US-China Relations Face Big Changes

Monday, September 18th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” It's generally agreed that the China trade bill the Senate is set to pass lays the basis for one of the most profound changes in U.S.-China relations since the first American ship, the Empress of China, arrived in Canton 216 years ago with 28 tons of ginseng herbs from the slopes of Appalachia.

Since then, the dream of feeding and clothing what is now one-fifth of the world's population has constantly been thwarted by war, economic turmoil and revolution. That could be about to change, although some warn it's too great a risk to American security and political interests.

On paper, it's an exceptional deal. On Tuesday, the Senate is certain to pass, and send to President Clinton for his signature, legislation that ends the annual battle over China's trade status and confers permanent normal trade relations.

By doing so, American businesses will benefit from the drastically lower tariffs and market-opening measures China is committed to as part of its impending entry into the World Trade Organization. The United States, which already has open markets, makes no economic concessions as part of the agreement.

``This is the biggest trade vote this country has had in the last 25 years, and will be the most significant in the next quarter century,'' said Bruce Josten, executive vice president of the U.S. Chamber of Commerce.

Sen. Max Baucus, D-Mont., said the trade pact would contribute to a relationship that over the next 20 to 30 years ``is going to have a very direct effect on the quality of life in America.''

Among other changes with its entry into the WTO, China will slash tariffs on U.S.-made goods from 25 percent in 1997 to 9 percent by 2005. Tariffs on high tech products will be eliminated, and on autos will drop from at least 80 percent to 25 percent.

Josten said China needs to invest $750 billion over the next several years in infrastructure, everything from roads to plumbing where U.S. companies excel. ``It's like building a Boston airport every two months. It's huge.''

Despite all this, there's no guarantee that the growing U.S. trade deficit with China, which hit $68 billion, will be reduced. That depends too much on growth rates and exchange rates in the two countries.

Critics note there's also no guarantee China will abide by its promises. Japan, a much closer U.S. partner, has for decades succeeded in keeping American businessmen out.

AFL-CIO president John Sweeney, in testimony to the Senate earlier this year, said the United States and China have entered into four bilateral agreements since 1992 â€” on market opening, prison labor, intellectual property rights and textiles â€” and ``the Chinese government has failed to live up to its obligations in all four cases.''

``There's always going to be tension. The hard part is going to be implementation,'' Baucus acknowledged. But Marino Marcich of the National Association of Manufacturers said the Chinese, under the WTO, ``will be bound by a far more elaborate system of rules'' than Japan faced in its disputes with the United States.

Critics also warn that by granting permanent trade status the United States is throwing away a crucial means of getting China to stop weapons proliferation and improve its human rights record.

While Congress is debating permanent trade relations, Sen. Jesse Helms, R-N.C., chairman of the Senate Foreign Relations Committee, told colleagues that China's human rights record has deteriorated and its threats to Taiwan have increased. The Senate, ``amidst all the high-pressure tactics, must no confuse business interests with the national interests,'' he said.

Taking away the trade leverage, said Sweeney, will ``make it easier for the Chinese government to go on repressing its citizens and violating every norm of international conduct.''

But supporters counter that increased trade can only help the reformers in China and lift more Chinese out of poverty, loosening the grip of the hardliners.

Sen. Chuck Hagel, R-Neb., contended that the trade deal will benefit U.S. security interests. ``When nations are trading with each other they are rarely sending their armies against each other,'' he told the Senate.

â€”â€”â€”

The trade bill is H.R. 4444.

On the Net: AFL-CIO: http://www.aflcio.org/home.htm

National Association of Manufacturers: http://www.nam.org.

Business Coalition for U.S.-China Trade: http://www.business4chinatrade.org/