Freer Trade with China?
By Lenora Chu

Chinese technology ousting Sony in the United States? If this event is indeed in the cards, it’s not likely that it will happen anytime soon. But the U.S. government has taken one step closer to realizing that notion—last Wednesday the House of Representatives voted, 237 to 197, in favor of granting China permanent normal trade status and entrance into the World Trade Organization.

Whereas Congress has reviewed China’s trade status each year for the past 20 years—granting normal standing every year—under the new bill, China would be able to dodge the annual Congressional review that many Chinese diplomats consider “embarrassing.”

Surprising Republican Support?

Last week’s House vote sliced party lines—164 Republicans and 73 Democrats voted in favor, while 57 Republicans, 138 Democrats and 2 Independents voted against the bill.

Is this overwhelming Republican support of a Clinton bill surprising? Maybe so, given the anti-Clinton sentiment that prevails within the party. But a closer look at the issues suggests that the bill certainly aligns with party interests.

At first glance, it seems ironic that the Republicans who voted to impeach Clinton were the same ones that helped pass the trade bill in the House. But the Republican coffers are full of monies from corporate benefactors, who will surely benefit from freer trade with China.

After all, the proposed bill would slash Chinese tariffs on a wide range of industrial products and lift barriers to some American service companies, like banks and telecom. Democratic opponents were likely voting against the bill to protect interests of the likes of struggling U.S. tomato farmers and auto-parts makers.

Protecting U.S. Interests

Last year, Americans bought $82 billion of Chinese-made goods and sold $69 billion worth to China, marking a trade deficit of $13 billion—America’s second largest, next to Japan. Will this deficit increase or disappear? The bill’s supporters and opponents alike are concerned that cheaper Chinese goods would flood U.S. markets and squeeze domestic businesses.

But Representative Sander M. Levin, a Democrat from Michigan, devised an amendment to the bill that would fight sudden surges of imports from China. He also drafted a proposal that would create a 23-member commission to monitor human rights in China. Vote counters have said that the provisions drew the support of 20 members of the House who might have otherwise opposed the measure.

‘Quid Pro Quo, Doctor’

Leaving nothing to chance, bill supporters put “vote-buying” tactics into full play on Capitol Hill. Clinton got the extra votes he needed by scratching a few critical backs—one undecided Congressman got a zip code for a small town in his territory and two Texans got approval for a natural gas pipeline near El Paso. He also played to the largely China-averse Congress with the mantra that this bill would use U.S. economic power to affect change in China and even weaken Communist-party rule.

California Republican Elton Gallegly said that voting for the bill was easier after he received assurances from Secretary of Agriculture Fan Glickman about keeping a ban on Argentine oranges, which could introduce a citrus-killing pest into Southern California orchards. And Republican Spencer Bachus, an Alabama representative with steel mills in his district, voted in support after Republican leaders promised to amend a bill to address his concerns about the imported coke used in steel processing.

Trouble with Labor?

Labor unions have spoken out against the agreement. John J. Sweeney, head of the AFL-CIO, has refused to meet with Clinton upon several occasions. And in a New York Times article, George Becker, president of the United Steelworkers of America said, “[The bill] is a betrayal of workers’ interests. This is about moving factories from the U.S. so that they can export back here.”

Religious groups, environmentalists, veterans’ organizations and human rights groups have also opposed the bill, citing that this trade agreement rewards a Communist government with no concern for its people and its neighbors. And other naysayers claimed that the trade agreement would allow China to build up nuclear capacity.

Chinese Thoughts

China also faces concerns at home. For one, with the certain influx of U.S. competitors into its market space, Chinese officials must figure out how to protect the tens of millions of workers whose livelihoods will be threatened.

But China’s reform-minded leaders, led by Prime Minister Zhu Rongji, are wagering that entry into the WTO will bring foreign investment and technology to China and prepare state-run industries for the free market. The intended result: a more efficient economy with more jobs for all.

Clinton Seeking His ‘Legacy’

Does this trade bill stand a chance of marking Bill Clinton’s place in presidential history? Maybe—but the bill still must pass through the Senate. Because the Senate is more pro-trade and internationalist than the House, all indications say that the bill will pass. But whether it will be altered beyond recognition remains to be seen—opponents are already drafting amendments to the carefully crafted bill.

Assuming that the bill will pass, it will still be years before we know whether this economic gamble will pay off—or whether new bureaucratic obstacles will emerge even as tariffs disappear.