On Wednesday, 24 of May this year, the US House of Representative approved the Bill to grant China Permanent Normal Trade Relations (PNTR) after many hours of highly charged emotional debate.  This deal affectively ends the 20 years of annual congressional reviews of trading status between the two Superpowers and help pave way for China to enter the World Trade Organisation (WTO).  It was a close margin of 237-197, without Senate approval.

The key issues, which have heavily impacted on the decision to grant PNTR by the Americans are: the overall benefits to the United States, Human Rights and Religious Freedom (within China), 

The Overall Advantages and Disadvantages to China and the United States of America.

Overall, the bill permanently guarantees Chinese goods the same low-tariffs given to many but a few of United States trading partners, however, the terms of this agreement is subjected to annual human rights reports detailed by both houses of Congress and from the administration. China would, in exchange, provide American businesses with unequal access to its market.

Under the PNTR agreement, China would cut average tariffs from 24 per cent to 9 per cent on U.S. priority goods, high-technology goods and agricultural products.  It also permits access virtually across every economic sector.  Market access is given for U.S. corn, cotton, wheat, rice, barely, soybeans, meats and other products. So is full trading rights to foreign firms, to which the state middlemen are eliminated and markets for telecommunications, insurance, banking, securities, audio visual, and professional services is to be given as well.  Others are to expand the number of foreign movies shown, open Internet sectors to foreign investment and finally accelerate reduction of auto tariffs. 

The U.S. business community gave its full support after foreseeing the tremendous future benefits.  It estimates that the US stands to lose nothing but boost export by $13 billion for the next five years.

The main bolt of the business community’s arguments centres on the belief that failing to grant China PNTR would deprived the United States of virtually all market access that is granted to other trading partners plus the lost of the reductions of tariffs on U.S. goods.  On a competitive edge wise, it would leave U.S. out to dry since their ability to import and distribute their goods using their own distribution channels is currently been denied.  And also approval to the Bill would effectively do away with the need for U.S. business to set up local factories in China to sell product through Chinese partners.

Further, not permitting China PNTR would allow Asian, Australian, Latin American, Canadian and Europeans take advantage the world’s largest markets at the detriment of U.S. 

For the benefit of China and the world, the Bill will help promote reforms within China and create a safer place for the World. It will obligate and empower China’s leaders to further push their reform toward a more market driven economy.  This will affectively expose China to global competition and thereby force China to reform or go out of business. Chinese as well as foreign businesspeople will gain the right to both export and import without the need for government middlemen. 

Another result will be to accelerate removal of government intervention from the lives of China’s people.  China’s people will have greater autonomy in regard to how they live their lives.  This is achieved by the provision of telecommunication services and tools, which will enable the Chinese to gain access to information and ideas and as they become richer, and aware to different ways of life, they will push for change.

In relation to the rule of law, the Chinese government will be obliged to publish laws and regulations and subjects material decisions to review of an international body.  This will, in affect strengthens the rule of law in China and increase the possibility that it will play by the rule of international laws as well. Echoing Martin Lee’s sentiment saying that “the participation of China in the WTO would not only have economic and political benefits, but would also serve to bolster those in China who understand that the country must embrace the rule of law.” Mr Lee is the Chairman of the Democratic Party of Hong Kong.  Not only that, it would pave way for about 500 million Chinese to participate in village level elections.

If the Bill did not passed, it would fail to strengthen the United States’ current ability to enforce it’s fair trade agreements and fail to protect U.S. agricultural and manufacturing base from imports surges.  Prior to debate of the bill, the Democrats and the Republican in the Congress raised concerns of issues pertaining to unfair trading practices and as such, their due concerns precipitates stringent clauses in the documents prepared for China’s access into the WTO. The clauses were: 

A China-specific safeguard.  In addition to current anti-competitive measures, for the first 12 years, China has to also agree to a country-specific safeguard.  This grant the United States power to take action in case of increased imports of a particular product arriving from China that is going to or likely to cause market disruption in the United States.

Strong anti-dumping protections.   This deal includes an arrangement permitting the U.S. to employ specific methods, designed for non-market economies (such as China), to contravene dumpling applicable for 15 years after China’s accession into WTO.

Requiring China to eliminate barriers to U.S. companies that can cost American jobs and technology.  For the first time, Americans will have a mean, structured within the WTO agreements to combat such measures as forced technology transfer, local content requirements and other practices that is intended to take away American jobs.  Simply, the U.S. for the first time will have the right to export their product directly to China instead of setting up factors to produce or manufactured their products in China.

Provision in WTO rules that allow the U.S. rights to block imports of goods made under conditions prohibited under U.S. laws. Such as goods made under forced labor and to remove benefits including NTR in the interest of national security. 

Unions, Human Rights and Religious Freedom

Unions and Human Rights groups opposed to granting China PNTR declaring that it was a “sell out” to small businesses and the manufacturing industries and could cost hundreds of thousands of Americans their jobs while at the same time help one of the world’s most repressive countries become rich.

The Economic Policy Institute, a union oriented research group says “…Recent trade flows with China suggest that the U.S. trade deficit with that country is likely to double in the near future if China is allowed into the WTO.”  They also estimated that America stands to lose more than “600,000” jobs, most of them in the manufacturing industries.”  As a Democrat, Ron Klink puts it; “…We’ve lost 22,000 jobs to Mexico since NAFTA (North America Free Trade Agreement).  How much worse it be when we’re asked to make the same sacrifice with a country much larger than Mexico?” The reality is, under this agreement, China would not be given any more market access to the U.S. then it already has. Instead China, under PNTR will be forced to open its markets, which means this deal will create more jobs for U.S.. 

Similarly other sentiments were: the deal would allow in a flood of Chinese products, harming U.S. producers of similar goods and as China sells the USA more imports, jobs are lost here.  Human Rights issue in general is another major reason, which determined a narrow margin of votes. Kasich, the House Budget Committee chairman says, "I'm very troubled by the Chinese economy, its political system and how it treats political and religious dissidents.” Others like Nancy Pelosi, a Democrat of the House of Representatives said that China’s regime is brutal and repressive especially towards Tibet and that its sales of arms to “rogue states…represent a challenge…” to America’s moral conscience and is a threat to global security.  This is especially true when “the Central Intelligence Agency and the Pentagon have been giving congressmen briefings that explain, in detail, how China is using its export earnings to upgrade its weapons systems”. Says the Economist.

Finally, Human Rights specifically in relation to religious freedom is also another major factor influencing the vote against PNTR. In an U.S. Commission on International Religious Freedom on religious persecution in China concluded that the in the recent years "…serious deterioration in religious freedom…" has occurred says Lawrence Goodrich, commission spokesman.  The findings was hoped to have negative impact on the Congress’s decision to grant China PNTR.

There are two issues here, first is United State’s internal decision to grant China PNTR and China’s entry in the WTO. Though they maybe related but China will enter the WTO regardless of whether the U.S. grant China PNTR. 

It estimates that the US stands to lose nothing but boost Granting China PNTR is not going to produce anything solid and beneficial for China’s people except force open China’s enormous market to U.S. business interests since America is not been asked to reduce its tariffs for Chinese goods one single bit. The only difference is the United States will ends annual congressional reviews of trading status, leaving China with a permanent trading status. Instead the U.S. stands to gain as much as $13 billion for the next five years. 

What will happen is that China’s enormous market will be opened by the U.S., forcing the Chinese to cut tariffs to more than half, expand its agricultural market access, open its finance, telecommunication and other professional sectors.   The main reason the U.S. business community gives for granting a PNTR is that, trade with the U.S. through its conditional economic and ethic clauses, will effectually pave ways for international standards of business practices and development of moral (such as Human Rights). The only thing here that is going to happen is that U.S. is gaining access to China and what ever else is wishful thinking.    A lot of other things can happen to. 

Lets step back a little and focus on the needs of China’s people.  One possibility of giving America’s unequal access to China’s market would result in the lost have much needed capital for furthers infrastructure development. If that is the case, the Chinese government instead of spending the surpluses on further development of the country, China is now spending it on American goods and services. Much money is needed for research and development in order to get China’s economy into an international standard or in a position to compete with the developed economies of the world. For now, China’s economy is only at its foetal stages of its development. 

The economy of China is not very complex and its primary incomes come from export earnings, which is also a primary mean to which sustains its current economic development.  The majority of its earnings, like many of the wealth of the “Asian Tigers,” except Japan, come from cheap labor, via manufacturing. In order for China to compete with the Western world, she must utilise her vast pool of intellectual resources available to her. To does this China needs to spend money on research or even buy the “know how” and patents from the West so it can produce goods and services superior to or of the same standard made by the West and Japan.  Her goal is simply to eliminate the poor image associated with the “Made In China” label. If she can achieve this, there are two likely consequences for the Chinese economy. First, it would enable the people of China to create goods and eventually services of world standard at a cheaper price so that she can sell to the domestic market, and secondly this would enable them compete both domestically and internationally with foreign goods and services.  This will not give an economic advantage to people of China but merely gives China an equal footing with the developed economies of the world.  But also, buying the “know how” would endow the Chinese people with new skills and technology that could only enrich China materially and intellectually, which would pave ways for further innovation. 

Before China permits the U.S. within its walls, it must ensure that its economy is at a competitively equal par with that of its competitor, and not enter an agreement that hopes market forces will perhaps shape China’s economy into material and intellectual development, which is what this PNTR effectually hopes to achieve. 

The other part of the economic success equations for China relies on how the well the Beijing governs the people of China.  As China pushes towards an economic driven society, instead of a Communist society, what it in effect is doing is fostering, nurturing and encouraging the enlargement and development of the Middle and Upper-class and as larger these entity becomes, the more affluent China will become.  The U.S., Europe, Japan and Australia are good examples of this.  All these countries have one thing in common, their countries has enormous Middle-class population.  In order for China to achieve this, and eventual economic wealth, it must find superior ways to handle and foster this development. This does not mean that wealth is achieved at the detriment of the poor, on the contrary, the role of the Government in the future as it is now, is to provide education and jobs and opportunities for the poor and disadvantage to become economically mobile.  Therefore contributing to the growth of Middle and Upper-classes.

To do this, the Government of China must review how it sees as its responsibility towards the State and the position of its Government within society.  It must source out ways and methods to which might better manage China.  It must implement a system which, in Liu Ji’s opinions, “… addresses the opinions of the experts, general people and politicians at the same time.”  Liu Ji is a writer for of the China Daily newspaper.

This “system” is of crucial importance when dealing with the economy. When China conducts talks with the Government of the United States, China is in fact speaking to the mouth piece of the  “opinions of the experts, general people” of United States, not representing them but in actual fact presenting their actual thoughts and conscience.  But they also represent their thoughts as well.  On the other hand, when the United States is talking with the Government of China, is it actually talking on the Government’s own behalf, which represents it self and its own expertise and interests, and not the actual desires of their own people.  This is also true when they govern the country, without the opinions of their people they would lack expertise, which leads to inadequate laws and policy making. 

The Government of China must see its position in the light of the truth.  That is, they are to Govern and not to rule.  The founder of modern China has done away with thousands of years of monarchic rule and so should the current system.  It must move away from the “one party, one leader, one doctrine” mentality.  No one group of people can have the intelligence and power of the whole of a country. After all, no man is so great that he is greater than a country, he is only so great that he is greater than another man is. The day when China sees this reality and realise the economic and intellectual power of Democracy, and make ways towards is the day when China will enter its second unsurpassed Golden Age of its civilisation, where it’s wealth is both material and intellectual is beyond compared. 

There is not only a need to democratise its institutions but also there is a need for the China to create means to keep the Government in check.  Accountability to their people is of utmost importance.  This will enable the Government to develop and maintain public trust and the integrity. 

Its media and education institutions must never be under the jurisdiction of the Government, it must be encourage to form and develop its own unfeathered opinions, and in matter of fact should become a political force in it self that influence Government’s policy making process. 

It must also encourage the development of both public and private media companies, to produce newspapers and other mediums so to present differing points of views about any issue.  They too should be encouraged and develop individual political stands and represent the medium between the public and the government, depending on their political stands. The media is also a fantastic tool used to educate people and keep them updated with what is happening around the world. There is also another important role for the media that is to expose unethical, fraudulent, or corrupt business officials to people. 

In the light of newspapers companies, they must develop codes of conduct which, prohibits companies or individuals from buying out stories and keeps the pubic in the dark about issues of public interests, such as corruption.

Overall, a Trades Practices Act must be created in order to form a code of practice and a standard of practice for businesses. In addition, Consumer’s Protection laws must be created to protect people from fraudulent businesses and to force business to treat the consumers with respect and raise standards of business practices.

These accountability measures are not placed at the whim of the Government, they must be made a compulsory part of any good government.  It will not only create credibility and integrity for the Government but it would also keep government officials from misconducts within the government.

No, for all these reasons mentioned, I do not support China’s acceptance of the United State’s PNTR.  For the simple fact that China’s economy is not in an equal footing with America to compete with it.

When it comes down to it, the Government are there to handle the direct interests of the people and the people’s money: taxes.  That belongs to the public and that is why the is a great need for governments to be accountable with their goverments.

John Lam