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Clinton Proposes Renewing China's Most-Favored Trade Status

Congressional reaction mixed amidst larger China policy issues

WASHINGTON (AllPolitics, June 3) -- President Bill Clinton on Wednesday proposed renewing most-favored-nation (MFN) trade status for China, saying it was "clearly in our nation's interest" as he urged Congress to support the request.

Most Favored Nation

Most-favored-nation status offers low tariffs and treats countries as normal trading partners.

"Trade is also an important part of our relationship with China. Our exports have tripled over the last decade and now support over 170,000 American jobs," Clinton argued.

"This status does not convey any special privilege," Clinton said. "It is simply ordinary, natural fair treatment offered to virtually every nation on Earth."

Clinton cited China's hosting of a five-nation meeting in Geneva this week as an important example of the role Beijing can play in "meeting the challenges of the 21st Century."

The Geneva meeting is aimed at preventing an escalation of nuclear tensions in South Asia.

"Not to renew would be to sever our economic and, to a large measure, our strategic relationship with China, turning our back on a fourth of the world at a time when our cooperation for world peace and security is especially important, in light of the recent events in South Asia," the president said, referring to heightened tensions between Pakistan and India.

Clinton also continued to support his policy of "constructive engagement" with the Chinese.

"Trade is a force for change in China, exposing China to our ideas and our ideals, and integrating China into the global economy," Clinton said.

Congress has 30 days to respond to the president's recommendation for an MFN waiver. But amid growing concern about the president's involvement with another waiver that possibly led to the disclosure of sensitive national security information to China, reaction from Congressional leaders is mixed.

Support from Gingrich

House Speaker Newt Gingrich welcomed Clinton's recommendation for renewing MFN status for China, and vowed to work in a bipartisan manner to ensure that China receives it from Congress.

Gingrich, joined by Reps. Bill Archer (R-Texas) and Philip Crane (R-Ill.), made his comments in a letter to Clinton.

The lawmakers told Clinton, "We welcome the determination you made today to recommend the renewal of MFN trade status for China, and we pledge to work with you in a bipartisan manner to preserve our longstanding policy of commercial and diplomatic engagement with the Chinese. Seeking to keep China open to the West has proven to be the most effective way to advance our democratic values in this turbulent region of the world -- a policy we are committed to maintaining."

Despite their positive feedback, the members reminded Clinton that Congress is about to examine the question of whether national security was compromised by the transfer of missile technology to China, pledging to "carry out this investigation as fairly and expeditiously as possible."


Many members of Congress are not as positive about the president's announcement as Speaker Gingrich.

House Democratic leader Richard Gephardt issued a statement Wednesday opposing Clinton's plan to extend China's trading status for another year.

Gephardt said China has not significantly improved its human rights record and "America must stand for more than money."

Gephardt has consistently opposed Clinton on China's most-favored-nation status, only to lose when the contentious issues comes to a vote. But Democratic opponents say they have a better shot at defeating the president this year because of new questions about Clinton's China policy.

Strange bedfellows

The anti-MFN coalition encompasses some strange bedfellows: liberal Democrats upset with China's human rights record and Christian conservatives critical of China's lack of religious freedom. This year, even some establishment Republicans who traditionally have supported MFN are threatening to withhold support because of questions about Clinton's technology waivers, and questions about China's role in Pakistan's missile and nuclear programs.

House GOP Conference Chairman John Boehner, a traditional MFN supporter, said Wednesday that support for the annual extension was in peril because Clinton had not swiftly put to rest suggestions the missile technology waiver was connected to big Democratic campaign contributions from the Loral Space & Communications' chairman.

The U.S. granted most-favored-nation status to all its trading partners in 1934. But in 1951, during the early days of the Cold War, the policy was modified to require the president to suspend the MFN status of all Sino-Soviet bloc countries.

The Trade Act of 1974 allowed "nonmarket economy" countries to be granted a waiver and have their MFN status restored. Under the conditions of that act the waiver must be renewed every year. In 1979 President Jimmy Carter sent Congress a trade agreement with China that included a MFN waiver. Normal trade status was formally restored to China on Feb. 1, 1980.

Despite a strained relationship after China's 1989 crackdown of protestors in Tiananmen Square, China has been granted a MFN waiver every year since 1980.

CNN's John King, Ann Curley and Steve Glasser contributed to this report.
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Wednesday, June 3, 1998

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