Key Politico Says No to China Deal

Electronic News, May 1, 2000 by Richard Bruner

On March 28 House Minority Leader Richard Gephardt told a breakfast meeting of 200 high-tech executives, "I understand your concerns about China PNTR. Not only is China a massive potential market for U.S. technology firms, but increased trade in technology also holds the promise of bringing democratic change to China."

With a vote coming up in the House May 25 on China's permanent normal trade relations (PNTR) status, Gephardt's remarks raised hopes for its relatively easy passage. Many executives that morning concluded the powerful Democratic leader was beginning to see the light on the issue of trade with China. However, last week he doused that hope.

"To truly honor our values, I have no choice but to oppose granting preferential trade status to China," Gephardt said last Wednesday in a speech in his St. Louis district. "Granting PNTR this year surrenders all leverage we hold in our trading relationship to the Chinese government and renders the United States powerless to protect our values and interests," he explained.

The sponsor of last month's breakfast meeting, the Information Technology Association of America (ITAA), quickly chastised Gephardt for his apparent turnabout. "In his address to ITAA last month, Congressman Gephardt expressed an enlightened understanding of the issues impacting the tech community," said Harris N. Miller, the organization's president, in a statement, describing the issue as one of the most important of the 106th Congress. "We urge Congressman Gephardt to rethink his vote before the week of May 22, the date of this critical House vote."

Gephardt had been described as "courting" high-tech industry executives in an effort to solicit more contributions from them. But John Doerr, a Silicon Valley venture capital powerhouse who has supported Vice President Al Gore, told Electronic News that Gephardt's stance will have a definite negative effect on Democrats' efforts to woo Silicon Valley. Doerr described Gephardt's position as "a response to pressure from representatives of labor who are concerned about jobs for Americans."

Like most executives in the electronics industry, Doerr favors trade with China. "My own feeling is we should have permanent normal trade relations with China," Doerr said. "By trading with China we will raise the standard of living for everybody, create more jobs, and, if they use and adopt more of our products, they'll see democracy flourish faster."

Gephardt, 59, has been leader of the House Democrats since 1989, the year after he sought the Democratic nomination for president (losing to Michael Dukakis). He has consistently opposed trade measures such as the 1993 North American Free Trade Agreement and the fast-track legislation sought by President Clinton in 1997 and 1998. His close ties to the labor movement have placed him in the more traditional segment of the Democratic Party (the Old Democrats, as opposed to President Clinton's New Democratic wing). Vice President Gore is a New Democrat, although he, too, has sought labor support and thus has had to appear ambivalent about PNTR. He was the first prominent Democrat office holder to make serious overtures to the high-tech industry.

Gephardt's announcement came as "no surprise" to Mike Maibach, Intel's Washington, D.C.-based director of government affairs. "The surprise actually has been that he has been low-keyed and neutral thus far because historically he has been against trade agreements," Maiback said. "But the good news is he's not breaking arms on his side of the aisle; he's not said this is a party-line vote. Instead, he's speaking for his own vote. And no one was counting him as a positive vote."

Will Gephardt's announcement affect the outcome of the PNTR vote in the House? "It might move a couple of votes, but I think most (Congress) people are going to make up their minds depending on their district. This is a bump, not a jolt or an earthquake," said Maibach. "It's going to be very close, but I think we're going to win," he added.