Newspaper article St Louis Post-Dispatch (MO)
Trade with Beijing to Bolster Freedom
Twelve months ago President Bill Clinton declared that unless China quickly made "overall, substantial progress" regarding respect for human rights, he would impose a $10 billion tax on American consumers and abolish approximately 170,000 American jobs. He did not say it that way, but those would be among the effects of revoking China's "most favored nation" trading status.
The very vocabulary of this controversy is as perverse as the probable consequences of revocation. The phrase most favored nation suggests the bestowing of a moral benediction. But Iran and Libya are among the 182 nations with MFN status. China's MFN status is at issue because of a 1974 law designed to force freer emigration from the Soviet bloc. The law requires annual review of human rights in nations with "non-market economies" seeking MFN status.
China got such status in 1979. After the 1989 Tiananmen Square massacre, Congress passed legislation revoking China's MFN status, but then-President George Bush vetoed the legislation. Candidate Clinton attacked Bush for "coddling" dictators and last year adopted unusually detailed criteria China had to meet to retain MFN. China has not even pretended to comply. Now Clinton must retreat, fudge or, by revoking MFN, sacrifice the national interest in the interest of sparing himself the embarrassment of retreating or fudging.
Without MFN, tariffs on imports from China would soar to the prohibitive levels of the 1930 Smoot-Hawley Act. That would cause Americans to pay an extra $10 billion in higher tariffs or more expensive alternative products, and approximately 170,000 U.S. jobs would be lost because of the closing of China's market to U.S. exports.
Booming China is the largest potential market for almost everything. It plans to spend $90 billion on telephone services by the end of this decade and $40 billion on 800 civilian aircraft by 2010. More than 550 U.S. companies have offices in China, and the $3 billion U.S. firms have invested there is the thin end of a potentially enormous wedge.
Clinton, who has an appetite for fudge, may try revoking MFN only for, say, state-run enterprises. But Sen. Max Baucus, D-Mont., says that plan presupposes a bright line that cannot be drawn: "In China, ministries run firms for profit. They start joint ventures with foreigners. Their bosses go into business for themselves. …