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By Adam Entous

WASHINGTON (Reuters) - The giant AFL-CIO labor federation last month began airing television ads with grim footage of Chinese political prisoners and sweatshop workers, hoping to mobilize the American public against a landmark trade agreement with China.

The pact's business supporters will respond this week with TV spots painting a very different picture -- one of smiling Chinese school children and entrepreneurs who would benefit from an agreement that would open Chinese markets and spur economic reform.

The competing ads, appearing on television and in newspapers across the country, open a new front in the biggest trade fight since the 1993 North American Free Trade Agreement.

With targeted TV spots, the AFL-CIO and a group called the Business Roundtable hope to shape public opinion and increase pressure on dozens of wavering lawmakers in key districts before Congress' high-stakes vote.

In exchange for China opening its markets to U.S. companies, President Clinton says Congress must grant Beijing permanent normal trade relations (NTR) -- a status it now gets only after an annual congressional review.

Permanent NTR would guarantee Chinese goods the same low-tariff access to U.S. markets as products from nearly every other nation.

The trade agreement is a crucial step for China to join the World Trade Organization, which sets global trading rules.

To jump-start congressional deliberations, Clinton is expected to send the trade legislation to Congress as early as this week. But it remains to be seen whether he can muster enough votes to ensure passage given the large number of union-backed Democrats in the House of Representatives who are opposed or undecided.

The White House is pushing for a vote on China's trade status by June, fearing that any further delay could bog down the legislation in election politics.

Big business, which desperately wants access to vast Chinese markets, has earmarked more than $10 million for its lobbying campaign, and has close ties with the Republican leaders who would steer the bill through Congress.

Unions won't spend as much money on lobbying but may already have the upper hand in the arena of public opinion with their demand that China improve labor standards and human rights before joining the Geneva-based WTO. According to a Pew Research Center poll released last week, Americans oppose granting China permanent NTR by a two-to-one margin.

The AFL-CIO ads open with a close-up shot of a "Made in China" label on a sweater.

"Behind this label is a shameful story," the announcer says, "of political prisoners and forced labor camps; of wages as low as 13 cents an hour; of a country that routinely violates trade rules, flooding our markets, draining American jobs."

Footage of Beijing prison laborers and sweatshop workers is followed by newspaper headlines citing Chinese trade violations and a growing U.S. trade deficit with Beijing.

It ends with an appeal to voters to call their congressmen to urge them to "vote no, and keep China on probation."

The AFL-CIO has run the ads across the country, hoping to sway voters in 11 congressional districts and three Senate races.

The Business Roundtable, which represents chief executives at the nation's largest companies, said its $1.5 million ad campaign will reach voters in 22 states, spanning the districts of 106 lawmakers.

The ads open with Earth as viewed from space, spinning from North America to mainland China.

"With 1.3 billion people, China is the world's largest marketplace," the announcer says.

Images of Chinese businessmen, school children with their teacher and young men playing basketball flash across the screen.

"A new trade agreement opens China's markets to our goods and services, their culture to our democratic values," the announcer says. "And it forces China to play by the rules."

A steel door slams shut across the scene.

"But isolationists want to slam the door on China, abandoning it to foreign competitors," the announcer said. "Now Congress must choose: Isolation or engagement. Tell Congress, vote yes on trade with China."

The AFL-CIO and the Business Roundtable say the television spots were the first phase of broader campaigns aimed at voters and members of Congress.: