[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[Senate]
[Pages 18181-18187]
[From the U.S. Government Publishing Office, www.gpo.gov]



              PERMANENT NORMAL TRADE RELATIONS WITH CHINA

  Mr. FITZGERALD. Mr. President, I rise today to speak in favor of 
granting permanent normal trade relations to the People's Republic of 
China. I support this move not only because of the tremendous economic 
benefits that will flow to the U.S. economy--and to my home state of 
Illinois--as a result of Chinese WTO membership; I also support PNTR 
because I believe that a China that is engaged with the international 
community--and which is reforming and privatizing its economy at home--
will be a more stable and a more democratic China, with improved human 
rights at home and a better relationship with its neighbor, Taiwan. 
PNTR will be an unqualified gain for both the United States and China; 
we must not allow this bill to fail.
  I first remind my fellow Senators of the many and impressive market 
openings that the Chinese agreed to as a condition for their entry into 
the World Trade Organization. The concessions won by U.S. negotiators 
are simply breathtaking:
  Average tariffs for U.S. agricultural products will drop from 22% to 
17.5% by 2004. For beef, grapes, wine, poultry, and pork, average 
tariffs will fall from 31.5% to 14.5%. One in every three American 
acres that is planted is growing food for overseas markets. U.S. farm 
exports to China last year totaled $1 billion, making China the eighth 
largest market for American farmers. And China will account for nearly 
40% of all future growth of U.S. farm exports.
  Also under the bilateral agreement, average tariffs for U.S. 
manufactured goods exported to China will fall from 24.6% to 9.4% by 
2005.
  But even more important than the change in formal trade barriers are 
the many fundamental market-opening changes that China has agreed to. 
Under our 1979 agreement with the Chinese--the current foundation for 
U.S. trade with the China--many nontariff barriers block entry of U.S. 
goods into China. These barriers consist of import licensing 
requirements, registration and certification requirements, and 
arbitrary technical and sanitary standards. Further, U.S. manufacturers 
that operate in China often are required to transfer technology to 
Chinese companies, use local materials, and to export a portion of 
their products abroad. Finally, many of these requirements are 
unpublished and are imposed arbitrarily. It is difficult for U.S. 
companies to know what restrictions will apply to their activities.
  Under our Bilateral Agreement with the Chinese, China will publish 
its rules and make them available to U.S. companies. It will eliminate 
technology-transfer, local-content, and export requirements. And it 
will impose only safety and sanitary standards that are scientifically 
based.
  China has also agreed to impressive changes in many areas of business 
where U.S. companies currently are effectively excluded. For example, 
in the area of:
  Distribution rights: U.S. firms currently cannot run their own 
distribution networks in China. Under the bilateral agreement, U.S. 
companies for the first time will be allowed to deliver their goods 
directly to retailers in China.
  Retailing: Under the bilateral agreement, U.S. companies will be able 
to open their own stores in anywhere in China without restriction. U.S. 
companies will be able to maintain majority ownership of stores, and 
will be able to sell U.S. products. The U.S. retailing industry is 
without peer--one-fifth of the U.S. workers work in retailing, and 
Americans have perfected the trade. But if we don't enact PNTR and 
enter the Chinese retailing market, foreign firms--such as the French 
conglomerate Carrefour--will take our place.
  Telecommunications and high technology: Foreign companies are 
currently prohibited from supplying telecommunications service in 
China. But as a WTO member, China will join the Information Technology 
Agreement, and will eliminate all tariffs on computers, 
telecommunications equipment, and semiconductors. China will also 
become a party to the Basic Telecommunications Agreement, adopting 
cost-based pricing, interconnection rights, and creating an independent 
regulatory authority. Foreign companies will be allowed to provide e-
mail, voice-mail, on-line information and data-base retrieval, 
electronic data interchange, and paging services. Foreign companies 
will be allowed to hold a 30% share in Chinese service suppliers, 
eventually going up to 50%. For cell-phone services, foreign companies' 
stake will be allowed to go from 25% to 49%.
  Finally, it bears emphasis that the significance of all these changes 
is magnified by the sheer size of the Chinese market. America is the 
world's largest exporter, and China will soon be the world's largest 
purchaser of consumer goods and services. In less than five years, 
China will have more than 230 million middle-income consumers, with 
retail sales exceeding $900 billion annually. Gaining access to this 
enormous market is critical to American business and the future health 
of the U.S. economy. PNTR will provide that access. The Institute for 
International Economics estimates that the increase in world export of 
goods to China that will result from China's entry to WTO will total 
$21.3 billion--and the immediate increase in U.S. exports to China will 
be $3.1 billion. Goldman Sachs has estimated that by 2005, passage of 
PNTR will increase U.S. exports to China by $13 billion. This is, quite 
simply, an opportunity that the United States must not pass up.

[[Page 18182]]

  I also wish to emphasize today the benefits of PNTR to my home State 
of Illinois. Exports to China from Illinois totaled $901 million in 
1998, up 24% from 1993. China was the tenth largest export market for 
Illinois in 1998. And Illinois' exports to China are broadly 
diversified, covering almost every major product category. A few areas 
stand out:
  PNTR represents a tremendous opportunity for Illinois farmers. In 
1997, Illinois exported $3.7 billion in agricultural goods, ranking 
third among all States.
  Soybeans: Illinois is one of America's principal producers of 
soybeans. Under the bilateral agreement, tariffs will be set at 3% for 
soybeans and 5% for soybean meal, with no quota limits. For soybean 
oil, quotas will be eliminated by 2006; the in-quota tariff (the only 
tariff that will remain after 2006) will be reduced to 9%. Soybean oil 
exports to China could double within five yeas after the United States 
enacts PNTR.
  Corn: Illinois is also one of this Nation's main corn-producing 
States. In 1998, China imported less than 250,000 metric tons of corn 
from all countries. But under the bilateral agreement, the quota on 
corn imported to China will immediately rise to 4.5 million metric 
tons, climbing to 7.2 million tons by 2004. Corn within the quota will 
be subject to only a 1% tariff. Corn exports to China could increase a 
hundred-fold by 2004.
  Beef and pork: Illinois is the fourth largest State in pork 
production. Frozen pork cuts and pork offal tariffs will fall from 20% 
to 12%. China's tariff on frozen beef cuts will drop from 45% to 12%, 
and chilled beef tariffs will go from 45% to 25% by 2004. There will be 
no quota, and China has agreed to accept all pork and beef from the 
United States that is certified as wholesome by the USDA.
  Fertilizers: All quotas on importation of fertilizer into China will 
be eliminated by 2002, and tariffs will decline from 6% to 4%.
  The insurance industry is not often discussed in the debate over 
PNTR, but it is important to my home State of Illinois. 140,000 jobs 
depend on the insurance industry in Illinois. And for all the talk we 
hear from opponents of PNTR about trade deficits and jobs lost as a 
result of trade, it is worth emphasizing that the U.S. actually has a 
trade surplus in global trade in services such as insurance. The 
bilateral agreement will help us widen that surplus. China's market 
currently is almost completely closed to foreign insurers; most 
consumers may choose only among a few state-run monopolies. The 
bilateral agreement will throw open the Chinese market for insurance 
and reinsurance. With 1.2 billion people, China represents the largest 
insurance market in the world--a market that is significantly 
underinsured at present. From 1993-98, however, growth in the Chinese 
insurance market averaged almost 30% a year. Under the WTO agreement, 
foreign insurers will be allowed to offer group, health, and pension 
lines of insurance, which represent about 85% of total premiums. China 
will also set clear licensing standards--with no economic-needs tests 
or quantitative limits on the number of licenses issued--and will allow 
foreign insurers to sell their products throughout the country, 
directly to Chinese consumers. The bilateral agreement will also serve 
as an excellent model for future WTO negotiations on insurance trade. 
Although only two U.S. insurance companies currently are allowed to 
sell any insurance in China, over 20 have recently set up offices 
there, and are poised to move quickly into the Chinese market. PNTR 
will be a boon to the U.S. insurance industry and will generate high-
paying jobs here in America.
  Under the bilateral agreement, average tariffs on construction 
equipment will fall from 13.6% to 6.4%. China is an enormous potential 
growth market. According to the World Bank, China will need to spend an 
estimated $750 billion in new infrastructure over the next decade--
increasing demand for earth-moving equipment. Illinois firms are well-
placed to compete for this booming market.
  But all of these benefits will not comes to the United States 
automatically. We must grant PNTR to China. Some opponents of PNTR have 
claimed that we need not give up annual review of China's NTR status, 
that China would join the WTO anyway. They are half right. China's 
accession to the WTO only requires a two-thirds vote of all members--
even a U.S. vote against China would not block their entry at this 
point. However, once China does enter the WTO, the United States will 
be required to comply with all WTO rules with regard to China in order 
to enjoy the benefits of Chinese membership in that organization. And 
the main WTO rule is that all members must extend equal and 
unconditional trading rights to each other. This means that we must 
extend Normal Trading Relations to China unconditionally. If we do not 
grant China PNTR before it enters the WTO, China would be able to 
challenge the U.S. refusal--and the United States would be required to 
invoke article XIII of the WTO agreement, suspending the application of 
WTO rules between itself and China. This would mean that every one of 
the WTO's other 135 members--who account for 90% of world trade--would 
be eligible for the benefit of Chinese WTO membership, but the United 
States would not. And this includes the benefits that stem from the 
U.S.-Chinese bilateral accession agreement. The concessions that China 
made to the United States, to secure our support for Chinese accession, 
would be available to all other WTO members, but not to the United 
States. We cannot let this happen--we cannot allow our trade 
competitors to eat our lunch in China.
  It bears emphasis that by granting PNTR, the United States gives up 
no trade protections. China already enjoys normal trade relations with 
the United States--our markets are already open to Chinese imports. The 
concessions that were made as a condition to Chinese entry to WTO were 
all made by the Chinese--the U.S. gave up nothing, and PNTR will not 
affect a single American tariff or other trade barrier.
  The only thing that the United States does give up by granting PNTR 
is the right to review China's NTR status annually. With this, we give 
up very little, for NTR review has not been an effective tool for 
influencing events in China. Congress has renewed China's NTR status 
every year since 1980. The Chinese no longer take the threat of review 
seriously--particularly after NTR was again extended after the 
Tiananmen Square massacre in 1989. The NTR procedure was originally 
enacted as the Jackson-Vanik amendment to Trade Act of 1974. The 
official condition for extending NTR is that the country being reviewed 
allow free emigration from its territory. The process was originally 
set up to pressure the Soviet Union with regard to free emigration of 
Soviet Jews. In other words, annual NTR review is a procedure that was 
set up to deal with an issue that does not concern us with regard to 
China, and to control the behavior of a country that no longer exists. 
Having lost its credibility over the last twenty years, it is time for 
annual NTR review to be retired.
  But you need not take my word about the lack of leverage provided by 
annual review. Take the word of Fu Shenqui, a Chinese dissident who has 
been active in the human-rights movement in China since the 1979 
Democracy Wall movement, and who has been imprisoned for his activism 
three separate times. Mr. Fu had this to say about the effectiveness of 
annual trade review:

       [T]he annual argument over NTR renewal exerts no genuine 
     pressure on the Chinese Communists and performs absolutely no 
     role in compelling them to improve the human rights 
     situation. . . . [T]he improvement of the human rights 
     situation and the advancement of democracy in China must 
     mainly depend on the great mass of the Chinese people, in the 
     process of economic modernization, gradually creating the 
     popular citizen consciousness and democratic consciousness 
     and struggling for them. It will not be achieved through the 
     action of the U.S. Congress in debating Normal Trade 
     Relations . . .

  Also consider the words of Bao Tong, a prominent Chinese dissident. 
In an interview with the Washington Post, May 11, 2000, Mr. Bao said 
simply: ``I

[[Page 18183]]

appreciate the efforts of friends and colleagues to help our human 
rights situation, but it doesn't make sense to use trade as a lever. It 
just doesn't work.''
  While annual review doesn't work, engagement does. Despite the 
failure of the annual NTR process, the United States does still have a 
means of adding liberalization and democratization in China. The United 
States can contribute to the reforms that have been building for the 
last twenty years by supporting the reform faction in the Beijing 
regime; by providing an example of democracy and rule of law to 
individual Chinese citizens; by getting the Chinese government involved 
in the international organizations and frameworks; and by aiding the 
process of private capital formation in China. And all of these things 
can be accomplished by enacting PNTR and supporting Chinese membership 
in the WTO.
  Zhu Rongji, the current Premier, is widely regarded as the most 
proreform leader in China. His group is friendly to the U.S., and they 
have bet their future on WTO and PNTR. After two decades of rapid 
growth, China's economy appears to be faltering--growth is down 
substantially in the last few years, and deflation has plagued the 
economy for over two years. The current leadership views WTO--and the 
reforms and market opening that it will entail--as a tool for reviving 
a flagging economy. WTO has been the mostly hotly debated topic in 
China since 1989. The reformers have agreed to adopt sweeping economic 
reforms in exchange for accession to the World Trade Organization. For 
the U.S. to reject this offer of increased openness and reform would 
deal a serious blow to the liberals in the Chinese government--and 
greatly strengthen the hand of the Communist hardliners. The W.T.O. 
accession agreement also offers the Chinese reformers political cover--
it would merge their domestic market reform agenda with international 
commitments and Chinese membership in a prestigious international body. 
China's opening would become not just one political faction's program, 
but the new role of China as a participant in the international system. 
The United States must seize this historic opportunity to establish 
friendly relations with China, and to consolidate the current 
atmosphere of openness and reform within that country. The Chinese 
liberals have done their part by negotiating the most ambitious market-
liberalization agreement that nation has ever seen; now it is our turn 
to do our part.
  Again, it is worth hearing the views of these matters of those for 
whom China's future course is not just a theoretical concern. Martin 
Lee is the Chairman of the Democratic Party of Hong Kong. He emphasizes 
that ``the participation of China in the WTO would not only have 
economic and political benefits, but would also serve to bolster those 
in China who understand that the country must embrace the rule of 
law.''
  Dai Quing is a Chinese investigative journalist and environmentalist 
and the winner of the 1992 Golden Pen for Freedom award given by the 
International Federation of Newspaper Publishers. Ms. Dai was recently 
imprisoned in China for 10 months on account of her writings. She 
nevertheless favors granting China PNTR She says:

       I have heard on the news that two of the groups I admire 
     most in the U.S.--the AFL-CIO and the Sierra Club--are 
     against granting permanent normal trade relations with China. 
     . . . As a Chinese environmentalist and human-rights 
     activist, I disagree with their position. . . . I believe 
     that permanent normal trade status, with its implication of 
     openness and fairness, is among the most powerful means of 
     promoting freedom in China. Starting in 1978, the open-door 
     policy completely changed the way China responded to the 
     world. Today, PNTR is a powerful means to keep China's doors 
     as open as possible.

  WTO membership and PNTR will not only keep China open to the West, 
but will improve conditions within that country. The market reforms 
that will come to China as a result of PNTR--both a requirements of 
WTO, and as necessary changes in the face of increased competition--
will help to directly liberalize Chinese society. These changes will 
include a much freer flow of information to China; as the economy 
advances, more information technology will fall into private hands, and 
the overall volume of communication will increase, making it much more 
difficult for the government to monitor and control its people.
  Also, market reforms will assist the growth of civil society and the 
democratization of China by reducing the dependence of individual 
Chinese on the state sector. Although private business's share of the 
Chinese economy is ever increasing, a majority of Chinese workers still 
work for some form of a collectively owned enterprise. These state 
workers are paid very little in actual wages; instead, they receive 
much of their compensation in the form of subsidized housing, health 
care, child care, food, clothing, and education. State workers' 
reliance on these government-provided benefits greatly increases the 
government's power over these individuals. Those who depend on the 
government for their necessities are generally loath to criticize it--
or to do anything that may incur its wrath and jeopardize their ability 
to simply get by. Increased private ownership and employment in China 
will break this cycle of dependence, and will do much to loosen the 
government's grip on its citizens.
  But again, you need not take my word for it. We have heard much talk 
about human rights from those opposed to PNTR with China. Let us also 
listen to those on the front lines in the fight for democracy and 
greater freedom in China:
  The China Democracy Party was founded two years ago in Zhejiang, 
China. Many of its members are currently imprisoned or under house 
arrest in China. The party has issued the following statement, which 
deserves the attention of all those concerned about political reform in 
China:

       The China Communist government is planted in state 
     ownership. The very base for government power is in each and 
     every state-owned company and farm. Bringing China into the 
     international community will speed China's economic 
     privatization and its development, thus [converting] state 
     ownership into private ownership. This change will 
     tremendously weaken the state ownership that the Communist 
     government power basically relies on.

  The same point is made by prodemocracy leader Ren Wanding, who simply 
states:

       A free and private economy forms the base for a democratic 
     . . . [WTO membership] will make China's government organs 
     and legal system evolve toward democracy.

  Greater openness and trade for China will also increase China's 
communication with the outside world. This will not only introduce more 
Chinese to liberal ideas and principles, but will also increase 
international awareness of conditions within China. Again, as the China 
Democracy Party declares in its official statement: ``the closer the 
economic relationship between the United States and China, the more 
chances for the United States to politically influence China, the more 
chances to monitor human rights conditions in China, and [the] more 
effective the United States [will be] to push China to launch political 
reforms.''
  And finally, the emergence of alternative power centers--especially 
private business--will fuel the growth of a civil society--of 
institutions and practices that are independent of political power. 
Civil society offers a check on government, and forms the bedrock of 
political democracy. As independent power centers become more important 
in China, the state will be forced to concede some power to them. This 
is the pattern that has led to democracy across East Asia--in South 
Korea, in Taiwan, and in the Philippines. Just as in these countries, 
market reforms and private sector growth can also be expected to lead 
to political liberalization in China.
  In this regard, it is worth considering the concerns of those who do 
not favor great openness and democracy in China. A story in the 
Washington Post, on March 13, 2000, notes that:

       China's security services, including the People's 
     Liberation Army, are concerned, analysts say, that joining 
     the WTO will mark another step toward privatizing China's 
     economy and importing even more Western ideas about 
     management and civil society--

[[Page 18184]]

     a headache for those whose job it is to ensure the longevity 
     of the one-party Communist state.

  By voting for PNTR, we give the hardliners in China even more to 
worry about. We must pass this important legislation--not just for our 
own economic benefit, but to encourage and accelerate the reforms and 
openings that are currently taking place in China. We must not let this 
historic opportunity slip away.
  Some have also suggested that the grant of PNTR must be tempered by 
our concern for China's neighbor Taiwan. But the bill that we are 
voting on today--the House version of PNTR--already includes a 
provision asking that the WTO approve the accession of both China and 
Taiwan at the same WTO session. The United States must remain committed 
to that policy--of immediate Taiwanese membership in the World Trade 
Organization.
  It bears mention that Chen Shui-Ban, the recently elected President 
of Taiwan, also supports China's entry into the WTO club. In a March 22 
interview with the Los Angeles Times, Mr. Chen stated:

       We would welcome the normalization of U.S.-China relations, 
     just like we hope that cross-strait relations [will improve]. 
     . . . We look forward to both the People's Republic of 
     China's and Taiwan's accession to WTO.

  Few have more at stake in China's future course--and in its attitude 
toward its neighbors--than the Taiwanese. Their leaders support China 
PNTR.
  Finally, enacting PNTR will build on the edifice of free trade that 
the United States has been constructing for the last 50 years. This 
decade, in particular, has seen some impressive strides toward free 
trade, with the approval of the North American Free Trade Agreement in 
1993 and the creation of the World Trade Organization in 1994. When 
those agreements were set in place, we heard dire warnings from the 
naysayers of trade, who predicted a giant sucking sound of good jobs 
and capital investment leaving this country. But we need no longer 
evaluate those predictions in the abstract. Since that time, the rest 
of the 1990s have elapsed, and we can see the product of the modern 
free-trade regime. Since the enactment of NAFTA and GATT, we have seen:
  More jobs: In the 1990s, total civilian employment in the United 
States has surged by 16 million jobs.
  Better jobs: Over 80% of the new jobs created since 1993 have been in 
industry/occupation categories that pay above-median wages. 65% are in 
the highest-paying third of job categories.
  Families are better off: Between 1993 and 1998, real average 
household income has grown between 9.9% and 11.7% for every quintile of 
the income distribution. For African-Americans, it has grown by 15%. 
For families in the lowest quintile, income rose at a 2.7% annual rate.
  Trade brings more and better jobs: Last year, international trade 
supported over 12 million American jobs. Exports to China alone 
supported over 200,000 American jobs directly, and tens of thousands 
more jobs indirectly. And these export-related jobs are better jobs, 
paying on average 17% more than non-export related jobs.
  The trade naysayers also warned that free trade would lead to capital 
flight from the United States--that as soon as we let down our trade 
barriers, all of our factories would relocate abroad and that new 
investments would follow them. It hasn't happened. Instead, our 
manufacturing base is thriving:
  Manufacturing output has gone up, not down: Since 1992, manufacturing 
output in the United States has risen by 42%. Domestic output of motor 
vehicles has shot up 51%, and domestic automobile employment has 
increased by 177,000 to almost 1 million. America remains the world's 
top exporter of manufactured goods. Among America's leading exports in 
1998 were aircraft, computer equipment, telecommunications equipment, 
valves and transistors, passenger cars, and car parts.
  Direct investment in the United States is soaring: In the 1990s, the 
United States has been the world's largest recipient of foreign 
investment. In 1999, fixed nonresidential private investment in the 
United States exceeded $1 trillion.
  Low-wage countries are not siphoning away investment: From 1994-98, 
U.S. manufacturing investment in Mexico averaged $1.7 billion annually. 
But in 1997, U.S. investment in U.S. manufacturing totaled $192 
billion. In 1998, 80% of U.S. investment in foreign manufacturing was 
in other high-wage countries. (The top five destinations were Great 
Britain, Canada, the Netherlands, Germany, and Singapore.) Rather than 
low wages, investors seek countries with economic stability, well-
developed infrastructure, lucrative market potential, and skilled 
workers. We have nothing to fear from lower barriers to U.S. investment 
in underdeveloped countries such as China.
  Finally, it bears mention the trade also benefits American consumers. 
Free trade has reduced the prices that American consumers pay for 
everyday goods--saving the average American family of four as much as 
$3,000 a year.
  In the early 1990s, we might have doubted. But we rejected the 
counsel of the trade scaremongers, those who thought that the United 
States would not be able to compete in a free-trade world. And today we 
are better off for it--with more and better jobs, a stronger 
manufacturing base, and a better standard of living. It is time to 
build upon success, and enact the next item in the free trade agenda, 
by putting into law China PNTR.
  I have previously spoken on the floor of the Senate about the 
importance of this agreement to the U.S. economy, how it will help 
increase jobs in manufacturing and business activities here as we can 
more readily export goods to China. By joining the World Trade 
Organization and having the U.S. Government grant permanent normal 
trade relations to China, China will be forced to lower its tariffs on 
goods that it is importing from the United States. That will enable us 
to export more products to the world's largest market.
  This agreement is of particular importance to the State of Illinois, 
and that is because Illinois is a major exporting State. If Illinois 
were a freestanding nation, it would be one of the largest exporting 
nations in the entire world. Not only do we have a large agricultural 
economy--we are the third largest agricultural producer in the United 
States--but in addition, we have a diverse manufacturing base. It is 
hoped that after this agreement is implemented, we will be able to 
export more corn, more soybeans, more cattle, more beef production, as 
well as more pork production, to China. China, with 1.3 billion mouths 
to feed, is a potentially vast market for U.S. agricultural products.
  In addition, we have large manufacturing concerns in Illinois, such 
as Caterpillar based in Peoria, with factories all over the State of 
Illinois; John Deere based in the quad cities part of our State; and 
Motorola, one of the largest manufacturers of cell phones and other 
high-tech products. This agreement will benefit businesses such as 
those and thousands of other smaller businesses in Illinois that make 
products which they will be more easily able to export to China 
following this agreement.
  During this debate on PNTR, the economic reasons for voting in favor 
of this agreement have been thoroughly addressed. Opponents have argued 
that somehow this agreement will cause the United States to lose jobs. 
They made those same dire warnings in the early 1990s when we were 
considering the free trade agreement with Mexico and Canada that became 
known as NAFTA, as well as when we were going into the World Trade 
Organization. There were dire predictions of a giant sucking sound of 
jobs going across the border.
  Those predictions have not been borne out. In the intervening years, 
we have seen our economy grow dramatically. We have added 16 million 
jobs in the intervening years, and we continue to create jobs, high-
paying jobs, at a very dramatic rate.
  Not only that, the most recent statistics show that more capital is 
being invested in the United States than anywhere else in the world 
right now.
  Of the capital that our manufacturers are investing in foreign 
countries, they are not, as predicted, investing it

[[Page 18185]]

all in low-cost poorer underdeveloped countries, but, in fact, the 
largest recipients of U.S. capital, in recent years, have been advanced 
nations such as Great Britain, Germany, and the Netherlands.
  It turns out that our manufacturers, when they have wanted to invest 
abroad, have not only looked for low-cost--that certainly would be a 
plus--but they have looked for stable economies, with good 
infrastructures, and strong, skilled labor forces, as well as good 
market potential. So I think the opponents of the expansion of free 
trade have been mistaken when they predicted that it would hurt our 
jobs for us in this country and harm our economy.
  But there is one other side to this, in which the opponents say, even 
if they can see the economic argument in favor of free trade, they 
argue that we should vote against free trade with China for moral 
reasons. I wanted to take the floor to address those arguments because 
I disagree strongly with what they have said.
  Many opponents of permanent normal trade relations with China have 
suggested that by giving up the annual review of our trade status with 
China, we will lose any leverage we have to affect human rights 
conditions in that nation. But here, too, I believe the opponents of 
the agreement are wrong.
  First, the Chinese Communists no longer take the annual trade review 
process seriously. Congress has renewed that status every year since it 
was first granted in 1979. Whatever credibility the annual process of 
granting normal trade relations to China has had, that all evaporated 
when China was granted that status in 1989 following the Tiananmen 
Square massacre.
  While annual review does not work, engagement does. The most 
immediate effect of granting permanent normal trade relations to China 
will be to shore up the position of the reformers in the Chinese 
Government. Zhu Rongji, the current Premier, is widely regarded as the 
most pro-reform leader in China. Mr. Rongji has staked his career on 
the passage of this agreement and the future of permanent normal trade 
relations.
  China's impending WTO membership has been the most hotly debated 
topic in China since 1989. The current leadership has agreed to adopt 
sweeping economic reforms in exchange for Chinese accession to the WTO. 
Should we accept China into that body, these reforms will be cemented 
into place. They will become an international commitment, enforceable 
through the WTO's multilateral enforcement mechanism. But should the 
United States reject China's offer of increased openness, we would deal 
a serious blow to China's reformers and greatly strengthen the hand of 
Communist hard-liners.
  PNTR will also contribute to the development of a freer and more 
democratic society in China at the grassroots. The reforms accompanying 
China's WTO admission would accelerate the growth of the private sector 
in China and will make it possible for more Chinese to work for foreign 
companies. These changes are important for the progression of freedom 
in China.
  What most people do not think about in this debate is that at the 
current time most Chinese workers are employed by their Government. I 
think the figure is close to 70 percent. These workers are paid minimal 
wages, very low wages. Most of their compensation is in the form of 
housing, health care, and education. They have to work in order to get 
those benefits.
  But state workers' reliance on these benefits greatly increases the 
Chinese Government's control over them. Individuals who depend on the 
state for basic necessities are generally loath to criticize the 
Government or otherwise to incur its wrath.
  Increased private ownership, which will result from China's accession 
into the World Trade Organization, and increased employment by private 
companies--American, European, and companies from around the world--
doing business in China, employing Chinese workers in the private 
sector, will help break the Chinese people's cycle of dependence on the 
Government and will do much to loosen the Government's grip over its 
citizens.
  Moreover, the emergence of alternative power centers in China, 
through private enterprise and the accumulation of private property, 
will spur the growth of civil society in China, fostering institutions 
and practices that are beyond political control.
  Civil society offers a check on government and forms the bedrock of 
political democracy. As independent institutions become more important 
in China, the state will inevitably cede some power to them. This is 
the path that has led to democracy across Asia, in South Korea, in 
Taiwan, and in the Philippines.
  Members of the Senate need not take my word for this. As Federal 
Reserve Chairman Alan Greenspan recently noted:

       History has demonstrated that implicit in any removal of 
     power from central planners and broadening of market 
     mechanisms . . . is a more general spread of rights to 
     individuals. Such a development will be a far stronger 
     vehicle to foster other individual rights than any other 
     alternative of which I am aware.

  Thus, I am making the argument that has not really been made too 
often in this whole debate: That not only is this agreement good for 
our economy, for our job creation, and for our business sector, but 
adoption of this agreement in the legislation we will vote on on 
Tuesday will be good for the Chinese people because it will ultimately 
breed more freedom within that country.
  Mr. President, I yield the floor.
  Mr. COCHRAN. Mr. President, this has been a very worthwhile 
discussion of an issue that has bedeviled the Congress on an annual 
basis for too many years. We now are considering a bill that has the 
effect of answering a question that doesn't have to be considered each 
year in the future.
  Although the amendments that have been offered ran the gamut of 
Chinese transgressions and shortcomings, both real and imagined, and 
many are very troubling, I am supporting this bill as reported by the 
Finance Committee.
  Two months ago I read an editorial in the Wall Street Journal which 
reflected my thoughts on the relationship between our concerns about 
Chinese proliferation of technology and missiles on the one hand and 
our trade interests on the other. The editorial appeared in the July 
19, 2000 edition of the paper and I saved it to put in the Record 
during this debate because in my view it answers in a thoughtful and 
persuasive way why this bill should be passed by the Senate and sent 
directly to the President for his signature.
  I ask unanimous consent that the editorial be printed in the Record.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

                       China, Trade and Missiles

       The test of an Iranian medium-range ballistic missile 
     Saturday raised further U.S. concerns that China is exporting 
     technology that could destabilize other areas of the world. 
     U.S. intelligence officials believe that Beijing continues to 
     sell components and know-how to aid the Iranian and Pakistani 
     missile programs, despite U.S. objections. They fear as well 
     that Iran is developing longer-range missiles capable of 
     reaching well outside the Middle East.
       These suspicions have spurred the U.S. Senate to hold up 
     the passage of Permanent Normal Trading Relations (PNTR) for 
     China. A bill is now pending to require tougher sanctions if 
     Beijing continues to support the spread of such weapons.
       The Senate's annoyance seems justified, even if the various 
     proposals for retaliation might not be. A few years ago the 
     Clinton Administration extracted promises from Beijing to 
     curtail exports of technology for weapons of mass 
     destruction, as well as whole missiles. But it has made no 
     progress on stopping ``dual-use'' technology exports to Iran 
     and Pakistan--technology that might have either military or 
     commercial applications.
       Given that developing nations seldom test missiles with 
     peaceful purposes in mind, the Senators are prodding American 
     and Chinese officials to come to some agreement about 
     controlling the spread of such technology. Several U.S. 
     officials, including Defense Secretary William Cohen, have 
     been to Beijing in recent weeks to hash out the issue. But 
     there seems only to have been an ``exchange of views.''
       Pressure from Congress is certainly useful here, but there 
     should be a clear line drawn when it comes to PNTR. Both 
     sides in the debate tend to over-emphasize the link between 
     trade and China's behavior on human

[[Page 18186]]

     rights, weapons proliferation and other concerns. This is a 
     mistake. Normal trade relations should be weighed on its own 
     merits.
       Passage of PNTR would not belittle the seriousness of 
     China's peddling of missiles, components and weapons 
     technology to anti-American Iran. But that problem needs to 
     be addressed in other ways that would not undermine America's 
     interest in advancing free trade and encouraging movement by 
     China toward a free market economy.
       Pursuing missile defense for the U.S. and its allies is one 
     quite appropriate response. China complains frequently about 
     American moves to develop a national missile defense. The 
     obvious counter is that it is made necessary partly by the 
     PRC's contributions to weapons proliferation.
       Sorting out a U.S. policy toward China is possible only by 
     looking at the big picture. Global political stability will 
     be enhanced if China continues to advance economically and 
     learns to observe international rules dealing with trade and 
     investment. World Trade Organization membership for China 
     affords no guarantee against a future conflict, but there is 
     a sound argument to be made that development of a prospering 
     middle class in China will push the regime toward greater 
     moderation in both domestic and foreign policy, partly 
     because China will have more to lose from failed adventures.
       In an interview with the Asian Wall Street Journal's 
     editorial staff, Admiral Dennis Blair, Commander in Chief of 
     U.S. Pacific Command, emphasized the strategic importance of 
     nurturing a working relationship with China so that a habit 
     of trust and cooperation can over time replace a tradition of 
     confrontation. Military exchanges, regional peacekeeping and 
     humanitarian exercises, and normalized trade all further the 
     goals of Americans security and Asian stability in the 
     future. The U.S. and China may not share the same vision for 
     the region, but they can find common interests.
       Simply comparing the PRC's mild treatment of this year's 
     Taiwanese elections with their more ominous military 
     maneuvers during the 1996 election reveals how China does 
     respond when the U.S. stands firm. The missile tests four 
     years ago alienated the Taiwanese public and forced the U.S. 
     to make its commitment to Taiwan more explicit by sending 
     aircraft carriers to the area. Beijing has evidently drawn 
     some conclusions from this and changed its behavior. The U.S. 
     now must make China perceive the seriousness of the missile 
     proliferation issue.
       Senate Majority Leader Trent Lott says that PNTR will pass 
     after some appropriations legislation is cleared. But it 
     certainly doesn't help the case for normalized trade in an 
     American election year if China is perceived to be thumbing 
     its nose at the U.S. on an issue important to the security of 
     the U.S. and its allies. Indeed, its intransigence merely 
     encourages lawmakers in their efforts to dilute PNTR with 
     anti-proliferation trade sanctions.
       If there is an assumption in Beijing that it can be less 
     observant of U.S. concerns now that its WTO membership seems 
     assured, the Chinese leadership is making a serious mistake. 
     They too have a stake in there being a constructive working 
     relationship between the two countries. A wise leadership 
     would not risk that relationship for the paltry earnings from 
     sales of a few missiles or missile parts.

  Mr. GORTON. Mr. President, on Wednesday, the Senate voted on several 
amendments to the bill establishing permanent normal trade relations 
status for the People's Republic of China. While I was unfortunately 
unable to cast my votes regarding these amendments, I was able to 
comment on a few of them. Today I wish to comment on the remaining 
amendments.
  Two of the amendments argued were introduced by our colleague from 
North Carolina. I supported the first amendment offered by Senator 
Helms, regarding family planning, abortion, and sterilization practices 
in China. Although the amendment failed by ten votes, I am pleased the 
Senate made a strong statement regarding these abhorrent practices.
  While I agreed with Senator Helms on his first amendment, I did not 
agree with him on his second measure. American industries have set the 
standard for appropriate business practice, and even though I agree 
with Senator Helms that they ought to utilize these practices in China, 
I do not believe another layer of bureaucracy is necessary to 
accomplish this mission.
  I would also have voted against Senator Feingold's amendment 
regarding the Congressional-Executive Commission established in H.R. 
4444. I believe the parameters with which the Commission was 
established in the House of Representatives are adequate, and that 
additional requests or requirements from its members are not 
imperative.
  Finally, the Senate considered an amendment offered by Senator 
Wellstone. Without question, the issues surrounding political prisoners 
and detainees who have attempted to organize should be addressed by the 
People's Republic of China. However, I believe the administration 
already has the tools necessary to address these very concerns. I would 
not have voted for Senator Wellstone's amendment.
  Mr. BROWNBACK. Mr. President, I rise today in support of H.R. 4444, 
the U.S.-China Relations Act of 2000. This bill is the most significant 
foreign policy-related legislation that we have debated during the 
106th Congress.
  H.R. 4444 presents tremendous new export opportunities for our 
manufacturers, farmers, and service providers. While China has had 
excellent access to the U.S. market for 20 years, U.S. access to 
China's enormous market has been limited. With the enactment of this 
legislation, and China's accession to the WTO, that situation is about 
to change.
  The United States is finally going to enjoy virtually unfettered 
access to China's vast market. The impact on my State of Kansas will be 
substantial. China agreed to end corn export subsidies, increase import 
quotas for wheat and corn, and reduce soybean tariffs. China agreed to 
lower its tariff on beef from 45 to 12 percent and on pork from 20 to 
12 percent. China agreed to accept USDA safety certification for meat 
and pork exports.
  And agriculture is not the only sector in my State that will benefit 
from China's accession to the WTO. Black & Veatch will see lower 
tariffs on imported equipment, which will reduce the contract cost of 
projects won in China. Boeing will have a more stable economic 
environment in which to sell airplanes to China's airlines.
  Granting Permanent Normal Trade Relations status to China will 
increase our exports to the world's most populous country. But, more 
importantly, bringing China into the WTO will put the PRC on a 
collision course with economic and political liberalization.
  Mr. President, China has been ruled by the Communist Party with an 
iron grip for more than 50 years. But WTO accession comes with a price. 
WTO accession will usher the forces of globalization into China in a 
very permanent way. Globalization will be good for China's economy 
because it will integrate China's economy into the world's economy. 
Globalization will also force the systemic reform of China's 
inefficient state-owned enterprises and banking system.
  But globalization will also have a much more profound effect on 
China. Globalization will force upon China the infrastructure necessary 
for greater political liberalization. Globalization will require China 
to have a stronger adherence to the rule of law and property rights. 
Globalization will create a stronger middle class in China that will 
demand greater freedom with which to enjoy their new position. 
Globalization will bring the internet into tens of millions of Chinese 
homes, exposing the Chinese people to Western standards of political 
and religious freedom, and human rights.
  I ardently believe that PNTR and human rights must go hand in hand. 
It is important to note that my positive position on PNTR gives me a 
door to walk through to raise a number of human rights issues with the 
Chinese Government, including religious liberty and the development of 
the rule of law.
  Somehow, an intellectual myth has been adopted, dictating only two 
ways to deal with China. Either grant PNTR status but never raise these 
issues, which gives an unfortunate, unbridled affirmation regarding 
known abuses. Or the second method which mandates a complete isolation 
from any relationship other than that of repeatedly dunning this 
government with ill will and no positive incentives. Such vitriol does 
not work with people and it does not work with governments, and 
ultimately, nothing changes for those who suffer.
  I propose a third way which calls for a relationship where we 
genuinely raise these issues in a serious, sustained dialogue. I do, in 
fact, raise these issues continuously. This way, will in the end, get 
religious prisoners free, and create an independent judiciary not ruled 
by Communist dogma, and give

[[Page 18187]]

China pause the next time another Tiananmen Square breaks out. 
Ultimately, this way engenders freedom and human rights better than 
either of those other two methods. After all, isn't that what this is 
all about?
  One final note: I hope that the Chinese Government does not think 
that the tabling of the Thompson amendment is the end of the 
proliferation debate in the Senate. China must stop engaging in the 
proliferation of weapons of mass destruction. The Clinton 
administration has failed miserably to curb such proliferation. That is 
why there has been support to legislate antiproliferation policy in the 
absence of an executive proliferation policy.
  Mr. President, China must stop making weapons of mass destruction 
available to rogue nations around the world. We need to open up trade 
with China to increase our exports and to increase the exposure of the 
Chinese people to economic and political liberalization. But trade must 
not come at the expense of national security. Ignoring China's 
proliferation activities while we increase our trade ties with China 
would be a grave mistake. We must be vigilant and enforce current U.S. 
law as it pertains to proliferation. The Clinton administration's 
failure to do so has jeopardized national security. Congress must not 
permit future administrations to make the same mistake.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that during 
today's session the following Senators be recognized in morning 
business for the times specified: Senator Graham of Florida and Senator 
Edwards of North Carolina for up to 10 minutes each, and Senator Dorgan 
of North Dakota for up to 20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. Mr. President, I will now proceed to use the 10 minutes 
which I have been allocated.
  The PRESIDING OFFICER. The Senator is recognized.
  (The remarks of Mr. Graham are located in today's Record under 
``Morning Business.'')
  Mr. GRAHAM. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LOTT. Mr. 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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