[Congressional Record Volume 146, Number 57 (Wednesday, May 10, 2000)]
[Extensions of Remarks]
[Pages E694-E695]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         REGARDING PERMANENT NORMAL TRADE RELATIONS WITH CHINA

                                 ______
                                 

                          HON. DAVID D. PHELPS

                              of illinois

                    in the house of representatives

                        Wednesday, May 10, 2000

  Mr. PHELPS. Mr. Speaker, today after months of information-gathering, 
discussion, and deliberation, I am announcing my position on the issue 
of granting Permanent Normal Trade Relations (PNTR) status to China. I 
would like to express my sincere appreciation to the hundreds of 
constituents, colleagues, community leaders, and representatives of 
groups with a stake in this debate, for sharing their views and 
answering my questions as they patiently engaged in this process with 
me. Seldom in my legislative career have I taken an issue more 
seriously than this one. While I realize that my decision will not 
please everybody, I hope there is no doubt that every voice and every 
argument presented to me was given the utmost consideration.
  I believe it to be in the best interests of the 19th District of 
Illinois, and the nation as a whole, that I oppose extension of 
Permanent Normal Trade Relations to China. I do support China's 
accession to the World Trade Organization. However, I am convinced that 
the United States must maintain annual grants of NTR until we have 
ascertained that China is living up to WTO rules and our own 
expectations regarding human rights, labor rights, religious tolerance 
and environmental protection.
  China has a long history of failing to live up to its agreements, and 
Chinese officials have recently indicated they do not intend to abide 
by certain components of the WTO agreement either. While I hope this 
will not be the case, I am not comfortable relinquishing bilateral 
enforcement tools like Section 301 and anti-dumping provisions in favor 
of a WTO dispute resolution process which is notoriously slow. We must 
not place ourselves in a situation where American jobs are sacrificed 
while we wait two or three years for a WTO ruling, only to have no 
recourse if the ruling is adverse.
  Many argue that only through engagement and open trade will we see 
programs in China on matters of labor rights, human rights, religious 
persecution, and environmental degradation. If this is indeed the case, 
then we need not worry, for China will be engaged with the global 
marketplace through its WTO membership regardless of the outcome of our 
PNTR vote. Unfortunately, there is reason to doubt this contention. The 
United States has been trading with China since 1980, and since 1994 we 
have followed a policy of ``delinking'' human rights from trade policy, 
based upon the theory that free trade equals greater freedom in 
society. Yet every year since delinkage conditions in China have 
worsened, and according to a 1999 State Department report, human rights 
there have deteriorated markedly.
  I represent an agricultural district, and I have seen first-hand the 
devastation that recent price drops have wrought. I am sympathetic to 
the need for expanded export markets and other opportunities to improve 
the farm economy, and if I believed that the China agreement was the 
answer to agriculture's problems, I may have taken a different 
position. Unfortunately, several factors lead me to the opposite 
conclusion. First, as I have mentioned, China has not been a model 
trading partner in the past, and I remain skeptical that they will 
follow through with promises regarding agriculture and other products. 
Second, China is a nation committed to preserving its national 
independence and improving rural stability, and its agricultural 
production consistently outpaces demand. China maintains nearly a 
three-to-one ratio of agricultural exports to imports, and I worry that 
China's objective is to improve its domestic distribution system, 
rather than bring in more agriculture products when they already have 
surpluses. If this is the case, our agreement with China will bring 
minimal benefits to struggling farmers in Illinois.
  The argument has been made that increased trade with China will 
obviate the need for federal assistance like the $8.7 billion in 
emergency farm aid that Congress provided last year. However, even 
under the rosiest scenario, the total value of U.S. exports of wheat, 
rice, corn, cotton, soybeans and soybean products to China would 
increase by $1.6 billion dollars in 2005 when the agreement is fully 
implemented, and the average annual value of U.S. exports from 2000 
through 2009 would increase by $1.5 billion dollars. The administration 
estimates that net farm income would be higher by $1.7 billion in 2005, 
and higher by an annual average of $1.1 billion per year through 2009, 
although higher feed costs and reduced government payments would offset 
part of the increase.
  These potential increases, even if fully realized, fall billions 
short of the assistance that has been required in recent years to help 
farmers weather hard times, suggesting to me that China's export market 
is not the panacea it has been portrayed to be. I recall that during 
the NAFTA debate, proponents of the agreement made similar arguments 
about the importance of new export markets for American

[[Page E695]]

agriculture. Yet since NAFTA's passage, our farmers have experienced 
the worst farm crisis in decades.
  Furthermore, any decreases in federal aid to farmers would likely be 
negated by the increased funding needed for dislocated worker programs 
like Trade Adjustment Assistance. Since 1994, in my district alone, 
over 2200 workers have qualified for TAA. If PNTR is granted, many 
American companies will undoubtedly find it more cost-effective to 
shift production to China. This will mean even more displaced workers 
(and more federal aid) in a district like mine, where manufacturing 
jobs often provide the highest wages and best benefits in the area. 
Even ardent backers of PNTR admit that while on the whole they believe 
the agreement will benefit the American economy, some sectors will 
suffer and some areas will lose jobs.
  Finally, although the United States and China have reached agreement 
on many issues, the Government Accounting Office warns that some remain 
incomplete. Several negotiating objectives have yet to be reached, and 
of those that have, some remain to be finalized. In addition, China has 
not yet reached agreement with the European Union. I am reluctant to 
vote to forever relinquish congressional powers of review when we have 
not been presented with a complete agreement, and when even the nature 
of the remaining issues has been classified as a national security 
matter.
  Many of my concerns can be answered by taking a cautious approach to 
this issue, welcoming China into the WTO without granting PNTR and 
sacrificing our bilateral enforcement mechanisms. With all due respect 
to those who have sought to convince me otherwise, I firmly believe 
that this approach is viable. I am convinced that our 1979 Agreement 
with China ensures for American farmers and manufacturers the identical 
tariff and other benefits that China must give all other WTO nations 
once it enters that body. Therefore, we need not fear that our goods 
will be at a competitive disadvantage to similar products from other 
member nations. Meanwhile, we will maintain our ability to respond to 
non-compliance or bad behavior on China's part with our own enforcement 
tools which have proven effective in the past. Our already large trade 
deficit with China is expected to widen under this agreement, and we 
must be able to act quickly and effectively to protect the interests of 
American producers, businesses, workers and consumers.
  I remain committed to working towards a free and open trading 
relationship with China, one that promotes growth and change in that 
nation without shortchanging American interests. However, I do not 
believe that we have reached an agreement that will accomplish these 
goals. The very definition of PNTR is that it is permanent. Given the 
many doubts and concerns I have not been able to reconcile, I am simply 
not prepared to support the irrevocable sacrifice of America's leverage 
and oversight on such a critical issue.

                          ____________________