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“REGARDING PERMANENT NORMAL TRADE RELATIONS WITH CHINA” mentioning the U.S. Dept of State was published in the Extensions of Remarks section on pages E694-E695 on May 10, 2000.
The publication is reproduced in full below:
REGARDING PERMANENT NORMAL TRADE RELATIONS WITH CHINA
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HON. DAVID D. PHELPS
of illinois
in the house of representatives
Wednesday, May 10, 2000
Mr. PHELPS. Mr. Speaker, today after months of information-gathering, discussion, and deliberation, I am announcing my position on the issue of granting Permanent Normal Trade Relations (PNTR) status to China. I would like to express my sincere appreciation to the hundreds of constituents, colleagues, community leaders, and representatives of groups with a stake in this debate, for sharing their views and answering my questions as they patiently engaged in this process with me. Seldom in my legislative career have I taken an issue more seriously than this one. While I realize that my decision will not please everybody, I hope there is no doubt that every voice and every argument presented to me was given the utmost consideration.
I believe it to be in the best interests of the 19th District of Illinois, and the nation as a whole, that I oppose extension of Permanent Normal Trade Relations to China. I do support China's accession to the World Trade Organization. However, I am convinced that the United States must maintain annual grants of NTR until we have ascertained that China is living up to WTO rules and our own expectations regarding human rights, labor rights, religious tolerance and environmental protection.
China has a long history of failing to live up to its agreements, and Chinese officials have recently indicated they do not intend to abide by certain components of the WTO agreement either. While I hope this will not be the case, I am not comfortable relinquishing bilateral enforcement tools like Section 301 and anti-dumping provisions in favor of a WTO dispute resolution process which is notoriously slow. We must not place ourselves in a situation where American jobs are sacrificed while we wait two or three years for a WTO ruling, only to have no recourse if the ruling is adverse.
Many argue that only through engagement and open trade will we see programs in China on matters of labor rights, human rights, religious persecution, and environmental degradation. If this is indeed the case, then we need not worry, for China will be engaged with the global marketplace through its WTO membership regardless of the outcome of our PNTR vote. Unfortunately, there is reason to doubt this contention. The United States has been trading with China since 1980, and since 1994 we have followed a policy of ``delinking'' human rights from trade policy, based upon the theory that free trade equals greater freedom in society. Yet every year since delinkage conditions in China have worsened, and according to a 1999 State Department report, human rights there have deteriorated markedly.
I represent an agricultural district, and I have seen first-hand the devastation that recent price drops have wrought. I am sympathetic to the need for expanded export markets and other opportunities to improve the farm economy, and if I believed that the China agreement was the answer to agriculture's problems, I may have taken a different position. Unfortunately, several factors lead me to the opposite conclusion. First, as I have mentioned, China has not been a model trading partner in the past, and I remain skeptical that they will follow through with promises regarding agriculture and other products. Second, China is a nation committed to preserving its national independence and improving rural stability, and its agricultural production consistently outpaces demand. China maintains nearly a three-to-one ratio of agricultural exports to imports, and I worry that China's objective is to improve its domestic distribution system, rather than bring in more agriculture products when they already have surpluses. If this is the case, our agreement with China will bring minimal benefits to struggling farmers in Illinois.
The argument has been made that increased trade with China will obviate the need for federal assistance like the $8.7 billion in emergency farm aid that Congress provided last year. However, even under the rosiest scenario, the total value of U.S. exports of wheat, rice, corn, cotton, soybeans and soybean products to China would increase by $1.6 billion dollars in 2005 when the agreement is fully implemented, and the average annual value of U.S. exports from 2000 through 2009 would increase by $1.5 billion dollars. The administration estimates that net farm income would be higher by $1.7 billion in 2005, and higher by an annual average of $1.1 billion per year through 2009, although higher feed costs and reduced government payments would offset part of the increase.
These potential increases, even if fully realized, fall billions short of the assistance that has been required in recent years to help farmers weather hard times, suggesting to me that China's export market is not the panacea it has been portrayed to be. I recall that during the NAFTA debate, proponents of the agreement made similar arguments about the importance of new export markets for American agriculture. Yet since NAFTA's passage, our farmers have experienced the worst farm crisis in decades.
Furthermore, any decreases in federal aid to farmers would likely be negated by the increased funding needed for dislocated worker programs like Trade Adjustment Assistance. Since 1994, in my district alone, over 2200 workers have qualified for TAA. If PNTR is granted, many American companies will undoubtedly find it more cost-effective to shift production to China. This will mean even more displaced workers
(and more federal aid) in a district like mine, where manufacturing jobs often provide the highest wages and best benefits in the area. Even ardent backers of PNTR admit that while on the whole they believe the agreement will benefit the American economy, some sectors will suffer and some areas will lose jobs.
Finally, although the United States and China have reached agreement on many issues, the Government Accounting Office warns that some remain incomplete. Several negotiating objectives have yet to be reached, and of those that have, some remain to be finalized. In addition, China has not yet reached agreement with the European Union. I am reluctant to vote to forever relinquish congressional powers of review when we have not been presented with a complete agreement, and when even the nature of the remaining issues has been classified as a national security matter.
Many of my concerns can be answered by taking a cautious approach to this issue, welcoming China into the WTO without granting PNTR and sacrificing our bilateral enforcement mechanisms. With all due respect to those who have sought to convince me otherwise, I firmly believe that this approach is viable. I am convinced that our 1979 Agreement with China ensures for American farmers and manufacturers the identical tariff and other benefits that China must give all other WTO nations once it enters that body. Therefore, we need not fear that our goods will be at a competitive disadvantage to similar products from other member nations. Meanwhile, we will maintain our ability to respond to non-compliance or bad behavior on China's part with our own enforcement tools which have proven effective in the past. Our already large trade deficit with China is expected to widen under this agreement, and we must be able to act quickly and effectively to protect the interests of American producers, businesses, workers and consumers.
I remain committed to working towards a free and open trading relationship with China, one that promotes growth and change in that nation without shortchanging American interests. However, I do not believe that we have reached an agreement that will accomplish these goals. The very definition of PNTR is that it is permanent. Given the many doubts and concerns I have not been able to reconcile, I am simply not prepared to support the irrevocable sacrifice of America's leverage and oversight on such a critical issue.
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