China trade bill nears passage behind high-tech support

China trade bill nears passage behind high-tech support
WASHINGTON — The full-court press on China trade mounted by the Clinton administration, pro-trade lawmakers and their high-technology supporters is bearing fruit in the final days of the debate over whether to grant Beijing permanent normal trade relations.

Passage of the China trade measure scheduled for a vote in the House later this month would clear the way for China's entry into the World Trade Organization (WTO), and with it, supporters said, the opening of the huge Chinese market to U.S. high-tech manufacturers. Labor and human rights groups oppose the trade legislation, as does the ranking House Democrat, Rep. Richard Gephardt of Missouri.

With the necessary 218 House votes needed to approve the measure apparently within reach, GOP and Democratic supporters joined this past week with Intel Corp. and other members of the Information Technology Industry Council (ITI) to tout the benefits of passage and warn of the consequences of rejection. House supporters of normalizing trade relations with China declined to discuss the current head count, but all agreed they have enough votes to win passage. The Senate is scheduled to vote on the matter in June.

"We're going to have 218 votes," predicted Rep. David Dreier, R-Calif., chairman of the House Rules Committee.

Opposition to the China trade bill is being spearheaded by U.S. labor unions and human rights groups. Labor organizations argue that normalizing trade relations with Beijing will cost American workers jobs by driving manufacturing off shore. Human rights groups favor continued linkage of the rights issue to an annual congressional review of China's most-favored nation trade status. Approving normal trade relations would end that yearly review.

The Clinton administration sought to allay human rights concerns this past week by proposing a commission that would monitor Beijing's compliance with international human rights agreements. The proposal is expected to provide some Democratic swing votes with the political cover needed to support the China trade legislation.

Message sharpened

Supporters of the China trade bill have winnowed their message to a few key arguments designed to link high-technology exports, the Internet and the growth of democracy in China. "Trade will help spread the Internet to the Chinese people and hasten democratic reforms," said ITI President Rhett Dawson.

High technology is America's biggest export category, added Intel vice president Michael Maibach, and China represents the world's third largest PC market. It is expected to become the world's largest computer market in the next several years, according to several estimates.

ITI and other high-tech groups here stepped up their efforts in recent weeks to gain passage of the China trade legislation, helping to reverse early congressional opposition to the proposal led by House Minority Leader Gephardt and U.S. labor unions.

The China bill's fortunes in the House changed significantly when a number of California Democrats, many with electronics companies in their districts, signed on to support the legislation. One of them, Rep. Robert Matsui, warned earlier this week that failure to approve the China trade bill would prompt "very provocative" responses by Beijing. Asked to elaborate, Matsui said only that the Chinese response would have significant long-term foreign policy implications for the United States.

Reform risk cited

One implication could be the undermining of China's economic reformers and the strengthening of its old guard. One lawmaker quoted a Hong Kong-based leader of China's democracy movement as saying a negative vote would bring the ouster of Chinese Premier Zhu Rongji, who is widely seen as the government's leading economic reformer.

Zhu lobbied the White House unsuccessfully last April for a deal that would admit China to the WTO. The Clinton administration later reversed itself and agreed late last year to a deal that would clear the way for Beijing's accession to the trade group.

Other supporters of the trade deal stressed the predictability that passage of the normal trade relations bill would bring to U.S.-China trade relations, especially for the high-tech sector. Rep. John Linder, R-Ga., said one immediate effect would be the elimination of Chinese tariffs on semiconductors and other IT products.

But, argue many legislators and the high-tech lobby, the bottom line is that opening trade with China will transform it from a state-run economy to a democratic, market-oriented economy.

The key, supporters argued, is high-technology exports to nearly one quarter of humankind. "It is inconceivable to me that China will not be more free when a billion Chinese people can log onto the World Wide Web," said Dreier, the leader of the GOP efforts to approve normal trade relations with China.

Matsui said the positive effects of high-tech trade could already be seen in southern China where Hong Kong's mainland neighbor, the boom town of Shenzhen, has been designated a special trade zone. Wireless telecommunications manufacturers, for example, are flooding the city.

Despite the dire tone of the China trade debate here, however, businesses in China do not place nearly as much significance in normalization of U.S.-China trade relations as American high-tech firms. Some domestic and overseas executives maintained that the expansion of China's high-tech market will continue regardless of the outcome of the congressional vote.

In Taiwan, where simmering political differences have led to Beijing saber-rattling, the business community largely wishes China well in its bid for normal trade relations with the United States. "Taiwan's electronics industry, like most other manufacturing industries in Taiwan, has extensive manufacturing facilities in Mainland China now," said Lawrence Eyton, political analyst for the English language newspaper Taipei Times. "To the extent that normalized relations helps increase trade between China and the United States, then it helps Taiwanese companies that manufacture there."

More important for Taiwan than the trade implications of the U.S. congressional vote are the political implications of the timing of the action. "I find it hard to believe that the vote . . . is just coincidentally occurring two days after [Taiwan's] presidential inauguration," said Eyton.

In the past few weeks, he noted, China has hinted at military exercises during or just after the inauguration. Congress' scheduling of the trade bill vote during that same period, Eyton suggested, is a savvy way to keep China in line.

— Additional reporting in Taiwan by Mark Carroll