Inside US Trade | Vol. 19, No. 22
U.S. business and agriculture groups are preparing to begin their campaign for renewing most favored nation status for China by portraying the upcoming vote as a routine one aimed at maintaining the status quo and necessary to allow the completion of negotiations to have China and Taiwan enter the World Trade Organization.
The vote on extending MFN status for another year is different from last year's on permanent MFN, which is not kicking in because the accession negotiations took longer than expected, according to a draft letter developed by these groups. "Unlike PNTR, the upcoming NTR vote is the trade equivalent of an 'extender' designed to maintain the status quo, pending completion of a WTO agreement," the letter said.
"Congress must vote again on whether to disapprove the President's annual extension of NTR by imposing prohibitive Smoot-Hawley tariffs on Chinese goods," the draft said.
Supporters of permanent MFN argued last year that the vote had to take place immediately because China would otherwise get into the WTO, depriving the U.S. of its trade concessions.
Signatures for the letter, which will be sent to House Speaker Dennis Hastert (R-IL) and other congressional leaders, are due today (June 1). This is the day President Bush has announced he will submit to Congress his formal request for an annual renewal of MFN, also called normal trade relations or NTR.
The draft only briefly refers to the recent deterioration of the bilateral relationship caused by the spy plane incident, and points out that revoking MFN would be the wrong response. "While, like all Americans, we are concerned by recent developments in U.S.-China relations, revoking NTR would be the wrong response, with devastating consequences for U.S. security, jobs, exports, and consumers," the draft letter said.
Business is facing this year's lobbying campaign on MFN largely by itself since White House officials have made it clear they will not weigh heavily into the debate (Inside U.S. Trade, May 25, p. 13). The Administration is in the middle of a policy review for China and the President does not want to be seen as getting too deeply involved on behalf of China before he has defined an overall approach, private-sector sources said.
Business is also hoping that the Administration will express its opposition to a pending resolution urging the International Olympic Committee not to chose Beijing as the host of the 2008 Olympics. A State Dept. official said yesterday (May 31) in a briefing that it is not up to the U.S. government to decide who hosts the Olympics and that the Chinese people are monitoring the issue, a business source said. However, the official did not clearly indicate that the Bush Administration would oppose the resolution, the source said. Instead, the official said that the Administration is waiting to see the context in which the resolution will be taken up, according to the source.
In announcing his decision to seek a renewal of MFN, President Bush did not focus on China, but rather on the benefits of trade in general. Bush said that trade promotes prosperity for the U.S. and the world, which is why he is requesting approval of trade promotion authority this year and the renewal of MFN for China for another year.
"Open trade is a force for freedom in China, a force for stability in Asia and a force for prosperity in the United States," Bush said in a May 29 speech at the Los Angeles World Affairs Council. "We trade with China because trade is good policy for our economy, because trade is good policy for democracy and because trade is good policy for national security."
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