EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)

July 26, 1999 (House)

H.J.Res. 57 - Disapproving the Extension of Nondiscriminatory Trade Treatment to China (Rohrabacher (R) CA and 21 cosponsors)

The Administration strongly opposes H.J.Res. 57, which would disapprove normal trade relations (NTR) with China. Renewing nondiscriminatory trade treatment, previously known as most-favored-nation (MFN) treatment, does not give China a special deal. It simply extends to China the ordinary tariff treatment the United States extends to virtually all nations. The Administration urges the Congress to defeat H.J.Res. 57 for the reasons explained below. The Administration urges support for the renewal of NTR to China because it advances a broad range of critical U.S. interests, such as advancing America's economic interests, preventing the spread of weapons of mass destruction, combating international crime and drug trafficking, promoting economic and regional stability in Asia, and protecting the global environment. Maintaining our overall relationship with China will enable the United States to actively engage China in the months and years ahead, to enhance areas of cooperation, and to pursue American interests where we differ. That engagement can help determine whether China becomes an increasingly open and productive partner for America, or whether it becomes more isolated and unpredictable. Extending NTR status to China is vital to our ability to successfully engage China and advance U.S. interests. Engagement means advancing important U.S. national security and foreign policy interests in tangible ways. China has condemned both India and Pakistan's nuclear testing and has agreed to work towards preventing an arms race in South Asia. China continues to play a constructive role in peace talks and easing tensions on the Korean Peninsula. China has also played a constructive role in responding to the Asian financial crisis. The Administration has gained China's agreement to sign and submit for ratification the Comprehensive Test Ban Treaty; cease all cooperation with unsafeguarded nuclear facilities; engage in no new nuclear cooperation with Iran, including for peaceful purposes; promulgate national nuclear export laws and regulations controlling the export of dual-use items with nuclear applications; and improve verification and implementation of the Biological Weapons Convention; and China joined and ratified the Chemical Weapons Convention. More remains to be done. The Administration will continue to urge the Chinese to tighten further their controls on exports of missile technology and is urging them to take the steps necessary for eligibility in the Missile Technology Control Regime. China, through engagement, is increasingly moving from being part of the proliferation problem to being part of the solution. The United States also continues to maintain strong unofficial relations with Taiwan, including arms sales, based on the Taiwan Relations Act. H.J.Res. 57 would undermine America's economic interests. The Administration is in negotiations with China on accession to the World Trade Organization that could result in an historic opening of China's markets to U.S. agricultural, industrial, and services exports. Revocation of NTR would adversely affect this effort to boost U.S. exports and to make China subject to global trade rules. In addition, U.S. exports to China and Hong Kong support an estimated 400,000 American jobs, as U.S. exports to China have quadrupled over the past decade to $14.3 billion. Chinese retaliation would imperil or eliminate a number of these jobs, exclude American companies and workers from future business in one of the world's most dynamic markets, and cede this market to European and Asian competitors. Denial of NTR would also hurt U.S. consumers, who because of higher tariffs could pay more each year for goods such as shoes, clothing, and industrial inputs. Finally, revocation of NTR would hurt U.S. interests in and the economic stability of Hong Kong, which handles over forty percent of U.S.-China trade. Engagement allows the Administration to deal forthrightly with our differences, including human rights and universal principles of freedom and democracy. The President has made the case not only to the Chinese leadership but directly to the Chinese people that human rights are universal and that all nations have an obligation to adhere to international human rights instruments. We have also argued that respect for fundamental human rights is indispensable to a country's stability and progress. Over the past two years, China has signed two international human rights covenants, and engaged in human rights dialogues with several nations, including the United States. Although we remain deeply concerned about human rights violations in China and more needs to be done, the Administration remains convinced that engagement with China will lead to progress in the long term. Over time, the more the United States brings China into the world, the more the world will help bring freedom to China. Revoking NTR would significantly damage America's relationship with a fifth of the world's population and jeopardize U.S. political and economic security. It would reverse three decades of bipartisan China policy and would seriously weaken our influence not only in China, but throughout Asia and beyond. Renewal of NTR best advances the substantial and broad range of U.S. interests.