President Urges Renewal of China's Top Trade Status

PRESIDENT Clinton is taking a tougher trade position toward China by attaching conditions to the United States' extension of most-favored-nation (MFN) trading status.

The White House decision, announced yesterday after long consultations with US lawmakers and business leaders, will require China to make improvements over the next year in human rights, redress unfair trade practices, and honor its commitment to accords on nonproliferation of nuclear, chemical, and biological weapons.

If Beijing fails to respond, the US may disqualify China from receiving the lowest tariffs that most US trade partners are entitled to under MFN.

"I want to support modernization in China," Mr. Clinton said. But he added that China must realize "there has to be some progress on human rights" and in curbing use of prison labor.

China continues its flagrant human rights abuses and export of goods to the US made by forced prison labor, according to a just-released report by former Chinese prisoner Harry Wu.

Beijing's Ministry of Foreign Affairs agreed last August to suspend such exports, and the Chinese government denies any violation of this agreement.

The issue of China's trade status is a prickly one for Clinton, who is challenged both to satisfy tough China critics on Capitol Hill and to avoid damaging ties with the world's most populous country - and the most promising outlet for US exports.

"Our goals here are to have Congress behind us ... to push China to make the changes," says a senior US official. He underscores the country's vast market potential: "China will move from an $80 billion economy to a $165 billion economy by the end of the decade." Congressional support

The White House seems to have congressional leaders on board. One, Senate majority leader George Mitchell (D) of Maine, was blocked by the Bush administration in his efforts to hold the Asian powerhouse accountable for its policies.

"You [now] have a president who is considering strong and meaningful executive action," a pleased Senator Mitchell told the Monitor this week.

The weeks of negotiation leading up to the June 3 MFN decision deadline have not been easy. Policymakers have been in conflict over competing commercial and diplomatic concerns, including China's fast-expanding market opportunities and a human rights record that offends the US.

Last week the International Monetary Fund (IMF) recognized China as the third-largest economy in the world, after the US and Japan. According to the IMF, China posted a dramatic 30.7 percent increase in import growth during the last quarter of 1993, compared with one year earlier.

US businesses of all sizes are eager to secure a greater foothold that market. China retaliation

Donald Anderson, president of the US-China Business Council, whose membership includes 200 US firms, is wary that a tougher US approach will trigger market- closing retaliation by the Chinese and cause the US to lose ground to global competitors.

In 1992, American companies exported $7.5 billion worth of largely high-tech goods, including aircraft, computers, oil field drilling equipment, and telecommunications equipment to China.

"Boeing and McDonnell Douglas account for 76 percent of China's imports of commercial aircraft," Mr. Anderson says. "Obviously [the European consortium] Airbus would love to see that market open." Revoking MFN would put some 150,000 jobs for highly skilled workers who manufacture such products in jeopardy, he says.

National Association of Manufacturers President Jerry Jasinowski, whose organization represents 1,250 American manu- facturers that account for roughly 80 percent of US industrial output, says Clinton's decision will have a "profound impact" on US firms, workers, and industrial competitiveness. He urges the president "to articulate a policy toward China that is based upon a stable and predictable commercial relationship, not a conditional one."

"If we believe in the bonds of democracy, we must resolve to strengthen the bonds of commerce," Clinton said during his seminal Feb. 26 American University speech linking US foreign policy goals with international economic priorities.

China's strides toward economic liberalization and opening to the West "will eventually mean greater democratization," says Ralph Clough, coordinator of Johns Hopkins University's China Forum. But imposing sanctions against Beijing, he says, "will simply play into China's hard-liners who have no interest in improving relations with the US."

Maurice Greenberg, chairman and CEO of American International Group - the first foreign insurance company permitted to operate in China - agrees that a policy of commercial engagement with China will lead to greater democratic reforms. China's human rights record should not be the standard for judging its eligibility for MFN, he says.