QUESTIONS OF INFLUENCE ON U.S.-CHINA PACT REVIVED

Byline: Jim Ostroff

WASHINGTON — Debate over the new U.S.-China textile pact has flared anew, with allegations the accord was skewed in China’s favor by a Hong Kong apparel maker and adviser to the Chinese government whose partner made campaign contributions to the Democratic Party.
In its latest issue, which hits newsstands today, Newsweek reported that Stephen Lau, chairman of Synergy Sports International of Kowloon, attended a fund-raising dinner with President Clinton on Nov. 9, 1995, where a photo of the two shaking hands was taken, and another dinner 10 months later. Both dinners were at the Hay-Adams Hotel, across the street from the White House. Lau’s New York business partner, Tom Nastos, acknowledged contributing $70,000 to the Democrats to gain Lau’s access to the dinners, the magazine reported.
Lau and Nastos paid a $3 million fine in 1995 to settle U.S. allegations that Synergy, which makes sportswear, outerwear and children’s wear in China, made “illicit payments” to obtain bogus export visas. Synergy’s New York representative pleaded guilty to felony customs fraud charges, Newsweek reported.
Newsweek intimated that Lau’s entree with Clinton influenced a decision by Rita Hayes, the chief textile negotiator, to scale back Draconian cuts in some of China’s U.S. import quotas. Noting that William Houston, a former U.S. chief textile negotiator working for Lau, sat in at Hayes’s briefings for U.S. industry officials at January’s Beijing talks, it stated that the final pact was “precisely the outcome Lau and the Chinese government wanted.”
Lau and Houston were not available for comment Monday. The White House declined comment.
The article immediately rekindled questions first raised in an article in these columns on April 28 about Lau’s and Houston’s involvement in the talks. As reported, Houston, a registered Synergy lobbyist with Sandler, Travis & Rosenberg, Miami, said Lau “wanted an agreement; he wanted to expand trade,” and Lau said Houston “didn’t give me any information about the briefings.”
Lau denied he participated in the talks, said there was nothing improper about his ride with Hayes in a Chinese limousine before the talks ended and said that in 1996 he helped mediate a Sino-U.S. transshipping dispute.
Numerous U.S. textile-apparel firms and their trade groups embraced the pact but privately groused to Hayes about provisions speeding access to U.S. markets should China join the World Trade Organization. They also complained about an import safeguard some said wouldn’t pass WTO muster.
Hayes told WWD on Saturday, “I assure you emphatically that Mr. Lau had no influence whatsoever on this agreement,” adding that her decisions to reduce proposed quota cuts and raise others were normal end-game negotiating ones. Hayes, nominated by Clinton to be the WTO ambassador, said that while she conferred with federal officials and U.S. Trade Representative Charlene Barshefsky, “the final decision was mine.”
Hayes denied “any knowledge about any [Lau-Nastos] donations,” denied she had substantive talks with Lau and said she knew nothing about Customs’ actions against him. She said Houston could not be barred from the briefings because the U.S. in 1994 ended its confidential adviser system, adding that he “was an interested party.” She said, “He worked for a law firm with textile clients on both sides.”
Troy Cribb, Commerce’s textile chief and chairman of the Committee for the Implementation of Textile Agreements, denied “the administration’s textile policy was influenced by campaign contributions.” Cribb said such charges are flawed because “they ignore that importer-retailer advisers in Beijing were looking to minimize quota cuts and get increases.”
Robert Hall, a National Retail Federation vice president, who attended the talks, claimed the last-minute quota changes were due to “extraordinary efforts retailers and importers made” calling Congress members who in turn lobbied Barshefsky in Washington.
“I’d be surprised if anyone at USTR made decisions based on political contributions [by Lau],” Hall said.
Julie Hughes, Washington analyst for the U.S. Association of Importers of Textiles and Apparel, who also was an adviser, said she didn’t know whether Lau, like the retailers, could have affected the final pact.
But Hughes said the presence of Lau, who “sought influence by participating in Clinton dinners, raised the appearance the system could be manipulated.”
Carlos Moore, the American Textile Manufacturers Institute’s executive vice president, said he “doesn’t know of any role Houston or Lau played that affected the agreement,” which he termed “the best one I’ve ever seen: it essentially has no quota growth, tough transshipment language, provides access to China’s market and a safeguard provision. China’s major concessions are evidence that charges of undue influence are without foundation.”
Larry Martin, president of the American Apparel Manufacturers Association, termed the influence allegations “a failure to understand the negotiating process, where each side saves its concessions until the end.” Besides, Martin said, “If anybody had something to tell [Hayes] they didn’t want broadcast to the world, they always had the opportunity to talk with her in private.”

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