinitely. We need to move 
toward removing MFN as a factor in our already complicated and complex 
bilateral relationship with China if we want to stabilize that 
relationship and make progress on issues that matter to the American 
public. Too much else is at stake--for both nations.


the stability of the united states-china relationship is important for 
                 americans--and for the chinese people

  Why is a stable United States-China relationship important for 
Americans? For a number of reasons.
  First, Americans traditionally have worked to promote democratic 
ideals around the globe. As a society, we have an interest in 
encouraging such ideals as respect for human rights in other nations. A 
solid, stable relationship with the Chinese can, over time, bring such 
improvements to pass--with great benefit for the Chinese people.
  Second, American have a vested interest in promoting international 
security. Securing nuclear nonproliferation and defusing regional 
conflicts overseas mean a great deal to the overall well-being of 
Americans and their families. If we want to see these goals advanced, 
we must work with China, an emerging superpower.
  Third, and very importantly, Americans have a direct economic tie to 
the Chinese economy. We now export some $12 billion worth of goods to 
China--exports that include plastic packaging systems made by the 125 
employees at Marshall & Williams Co. in Providence, Rhode Island. And 
we import nearly four times as much--$46 billion--from China--imports 
that include toys for children. Not only do families across the United 
States buy those toys, but the 1,600 workers at Hasbro in Pawtucket, 
RI, rely on those sales to keep their company strong and their jobs in 
place. Clearly, there is much to do to address the enormous trade 
imbalance between our two nations. But notwithstanding that imbalance, 
the current level of the United States/China economic interaction is so 
significant that if it were disrupted, the negative repercussions for 
our own economy would be staggering.
  In sum, we have many important challenges facing us that require a 
steady, stable United States/China relationship. Whether it is nuclear 
non-proliferation, adherence to human rights, security around the 
globe, protection of intellectual property, or the transition of Hong 
Kong, we must continue to work with the Chinese, using the tools of 
diplomacy and of laws that are tailored to those purposes.


PERMANENT MFN WILL BE ESPECIALLY APPROPRIATE AS CHINA ENTERS THE GLOBAL 
                             TRADING SYSTEM

  The eventual adoption of permanent MFN for China is in the interests 
of the United States. Our actions today are

[[Page S4395]]

meant to encourage Congress and the administration to begin 
consideration of that next step. We do not expect or intend for this 
bill to be considered this year.
  But our action does come at an important time. The Chinese Government 
now is taking steps to join the world community and its institutions. 
Chief among these steps is China's bid to join the global trading 
system known as the World Trade Organization. If successful, this move 
will bring China into line with the trading practices of the 120-plus 
nations that now are WTO members.
  To be successful, China will have to agree to accede to the WTO on 
terms that are commercially viable--or to put it more simply, that are 
fair to other nations in terms of market access, nondiscrimination, 
enforcement, and other important areas. Should China enter the global 
trading system on such terms, it would be a natural point at which the 
United States could move forward with permanent MFN.
  If we begin considering this issue now, it may ripen at a time that 
is beneficial to both the United States and China.


  SUMMARY: PERMANENT MFN IS IN THE BEST INTEREST OF THE UNITED STATES

  In sum, the permanent grant of MFN to China is in the best interest 
of the United States and her citizens. It will end for once and for all 
the annual debate that is actively hindering--not helping--the 
achievement of important American goals, thereby allowing the 
establishment of a stable relationship that would bring prosperity and 
growth to both nations. Over the next year, as China takes serious 
steps toward full integration in the global economy, the granting of 
permanent MFN will make more and more sense. We think the United States 
should begin laying the groundwork now, and we are introducing our bill 
today toward that end.

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