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The age-old question of whether the U.S. and China should trade freely will be getting a fresh look as the president of China visits Harvard this weekend.
The controversy centers around China's most-favored-nation (MFN) trading status and its quest to join the World Trade Organization (WTO).
Congress has consistently decided to extend MFN status to China, most recently in May. The decision has always invoked heated debate between business interests and labor unions and human right activists.
Now China is seeking to be part of the WTO, which, according to a fact sheet released by the U.S. State Department, would bring China into a rules-based trading system.
Speeding China's entry into the WTO was among the goals of Chinese President Jiang Zemin's meeting with President Clinton this week.
A spokesperson for Congressional Representative Doug Bereuter, chair of the Subcommittee on Asia and the Pacific, says China is not eligible to join the WTO--at least, not yet.
"It would be beneficial for China to join the WTO, but China has not put forward a commercially acceptable protocol," he says. "Their offers to date have been inadequate."
This opinion is taken to a greater extreme by the AFL-CIO labor union.
Greg Woodhead, an economist in the Department of Public Policy at the CIO, says China is nowhere near meeting the standards of a WTO member nation.
"China routinely signs agreements and ignores them," he says. "To be part of the WTO, you have to play by the rules, and China can't be an exception.... It's the same thing as: I want go to Harvard but I don't want to take the SATs."
"The preamble in the WTO requires its member nations to obey a certain labor standard," he adds. "They must observe international workers' rights, and China has a long way to go before it can reach that standard."
Among these standards are the prohibition of forced labor and child labor as well as the rights to assemble and to form labor unions.
Another objection the AFL-CIO has to China becoming a part of WTO is the huge trade deficit between the two countries.
"U.S. exports to China this year were under $7 billion while China-to-U.S. exports were $32 billion," Woodhead says.
For those reasons as well as concerns for China's human rights abuses, the AFL-CIO is also adamantly against MFN status for China.
"A continuation of MFN status now would send a message of accommodation to ongoing violations of international trading norms and human rights," said John J. Sweeney, president of the AFL-CIO, in a statement in May.
A revocation of MFN status would mean a dramatic increase in tariffs on U.S. imports from China--the average trade weighted MFN duty applied to U.S. imports from China is 6 percent, without the MFN, trade weighted tariff rate would be 44 percent.
However, according to the Bureau of Public Affairs, MFN status is really a misnomer. It is not a privileged status, but a name for ordinary tariff treatment given to many nations.
The State Department and a majority of the members of Congress say denying China the status would be a mistake.
"Denying MFN would hurt the United States--our jobs, exports, and investments in China...and [with certain retaliation], many of the approximately 175,000 high-paying export jobs related to US trade would disappear," Bereuter said in a speech a few days after the extension of MFN to China this year.
But Woodhead insists that corporate interests in the U.S. are concerned with money instead of human rights.
"We have many multinationals that want to do business with China, and inasmuch as I hate to quote Pat Buchanan, I think he was right when he said 'When it comes to MFN, Republicans love money more than they hate tyranny.' They'd do business with everyone, but at some point you've got to say no," Woodhead says.
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