[Congressional Record Volume 146, Number 112 (Wednesday, September 20, 2000)]
[Senate]
[Pages S8812-S8814]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              PERMANENT NORMAL TRADING RELATIONS FOR CHINA

  Mr. ABRAHAM. Mr. President, I rise today to discuss the vote I cast 
yesterday in support of H.R. 4444, the bill extending permanent normal 
trading relations to the Peoples' Republic of China.
  While the vote we cast yesterday was to grant China PNTR, it cannot 
be viewed separate from the question of China's accession to the WTO. 
In our negotiations with the Chinese over their entry in the WTO, we 
agreed to end the annual exercise of renewing NTR and to extend NTR to 
China permanently. In fact, if we do not grant China PNTR we will be 
the ones in violation of the WTO's rules when China is ultimately 
granted entry into the WTO. And, as a result, we will lose access to 
their markets and the beneficiaries of this will be our trade 
competitors in Europe, Asia, and South America. Most importantly, we 
have gained some very important trade concessions in our negotiations 
with the Chinese over their entry into the WTO, and we stand to gain 
even greater trade concessions from them once they join the WTO and 
become subject to its rules and dispute resolution procedures.
  By extending PNTR and allowing China entry into the WTO, the U.S. can 
expect to increase exports to China by an estimated $13.9 billion 
within the first five years. And according to the U.S. Department of 
Agriculture, American farmers will account for $2.2 billion of that 
increase in exports to China. If our economy is to continue to grow and 
we are to continue to create more good-paying, skilled jobs so that 
unemployment remains low and Americans can take home more income, we 
must expand our economic opportunities. The best way to accomplish that 
is to find new markets for our products. And the most lucrative new 
market that exists is China.
  As our colleague from Texas, Senator Phil Gramm, pointed out in a 
``Dear Colleague'' letter he circulated earlier this week, things in 
China are changing significantly, if perhaps not as quickly or as 
comprehensively as we wish. Senator Gramm quoted a report on China 
recently issued by the Federal Reserve Bank of Dallas, in which the 
observation is made: ``Beijing's billboards no longer spout ideology. 
They advertise consumer products like Internet service, cell phones, 
and credit cards.'' There can be little doubt that China is changing. 
The task left to us to decide is how best to effectuate positive change 
there.
  My primary concern, in evaluating how to vote on PNTR and China's 
accession to the WTO has always been: ``What is in the best interests 
of Michigan's workers and businesses?''
  China was Michigan's 15th largest export market in 1998. That rank 
has almost certainly risen since then. Michigan's exports to China grew 
by 25 percent during the 5 years between 1993 and 1998, increasing from 
$211 million to $264 million. Businesses in the Detroit area accounted 
for $180 million of those exports in 1998, an 11 percent increase over 
its 1993 figure. Other areas of Michigan are seeing truly phenomenal 
growth in trade with China. Exports to China from businesses located in 
the Flint and Lansing areas grew by more than 84 percent from 1993 to 
1998. And exports from Kalamazoo and Battle Creek businesses to China 
grew by an astounding 353 percent during that same period, according to 
the U.S. International Trade Administration.
  The growth in China trade outside of Detroit is due to the 
surprisingly high number of small and medium-sized businesses in 
Michigan that are exporting to China. According to the Commerce 
Department, more than 60 percent of the Michigan firms exporting to 
China in 1997 were either small or medium-sized companies. Of the 149 
small and medium-sized Michigan businesses exporting to Michigan in 
1997, as substantial majority of these were small businesses with fewer 
than 100 employees. This trend extends beyond Michigan as well. 
Nationwide, not only did small and medium-sized businesses in 1997 
comprise 35 percent of all U.S. merchandise exports to China--up from 
28 percent in 1992--but this 35 percent share of the Chinese market was 
higher than the share small and medium-sized businesses had of overall 
U.S. merchandise exports that year--31 percent.

[[Page S8813]]

  While Michigan's manufacturing sector certainly stands to benefit 
from passing PNTR and China's accession to the WTO, we must not 
overlook the tremendous benefits that Michigan farmers also stand to 
gain from these agreements. Agriculture is Michigan's second largest 
industry, and exporting is a vital component of the state's 
agricultural business. Michigan agricultural exports totaled almost $1 
billion in 1998, but that figure was down almost $100 million from two 
years earlier. With increased competition in agriculture at home and 
abroad from the European Community and major S. American exporters such 
as Chile, opening up a massive new market such as China would be of 
tremendous benefit to a state like Michigan that relies so heavily on 
agriculture production and export.
  The agreement the U.S. negotiated with China, which includes PNTR, 
contains significant trade concessions by the Chinese in four areas 
critical to Michigan agriculture. Michigan exported $240 million worth 
of soybeans and soybean products in 1998, and China is the world's 
largest growth market for soybeans. China has agreed to lower tariff 
rates on soybeans to 3 percent with no quota limits. Michigan is also a 
large feed grains producer, exporting $163 million worth of feed grains 
and products in 1998. China has agreed to lower their quota to a 
nominal 1 percent within an agreed upon import quota schedule. However, 
that quota grows at a tremendous rate, starting at 4.5 million metric 
tons and growing to 7.5 million metric tons by 2004. By comparison, 
China imported less than 250,000 metric tons of corn from all countries 
in 1998. The circumstances are much the same for two other very 
important Michigan agriculture products--vegetables and fruit. On 
vegetables, China's tariff rates are scheduled to drop anywhere from 20 
to 60 percent by 2004. With respect to fresh and processed deciduous 
fruit, China has committed to tariff reductions of up to 75 percent. To 
a state like Michigan, which is known for its cherries, apples, pears, 
and peaches, this is a significant breakthrough for our fruit growers.

  Of course, Mr. President, this is not the end of the story. While 
many of these tariffs will be substantially reduced and quotas are 
lifted or expanded considerably, tariffs and quotas will still remain 
on many U.S. goods--as they in fact will continue to exist on certain 
goods coming from China into the United States. But once China is a 
member of the WTO, the U.S. will continue to push to have Chinese trade 
barriers reduced even further and eliminated altogether.
  A critical element of this debate that too often gets overlooked is 
the degree to which our membership in the WTO helps us eliminate unfair 
trading practices amongst our trading partners. The WTO provides a 
forum to which we can take trade disputes with our trading partners 
involving unfair trading practices by them. One of the primary 
functions of the WTO is to provide procedures to settle trade disputes 
promptly, eliminating a significant deficiency of the previous GATT 
system in which the process often dragged out indefinitely. The WTO 
procedures are inherently more fair and more predictable--and that is 
to our benefit as the world's largest economy and as the world's 
foremost promoter of free and fair trade.
  The United States has filed more complaints to the WTO against other 
countries--49 of them as of April of this year--than any other WTO 
member country. The U.S. has also prevailed in 23 of the 25 complaints 
acted upon up to that time--clear evidence that the WTO is of 
tremendous assistance to us in getting other countries to stop their 
unfair trading practices. This is also why we can be confident that 
once China becomes a member of the WTO that we will be able to further 
reduce the remaining trade impediments they have against our goods and 
that we will be able to ensure that they live up to the commitments 
they have already made to us in exchange for PNTR and our support for 
them joining the WTO.
  While I have supported annual renewal of NTR each year I have been in 
the Senate, I have also been a severe critic of many of China's 
policies and actions and their human rights record. In 1997, I 
introduced the China Policy Act, in which I attempted to outline a new 
paradigm for dealing with the Chinese. Specifically, I felt it was 
unwise for us to use trade continually as our weapon of first resort 
each time an issue arose between our two countries, whether it be 
nuclear non-proliferation and missile sales to rogue nations, religious 
persecution, repression in Tibet, forced abortion, or threatening 
gestures towards Taiwan.
  I feel it unfair to American companies and farmers doing business in 
China to make them constantly bear the brunt of our efforts to get the 
Chinese to modify their behavior. I am also concerned about pursuing 
such a strategy when it would likely result in U.S. companies and 
farmers losing market share and market access in China to our trade 
competitors in Europe, Asia, and South America. The China Policy Act 
legislation I introduced in 1997 essentially said, ``Let us reserve 
using trade as a weapon only for those occasions when our dispute with 
China is trade related.''
  My China Policy Act took a very tough stand on what I believe was 
unacceptable behavior by the Chinese in the area of missile sales and 
nuclear proliferation. In response to China's sale of 60 cruise 
missiles to Iran, which I viewed as a direct violation of the Iran-Iraq 
Non-Proliferation Act of 1972, my legislation required the President to 
impose the sanctions provided for by the 1972 act against China. In 
addition, because I believed the Chinese sale was so dangerous, my 
legislation suspended the President's ability to waive those sanctions.
  I have also taken other steps to thwart China's ability to export 
dangerous armaments and weapons of mass destruction. I voted for the 
Cochran amendment to the FY '98 DoD Authorization bill to control the 
export to China of supercomputers that could be utilized by them in 
their development of missiles and in exploiting nuclear technology. I 
also supported the Hutchinson amendment to the FY '99 DoD Authorization 
bill to study the development of U.S. Theater Missile Defense systems 
against potential Chinese ballistic missiles.
  Based on this track record and of my continuing concerns for China's 
actions in this area, I felt compelled to support the Thompson 
amendment because I believed it was the wisest approach to dealing with 
this very real threat to our national security. To those who argued 
that the Thompson amendment would undermine the very principles upon 
which PNTR was based, I would counter that Senator Thompson made a 
number of significant modifications to his legislation to address these 
very concerns.
  The Senator from Tennessee went to great lengths to ensure that 
American agriculture would be spared the brunt of any trade actions 
taken against China. This ensures that our farmers are not unfortunate 
victims of attempts by U.S. policymakers to punish the Chinese for 
their behavior in non-trade areas. Senator Thompson also gave the 
President greater flexibility to respond to crises by making sanctions 
against supplier countries under the act discretionary rather than 
mandatory. And the evidentiary standard in the legislation for imposing 
mandatory sanctions on companies identified as proliferators has been 
raised to give the President discretion in determining whether a 
company has truly engaged in proliferation activities.
  So I believe the most problematic areas of Senator Thompson's 
original legislation have been addressed responsibly and that made it 
worthy of support. While I remain a staunch supporter of PNTR for China 
and supporting China's accession into the WTO, I simply cannot ignore 
China's past practices in the area of missile sales to rogue nations 
and it's role in nuclear proliferation. The U.S. must maintain the 
ability to confront such aggressive arms practices abroad as a means of 
protecting its own national security.
  In conclusion, I am keenly aware of the deeply divided feelings 
Americans have over the questions of PNTR and China's accession to the 
WTO. There are few, if any, states in which feelings are more polarized 
on this subject than in Michigan. I respect the fact that sincere 
people can and will draw a conclusion different from mine. To those who 
came to a different conclusion, I say that we here in Congress have 
promised to pay close attention to the reports

[[Page S8814]]

issued by the Congressional-Executive Commission on Human and Labor 
Rights created in this legislation. If China's behavior does not 
improve and if they do not abide by the agreements they have signed, I 
am sure that Congress will respond accordingly. I certainly intend to.
  As many of my colleagues may know, both my wife and I grew up in 
union households. Her father was a member of the United Auto Workers. 
And my father was a UAW member as well. That is not an uncommon 
situation in a state like Michigan, as you can well imagine, where a 
significant percentage of the population is employed either by one of 
the automakers or one of the various supplier companies. But like most 
Michiganders who grew up in a union household or are currently living 
in one I know what it's like to see a father or mother come home 
celebrating a raise or some benefits they had secured in a recently 
ratified contract. And I also know the pain and stress that goes with 
layoffs or plant closings, things my state has had all too much 
experience with in the not too distant past.
  Many current union workers and their families have come up to me in 
the past year and said they were scared about what will happen if we 
pass PNTR and allow China into the WTO. They fear that the Chinese will 
not live up to the commitments they have made with respect to 
eliminating trade barriers or that American companies might choose to 
move their operations overseas leaving workers here unemployed and 
without any available jobs or careers into which to move. Those are 
very real fears. And I take those concerns very seriously and to heart.
  China will open its markets in the very near future. The question is: 
Will U.S. firms be among those competing for these new markets, 
competing for a portion of the one billion new consumers that are going 
to be available in China? Or are we going to cede those new 
opportunities to our competitors in Europe, Asia, and South America? 
Likewise, the question is not whether U.S. companies will eventually do 
business in China. The question is whether it will be on our terms or 
on China's. Will companies be forced to move over to China in order to 
avoid high tariffs, quotas on U.S. produced goods, or other 
restrictions which make it difficult for them to do business there? Or 
will we attempt to eliminate such barriers to market access now through 
negotiation, so that U.S. companies can continue to operate here in the 
States, employing U.S. workers and paying U.S. Taxes, and still export 
goods and services to China in a competitive environment with our 
trading competitors?
  I think when most workers consider the options we face, they will 
agree that the best course for our nation is to join with the other 
nations of the world in accepting China into the WTO and attempting to 
work with the procedures available there to open their markets further 
and ensure they live up to the commitments they have already made.
  That is the conclusion to which this Senator has come. That is why I 
voted for permanent normal trade relations for the Peoples' Republic of 
China. That is why I support China's accession to the WTO.

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