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Published: Sunday, 3/12/2000

The facts don't justify trade deal with China

President Clinton has promised an all-out effort to win congressional approval of a trade deal with China. The United States would grant permanent normal trading status to China in exchange for Chinese promises to open up some of its markets.

The President will be opposed by those Democrats who value trade unions more than they do corporate soft money, and by those Republicans who value national security and human rights more than they do corporate soft money.

That the outcome of the battle is too close to call indicates how potent a force corporate soft money is in our politics today. But it is hard to justify permanent normal trade status for China on the basis of the facts.

The Commerce Department reported last month that the U.S. trade deficit for 1999 was the largest ever - $271.3 billion, $100 billion more than the record set in 1998. The single largest chunk - $73.9 billion - was in our trade with China. China accounts for 27 per cent of the total trade deficit. This is remarkable, because we import nothing from China that we cannot make ourselves, or obtain from other countries.

The trade deficit with China is so large not because the Chinese people are unwilling to buy American products, but because their government won't let them. Markets for most of the products we manufacture are obstructed by tariffs and other restrictions.

In exchange for permanent normal trade status, and for U.S. backing for its application to join the World Trade Organization, the Chinese government has promised to loosen those restrictions. But the Chinese record on keeping such promises isn't very good. China, according to the AFL-CIO, has violated all four trade agreements it has made with the United States in the last 10 years.

The Clinton administration says that if China is allowed to join the WTO, it will play by the trade rules that international body sets. But that's not what the Chinese say. Britain's Financial Times reported that "Ma Yongwei, chairman of the China Insurance Regulatory Commission, said that even after China's accession to the World Trade Organization, Beijing reserved the right to block licenses for foreign insurance companies."

Trade unions oppose the China deal because they fear a flood of cheap Chinese imports - many of them made with slave labor - will cost American workers their jobs. The unions are joined by those who don't think China should be rewarded for its human rights abuses, and by those who don't think U.S. companies should sell technologies to China which wind up in weapons pointed at us.

The U.S. International Trade Commission says that if China is admitted to the WTO and keeps its promises, U.S. exports to China would increase by 10.1 per cent, while Chinese imports to the United States would grow by only 6.9 per cent. But the projections indicate our absolute trade deficit would continue to grow, to a whopping $649 billion by 2048.

No strategic rationale can be made for concessions to China. So why is President Clinton so avidly pursuing a China deal? And why is the Republican congressional leadership on board?

James Riady, an Indonesian of Chinese extraction with close ties to the Peoples Liberation Army, contributed nearly $1 million to the Clinton campaign in 1992, according to Johnny Chung. Bernard Schwartz, whose company, Loral, supplied China with the technology to put multiple warheads on its missiles, was the single largest contributor to the Democratic National Committee in 1996.

Messrs. Riady and Schwartz may have bought favors America can't afford.

Jack Kelly is a member of The Blade's national bureau.



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