[Congressional Record Volume 146, Number 23 (Monday, March 6, 2000)]
[Senate]
[Pages S1169-S1170]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             PERMANENT NORMAL TRADING RELATIONS WITH CHINA

  Mr. GRASSLEY. Madam President, there are a number of misconceptions 
about the upcoming vote in the Senate to grant China permanent normal 
trading relations or, as we often call it, PNTR. I will refer to it as 
normal trading relations.
  Today, as chairman of the International Trade Subcommittee, and to 
inform my colleagues about the importance of this issue because I favor 
normal trading relations with China, I want to address two 
misunderstandings regarding China.
  The first misconception is that a vote by the Senate on normal 
trading relations is a vote to admit China to the World Trade 
Organization. We do not have anything to do with China being in the 
World Trade Organization. It is a wrong misconception. Also, there is a 
belief if we do not approve PNTR, China will not be able to join the 
World Trade Organization. As a member of the World Trade Organization, 
we can say something about it through our representative there, but in 
the Senate our vote on PNTR will not affect China's ability to join the 
WTO.
  I want to tell my colleagues what will be consequence of not 
approving permanent normal trading relations with China. The only thing 
that will happen if we vote against permanent normal trading relations 
with China is that American farmers and all of our businesses will miss 
out on lower tariff rates and the other market-access concessions China 
will grant to farmers and businesses in other countries.
  Remember, China is not just a big chunk of land; China is 20 percent 
of the world's population. When we talk about doing business with 
China, we are not talking about doing business in East Podunk; we are 
talking about doing business with 20 percent of the people of this 
Earth.
  Let me explain what the PNTR vote is really about. Congress has 
placed conditions on our trade with China. These stipulations are not 
consistent with the core World Trade Organization obligations for 
member countries to grant each other unconditional, most-favored-nation 
treatment. If we do not grant permanent normal trading relations with 
China, thus removing the Jackson-Vanik restrictions, and if, at the 
same time, China eventually becomes a World Trade Organization member--
and this is going to happen sooner or later--then the World Trade 
Organization rules will require the United States to opt out of the 
tariff and market access concessions we helped negotiate.
  It does not hurt China, it does not hurt any of the other 137 members 
of the World Trade Organization, but it is going to help us because 
these other countries will get market access. Other countries will gain 
and build market share in China while the United States is sitting on 
the sidelines. This will be at the expense of the American soybean 
farmers, at the expense of the American pork producers, at the expense 
of the American insurance companies, and other financial service 
providers. You can list any segment of the American economy. I happen 
to list those that are very much related to the economy of my State. In 
the process, China--this country with 20 percent of the world's 
population--will not be hurt one bit, either.

  Let's make it clear. Let's say somehow the Congress decides we do not 
want permanent normal trading relations with China, and China joins the 
World Trade Organization. China gets the benefit of that. All the other 
countries get the benefit of that. Let's say we decide to not complete 
the agreement with China. China is not going to be hurt one bit. In 
fact, hundreds of millions of Chinese consumers--20 percent of the 
world's population--will reap the benefits of free trade. Our farmers 
and businesses will surely suffer. This is not fair.
  Since I am a Republican, I would like to quote a Democrat. Within the 
last week, before the Senate Agriculture Committee, Secretary of 
Agriculture Glickman said something very interesting. He said that for 
a couple decades we have been letting almost anything from China they 
want to export come into our country, with few restrictions. Yes, this 
open access has certainly helped our consumers. When we talk about the 
difficulty of getting our goods into China, we have to deal with state 
trading organizations, and with a lot of nontariff trade barriers. So 
it is quite obvious this agreement with China would be a win-win 
situation for the United States of America.
  That is Secretary of Agriculture Glickman speaking not only about 
agriculture but speaking about all the

[[Page S1170]]

nonagricultural manufacturing products and services that we can send to 
that country as a result of this agreement.
  Remember, the first misconception I cited is that some believe if 
China does not get permanent normal trading relations, that it is going 
to keep China from joining the World Trade Organization. But if China 
does get in the World Trade Organization, she will have a fairly free 
trade relationship with 137 other countries. And then we will not have 
that same agreement with China. It will be a lose-lose situation for 
America.
  The second misconception I want to address is that even if China does 
get into the World Trade Organization, it will not mean that much right 
away for American manufacturers and American agriculture.
  That is something that could not be further from the truth because we 
are going to reap immediate benefits from China having normal trading 
relations with us. As well, with China being a member of the World 
Trade Organization, we will benefit from that relationship with China. 
Because we are also in the WTO, we will benefit from what happens with 
the increased trade that results from that.
  The fact is, China is not only a large economy, it also happens to be 
a very dynamic economy. Because they have made economic reforms there, 
China's leaders have sparked an economic renewal that has led to growth 
rates of 7 to 10 percent every year of the last decade, easily dwarfing 
the rates of our own superheated economy in the United States.
  China's economy has grown 7 to 10 percent. Quite frankly, I do not 
know whether they want to admit this, but China's economy has to grow 
at least 5 percent for them to make room for all the young people 
coming into the workforce.
  Any way you look at it--the 5 percent they have to have to keep 
people employed or the 7 to 10 percent they have had in recent years--
there is a lot of new prosperity in China. As a consequence of this, 
China is buying a great deal of everything, especially agriculture 
products.
  But because about one-third of China's economic activity is generated 
and controlled by state-owned enterprises, China often manipulates its 
markets in a way that harms its trading partners. This agreement we 
have with China takes care of this problem. I would like to give you an 
example. It is one that is well known to the soybean farmers of my own 
State of Iowa.

  In 1992, China soybean oil consumption shot up from about 750,000 
metric tons to 1.7 million metric tons. Keeping pace with this 
increased new demand, soybean oil imports also more than doubled.
  In order to keep up with surging domestic demand, China imported more 
soybeans and soybean meal, much of it from the United States, and, in 
fact, much of it from my State of Iowa--the leading producer of 
soybeans of the 50 States.
  When China's soybean imports hit their peak in 1997, soybean meal in 
the United States was trading at an average base price of about $240 
per ton. This meant for a while farmers were getting a lot better price 
than they are now for soybeans, sometimes close to $7 per bushel. 
Everyone was better off. China's consumers got what they wanted. 
American soybean growers prospered. Of course, this is the way trade is 
supposed to work.
  But suddenly, Chinese state-run trading companies arbitrarily shut 
off imports of soybeans. Soybean meal that was selling in 1997 for $240 
per ton in the United States plummeted to $125 per ton by January 1999. 
Soybeans selling for over $7 per bushel in 1997, fell to just over $4 
per bushel by last summer.
  So you can imagine what happened on the farm with the loss of that 
income. Combined with other factors, farmers were unable to pay their 
bills. Many farmers who were considered by their bankers to be well off 
are struggling to recover. In trade, what happens in China does make a 
difference in the United States of America, at least with our economy.
  This shows what occurs when protectionism, when trade barriers, when 
tariffs, and when government-run controls take the place of the free 
market. Trade is distorted. Consumers abroad have less choice. And 
American family farmers suffer. It also demonstrates how important 
China's entry into the World Trade Organization is for America's 
farmers.
  With a new bilateral market access agreement in place, and with 
meaningful protocol agreements that should soon be in place, China will 
not be able to use straight state trading enterprises to arbitrarily 
restrict and manipulate agriculture trade, and trade in any product, 
for that matter.
  Once China has entered the World Trade Organization, they will have 
to do away with those organizations that violate the principles of a 
free market economy because they will have to in order to get into the 
World Trade Organization. For the first time in history, China would be 
bound by enforceable international trade rules.

  When we trade with other countries, we export more than farm 
equipment, soybeans, computer chips, insurance, banking, a lot of 
services. We export part of our society and what our society stands 
for, the American values and ideals that can be communicated sometimes 
in commerce, that can never be communicated by American political 
leaders and by American diplomats. I think the exporting of our values 
and our ideals is very good. This is surely good for the World Trade 
Organization. It is good for China. It is good for the United States. I 
believe it is part of the process of keeping the peace.
  We seldom get a real chance in Congress to make this a better and 
safer world in a very large way without expending American blood and 
deploying American military might around the world. This is one of 
those rare opportunities, through commerce and through a very peaceful 
approach, to do something for peace around the world.
  I urge my colleagues to join me in supporting permanent normal 
trading relations with China.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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