Enriching China

0 Comments | Insight on the News, June 25, 2001 | by Sheila R. Cherry

Proponents of China trade claim that granting `permanent normal trade relations' will benefit U.S. business, but critics cite evidence American workers will suffer.

Congress must decide again this month whether the People's Republic of China, one of the world's last Communist dictatorships, should remain a normal trading partner of the United States. Last year, proponents of China trade thought the matter had been decided permanently. But so-called "permanent normal trade relations" (PNTR) was made contingent upon Beijing meeting the standards to become a member of the World Trade Organization (WTO). It couldn't and didn't. As a result China traders are back at the same old stand, hawking the benefits of trade as a powerful tonic for what fiscally ails America.

Even President George W. Bush, in a speech to the left-wing World Affairs Council, has been touting the Chinese nostrum as full of golden outcomes. "Open trade is a force for freedom in China, a force for stability in Asia and a force for prosperity in the United States," he said as he prepared to certify normal trade for China under the 1973 Jackson-Vanik amendment regulating such dealings with unsavory Communist regimes. To block the granting of favored trade relations, Congress must pass a resolution within 30 days reversing the president's decision and then most likely pass it again in at least one house with 60 percent of the vote to override the expected presidential veto.

But in granting PNTR, Bush is doing no more than Bill Clinton did before him, or his father before that, or President Reagan, or President Carter. And never mind that none of these ever saw the promise of the China-trade rhetoric fulfilled. Instead, the trade gap with China grew to an $83 billion trade deficit last year -- and has taken highly paid manufacturing jobs away from U.S. workers.

In his March 2000 report to Congress on national export strategy, Clinton made claims similar to what Bush is saying now. "Last November, we negotiated a strong, comprehensive agreement that draws the world's fastest-growing economy into a system of international rules enforceable in the WTO and provides strong safeguards for the United States against unfair competition from China," he reassured skittish lawmakers. "If we do not grant China permanent normal trade relations now, American farmers, businesses and workers may be left behind while our Asian, Latin American and European competitors reap the benefits."

But, critics say, Clinton's words did not match what was happening. While American workers were enduring the ordeal of trade-related downsizing, Clinton's commerce secretary, William Daley, was leading a trade delegation to China. The junket either resulted in or coincided with deals that included approximately $206 million in telecom contracts for electronics giant Motorola and a Lockheed Martin contract to provide air-traffic-control equipment to China's civil aviation administration, an arm of the People's Liberation Army (PLA). And at what price to U.S. national interests?

Alan Tonelson, author of The Race to the Bottom, argues that a worldwide worker surplus and uncontrolled free trade are sinking American living standards. He charges that U.S. multinationals in China have devalued the amount and nature of U.S. export trade from exchanges of finished goods (such as aircraft or TV sets) between unrelated buyers and sellers to shipments of parts and components between assembly plants, factories and other facilities of the same multinational company or its partners. "This activity is not `exporting' at all in any meaningful sense; it is outsourcing," Tonelson says.

On March 24, the National Association of Manufacturers and Manufacturers Alliance/MAPI released a report that appeared to have been aiming to refute Tonelson's thesis. You see, these China traders declared, it's the other way around. "America's manufacturers are exporting their high labor and environmental standards to their operations abroad" Thomas J. Duesterberg, president and chief executive officer of the Manufacturers Alliance/ MAPI, declared in a press release. "By exporting American standards through trade and investment, American companies not only help improve ethical, labor and environmental standards abroad, they help build respect for the human rights at the core of democracy and high standards of living."

The Boeing Co. in Seattle, for example, no doubt is increasing the standard of living in many provinces of China. As the company steadily downsizes from its historic home base in Washington state, it has announced plans to move fuselage production to Wichita, Kan., and fuselage-skin-panel manufacturing to Italy. China's Taikoo Aircraft Engineering Co. Ltd. now is remodeling Boeing's cargo planes. Boeing 737 stabilizers are being produced in Shanghai, while vertical fins are made in Xian, where trailing-edge ribs for Boeing 747s and vertical fins and horizontal stabilizers for 737s also are made.

Factories in Chengdu and Shenyang are under contract for Boeing's 757 components. In all, according to the Beijing People's Daily, since 1972 when Boeing entered the China market, "It has produced 334 planes for airline companies in mainland China, accounting for 67 percent of the total owned by these companies" And never mind that only days ago, when Boeing announced plans to cut 600 jobs in Long Beach, Calif., company analysts cited reduced demand in orders from China as the reason for the firings.