CHINA’S MFN STATUS FACES NEW HURDLE
Byline: Joyce Barrett / With contributions from Jennifer Owens
WASHINGTON — China’s trade status has become increasingly imperiled by allegations that President Clinton’s foreign policy was influenced by Chinese campaign contributions.
Senate Majority Leader Trent Lott (R., Miss.) told reporters at a press conference here Monday that the question of renewing China’s most-favored-nation trading benefits “will be reviewed carefully this year, maybe more than in past years.” Lott, a past backer of MFN, said he was undecided this year.
Noting such developments as disclosures of satellite exports to China, nuclear weapons testing by India and Pakistan and reports that campaign funds to Democratic accounts in 1996 came from a Chinese military official, Lott added, “All of these things combine to raise a lot of very serious questions. And I think the timing obviously is not good.”
The perennial debate over whether China’s MFN status should be extended for another year had been expected to create barely a ripple. But recent allegations that Clinton’s decision to export satellites and other space technology to China may have been influenced by Chinese campaign contributions and could threaten U.S. security have prompted criticism and full-scale investigations into the satellite exports by the House and the Senate.
Clinton has until Wednesday to notify Capitol Hill that he intends to extend again China’s trade benefits, which grant its exports the lowest allowable tariff rates, putting China on a par with most of the U.S.’s trading partners. The extension does not require Congressional approval, but Congress can vote to deny it. Under Congressional rules, the debate will originate in the House, and those who have historically opposed MFN are plotting to once again force a House vote on withholding MFN. No bills have been introduced yet.
Even those who have been the staunchest defenders of China’s trade benefits are wavering. In a letter late last month to Clinton, Rep. David Dreier (R., Calif.) and a dozen other Republicans who have supported MFN in the past warned the President that unless he cooperated fully with Congressional investigators, the administration could not “move this critical relationship forward. Therefore, we implore you to work quickly with the appropriate Congressional committees and to make available all relevant information related to the matters in question. It is in our national interest to resolve these questions so that we can build support for a policy of engagement with China that is firmly rooted in our national security interests.”
Others who signed the letter were Rep. Jim Kolbe (R., Ariz.), who has been the administration’s Republican liaison with the GOP on trade initiatives, and Rep. Jennifer Dunn (R., Wash.), a member of the House trade subcommittee.
The retail industry has allied with a coalition of businesses organized by the Emergency Committee on American Trade to shore up Congressional and administration support for MFN. Jonathan Gold, legislative representative with the International Mass Retail Association, said the industry was gearing up for a tougher battle than originally expected. Retailers have signed a letter expected to be sent to the White House in the next week urging MFN support.
Protecting China’s trade benefits and insuring a source of plentiful, low-cost imports is a priority for retailers. Last year, the National Retail Federation spent $500,000 on its nationwide MFN campaign.
The White House is to begin lobbying on Congress on its MFN position Thursday, when officials are scheduled to meet with Democrats.
The issue of China’s MFN came up Monday at a trade conference sponsored by the American Association of Exporters & Importers.
Speaking to more than 550 members of the importing-exporting industry, Walter L. Raheb, a trade specialist for the House Ways and Means Committee, agreed that MFN for China faces stiff opposition in Congress.
“If a vote was held in the House today,” he said, “MFN would lose.”
He added that Congress is angry about recent nuclear tests in India and Pakistan. “These are issues I think you really need to think about because there is movement in the House toward greater sanctions,” Raheb told the crowd.
Raheb said if China, India or Pakistan lost its MFN status, importers would see duties increase precipitously. Currently, he said, only six countries are without MFN status: Afghanistan, Cuba, Laos, North Korea, the former Yugoslavia and Vietnam.