As an election-year congressional session
gets under way, one of the hottest topics of speculation concerns
the timing of congressional votes on permanent normal trade
relations (NTR) for China.
The Clinton administration and its backers are pushing for
a vote on NTR, formerly known as most-favored-nation status,
no later than this summer, but some seem less anxious to vote
in 2000. The debate over timing should, however, be secondary
to ensuring that Congress has complete information before the
vote.
Currently, an obscure 1972 trade law requires the Congress
to consider NTR for China on an annual basis. Since such status
is a cornerstone of the World Trade Organization, China expects
the United States to extend it on a permanent basis as a quid
pro quo for the reforms it must implement to gain WTO membership.
Permanent NTR, however, requires a change in U.S. law that
must be approved by Congress. The election-shortened legislative
calendar for 2000 and the pace of China's WTO negotiations with
its other WTO partners raise questions about whether this vote
can or should occur this year.
Assuming that vigorous efforts are made to enforce a WTO agreement
with China, China should be granted WTO membership and permanent
NTR by the United States.
That said, because of the outdated and peculiar balance of
power between the president and the Congress on WTO accession,
this vote will be Congress' only chance to make itself heard
on the issue of WTO membership for China. Were it not for the
need to amend the 1972 law, the Clinton administration could
usher China into the WTO without Congress ever having a direct
opportunity to vote on the issue.
Moreover, this is a final vote. As a practical matter, once
China is in the WTO, its membership is not reversible. Any oversights
or shortcomings in the accession protocol that brings China
into the WTO are essentially beyond repair, unless China is
willing to accept the changes.
Unfortunately, Congress has not yet even had the opportunity
to review the final accession protocol -- because it does not
exist -- or even to publicly review the details of the U.S.-China
agreement struck last November.
At this stage in the accession process, each of China's major
trading partners negotiates bilaterally to win concessions that
are then incorporated along with understandings on the application
of various multilateral rules into a final accession arrangement.
A number of trading partners, notably the European Union,
are still negotiating with China. These talks could materially
change the U.S. trade prospects resulting from China's WTO membership.
Beyond that, many of the multilateral rules that will be applied
to China in the final protocol are critically important. Such
matters as the application of state trading rules to China's
vast state sector and the application of subsidy rules to its
web of government supports are primarily addressed in the multilateral
protocol.
There are also important enforcement issues related to the
multilateral protocol, such as the frequency and schedule for
reviews of China's trade policies.
Although it should shock many, the details of the bilateral
agreement struck between the United States and China last November
have still not been made public.
The administration notes that the agreement is available to
members of Congress and, on a limited basis, to interested companies.
This, however, is obviously not nearly the same as opening it
to full and complete public debate, which would allow potential
critics to scrutinize the text and notify Congress of their
concerns.
The administration argues that the secrecy is needed to accommodate
Chinese concerns. If the United States were to accommodate China's
true wishes, the agreement would likely never be released. China
is still upset by the release of some negotiating details after
talks last spring, but this is the way in which public business
is supposed to be conducted in an open society.
Releasing the agreement while other countries are still negotiating
with China might allow them to improve the agreement, which
would also serve U.S. interests.
If Congress waits to vote on permanent NTR until the negotiations
are complete and the agreement has been subject to full public
debate, it is possible that the vote might occur in 2001 instead
of 2000. For the Clinton administration, which leaves office
in 2000, this would certainly be a blow.
Despite the whispered threats, however, China hardly seems
likely to retaliate against U.S. interests if Congress chose
to vote in February of 2001 rather than July of 2000.
Congress would be well advised to ensure that it has all information
and the opportunity for a complete public debate before granting
China permanent normal trade relations.
Copyright 2000, Journal of Commerce
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