House OKs China Trade Bill

WASHINGTON —  The House of Representatives ushered in a new era of U.S.-China relations Wednesday, voting to bestow permanent normal trade relations on the communist regime in Beijing as the world’s most populous nation prepares to open its markets and join the global trading community.

The epochal 237-197 House vote culminated months of debate that exposed deep rifts within both major parties over the pros and cons of globalization, the state of human rights in a nation still under the yoke of authoritarian rule and the extent of the military threat China poses to U.S. security.

With the larger-than-expected margin of victory the product of a bipartisan coalition assembled by House Republican leaders and centrist Democrats--the China trade legislation cleared a deeply divided House and moved to the Senate, where passage next month seems assured.

At the same time, President Clinton moved closer to sealing what may be the final major legislative achievement of his presidency. And free-trade advocates celebrated their most important victory since Congress approved creation of a free-trade zone with Canada and Mexico seven years ago.

“For China, this agreement will clearly increase the benefits of cooperation and the costs of confrontation,” Clinton said. “America, of course, will continue to defend our interests but at this stage in China’s development we will have more positive influence with an outstretched hand than with a clenched fist.”

The vote was a landmark victory for most of American business and bodes especially well for California, whose technology, entertainment, telecommunications and agriculture industries are poised to exploit the openings in China’s market.

Under the legislation, the United States would eliminate the annual congressional reviews of China’s trade status that have been a source of tension since Beijing’s bloody crackdown on dissent in Tiananmen Square in 1989.

The bill would create a new commission to monitor human rights and working conditions in China. It mandates other steps designed to ensure that Beijing honors its promises and to protect U.S. industries from the threat of an avalanche of Chinese imports. Those provisions, embraced after much hesitation by Republican leaders, were the fruit of efforts to find bipartisan compromise.

Nonetheless, the vote was a blow to leaders of industrial trade unions, who mounted a massive lobbying campaign in Washington and around the country to defeat the bill on grounds that it would cost hundreds of thousands of American jobs. It also disappointed the coalition that labor formed with environmentalists and human-rights activists to fight for reform of an international trading system that they believe has forsaken working people and put natural resources in jeopardy.

Rights Monitoring Plan Is Assailed

In Beijing, the government praised the House vote as “wise.” But a spokesman for the Trade Ministry called the creation of a commission to monitor human rights in China an “unacceptable” attempt to interfere with the country’s internal affairs.

“Some articles contained in the bill which attempt to interfere in China’s internal affairs under the pretext of human rights are unacceptable,” the Xinhua news agency quoted a government spokesman as saying.

Enactment of the measure, both sides agreed, would thrust U.S.-China relations on the threshold of a change greater than any since the two countries established normal diplomatic contacts in 1979 under President Carter.

The House debate centered on the nature of that change: Would expanded U.S. commerce hasten the decline of totalitarian forces in China, as Clinton claimed, by giving a society with 1.2 billion consumers more access to Western products and ideas? And would American industry, as business lobbies asserted, play a key role in the attempt to influence China’s development through economic engagement?

Or would the end of Washington’s yearly vote on U.S.-China trade, as opponents claimed, give undue comfort to communist hard-liners in Beijing who threaten democratic forces in Taiwan, Hong Kong and Tibet? And would it, as union leaders argued, merely help multinational corporations gain unfettered access to a nearly bottomless source of cheap and easily exploited labor?

Proponents of the bill insisted that the vote would position the United States to influence momentous events unfolding on the far side of the globe.

“The fact is, the genie’s out of the bottle,” said Rep. David Dreier (R-San Dimas). The Chinese people, he said, “are getting a taste of freedom and they’re thirsting for more.”

Rep. Steny H. Hoyer of Maryland, one of the few members of the House Democratic leadership to back the bill, said: “As the most powerful nation on earth, we have a responsibility to engage China--the most populous nation in the world--and move it, if we can, toward democratic reform, open markets and respect for human rights.”

House approval of the bill removes the largest barrier to implementation of a trade agreement the United States reached with China last November as part of an initiative to bring China into the World Trade Organization. That body, based in Switzerland, polices international commerce.

China Reaches European Accord

With or without congressional action, China is expected soon to enter the WTO as a result of deals it is negotiating with would-be trading partners around the world. Last week, China passed another milestone on that path as it reached an accord to open its markets to goods produced by the European Union--a development that proponents of the bill said helped increase their margin of victory.

Clinton said that the trade bill is needed to ensure that U.S. businesses would get the full benefit of China’s decision to lower tariffs and reduced quotas.

The margin of victory was wider even than the 234-200 vote in 1993 by which the House approved the North American Free Trade Agreement. The extra cushion came from a late Republican surge as 164 GOP lawmakers voted for the bill and 57 voted against it. Among Democrats, 73 voted for the measure and 138 against. Two independents also voted no.

The vote followed a heated debate that ricocheted from one issue to another: whether American jobs would be gained or lost, whether human rights in China would be abused or enhanced, whether the United States would uphold or betray its democratic ideals. Irate opponents waved a dollar bill and a fig leaf to mock the legislation as a sellout to the rich.

“The big corporations get helped big time and a few of our middle-class Americans have their lives destroyed, if you vote for this terrible, terrible giveaway,” said Rep. Pete Stark (D-Hayward).

Opponents taunted those who claimed that the trade bill would enhance U.S. national security. Rep. Charlie Norwood (R-Ga.) said that the vote came down to “jobs, bombs and Bibles”--the impact on U.S. employment, the threat of Chinese nuclear weapons and the persecution of Chinese religious dissidents.

Rep. Richard A. Gephardt (D-Mo.), the House minority leader who hopes to lead his party back to power in the November elections, argued that the House should reject the bill as an affront to those who stood against segregation in the United States and apartheid in South Africa--and those who are now fighting for democracy in China.

“When we stand up, things get better in China for human rights. When we stand down, things get worse,” he declared.

Behind the rhetoric, the rosy promises of advocates and the gloomy warnings of skeptics, a championship-caliber political brawl unfolded in the weeks before the vote. Lingering public doubts about trade in general--and trade with China in particular--added further drama. A poll released earlier this month by the Pew Center for the People and the Press, for example, found that only 30% of the public supported normal trade ties with China, while 49% opposed it.

To overcome such doubts, American corporations, which had stood on the sidelines in other trade initiatives, unleashed a squadron of chief executives to prowl the halls of Congress in the weeks before the vote. Political organizers on both sides of the issue descended on congressional districts to pressure legislators.

The White House mounted its own energetic effort, offering wavering lawmakers help with pet projects. Some Texas Democrats who supported the trade bill were pleased to announce that they would get expedited federal review of plans for a gas pipeline near the Mexican border.

Normally the House is acutely divided on party lines. But Republicans and key Democrats suspended their differences long enough to achieve critical compromises that paved the way for the bill’s passage.

“This is a bring-home-the-bacon deal,” said Samuel L. Maury, president of the Business Roundtable, which led the efforts of major U.S. corporations. “It’s extraordinarily important.”

Organized labor mounted its own militant campaign, which included public demonstrations, television advertisements that featured a Chinese sweatshop and letters to Congress from workers. Labor wielded a potent lever over House Democrats, many of whom hope for its financial support in their reelection campaigns this fall.

John J. Sweeney, president of the AFL-CIO, said in a written statement that lawmakers faced “a choice between casting a vote dictated by conscience or a vote dictated by corporate money.” The American people, Sweeney said, would not look favorably upon members who “bowed to big money” in voting for the bill.

While Clinton in the later stages of the campaign stressed the vote’s importance for national security, the battle played out at first in economic terms. Opponents warned that as many as 872,000 jobs would be lost in the United States over the next decade, while business advocates claimed they were wrong.

Pro-labor researchers agreed with business lobbyists that U.S. exports to China would increase sharply, but they said that imports from China--a vastly higher volume--would expand at a brisk enough pace to more than eclipse the export gains.

Advocates of expanded China trade countered that normal trade ties with China will not set off a new import boom because the United States is already open to most imports from China. Under terms of the trade accord reached with Beijing last year, most negotiated changes would ease the entry of U.S. exports to China, not the other way around.

White House officials and other proponents of normal economic ties argued that anchoring China to a rules-based trading system would unleash enormous new pressures for reform and modernization, in the process striking a profound blow against entrenched bureaucrats and other anti-democratic interests.

News of the House vote was just hitting the Internet and radio airwaves as residents in Beijing were going to work this morning.

“This is great news for China. I believe the interests of the majority of people in both countries won out,” said Zhong Dajun, director of the Beijing Economic Research Center, a private think tank. “Most importantly, it will bring international rules into China. It will help the country progress more smoothly to democracy and the rule of law.”

“All other countries get normal trading status. Why shouldn’t China?” asked Luo Yabao, a middle-age businessman, as he finished his breakfast on the street. “Besides, it should be strictly a commercial matter. Why must the U.S. add all these conditions?”

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The Road to Free Trade

The vote in Congress granting China “permanent normal trade relations” status is the latest turn in China’s evolution toward a market-oriented economy and more open trade:

1948

China is one of 23 founding nations of GATT, the General Agreement on Tariffs and Trade.

1949

Communist revolution in China; government of Chiang Kai-shek is exiled to Taiwan.

1950

China withdraws from GATT. The country enters a long period of isolation and emphasis on self-sufficiency under Chairman Mao Tse-tung.

1971

President Nixon eases trade restrictions with China, ends 21-year trade embargo and travel ban. China, reversing a policy in effect since 1949, grants visas to Western journalists to cover Western table tennis team, which has been invited to play in China; resumes partial telephone service to the U.S. and Britain.

1972

Nixon makes historic visit to China.

1974

The 1974 Trade Act requires the president to annually certify certain communist nations before giving them normal trade status.

1979

U.S. and Communist China normalize diplomatic relations.

1986

China formally applies for readmission to GATT.

1987

Under leader Deng Xiaoping, China affirms commitments to economic modernization and the liberalization and decentralization of the economy. China’s first stock market since 1949 opens in Shanghai. GATT meets to discuss China’s inclusion in the organization. U.S. and Chinese officials begin discussing a bilateral trade agreement.

1989

China violently cracks down on protesters in Tiananmen Square, killing hundreds, perhaps thousands, of civilians and drawing worldwide condemnation. U.S. suspends high-level contacts; World Bank suspends loans to China.

1992

Deng tours southern parts of the country to jump-start economic liberalization.

1995

World Trade Organization is formed as successor to GATT.

1999

U.S. Trade Representative Charlene Barshefsky and Chinese Premier Zhu Rongji sign comprehensive trade agreement Nov. 15.

2000

European Union and Chinese officials sign comprehensive trade agreement May 19.

Sources: Congressional Quarterly, Facts on File

Researched by NONA YATES/Los Angeles Times

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Times staff writer Tyler Marshall in Washington and Anthony Kuhn of The Times Beijing bureau contributed to this story.

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BOON TO STATE

California is in a unique position to benefit from the opening of the China market. A22