[Congressional Record Volume 143, Number 147 (Tuesday, October 28, 1997)]
[Senate]
[Pages S11294-S11296]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROTH (for himself, Mr. Hagel, Mr. Thomas, Mr. Kerry, and 
        Mr. Akaka):
  S. 1327. A bill to grant normal trade relations status to the 
People's Republic of China on a permanent basis upon the accession of 
the People's Republic of China to the World Trade Organization; to the 
Committee on Finance.


                 the china trade relations act of 1997

  Mr. ROTH. Mr. President, I rise today for myself and Senators Hagel, 
Thomas, John Kerry, and Akaka to introduce legislation that will grant 
normal trade relations to the People's Republic of China on a permanent 
basis when China accedes to the World Trade Organization.
  Today, President Jiang arrives in Washington for the first bilateral 
summit in 8 years. Exchange at the highest levels is critical to the 
maintenance of

[[Page S11295]]

any of our important bilateral relationships. It is even more crucial 
in our relationship with the world's largest country, fastest growing 
economy, and most important rising power.
  Mr. President, this body has spent a great deal of energy debating 
United States policy toward China, cresting each year with the struggle 
over renewal of normal trade relations. I have always supported such 
renewal, and viewed the annual debate as a singularly unproductive 
means of moving the United States toward a coherent China policy. I say 
that because, besides regular high-level exchange, normal trade 
relations with China are essential to any coherent China policy, one 
that keeps our economy strong and engages Beijing in constructive 
reform.
  Currently, the United States is negotiating with China over the 
package of measures Beijing must implement to comply with the strict 
market-based rules of the World Trade Organization. Until the United 
States is satisfied with commitments from China on such issues as lower 
tariff levels and enhanced market access, and assured that Beijing can 
and will carry out those commitments, China will not gain entry to the 
WTO.
  The concessions China must make to gain United States approval are 
significant and will dramatically affect large segments of China's 
economy. The single most important economic benefit Beijing will derive 
from membership in the World Trade Organization is permanent normal 
trade relations--also known as most-favored-nation trading status--with 
every other WTO member. As a practical matter, however, every member 
economy of the World Trade Organization, except the United States, has 
already conferred on China permanent normal trade relations. Moreover, 
the United States has provided normal trade relations to China 1 year 
at a time for more than 15 years. However, until China is specifically 
removed from the limitations of title IV of the Trade Act of 1974, 
Beijing cannot receive permanent normal trade relations from the United 
States, whatever China's status in the WTO.
  The resulting ambiguity over China's trade status with the United 
States hinders Beijing's willingness to make the significant 
concessions necessary to complete a commercially viable WTO accession 
package. A clear signal from the United States that China will, in 
fact, gain permanent normal trade relations upon its accession to the 
World Trade Organization will provide Beijing an incentive to make 
those concessions.
  Mr. President, it is crucial that we understand that China's 
membership in the WTO under commercially viable terms is wholly in the 
interest of the United States. That is because China will be forced to 
open its markets significantly to American trade and investment. And 
more fully open markets represent the best approach to reducing our 
current trade deficit with China. China's membership in the World Trade 
Organization will also make Beijing fully subject to the market-
oriented disciplines of the WTO. Finally, our bilateral trade disputes 
with China will be subject to multilateral resolution mechanisms, in 
addition to the means we already have available under United States 
trade law.
  China is the world's 10th largest trading country. It is the largest 
economy not in the World Trade Organization. Regardless of its WTO 
status, China will have a major influence on the future development of 
the world trading system. I believe the time has come for Congress to 
recognize the importance of integrating China into the global economy.
  Our bilateral economic relationship is the most important means we 
have of integrating China fully into the world economy and the 
international political order. The United States is one of the top five 
sources of foreign investment in China. That investment is not limited 
to the special economic zones, but now takes place throughout China and 
across every major industry. Our businesses are linked in investment 
and in trading relationships that provide a vehicle for common effort 
and common understanding at the most practical and personal levels.
  China also represents a growing economic and political influence in a 
region of critical importance to the United States. The Asia-Pacific 
region now represents over 40 percent of world trade and 53 percent of 
world gross national product. Trans-Pacific trade is more than twice as 
large as trans-Atlantic trade. The Asia-Pacific region economies, 
including the United States and China, are becoming increasingly 
interdependent. The region now represents the largest market for United 
States exports--over $130 billion by some estimates. The predicate to 
our ability to encourage China to play a constructive role in the 
region is our willingness to redefine our bilateral economic 
relationship through the WTO accession process and the normalization of 
our trade relations under United States law.
  A China more fully immersed in global capitalism is more likely to 
behave in ways compatible with American interests and international 
norms. We have seen this reality throughout Asia as countries have made 
major reforms in opening their economies and joined us at the table of 
democratic freedom. Moreover, without permanent normal trade relations, 
not only will we have less influence over the role China chooses to 
play on the global stage, we will also be left on the sidelines of 
China's economic growth.
  We cannot passively accept abuses of human rights, religious 
persecution, or the many other problems we have with China that must be 
addressed and corrected. But neither must we neglect the many issues 
and problems where our interests converge, including the stability in 
the Asia Pacific that undergirds the region's economic growth, peaceful 
resolution of the urgent troubles on the Korean Peninsula, and 
addressing the transnational concerns posed by environmental 
degradation, narcotics trafficking, and crime.
  A relationship premised on cooperation in areas of shared interest 
also provides us a better opportunity to discourage Beijing from 
transferring missiles and other arms to Iran, Iraq, Burma, and other 
rogue regimes, persuade China to reduce tensions in the Taiwan Straits, 
and encourage Beijing to maintain freedoms in Hong Kong and foster 
greater human rights in China.
  Mr. President, Congress and the American people must understand what 
is at stake in the bilateral relationship and how best to move China in 
a direction that is in our best interest and the best interest of the 
American and Chinese people. The summit taking place this week and this 
legislation, I believe, can provide the United States and China the 
impetus to move toward a far more mutually productive relationship.
  Mr. HAGEL. Mr. President, today I am pleased to join with the 
distinguished chairman of the Finance Committee, Senator Roth, as an 
original cosponsor to his legislation to strengthen the President's 
hand in opening up China's market to American exports. I commend 
Chairman Roth for his leadership on trade issues. This bill would 
extend permanent most-favored-nation trading status to China upon that 
country's accession to membership of the World Trade Organization under 
commercially viable terms.
  Mr. President, I believe that the annual debate over so-called most-
favored-nation trading status for China has become counterproductive. 
It is time for the United States and China to transcend this flawed 
process. It is time for trade relations between our two countries to be 
based on the normal commercial standards that one would expect between 
two of the world's great trading powers.
  This legislation would greatly strengthen the President's hand in 
achieving trade negotiations with China. It would do this by giving the 
President the authority to grant China permanent MFN status upon that 
country's accession to the WTO under normal commercial arrangements. As 
long as the Congress merely promises to consider granting permanent MFN 
status after China has agreed to accept WTO obligations, the 
President's leverage in trade negotiations with China will be weakened.
  I would like to emphasize that I do not support China's entry into 
the World Trade Organization under any special arrangement that would 
allow China to avoid full compliance with WTO standards. However, 
China's accession to the WTO under normal commercial arrangements would 
be good

[[Page S11296]]

for the United States and good for the world trading system. It would 
require China to adhere to international trading standards. And should 
China fail to live up to its WTO obligations, we would then have access 
to the WTO's multilateral dispute resolution mechanisms. As long as 
China remains outside of the WTO, our only recourse for resolving our 
trade disputes with China is through the threat of often less effective 
bilateral actions, such as threats of section 301 trade sanctions.
  But once China becomes a member of the WTO under a viable commercial 
protocol, the rules of the WTO require other WTO nations to grant 
permanent MFN to China. If we do not, we lose much of the benefit of 
getting China to accept WTO rules. This is because the United States 
would be denied access to the WTO's dispute resolution process for 
forcing China to live up to its agreements. That is why this bill is so 
important.
  There are a great number of common misunderstanding over the annual 
debate on so-called most-favored-nation trading status for China. First 
of all, the archaic term ``most favored nation'' is itself misleading. 
MFN status is not, as many believe, some special trade benefit. It is 
not even the most favored trading status that we maintain with other 
countries. The United States grants much more favorable trade status to 
many other countries, including Canada, Israel, Mexico, the countries 
of the Caribbean, and a host of other nations--more than 130 in all--
that benefit from special trade programs. All MFN status means is that 
we are willing to maintain some semblance of regular trade relations 
with that country. This is demonstrated by the fact that only six 
countries in the world do not have MFN status.
  What is more, under current trade laws, there is no middle ground 
between full MFN trading status with average tariffs of 4 percent, and 
the disastrous 1930's-era Smoot-Hawley tariffs that average over 50 
percent. Let there be no doubt about the consequences of repealing MFN 
trading status for China: it would mean a virtual end to United States-
China trade relations.
  United States trade with China is important. Throughout the ages, 
commerce has been a driving force of modernity and the spread of 
western ideas. Withdrawing from China will not bring the kind of change 
we are all seeking in that still autocratic system. Isolating China 
economically would have a disastrous and counterproductive result.
  Nevertheless, there are serious trade issues between the United 
States and China that need to be resolved. This bill will make their 
resolution more likely. Nebraska is a major exporting state, with total 
exports last year of $2.45 billion of which $1.5 billion was food or 
agricultural products. Nebraska's meat exports to the world, primarily 
beef, grew 89 percent in the first half of this decade. United States 
beef exports to China, however, are severely constrained by China's 80 
percent tariffs. These levels must come down in the context of the WTO 
negotiations. China also maintains a wide range of trade restrictions 
that are illegal under WTO rules. These illegal trade barriers include 
unscientific health laws that entirely prohibit certain types of U.S. 
wheat exports.
  Mr. President, aggressive United States efforts to negotiate China's 
entry into the WTO under normal commercial arrangements is clearly in 
our national interest. The United States continues to run a large, 
persistent trade deficit with China. Last year, our deficit reached $39 
billion, and it is expected to be higher this year. But the way to 
reduce that deficit is not by closing off our borders and cutting off 
export markets, but to work aggressively to open those markets, 
particularly the China market.
  Export jobs pay 13-16 percent more than average American jobs. 
Exports are the future of our Nation, and we need to have China's 
market opened to American goods, services, and agricultural 
commodities.
                                 ______