China trade: the pros

The outcome of Congress's coming vote on whether to establish permanent normal trade relations (PNTR) with China will impact not only opportunities for US business, but the nature and quality of our relationship with a nation that is an emerging world leader.

The economic case for trade is compelling. China is the world's largest emerging market for information technology, with $3.3 billion in imports, and 20 to 40 percent annual market growth. The US Department of Agriculture projects agricultural exports to China may soon reach nearly $2 billion. These sales benefit our companies and support US jobs.

Unlike past votes, which each year approved Chinese access to US markets, this vote is all about US access to China's market. China has agreed to deep reductions in its import tariffs on industrial and agricultural goods. Products that will benefit range from automobiles to wine.

For high-tech industries, the agreement cuts to zero Chinese tariffs on semiconductors, computers, telecommunications equipment, and information- technology products. China will accept all of the World Trade Organization's (WTO) agreements that protect intellectual property. Restrictions on foreign films, videos, and recordings will be lowered. The ability of US companies to distribute their products in China will increase. China's insurance market will be opened to the US, and for the first time China will permit 50 percent US ownership of local telecommunications, Internet, and financial-service companies. Anticipating WTO membership, Chinese leaders are already bracing for increased competition.

In other words, the benefits of this market-opening agreement flow all one way - America's. What's wrong with that?

Opponents give two reasons: China's labor and environmental standards are inadequate, and by doing away with its annual vote, Congress will give up its leverage over China's human rights policies. Both arguments are understandable, but fall short.

Trade isn't a beauty contest. If it were, we'd trade only with a small group of nations that mirror our own society, and would be in a virtual cold war with the rest. You don't have to embrace a government or its policies to engage in trade. Through the WTO, we already have normal trade with all but a handful of nations, mostly small rogue states.

US companies and workers will benefit from expanded trade with China, though maybe not to the extent wild-eyed optimists believe.

But the political debate is about something else: Will normal trade relations advance or retard key American values - from labor and human rights to environmental protection?

Let's look at human rights. China's government is authoritarian and routinely represses dissidents. These are not nice guys. Yet the intrusiveness of China's government in the daily lives of its citizens has diminished sharply. The whims of China's Communist Party are losing their relevance to most Chinese as they go about their business. This hasn't happened because of political pressure from the US or any other foreign country. It's happening because economic liberalization and global market forces have forced China's leaders to progressively relinquish control. These forces are propelling China's economy beyond the reach of its political old guard and central planners.

A positive vote in Congress will accelerate this process, strengthen economic and political reformers, and put more power in the hands of the Chinese people. China's leaders know and fear this, but recognize that the global market economy leaves them little choice. Because of this, Martin Lee, Hong Kong's most outspoken democrat, and Chen Shui-Bian, the new president of Taiwan (neither of whom can be accused of being apologists for Beijing) strongly support normal trade relations and WTO membership for China. We'd be wise to listen to those on the front lines of Chinese democracy before giving up our best weapon to support their cause.

The most powerful force for labor, human rights, and the environment is economic development. Growth, better jobs, and rising income give workers the chance to improve their lives, and give governments and businesses the resources to provide more services and benefits. The prosperity and growing democracy enjoyed by most of Asia in the last 30 years bears this out. Environmental standards also rise with prosperity, as workers and citizens demand more once basic needs have been met.

Critics are pursuing a strategy that in the long run is ineffective. WTO membership will for the first time subject China to global trading rules - rules the US designed. If you don't trust China, what's better, a nation at large, or one tied to enforceable global agreements?

Congress can ensure its legitimate interest in human and labor rights in China by establishing a special committee to monitor these issues. But it should move now to unconditionally approve normal trade with China as the best way to support not only US jobs and business, but the development in China of an open, civil society.

* R. Sean Randolph is president of the Bay Area Economic Forum and has served (1994-98) as the state of California's director of international trade. The views expressed here are his own.

(c) Copyright 2000. The Christian Science Publishing Society

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