In the recent Senate debate on extending
permanent normal trade relations, or PNTR, to China, passage
was often portrayed as the solution to everything from U.S.
trade problems with China to Beijing's intolerance of dissent.
In fact, these expectations are grossly unrealistic. PNTR may
be a modest improvement in U.S. trade policy toward China, but
it is far from a panacea for U.S.-China problems.
Beginning with the Tiananmen massacre in 1989, the United States
and China have had 11 years of tense relations. Bilateral disputes
have covered topics from the protection--or lack thereof--of
intellectual property in China to the status of Taiwan. Since
the demise of the Soviet Union, the United States has a longer
list of bilateral disputes with China than it has with any other
Proponents of PNTR seem to believe that it will solve or help
to solve many of these problems. In particular, permanent normal
trade relations is painted as a solution to the rapidly expanding
bilateral trade imbalance with China and billed as a revolutionary
improvement in U.S.-China trade policy. If--in connection with
the granting of PNTR--China joins the World Trade Organization
and opens its markets to U.S. exports, the bilateral trade imbalance
could be reduced in the long run.
That, however, is an enormous if. Despite expectations of a
quick settlement, the final negotiations on China's accession
drag on in Geneva. Once they are completed and China becomes
a WTO member, China is unlikely to become an open market overnight.
In fact, the forces of protectionism are deeply entrenched in
China and have repeatedly demonstrated their political power.
In large part because of their actions, there have been serious
compliance problems with every trade agreement the United States
has negotiated with China. The WTO certainly does not provide
a magical solution to these compliance problems. Given the opaque
operations of the Chinese bureaucracy and its weak rule of law,
it is entirely possible that the WTO--which is premised upon
transparency and the rule of law--will prove unable to enforce
its rules on China.
PNTR is particularly unlikely to reduce the U.S. trade deficit
with China any time soon. As the U.S. International Trade Commission
noted last year, China's accession to the WTO would also obligate
the United States to rapidly open its textile and apparel market
to China. In the estimation of the commission, this is likely
to sharply increase imports from China and expand the bilateral
trade imbalance, at least in the short term. A number of other
economic estimates have reached similar conclusions.
Proponents also argue that PNTR will result in a rising middle
class in China, and increased contact with Western business
will democratize and liberalize China. This is a long-term hope,
but there is little evidence of this democratizing effect in
recent years. China has taken in more foreign direct investment
than any other country aside from the United States and become
one of the world's leading trading powers. Still, based on the
U.S. State Department's annual report on human rights in China,
respect for human rights has not noticeably improved since Tiananmen
Square. Intolerance of dissent and repression of religion is
still the norm. It may be that economic contact will ultimately
bring change in China, but that change may well be very long
Other problems between the United States and China, such as
the status of Taiwan, sales of dangerous weapons, proliferation
of missiles and the status of Tibet, are extremely unlikely
to be resolved by PNTR. The increasing success of true democracy
in Taiwan, in particular, seems to decrease the likelihood of
peaceful reunification between Taipei and Beijing any time soon--a
democratic people seem unlikely to willingly place themselves
under totalitarian control. The flowering of democracy also
increases sympathy and support for Taiwan in the United States.
This could well lead to increased conflict between the United
States and China over Taiwan in coming years.
Despite the sometimes-exaggerated claims of proponents, PNTR
is not a solution to U.S.-China problems. It is true that the
annual threat of withdrawing normal trade status from China
had lost credibility with Beijing and served no real purpose.
It is also true that Chinese membership in the WTO creates an
effective obligation on the United States to extend permanent
trade status. Even with PNTR, however, the trade problems, human
rights abuses, military competition and foreign policy disputes
that have created tensions between Washington and Beijing are
as likely to grow worse as they are to fade in the coming years.
Copyright 2000, Los Angeles Times