[Congressional Record Volume 143, Number 112 (Friday, August 1, 1997)]
[Extensions of Remarks]
[Pages E1619-E1621]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           CHINA'S MFN STATUS

                                 ______
                                 

                           HON. BOB SCHAFFER

                              of colorado

                    in the house of representatives

                         Friday, August 1, 1997

  Mr. BOB SCHAFFER of Colorado. Mr. Speaker, China will indefinitely 
enjoy its most favored nation trade status with the United States. The 
designation means fewer barriers to trade between the two nations.
  Despite weeks-long debate in Congress, MFN for China was never really 
in doubt. The only thing tested was the will of Congress to send a firm 
message to Chinese Communist leaders about human rights, terrorism, 
drug trafficking, weapons sales, military aggression, tampering with 
United States elections, et cetera.
  The President ultimately decides whether to extend MFN, and President 
Clinton did just that with respect to China. Congress then has the 
option of challenging the President's designation by repealing it.
  Congress did, in fact, consider a bill to revoke MFN for China, but 
rejected the idea. I voted for the repeal. Yet, had the bill to repeal 
actually prevailed through the House and Senate, the measure would have 
still required Clinton's signature. He assured a veto. Again, MFN for 
China was never really questionable.
  I had hoped to achieve a few important objectives throughout the 
debate. First, I had urged a delay of the House vote--perhaps by only a 
few weeks.
  Second, I had hoped the House would have considered, at the same time 
of the MFN vote, various sanctions against China targeting the specific 
problems we have with the nation, thereby allowing the trade issue to 
stand alone.
  Third, I had suggested the House request certain commitments on these 
topics from the Chinese Government in exchange for continuing MFN 
status.
  Unfortunately, there was a rush to force a vote on MFN prior to a 
handful of key events that might have improved America's standing with 
China. Since that time, a number of reports have been published 
exposing serious questions about our relationship with China.
  One of my colleagues from California, for example, cited the 
following four specific documents in a recent letter to each Member of 
Congress.

       Religious Persecution: ``Nearly one month after the vote on 
     MFN for China, the State Department's report on religious 
     persecution has been made public. It was on June 23 when U.S. 
     News and World Report revealed the report would not be 
     released before the vote on MFN as had been expected. In The 
     New York Times, Steven Erlanger writes in ``U.S. Assails 
     China Over Suppression of Religious Life,'' that the report 
     is highly critical of the Chinese regime for its wanton 
     disregard of religious freedom and its persecution of those 
     practicing non-sanctioned religions. This includes Catholics 
     who believe in Papal authority. In his column, ``On My 
     Mind,'' New York Times Columnist A.M. Rosenthal expounds on 
     the State Department report.''
       Proliferation: ``The Chinese government continues to ignore 
     international agreements and, in some cases, arms our enemies 
     with weapons of mass destruction. These actions place 
     American servicemen and women at risk. Tim Weiner of the New 
     York Times reveals who is buying what in his July 3rd 
     article: ``China is Top Supplier to Nations Seeking Powerful, 
     Banned Arms.''
       The China Trade Deficit: ``The Commerce Department reported 
     the U.S. trade deficit with China widened by 9.1 percent in 
     May to $3.76 billion from $3.45 billion in April. The gap was 
     the highest since October 1996. The trade deficit with China 
     surpassed that of Japan, for the third time.
       ``Also in the New York Times, A.M. Rosenthal writes about 
     Chinese abuses running the gamut from human rights to nuclear 
     weapons in The Connecting Line.''
       John N. Stafford, the Reagan administration's chief 
     Department of the Interior judge, recently wrote in his well-
     respected international investment newsletter about the 
     tremendous extent to which China influences the U.S. bond 
     market. Stafford recently wrote, ``We are providing funding 
     for our own self-destruction, especially when money is being 
     used to facilitate efforts to build up China's military and 
     provide weapons of mass destruction to known terrorist 
     countries and sworn enemies of the U.S.''
       To be clear, I have no doubt that China's markets are 
     attractive to our agricultural and manufacturing interests in 
     Colorado. In fact, the president of the Colorado Farm Bureau 
     testified in a recent debate that I sponsored in Fort 
     Collins, that most of our expansion in foreign markets could 
     occur in China over the next few years. Clearly, I do not 
     want Colorado to miss out on that, and improving our 
     relationship with China is something I believe we should 
     definitely do.
       But extending MFN the way the White House did, simply 
     missed a golden opportunity to make meaningful progress in 
     China.
       The very purpose of MFN status should be to foster more 
     open trade with partners who act fairly and demonstrate good-
     faith policies. According to United States Customs Department 
     testimony, Communist China continually violates United States 
     copyright and intellectual property laws by the mass pirating 
     and sale of American-made software, films, books, music and 
     other media and technologies. These unscrupulous acts

[[Page E1620]]

     have cost American businesses, shareholders, workers, and 
     families billions of dollars every year in stolen revenues.
       Not only does China violate United States trade law, but 
     they violate the conscience of the American people with human 
     rights abuses. The practices of China fuel an economy of mass 
     slave labor and the persecution, torture, and killing of 
     political and religious objectors--replete with 
     documentation.
       Yet recent events indicate that the MFN question, if raised 
     properly, as I had hoped, would yield demonstrable results in 
     China. In 1990, the mere threat of revoking MFN led the 
     Chinese Government to release 600 political prisoners from 
     slave labor and prison camps.
       There are still more items to consider. china will soon 
     begin deploying an advanced intercontinental-range ballistic 
     missile, called the Dong-Feng 31, giving China accurate 
     nuclear capacity eastward, including the Western United 
     States.
       China is guilty of shipping Soviet-style AK-47's and other 
     legal weapons to United States gangs, drug runners, and other 
     criminal elements. These guns are manufactured by the Chinese 
     firm Norinco, and Chinese agents have also marketed for sale 
     in the United States, rocket-propelled grenade launchers, 
     light armored vehicles, and shoulder-fired surface-to-air 
     missiles.
       Moreover, Beijing has routinely facilitated the spread of 
     weapons of mass destruction to other rogue nations disposed 
     to using them against U.S. personnel and our allies. The 
     Chinese Government is clearly using proliferation as part of 
     its campaign to intimidate the United States and undermine 
     our influence in the Western Pacific.
       V.I. Lenin once predicted that ``capitalists will sell us 
     the rope with which we will hang them.'' I hope he is wrong.
       For those who claim MFN will ``engage'' China and encourage 
     mutual resolution of these serious problems, I ask a simple 
     question. Why hasn't MFN for China worked so far? China has 
     enjoyed MFN status since February 1980. Chinese trade 
     barriers, our trade deficit with China, China's casual 
     approach to trade agreements, and blatant human rights abuses 
     all have come about during that time.
       The United States annual trade deficit with China now 
     stands at more than $35 billion, leaving China with 
     approximately $100 billion in foreign reserves according to 
     United States Trade Representative reports, most of which 
     goes toward its growing military program.
       While China will continue to enjoy MFN status, Colorado 
     should, in fact, push for broader trade markets there. 
     Actually, trade markets would have continued to exist under 
     tariff laws had MFN been revoked, just as they did before 
     1980. But the leverage MFN could have provided is lost and we 
     must now look to the next set of issues relative to China.
       Consequently, I am supporting a package of legislation 
     designed to address specific Chinese issues. Initiated by the 
     Republican Policy Committee, upon which I serve, these 
     proposals will encourage responsible behavior by the Chines 
     with respect to United States interaction.
       1. Sanctions for PLA Enterprises. The Communist Chinese 
     People's Liberation Army directly or indirectly controls a 
     large congeries of commercial enterprises. Such enterprises 
     have been involved in proliferation of weapons of mass 
     destruction, arms smuggling, economic espionage, use of 
     forced labor, piracy of intellectual property, and 
     misappropriation of militarily sensitive technology. As 
     state-owned enterprises, all operate on more or less 
     noncommercial terms, conducting their affairs for such non-
     market reasons as military or prestige considerations or the 
     advancement of Chinese foreign policy. And even when 
     operating for commercial motives, their profits subsidize the 
     Chinese military establishment.
       H.R. 2188 denies MFN status to the 3-million-man People's 
     Liberation Army and enterprises it controls. This targeted 
     MFN revocation is thoroughly consistent with free trade 
     principles, since the PLA does not trade with the United 
     States for purely commercial reasons. Rather, the PLA's 
     commercial activities serve also to provide it with off-
     budget financing, thus directly subsidizing the potential 
     military threat to the United States. H.R. 2188 also includes 
     a ``truth in trade'' provision requiring the annual 
     publication by the Defense Intelligence Agency of a list of 
     PLA-owned enterprises exporting products to or operating in 
     the United States.
       2. Tighter Prohibition on Laogai Slave Labor Product. 
     Import of ``convict made goods'' is currently banned under 
     United States law, but products made in Communist China's 
     vast archipelago of Laogai, reform through labor, camps 
     continue to flow to the United States. The Laogai system is a 
     gruesomely sinister aspect of Chinese Communist 
     totalitarianism. Some 6 to 8 million people are currently 
     captive in the Laogai. According to the latest official 
     statistics, the Laogai operates 140 export enterprises. 
     Laogai products are sold to over 70 nations abroad. Forced 
     labor is responsible for producing key commodities, including 
     graphite, rubber, and asbestos. One-third of Chinese tea is 
     grown by Laogai prisoners.
       H.R. 2195 will more effectively implement the ban on slave-
     labor goods. It authorizes $2 million in additional funds for 
     State Department and Customs Service personnel to monitor 
     Chinese slave-labor products. Presently, only two U.S. 
     officials in the U.S. Embassy in Beijing are assigned to 
     slave labor monitoring--and they also are charged with 
     monitoring widespread piracy of intellectual property rights. 
     In addition, to make this monitoring meaningful, the 
     legislation expresses the sense of the Congress that the 
     President should replace the current Memorandum of 
     Understanding on Prison Labor between the U.S. and the PRC 
     with one providing for stricter monitoring. Under the current 
     MOU, Communist China largely determines what prison labor 
     camps international monitors visit. The legislation will call 
     upon the President to negotiate a tightening of the 
     monitoring regime.
       3. Improving Radio Free Asia. Radio Free Asia/Voice of 
     America broadcasting to China is a desperately needed and 
     cost effective way to promote basic Chinese freedoms and 
     promote better United States-China relations. Currently, 
     Radio Free Asia's Chinese broadcasts are only 5 hours a day 
     in the Mandarin dialect and 2 hours a day in Tibetan, while 
     VOA broadcasts 10 hours a day in Mandarin and 3\1/2\ hours in 
     Tibetan.
       Chairman Smith offered an amendment to the Foreign Policy 
     Reform Act authorizing $20 million in increased funds for RFA 
     and $10 million for VOA, as well as $10 million for the 
     Broadcasting Board of Governors to complete construction of a 
     transmitter on Tinian Island. The amendment passed on a voice 
     vote. H.R. 2232 provides a more significant authorization in 
     a stand-alone bill. The added resources will accommodate 24-
     hour-a-day broadcasts to China in the major Chinese dialects 
     of Mandarin, Cantonese, and Tibetan, as well as other major 
     dialects such as the dialects spoken in Xinjiang. It further 
     requires the President to report, within 90 days of 
     enactment, on a plan to achieve continuous broadcasting in 
     Asia.
       4. Annual Report on PRC Intelligence Activities and Active 
     Measures in the U.S. Increasingly well-known Community 
     Chinese attempts to manipulate the American political 
     process, to direct political, military, and economic 
     espionage against the United States, and to suppress or 
     distort information provided to or about Communist China 
     within the United States require a direct remedy that MFN 
     denial cannot provide.
       In 1985, then-Rep Gingrich introduced legislation requiring 
     the State Department to produce classified and unclassified 
     annual reports on Soviet active measures in the United 
     States, legislation repealed at his request in 1993. Pursuant 
     to this law, the State Department, in consultation with the 
     CIA, NSA, DoD, DoJ, Treasury, and other appropriate agencies, 
     provided annual classified and unclassified reports on Soviet 
     active measures in the U.S.
       To deal with the must egregious PRC covert operations in 
     the United States, H.R. 2190 requires similar reports by the 
     Director of Central Intelligence concerning Communist Chinese 
     political, military, and economic espionage; intelligence 
     activities designed to gain political influence; efforts to 
     gain direct or indirect influence through commercial or non-
     commercial intermediaries; and PRC disinformation and press 
     manipulation.
       Cutoff of Loans from International Financial Institutions. 
     China has had remarkable access to the world's private 
     capital markets--including the United States capital markets. 
     Despite its extraordinary success at attracting foreign 
     investment, however, Communist China still benefits from soft 
     loans from the World Bank's poverty fund, the International 
     Development Association, on the premise that it is a 
     developing nation. The PRC also receives subsidized capital 
     through the IMF and the Asian Development Bank.
       Chairman Solomon introduced legislation in the 104th 
     Congress to address this inequitable situation. Because 
     Congress cannot direct the votes of U.S. representatives in 
     international organizations, the legislation urged, though it 
     did not direct, the President to instruct U.S. 
     representatives to vote against loans for the PRC in these 
     international financial institutions.
       Subsidies from U.S. taxpayers are unlike the extension of 
     MFN--free trade, after all, abhors subsidies. Accordingly, 
     H.R. 21966 cuts United States contributions to international 
     financial institutions by the amount constituting the 
     American share of the subsidies given to Communist China.
       6. Theater Missile Defense Sales to Taiwan. In both 1995 
     and 1996, the PLA blockaded Taiwan's two largest ports by 
     missile ``tests,'' which also interfered with United States 
     commercial shipping and aviation. The United States was 
     forced to respond by sending two carrier battle groups to the 
     Taiwan Strait during the crisis.
       Sale of theater missile defense components to Taiwan is 
     directly responsive to these threats. Because such systems 
     are purely defensive. they pose no threat to any nation in 
     the region, and by nature will only contribute to stability 
     in the region. As defensive weapons, their sale is consistent 
     with the Taiwan Relations Act, And, because such weapons 
     would be purchased from the United States, no U.S. foreign 
     aid is required for the transfer.
       The bill to be introduced shortly requires the 
     administration to develop plans for missile defense systems 
     capable of defending the territory of Taiwan as soon as 
     reasonably possible, and calls on the President to approve 
     their sale to Taiwan.
       7. Accession of Taiwan to the WTP Prior to Communist China. 
     WTO working groups are currently negotiating with Taiwan and 
     the PRC over their respective bids for accession to the WTO 
     Taiwan is applying for membership in the WTO as a special 
     customs region,

[[Page E1621]]

     a status that does not connote nationhood. Hong Kong, for 
     example, will retain its separate WTO membership as a special 
     customs region following the July 1, 1997 handover.
       Taiwan, our eighth largest trading partner, is currently 
     far closer than the PRC to concluding an accession agreement. 
     The PRC still has a long way to go to meet the free market 
     norms of the WTO. Some 100,000 state-owned enterprises are 
     currently operating in the PRC, accounting for over a third 
     of Communist China's total industrial production, and 
     employing two-thirds of the urban work force.
       Unlike the PRC, Taiwan does not seek accession as a 
     developing country, a status that would permit it to delay 
     revocation of a variety of unfair trading practices. Yet the 
     PRC, and its proxies on the Taiwan-WTO working group, insist 
     that Taiwan's accession be linked for political reasons to 
     that of the PRC.
       A provision of the Foreign Relations Authorization Act 
     authored by Representative Rohrabacher, and supported by the 
     Clinton administration and Representative Hamilton, states 
     that the United States should support Taiwan's application 
     for WTO membership. It passed the House on June 4, 1997. 
     Representative Gephardt has introduced more aggressive 
     language, constitutionally suspect, that attempts to require 
     the United States to oppose the PRC's accession to the WTO in 
     the absence of a variety of policy changes. Because the 
     Constitution gives the President, not Congress, the authority 
     to direct the votes and negotiating posture of U.S. 
     representatives in international forums, this vehicle is 
     flawed.
       House Concurrent Resolution 190 strengthens the Foreign 
     Relations Authorization Act provision concerning Taiwan's 
     admission to the WTO, but avoids the constitutional problems 
     of the Gephardt approach. It states Congress's support for 
     Taiwan's WTO application and urges that Taiwan be admitted 
     ahead of Communist China, which is not ready for WTO 
     accession.
       8. Fighting Missile Proliferation. The Gore-McCain Iran-
     Iraq Arms Non-Proliferation Act of 1992 requires the 
     President to sanction nations that transfer ``destabilizing 
     numbers and types'' of advanced conventional weapons to these 
     outlaw nations. Yet when the China National Precision 
     Machinery Import-Export Corporation transferred 60 C-802 
     cruise missiles to Iran, the administration declined to apply 
     the act's sanctions--despite the fact that 15,000 U.S. troops 
     are stationed within range of the C-802 missiles acquired by 
     Iran, and the fact that the State Department itself has found 
     that ``[t]hese cruise missiles pose new, direct threats to 
     deployed United States forces.'' Indeed, 37 American sailors 
     were killed during Operation Desert Storm when the U.S.S. 
     Stark was struck by a cruise missile in the Persian Gulf. And 
     on June 17 it was further reported that Iran and China are 
     jointly developing a new short-range ballistic missile with a 
     105-mile range.
       H.R. 188 expressly finds that the delivery of the C-802 
     missiles violated the 1992 act, and urges the Administration 
     to obey the law.
       9. Free the Clergy Act. International Relations Committee 
     Chairman Gilman introduced H.R. 967 on March 6, 1997. The 
     bill's findings outline the religious persecution perpetrated 
     by the Communist Chinese against Tibetan Buddhists, Catholic, 
     and other Christian clergy and worshippers. H.R. 967 states 
     it as congressional policy that religious freedom should be a 
     major facet of the President's policy toward China. H.R. 967 
     prohibits (1) issuance of visas and (2) the use of American 
     funds appropriated for the Department of State, USIA, or AID 
     to pay for the travel of Communist Chinese officials involved 
     in the Patriotic--government-approved churches--in the PRC, 
     or in the formulation or implementation of policies to 
     repress free worship.
       10. Opposing Forced Abortion in China. The abhorrent 
     pattern of forced abortion and sterilization countenanced 
     under the state-imposed ``one-child policy'' is a grisly 
     phenomenon with implications both for religious liberty and 
     for basic human rights. The China policy bill recently 
     introduced by Senator Abraham provides that United States 
     visas shall not be issued to Chinese officials implementing 
     this form of ``population control.'' The bill to be 
     introduced contains this prohibition as a stand-alone piece 
     of legislation.
       11. Helping Chinese Political Prisoners in the Laogai. 
     Dissidents--not only well-known individuals such as Wei 
     Jingsheng and Wang Dan, but literally hundreds of thousands 
     of others--are imprisoned without trial or even formal 
     charges. Wei himself has recently been sentenced to a second 
     14 years, without any semblance of due process. That glaring 
     injustice led two former U.S. Attorneys General to offer to 
     defend him at his December 1995 show trial--an offer Beijing 
     forbade.
       The bill expresses America's contempt for this aspect of 
     China's current autocratic rule. The bill authorizes 
     increased funding to permit six diplomats to monitor human 
     rights to be assigned to the Beijing Embassy, and at least 
     one diplomat dedicated to monitoring human rights to be 
     assigned to each U.S. Consulate in China. Currently, only one 
     official in the U.S. Embassy in Beijing is assigned to human 
     rights, and none in U.S. Consulates in the PRC.
       12. Encouraging China to Engage in Good-Faith Trade 
     Negotiations. The Chinese Government has thus far failed to 
     propose the kinds of meaningful reductions in trade barriers 
     necessary for it to enter the World Trade Organization. H.R. 
     1712, introduced by Representatives Bereuter and Ewing, 
     combines a carrot and a stick to motivate China to make the 
     necessary concessions to enter the WTO. The bill requires the 
     President to impose ``snapback''--pre-Uruguay Round--tariffs 
     on selected Chinese goods if he determines that the PRC is 
     not ``according adequate trade benefits to the United States, 
     including substantially equal competitive opportunities for 
     the commerce of the United States,'' and ``taking adequate 
     steps or making significant proposals to become a WTO 
     member.'' In addition, bill provides permanent MFN status for 
     Chinese goods if China accedes to the WTO.
       On July 31, 1997, I signed a letter to President Bill 
     Clinton responding to reported plans for the White House to 
     certify the 1985 Nuclear Cooperation Agreement between the 
     U.S. and China. The action is anticipated for the fall of 
     1997.
       According to the Atomic Energy Act of 1954, the United 
     States must have a bilateral agreement for nuclear 
     cooperation with any country it seeks to provide with the 
     technologies, materials and services required to build 
     nuclear powerplants or other nuclear facilities. In 1985, 
     such an agreement was negotiated with China.
       But before it is implemented, the President must certify to 
     Congress that China has become a reliable and responsible 
     party to the international nonproliferation regime by halting 
     all exports of nuclear technology to nations with 
     unsafeguarded nuclear facilities. No President has thus far 
     been able to certify this for China.
       In fact, in February, 1996, it was reported that China had 
     sold 5,000 ring magnets to Pakistan for use in Pakistan's 
     uranium enrichment facility. In the 1980's China secretly 
     constructed a nuclear reactor in Algeria capable of producing 
     nuclear weapons. China finally confessed to the project when 
     confronted with aerial photographs in 1991.
       I mention all of these examples of initiatives I am 
     pursuing in Washington because I believe the people of China 
     need a strong partnership with the United States. Without 
     question the United States will profit greatly from such an 
     association and our humanitarian objectives could also be 
     achieved. The only thing standing in the way has been the 
     Chinese Government.
       Obviously, the MFN question is one upon which I devoted 
     considerable time. In the end, after evaluating these and 
     other factors I came to the conclusion that the vote to 
     revoke MFN for China was, without question, in the best 
     interest of Colorado's Fourth Congressional District, and the 
     United States. I will continue to do all I can in my official 
     capacity to see the relationship between China and the United 
     States improved, and the prosperity of our citizens enhanced 
     by it.

     

                          ____________________