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These records pertain to China's Most Favored Nation status.
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China MFN [5]
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China MFN [5]
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These records pertain to China's Most Favored Nation status.
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Originally Processed With FOIA(s):
FOIA Number:
2012-1098-F
2012-1098-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Legislative Affairs, White House Office of
Series:
Dyer, James W., Files
Subseries:
OA/ID Number:
08451
Folder ID Number:
08451-009
Folder Title:
China MFN [5]
Stack:
Row:
Section:
Shelf:
Position:
G
20
11
6
1
Withdrawal/Redaction Sheet
(George Bush Library)
Doc. No. / Type
Subject/Title
Date
Restriction
Classification
01a. Memorandum To: President Bush From: Brent Scowcroft
n.d.
(b)(1)
Re: Reply to Senator Baucus' Letter on China MFN (1 pp.)
01b. Letter
To: Senator Baucus
n.d.
(b)(1)
Re: China's MFN Status (4 pp.)
01c. Paper
Re: Human Rights/Trade and Economic Issues (15 pp.)
n.d.
(b)(1)
01d. Letter
To: Senator Dole
n.d.
(b)(1)
Re: China's MFN Status (4 pp.)
01e. Paper
Re: Human Rights/Trade and Economic Issues (15 pp.)
n.d.
(b)(1)
01f. Memorandum
To: Brent Scowcroft From: Robert Pearson
7/12/91
(b)(1)
S
Re: Reply to Letter from Senator Baucus and Others (1 pp.)
01g. Letter
To: Senator Baucus
n.d.
(b)(1)
S
Re: China's MFN Status (8 pp.)
01h. Paper
Re: Trade and Economic Issues (14 pp.)
7/8/91
(b)(1)
02. List
China MFN (5 pp.)
n.d.
(b)(1)
Page 1 of 1
Collection:
Record Group:
Bush Presidential Records
Office:
Legislative Affairs, White House Office of
Series:
Dyer, James W., Files
Subseries:
WHORM Cat.:
File Location:
China MFN [5]
Pinksheet Number:
MB4342
OA/ID Number:
08451-009
Date Closed:
9/24/2012
FOIA/Sys Case #:
2012-1098-F
Re-review Case #:
P-2/P-5 Review Case #:
4887
NATIONAL SECURITY COUNCIL
WASHINGTON D.C. 20506
July 17, 1991
ACTION
MEMORANDUM FOR BRENT SCOWCROFT
FROM:
TIMOTHY CARNEY
SUBJECT:
Reply to Senator Baucus on China MFN
At Tab A is a letter to Senator Baucus and Senator Dole regarding
MFN for China. Our intent would be to hold the letter for
release until 24-48 hours before debate begins in the Senate. We
think debate could begin early next week but so far Senator
Mitchell has not made known his preference on timing.
Concurrence by: Mike Andricos
RECOMMENDATION
That you recommend the President sign the letter at Tab A.
Attachments
Tab I Scowcroft/President
Tab A
Letter to Senator Baucus
Tab B
Incoming Correspondence
Tab II
State Drafts
4887
THE WHITE HOUSE
WASHINGTON
ACTION
MEMORANDUM FOR THE PRESIDENT
FROM:
BRENT SCOWCROFT
SUBJECT:
Reply to Senator Baucus' Letter on China MFN
Purpose
To reply to Senator Baucus and Senator Dole, with copies to the
others on their letter regarding most-favored-nation trading
status for China. Our intent is to forward your response to the
signatories shortly before the Senate begins debate on the
subject, which could be early next week.
Background
The letter Senator Baucus initiated underscores serious U.S.
concerns about Chinese human rights; economic and trade
practices; missile and nuclear technology proliferation; and
general foreign policy. The signatories maintain that revoking
MFN is the wrong tool to effect the imperative need for Chinese
behavior to change. But, they argue for a more active
Administration response in addressing these American concerns.
Your reply, with its attachment, sets forth the philosophy that
strong, targeted measures must be used when necessary; cites a
number of sanctions already in effect; and touches on imminent
discussion of Chinese human rights matters which you plan at the
G-7 Summit. Your letter squarely addresses three issues said to
figure in pre-debate discussion on the Hill by: promising
resolute actions if China does not favorably address our missile
and nuclear nonproliferation concerns; detailing your
instructions to press on China's unfair trading practices
including, specifically, possible further action under Section
301; and affirming U.S. support for Taiwan's accession to GATT
while maintaining a one-China policy.
RECOMMENDATION
That you sign the letters at Tab A.
Attachments
Tab A
Presidential Letter for Signature
Tab B
Incoming Correspondence
CC:
Vice President
Chief of Staff
THE WHITE HOUSE
WASHINGTON
Dear Senator Baucus:
I appreciated receiving your views on the importance of renewing
China's most-favored-nation (MFN) trade status while also seeking
to achieve progress with the Chinese on issues of vital concern
to the American people. We clearly share the same goals. We
want to see China return to the path of reform, show greater
respect for human rights, adhere to international norms on
weapons sales, and practice fair trade. China should contribute
to international stability and not detract from it.
You rightly note that withdrawing MFN would hurt not only
Americans but also the people of Hong Kong and the millions in
China who are working for progressive change. Continuing MFN is
essential to protect American consumers and exporters, and to
support the economic forces that have been driving reform in
China for more than a decade. It is no accident that the process
of reform accelerated with the increase in foreign businesses
operating in that nation. Those who would end political and
economic reform in China have the most to gain if MFN were
withdrawn. It is the economic forces pressing for the loosening
of state control and increased personal freedom that would suffer
the most. Other losers would be the thousands of American
workers and farmers who together produced in 1990 almost $5
billion in exports to China.
Since we started the process of normalizing contacts with China
in the 1970s, there has been strong bipartisan support for the
U.S. -China relationship. Building on the three U.S.-China
communiques, U.S. interaction with the government and people of
China has produced demonstrable progress. That interaction must
continue despite the recent severe setbacks. Nevertheless, I
support the view that strong measures are needed to address our
concerns in China and have not hesitated to use them in a
targeted fashion. To underscore our deep dismay about human
rights violations, I have kept in place a number of sanctions
since the Tiananmen Square crackdown which have affected arms
sales, high-level contacts, U.S. economic programs and U.S.
support for multilateral development bank lending to China.
The U.S. is currently the only nation maintaining its Tiananmen
sanctions and refusing to normalize relations until China makes
substantial progress on human rights. For example, while all our
allies and other World Bank members have supported virtually all
of the last sixteen World Bank loans to China, we have declined
2
to support seven because the loans would not serve basic human
needs.
At the London Summit, we raised China's human rights practices
with our G-7 allies and encouraged them to continue to stress to
China's leaders, as we have repeatedly, the importance that
democratic governments attach to human rights. We made clear
that the U.S. will continue its policy of supporting only those
multilateral development loans for China that serve basic human
needs (BHN), and our view that any non-BHN lending to China help
to promote market-oriented economic reform.
To advance our nonproliferation objectives, I recently authorized
a number of steps aimed at engaging the Chinese on their weapons
transfer policies and making clear our dissatisfaction with
transfers that contribute to regional instability. The Under
Secretary of State for International Security Affairs recently
traveled to Beijing for a detailed discussion of nonproliferation
issues, including our specific concerns about Chinese exports.
He pressed for China's adherence to the Nuclear Nonproliferation
Treaty and the Missile Technology Control Regime, actions I
called for in my commencement speech at Yale University on
May 27. We are pleased with the constructive role China played
in the July 8-9 Middle East arms control talks in Paris. The
Chinese endorsed all the key objectives of my Middle East arms
control initiative (such as efforts to freeze and ultimately
eliminate surface-to-surface missiles and block the production
and acquisition of nuclear useable material). The Chinese also
agreed to work rapidly in follow-on meetings to flesh out the
broad agreements reached in Paris.
At the same time, I have also taken measures to emphasize to
China that the U.S. is concerned about reports of destabilizing
missile-related transfers. In April, I rejected requests for
licenses to export satellite components for a Chinese
communications project because of the involvement of Chinese
companies in unacceptable missile equipment transfers. Just
recently, I approved trade sanctions against two Chinese
companies for that same reason. In addition, I directed that no
further licenses of high-speed computers and no further exports
of satellites to China be authorized until our concerns that
China adhere to accepted international nonproliferation standards
:
are satisfactorily addressed. The U.S. will be coordinating with
other countries in order that these measures not be undercut.
Our experience has demonstrated that such consultations will lead
to effective, multilateral technology transfer restrictions.
I have also instructed U.S. agencies to press vigorously our
concerns about Chinese unfair trading practices. In April, I
directed the U.S. Trade Representative to identify China as a
priority foreign country under the Special 301 provisions of the
Trade Act for failing to protect U.S. intellectual property
3
rights. If China does not make real progress during the 301
investigation, trade action will follow. Beyond intellectual
property protection, my Administration has invited senior Chinese
trade officials to Washington in August for continuation of
consultations begun in June regarding access for U.S. products to
the Chinese market. If these talks fail to produce Chinese
commitments to take substantial measures to improve market
access, the Administration will self-initiate further action
under Section 301 of our trade laws.
We are strictly enforcing the terms of our textile agreement with
China and have already made charges against China's quota because
of illegal textile shipments through third countries totalling
approximately $85 million so far. Following consultations in
July, we expect to make additional charges. If China does not
exert effective control over these illegal shipments, we are
prepared to take additional action against China.
Charges that China exports goods produced with prison labor are a
matter of serious concern. The Customs Service is investigating
these charges. In addition, we have obtained a firm high-level
commitment to prevent the sale of prison labor products to the
United States. We will continue to monitor China's behavior in
this area closely and will strictly enforce relevant legislation
concerning prison labor exports. In particular, I am ordering
the following additional measures: The Department of State will
seek to negotiate a memorandum of understanding with China on
procedures for the prompt investigation of allegations that
specific imports from China were produced by prison labor.
Pending negotiation of this agreement, the U.S. Customs Service
will deny entry to products imported from China when there is
reasonable indication that the products were made by prison
labor. The denial will continue until the Chinese Government or
the Chinese exporter provides credible evidence that the products
were not produced by prison labor.
I am also instructing the U.S. Customs Service to identify an
office to receive information on prison labor exports and
establish procedures for the prompt investigation of reports of
prison labor exports from interested parties. Additional customs
officials will be directed to identify prison labor exports and
aid in uncovering illegal textile transhipments.
Although it is not directly related to China's MFN status, I
share your interest in Taiwan's accession to the GATT. As a
major trading economy, Taiwan can make an important contribution
to the global trade system through responsible GATT
participation. The U.S. has a firm position of supporting the
accession of Taiwan on terms acceptable to GATT contracting
parties. The United States will begin to work actively with
other contracting parties to resolve in a favorable manner the
issues relating to Taiwan's GATT accessing. Because China, our
4
tenth largest trading partner, could also make an important
contribution to the global trading system, I will seek to have
the Chinese Government take steps on trade reform so that China's
GATT application can advance and its trade practices can be
brought under GATT disciplines through the Working Party formed
for China in 1987. U.S. support for Taiwan's accession to GATT
as a customs territory should in no way be interpreted as a
departure from the long-standing policy of five administrations
which acknowledges the Chinese position that there is only one
China, and that Taiwan is part of China.
In sum, therefore, I am prepared to address the concerns you and
your colleagues have identified, and I am doing so. But
discontinuing MFN, or attaching conditions to its renewal, would
cause serious harm to American interests and would render futile
pursuit of the initiatives I have outlined, which are discussed
in greater detail in the attachments. Working together, I
believe we will best protect America's interests by remaining
engaged with China and the Chinese people.
Sincerely,
Attachments:
Part I - Human Rights
Part II - Nonproliferation
Part III - Trade and Economic Issues
The Honorable Max S. Baucus
United States Senate
Washington, D.C. 20510
PART I: HUMAN RIGHTS
Human rights concerns have been at the heart of our relationship
with the PRC since the tragic events of June 1989. Every high-
level meeting since that time has at least touched on human
rights issues, and several -- such as the December 1990 visit to
China by Assistant Secretary Schifter -- have been devoted
exclusively to them. We have consistently stressed to the
Chinese leadership that there can be no return to the kind of
relationship we enjoyed before 1989 without substantial
improvements in China's human rights practices.
Our overall approach on human rights issues has consisted of:
Public expression of concern
President Bush condemned the brutal suppression of
demonstrations in Tiananmen Square in June 1989, the first
world leader to do so. He declared May 13, 1990 a National
Day in support of Freedom and Human Rights in commemoration
of the 1989 demonstrations, and issued another statement to
mark the anniversary of the crackdown in 1991.
--
In our human rights reports for 1989 and 1990, we were fair
but hard-hitting, and as accurate as available information
would allow. These reports have drawn high praise from
human rights groups, and harsh condemnations from the
Chinese government.
--
The State Department issued a statement on January 9, 1991
condemning the trials of nonviolent dissidents.
--
In April 1991 the President met the Dalai Lama at the White
House to demonstrate our respect for His Holiness'
nonviolent approach to conflict resolution and our concern
for human rights problems in Tibet.
Suspension of bilateral programs
On June 6 and June 20, 1989, the President announced the
suspension of a number of bilateral programs and changes in U.S.
approach to multilateral issues until the human rights climate in
China improved. Those suspensions generally remain in effect.
--
A multitude of high-level exchange visits that would
normally have taken place since 1989 have been canceled.
Only a very limited number of visits at and above Assistant
Secretary level have been approved on a case-by-case basis,
and only when they addressed issues of key concern to the
United States, e.g., like human rights, nonproliferation,
unfair trade practices, and narcotics.
Military exchange visits have been suspended completely.
2
Work on several existing military equipment and technology
projects has been suspended indefinitely.
We have stopped the transfer of military or dual-use
equipment or technology to Chinese military and security
services.
The U.S. sought to postpone all multilateral development
bank loans to China from June 1989 to January 1990. Since
then, we have supported only those loans that serve the
basic human needs of the Chinese people.
We have suspended grants, loans and insurance guarantees to
China under the Trade and Development Program and OPIC.
--
We have worked through COCOM to suspend planned
liberalization of export controls to China.
Engagement in dialogue
Through the few high-level visits that have been authorized, and
through regular diplomatic channels, we have engaged the Chinese
government in an unprecedented continuing dialogue on a wide
range of human rights issues.
--
The Scowcroft-Eagleburger missions of July and December 1989
were devoted primarily to laying out our human rights
concerns and suggesting steps the Chinese could take to
address them.
--
During Chinese Foreign Minister Oian's visit to Washington
in November 1990, President Bush and Secretary Baker
reiterated the need for progress on human rights, and
stressed that human rights is a cornerstone of American
foreign policy.
Assistant Secretary Schifter visited China in December 1990,
the first time our top human rights official has done so.
In sixteen hours of intense discussions with senior Chinese
officials, he spelled out in detail our human rights
concerns in a wide range of areas including accounting of
detainees, release of political prisoners, denial of due
process and fair and open trials, treatment of prisoners,
divergence of Chinese law from international standards,
respect for freedom of religion, abusive implementation of
family planning regulations, and human rights problems in
Tibet. He delivered a list of 151 representative cases of
reported political incarceration, and asked Chinese
authorities to clarify the status of the cases and release
those whose imprisonment violated international norms. He
suggested changes in Chinese laws and judicial processes
that would bring them into conformity with international
standards.
3
Under Secretary Kimmitt in May 1991 reiterated many of the
points made by Assistant Secretary Schifter, and called on
the Chinese government to declare an amnesty for all those
imprisoned for nonviolent political activities. He also
urged the Chinese to implement effectively their claimed
prohibition on export of prison labor products.
Results of actions
Most importantly, the Chinese government has acknowledged the
legitimacy of human rights as a subject of bilateral discussion,
both with us and with other concerned governments. they received
a Congressional delegation devoted exclusively to human rights
concerns in March 1991, and agreed to receive another later this
year. They also agreed to receive human rights delegations to be
sent by the governments of France and Australia. In addition,
they have taken a number of modest but positive steps to improve
the human rights situation in China.
Martial law was lifted in Beijing in January 1990 and in
Lhasa four months later. No part of China is currently
subject to martial law.
Most of those detained after the Tiananmen tragedy were
released by the end of 1989. Chinese authorities announced
the release of nearly 1000 more detainees in 1990, and about
70 have been released so far in 1991. Officials claim that
only 21 still await trial detention in Beijing, and at least
one of these -- labor leader Han Dongfang -- has been
released for medical treatment.
While at least 30 persons have been convicted on political
charges since the beginning of the year, the sentences meted
out to them were generally less severe than those imposed on
similar charges in previous years. THose released without
further punishment included prominent dissidents such as
essayist Liu Xiaobo, journalist Zhang Weiguo, playwright
Wang Peigong, and legal scholar Chen Xiaoping.
Leading dissident Fang Lizhi and his wife, who had obtained
refuge in the U.S. Embassy in Beijing for over a year, were
allowed to leave China in June 1990, and are now at
Princeton.
--
Most investigations of those involved in the 1989 protests
have ended, and most of our Chinese contacts report that the
oppressive atmosphere of 1989 has lifted significantly.
--
The Chinese have ceased the most odious forms of harassment
of Chinese students and scholars in the U.S.; harassment was
a serious problem in 1989 and early 1990.
Relatives of many, though not all, overseas dissidents have
been allowed to leave China and join them abroad. In some
4
of the remaining cases that we have raised with Chinese
officials, passports have subsequently been issued.
Several released dissidents, including Tiananmen hunger
striker Gao Xin and former Arizona State student Yang Wei,
have been allowed to leave the country.
Chinese authorities have undertaken to stop the export to
the U.S. of products made in Chinese prisons. We will
continue to monitor this situation closely, but it appears
that the Chinese government is taking increasingly specific
steps to enforce their prohibition on export of these
products.
--
In response to concerns expressed by Administration
officials and Members of Congress, the Chinese have provided
useful new information on the status of persons reported
detained for religious activities.
--
Economic reforms have resumed, in some cases matching or
exceeding levels reached before 1989. Some limited
political reforms, in important but relatively
noncontroversial areas such as the personnel system, have
continued. An Administrative Procedure Law that became
effective in October 1990 for the first time enables Chinese
citizens to sue abusive officials.
There are indications that further progress may be in the offing.
We are continuing to press the Chinese government to release all
remaining detainees, to commute the sentences of those nonviolent
dissidents already convicted, and to allow the departure of the
remaining relatives of overseas dissidents who wish to leave. We
are hopeful that a combination of dialogue and specifically
targeted pressure will lead to further movement on these and
other remaining issues of concern. And in the longer term, we
are confident that the momentum toward greater freedom and
democratization in China, built up during the decade of reforms
and dramatically reflected in the 1989 demonstrations, will prove
irreversible.
5
PART II: ADMINISTRATION'S ACTIONS WITH RESPECT TO
PROLIFERATION CONCERNS
The United States is engaged in a high-level dialogue with the
Chinese that began early in our relationship. Looking at the
broad trends in China's nonproliferation policy since
normalization in 1979, it is clear that our dialogue has paid off
in important areas, demonstrated by China's evolution toward
international consensus on nonproliferation in areas of great
importance to us. For example, China, which once held an
antagonistic view of multilateral controls on nuclear exports,
joined the IAEA in 1984 and sent observers to the Nuclear
Nonproliferation Treaty Review Conference in 1990.
Middle East/South Asia
China's support for the Middle East arms control initiative is
another case in point. China's participation in the initiative
is a positive step that will strengthen international
nonproliferation efforts and indicates China's resolve to
contribute to efforts to attain stability in the Middle East. In
addition, China's willingness to participate in multilateral
efforts to reduce tension in South Asia will be crucial to
establishing stability in that volatile region.
Moreover, we have seen Chinese arms sales restraint in some areas
where we have vital interests. For example, to the best of our
knowledge, apart from the 1987/88 sale of missiles to Saudi
Arabia, China has not delivered medium-range missiles to the
Middle East. It is clear that in other specific cases China has
taken international concerns into account and declined proposed
missile exports to prospective buyers.
Underscoring Our Concerns
It is because serious concerns remain that we want to maintain a
constructive nonproliferation dialogue with Beijing. We do not
intend to ignore current problems, but isolating China by
dismantling the framework for our relations is not the way to
advance our nonproliferation objectives.
We have the means available to underscore our concerns where
there are differences in our approaches to nonproliferation and
we have used these legislative and executive branch tools. For
example, we have imposed trade sanctions mandated by the National
Defense Authorization Act on Chinese entities involved in
missile-related activities. We have also announced the
Administration's decision that, pending progress toward our
nonproliferation objectives, we will not license high speed
computers and will not issue further waivers of legislative
restrictions on satellite exports. These new sanctions have been
imposed in addition to the existing sanctions announced
immediately following the June 1989 assault on Tiananmen and
amplified by Congress in the Department of State Authorization
6
Act for FY 1990-1991. Moreover, we have not certified China
under the bilateral agreement for nuclear cooperation that took
effect in 1985.
Our policy mix of sanctions and cooperation at any given time is
necessarily dependent on Chinese behavior. We are encouraged by
China's indication in June that it is reviewing its policies with
respect to Missile Technology Control Regime (MTCR) and the NPT.
We seek China's adherence to the NPT and the MTCR guidelines and
will encourage the Chinese to take concrete steps toward
adherence to the key multilateral standards for international
behavior established by these institutions. The Administration
will continue to use the legislative authority that already
exists and will take resolute action if the Chinese do not
address favorably our nonproliferation concerns.
7
PART III: TRADE AND ECONOMIC ISSUES
The Administration is committed to achieving with China the same
goals that have guided our trade policy with all other countries.
We seek open markets and the opportunity for U.S. firms and their
products to compete on fair and equal terms. To achieve these
goals, and realize the principles of equality, mutual benefit and
non-discrimination set forth in the U.S. -China Bilateral Trade
Agreement, this Administration has pursued a policy of
negotiation and engagement on trade issues with China. In
particular, the Administration has sought to improve U.S. access
to China's marketplace; to bolster Chinese protection of
intellectual property; to end fraudulent practices by Chinese
textile exporters using false country of origin declarations;
and, to induce Beijing to undertake the economic and trade
reforms required for membership in the GATT.
Reciprocal MFN tariff treatment underpins our ability to work
constructively with the PRC. China's desire to retain access to
the U.S. market has enabled us to engage Chinese leaders even
during periods of tension. We believe that discontinuing MFN, or
attaching conditions to its renewal, would cause serious harm to
our trade interests and erode our ability to influence China's
behavior on key trade issues.
The Past Decade of Bilateral Trade Relations
After decades of adhering to an import-substitution strategy that
focused on minimizing China's reliance on outside sources of
machinery and equipment, China began in the 1980's to seek
outside sources of these goods. It also has increasingly drawn
on foreign technology, expertise, and funds by actively
encouraging joint ventures.
China's opening to the outside world has helped transform its
economy, bolstering reform-oriented sectors that are not directly
controlled by the central government. For example, the state
sector now produces just over half of China's industrial output;
in 1978, its share was 78 percent. China's dynamic rural
industries, which are privately and collectively owned, have
burgeoned. There are 30,000 foreign-invested ventures now in
China, with a total contracted value of $40 billion. The impact
of China's open door has been particularly pronounced in the
southern and coastal provinces, where 90 percent of the foreign
investment and more than three-fourths of China's trade
activities are located. This region, in turn, has become the
primary engine of economic reform in China largely as a result of
the introduction of market concepts to Chinese employees of joint
ventures and to citizens engaging in commercial exchanges with
the West. The economic autonomy fostered by this interaction
contributes to increased political and even individual self-
determination.
8
The United States has been a vital partner in this
transformation. Following Congressional approval of the
bilateral trade agreement, the United States and China
established formal trade relations and reciprocally granted most-
favored-nation (MFN) status in 1980. Growth in our commercial
ties has helped to change China and to bring it into the global
trading system. Since the resumption of normal trade relations,
U.S.-China two-way trade has increased almost 770 percent, from
$2.3 billion in 1979 to over $20 billion last year.
-- We are now China's second-largest trading partner and its
largest export market.
--
China is our tenth-largest trade partner, up from fifteenth
in 1981.
--
Over 1,000 U.S. firms have invested more than $4 billion in
China and another $5 billion in Hong Kong related primarily
to trade with the PRC.
--
In 1990, the United States exported $4.8 billion worth of
goods to China, including:
--
$749 million worth of aircraft
--
$544 million worth of fertilizer
--
$512 million worth of grain
--
$281 million worth of cotton yarn and fabric
--
$273 million worth of chemicals
--
$264 million worth of electric machinery
--
$238 million worth of wood and wood pulp
--
$227 million worth of scientific instruments.
Commercial relations with the United States have exerted positive
influences on China's business and economic practices since 1980.
China has shifted away from total reliance on a strongly
centralized economy, shown greater tolerance for experimentation
with market mechanisms to regulate its domestic economy, and
decentralized and liberalized its foreign trade practices.
Regression in China's Trade Policies
China's opening to the outside world has not been smooth. Over
the past decade, attempts to accelerate the implementation of
market-oriented reforms have been followed by Beijing's
recentralization of control, as concern about the country's
ballooning trade deficit led Beijing to step in to regain some of
the trade authority it had relinquished.
Moreover, throughout the period since the normalization of trade
relations and the granting of reciprocal most-favored-nation
trading status in 1980, China's web of barriers to imports has
made it difficult for many U.S. exporters to gain access to the
Chinese market. U.S. firms have also had difficulty securing
protection for their intellectual property.
9
U.S. trade negotiators have long been engaged with the Chinese
Government, both in bilateral negotiations and in multilateral
consultations at the GATT held to review China's application for
membership. We have sought to ensure that bilateral commercial
relations develop in accord with the principles that underlie our
bilateral trade agreement: equality; mutual benefit; and
nondiscrimination. From 1979 through 1987, Chinese authorities
made some progress in reducing nontariff barriers to imports, in
improving transparency, and in protecting the intellectual
property of foreigners.
This trend has been reversed over the last three years.
--
Since 1988, Chinese trade policies and practices have become
more protectionist, nontariff barriers to imports have
proliferated, and the trade system has become less
transparent. These policies undoubtedly contributed to a 17
percent decline in U.S. sales to China in 1990. China was
the only major foreign market for U.S. goods and services in
which our exports declined in 1990.
--
Despite intensive bilateral negotiations with Chinese
authorities since the USTR in 1989 placed China on the
"priority watch list" of countries providing inadequate
intellectual property protection--including three rounds of
meetings over the past five months--China has failed to live
up to the commitments contained in the bilateral Memorandum
of Understanding (MOU) signed in May 1989.
At the same time, other problems have developed in our bilateral
trade relationship. For example, to bypass U.S. textile and
apparel quotas, Chinese exporters have increasingly resorted to
shipping these products to the United States via third countries
using false invoices and counterfeit visas. Also of concern to
us has been the apparent lapse in China's commitment to economic
and trade reforms that would bring the country in line with the
GATT's free-trade principles. China's reassertion of central
control over the past few years has called into question its
willingness and ability to undertake the obligations that would
be required of China as a contracting party to the GATT.
Steps the U.S. Government Has Taken and Will Take to
Address Bilateral Trade Problems
In six key areas of our bilateral trade and economic relations,
:
the Administration has taken steps to resolve trade problems. We
are prepared to do more.
On Market Access
--
Beginning in the fall of 1990, the Administration
resumed sub-cabinet level meetings with the Chinese,
that had been suspended since June 1989, to secure
Chinese actions to reverse the growing list of new
protectionist measures.
10
In April 1991, the Administration formally set in
motion a market access initiative that continued with
the visit to Beijing, in mid-June, of an interagency
delegation to discuss market access issues. In
meetings with senior Chinese officials, U.S. Government
officials raised nine types of market access barriers,
including: the lack of transparency in rules and
regulations; the expansion of import licensing
requirements; the use of import substitution policies;
the proliferation of import bans and quotas; the growth
of standards, testing, and certification requirements,
including discriminatory "quality standards" procedures
for imports; the high level of many import tariffs; the
unnecessary use of certain phytosanitary regulations;
the uncertainties regarding government procurement and
tendering regulations; and the lack of information
regarding China's major development projects.
The Administration has proposed holding another round
of market access consultations in August 1991. If that
round of negotiations fails to yield substantial
commitments from the Chinese authorities to dismantle
market access barriers, the Administration will self-
initiate Section 301 action to address those barriers
the removal of which offers the most potential for
achieving U.S. trade policy objectives and increasing
U.S. exports.
On Intellectual Property Protection
On April 26, 1991, USTR identified the PRC as a
priority foreign country that denies adequate and
effective protection of intellectual property rights.
Accordingly, on May 26, 1991 USTR initiated a Special
Section 301 investigation on the basis of four problem
areas: (1) inadequate copyright protection, (2)
inadequate patent protection, (3) inadequate trade
secret protection and (4) ineffective enforcement of
trademarks. Consultations with the Chinese are
ongoing. The first round of consultations under the
Section 301 investigation occurred in mid-June and a
second has been proposed for August.
The deadline for making a determination under Section
:
301 is November 26, 1991. This may be extended for
three months if China is making substantial progress in
drafting or implementing measures that will provide
adequate and effective protection of U.S. intellectual
property rights. At that time, the USTR must determine
whether the acts, policies and practices of the PRC are
actionable under Section 301 and what retaliatory
action, if any, is appropriate.
11
--
If the consultations fail to produce adequate and
effective protection of intellectual property rights,
the Administration will take retaliatory action.
On Textile Transhipments
--
The U.S. Customs Service has been vigilant in
documenting cases of Chinese textile transhipments over
the past year.
--
In August 1990, USTR held consultations with Chinese
authorities on the transhipment issue. Additional
consultations took place in November 1990, March 1991,
and May 1991.
--
The U.S. Government "charged" China's quotas for goods
that were sent to the United States under false country
of origin declarations valued at over $85 million.
--
China has begun to take actions to curtail textile
fraud since the December charges were made. For
example, it issued regulations prohibiting reexports
through a third country to countries that have signed
textile agreements with China. Further, the Chinese
Government has issued provisions for the punishment of
those who violate the regulations.
--
The Administration has prepared more charges valued at
about $14 million that we anticipate will be levied
after consultations with China next month.
--
The Administration will increase the number of U.S.
Customs officials dedicated to investigating
circumvention.
--
If transhipment persists, we will be prepared to take
additional action against China.
On Forced Labor
--
The importation of goods produced with forced, convict
or indentured labor is prohibited by 19 USC Section
1307, which also directs the Secretary of the Treasury
to prescribe regulations for enforcement of the
provision. The Secretary of the Treasury, under 19 CFR
Section 12.42, has delegated to the Commissioner of
Customs, authority to determine that a class of goods
is the product of forced labor and exclude those goods.
--
Customs has been investigating imports alleged to be
the product of forced labor in China. Customs has
interviewed emigres about forced labor practices in
China. Customs is also analyzing import samples to
determine if they match the descriptions provided by
the emigres and others. Additional special agents have
12
been detailed to Hong Kong to assist in the
investigation.
Although the letter from Senator Baucus and fourteen
co-signers did not specifically address the issue of
prison labor imports, appropriate action is called for
to fulfill the intent of existing law. The
Administration therefore proposes to negotiate a
memorandum of understanding with China on procedures
for the prompt investigation of allegations that
specific products exports to the U.S. are being
produced by prison labor.
--
Pending negotiation of the MOU, Customs will
temporarily embargo specific products from China when
there is reasonable indication that they are made by
prison labor. Embargoes will be lifted only after the
Chinese Government or the Chinese exporter provides
credible evidence that the products are not produced by
prison labor.
Multilateral Lending to China
--
The G-7 consensus, led by the United States, was
successful in prohibiting all MDB lending to China from
June 1989 to February 1990 in response to the
international outcry against the crackdown by the
Chinese authorities at Tiananmen Square.
--
From February 1990 to July 1990, the G-7 consensus
supported a gradual resumption of World Bank lending to
China for projects that clearly met basic human needs
(BHN) The consensus held firm and actively prohibited
other loans from Board consideration. Only five loans
(totalling $590 million) were approved in WBFY 1990.
This is substantially less than pre-Tiananmen Square
levels of World Bank commitments to china, which were
$1.4 billion in WBFY 1988 and $1.3 billion in WBFY
1989.
--
At the Houston Summit in July 1990, several G-7
countries decided that China's long-term development
needs argued for lending outside the BHN limits favored
by the United States. Accordingly, the G-7 Houston
Summit Declaration of July 1990 on MDB lending to China
expanded the boundaries of permitted MDB lending to
China to include loans which were environmentally
beneficial or which supported market-oriented economic
reform. Only BHN loans were considered by the World
Bank Board until December 4, 1990 when the market
oriented economic reform loan for Rural Industrial
Technology was approved by the Board. On November 29,
1990, the ADB approved its first loan to China since
Tiananmen Square, Agricultural Bank Project, which the
U.S. did not support. Despite the approval of
infrastructure project loans by the World Bank and the
13
Asian Development Bank, the U.S. has and will continue
to withhold support on all loans that do not meet BHN
criteria.
On GATT Accession
--
Since China applied for GATT membership in July 1986,
the United States has been a leading participant in the
collective efforts of major GATT Contracting Parties to
develop terms for China's GATT participation that will
support the objectives of the GATT and will influence
Chinese Government policies to become, over time, more
compatible with the GATT framework for world trade.
--
U.S. and other major GATT contracting parties' concerns
about China's ability and willingness to live up to
GATT obligations, particularly since June 1989, have
stalled progress in the Working Party established to
consider China's application for membership in the
GATT.
--
The Administration intends to continue to press Beijing
to undertake trade and economic reforms so that its
GATT application can advance and its trade practices be
brought under GATT disciplines.
--
At the same time, the Administration will begin to work
actively with other GATT members to resolve in a
favorable manner the issues relating to Taiwan's GATT
accession. U.S. support for Taiwan's accession as a
customs territory would be consistent both with GATT
legal criteria and the "one-China" policy which
acknowledges the Chinese position and has been adhered
to by successive U.S. administrations.
Taiwan's GATT accession would yield substantial trade
and commercial benefits to the United States and to the
international trading system.
--
Taiwan has indicated that it is prepared to accede
to the GATT as a developed economy, to bind
virtually all its tariffs, and to join the major
non-tariff measure GATT codes.
The Importance of MFN
As highlighted above, the Administration is aggressively seeking
to resolve outstanding bilateral trade issues with the PRC. MFN
underpins our ability to work constructively with the PRC. We
believe that discontinuing MFN, or attaching conditions to its
renewal, would cause serious harm to our trade interests, and
would render futile pursuit of the initiatives outlined above.
It would reduce our leverage in market-access, intellectual
property rights protection, and other trade-related negotiations.
China's desire to retain access to the U.S. market has enabled us
14
to engage Chinese leaders in consultations on bilateral and
multilateral issues even during periods of tension. Because
China is not a GATT member and not bound by GATT trade
disciplines, it is especially important to have many levers that
enable us to engage the Chinese on trade issues.
It would hurt U.S. exporters. If the United Stated rescinds
China's MFN trading status, China will not only discontinue MFN
tariff treatment for the United States, but would likely cease
purchasing billions of dollars of U.S. wheat, aircraft,
fertilizer, cotton yarn and fabric, wood and wood pulp, electric
machinery, scientific equipment, and chemicals. Foreign
competitors, whose goods would be subject to lower tariffs, would
be quick to exploit our departure. Lost shares of China's market
would not easily be regained even if MFN were restored at some
future date.
It would hurt U.S. consumers. Tariffs on the 25 most important
U.S. imports from China would rise from the present average
tariff rate of 8.8 percent to an average rate of 50.5 percent.
These increases would mean sharply higher prices for lower-end
Chinese goods. The costs to U.S. consumers would be largely
borne by poorer Americans, who are primary consumers of low-cost
Chinese products.
It would damage America's reputation as a reliable trade partner.
Our trade competitors will not join us in denying MFN status to
China. Other Chinese trade partners, especially in Asia, urge
that China's MFN status be retained.
It would hurt investors, businesses, and workers in Hong Kong.
Loss of MFN would impede China's integration into the regional
economy, a development crucial to regional stability particularly
as we near the 1997 deadline for Hong Kong's reversion to Chinese
sovereignty. It could cost over 43,000 jobs in Hong Kong and
result in direct revenue losses of approximately $1.2 billion
dollars. Hong Kong's GDP growth could be curtailed by as much as
two percent.
It would set back efforts to bring about meaningful economic
reform in China. A disproportionate burden of the MFN denial
would fall on the primary engine of economic reform in China--the
economies of the southern and coastal provinces. In Guangdong
province, for example, 40 percent of industrial output is
produced for export, half of which goes to the United States.
:
Sectors that fall outside of the direct control of the central
government have been especially important to China's development
as an exporter; one-third of China's exports currently come from
rural (individual and collectively owned) industries and from
foreign-invested ventures. The foreign ties these provinces and
non-state-owned factories developed with the outside world prior
to Beijing's reassertion of central control in mid-1989 enabled
these provinces to weather the austerity program; without these
foreign markets, Beijing's grip would have been all the tighter.
As Beijing's influence over the regions and sectors most closely
integrated into the global economy has diminished, these regions
15
and sectors have become increasingly sensitive to global economic
conditions. Revocation of China's MFN trading status would cause
unemployment to rise and factory losses to mount in export-
producing regions.
Conclusion
Those who engineered the violence in China in June 1989 are
unlikely to bear the economic costs associated with the denial of
MFN. Instead, those who suffer would be American businesses and
their employees, American consumers, and the people of Hong Kong
and the progressive areas of China.
China's opening to the outside world over the past decade has
accelerated growth in the non-state sectors of the economy;
resulted in strong links between China's coastal regions and the
global economy that have enabled this reformist region to weather
Beijing's periodic efforts to reimpose central government control
over economic activity; and introduced market concepts to a
generation of Chinese managers involved in joint ventures, trade
negotiations, and training in the West. For this process to
continue, China's most-favored-nation treatment in the United
States is essential.
THE WHITE HOUSE
WASHINGTON
Dear Senator Dole:
I appreciated receiving your views on the importance of renewing
China's most-favored-nation (MFN) trade status while also seeking
to achieve progress with the Chinese on issues of vital concern
to the American people. We clearly share the same goals. We
want to see China return to the path of reform, show greater
respect for human rights, adhere to international norms on
weapons sales, and practice fair trade. China should contribute
to international stability and not detract from it.
You rightly note that withdrawing MFN would hurt not only
Americans but also the people of Hong Kong and the millions in
China who are working for progressive change. Continuing MFN is
essential to protect American consumers and exporters, and to
support the economic forces that have been driving reform in
China for more than a decade. It is no accident that the process
of reform accelerated with the increase in foreign businesses
operating in that nation. Those who would end political and
economic reform in China have the most to gain if MFN were
withdrawn. It is the economic forces pressing for the loosening
of state control and increased personal freedom that would suffer
the most. Other losers would be the thousands of American
workers and farmers who together produced in 1990 almost $5
billion in exports to China.
Since we started the process of normalizing contacts with China
in the 1970s, there has been strong bipartisan support for the
U.S.-China relationship. Building on the three U.S.-China
communiques, U.S. interaction with the government and people of
China has produced demonstrable progress. That interaction must
continue despite the recent severe setbacks. Nevertheless, I
support the view that strong measures are needed to address our
concerns in China and have not hesitated to use them in a
targeted fashion. To underscore our deep dismay about human
rights violations, I have kept in place a number of sanctions
since the Tiananmen Square crackdown which have affected arms
sales, high-level contacts, U.S. economic programs and U.S.
support for multilateral development bank lending to China.
The U.S. is currently the only nation maintaining its Tiananmen
sanctions and refusing to normalize relations until China makes
substantial progress on human rights. For example, while all our
allies and other World Bank members have supported virtually all
of the last sixteen World Bank loans to China, we have declined
2
to support seven because the loans would not serve basic human
needs.
At the London Summit, we raised China's human rights practices
with our G-7 allies and encouraged them to continue to stress to
China's leaders, as we have repeatedly, the importance that
democratic governments attach to human rights. We made clear
that the U.S. will continue its policy of supporting only those
multilateral development loans for China that serve basic human
needs (BHN), and our view that any non-BHN lending to China help
to promote market-oriented economic reform.
To advance our nonproliferation objectives, I recently authorized
a number of steps aimed at engaging the Chinese on their weapons
transfer policies and making clear our dissatisfaction with
transfers that contribute to regional instability. The Under
Secretary of State for International Security Affairs recently
traveled to Beijing for a detailed discussion of nonproliferation
issues, including our specific concerns about Chinese exports.
He pressed for China's adherence to the Nuclear Nonproliferation
Treaty and the Missile Technology Control Regime, actions I
called for in my commencement speech at Yale University on
May 27. We are pleased with the constructive role China played
in the July 8-9 Middle East arms control talks in Paris. The
Chinese endorsed all the key objectives of my Middle East arms
control initiative (such as efforts to freeze and ultimately
eliminate surface-to-surface missiles and block the production
and acquisition of nuclear useable material). The Chinese also
agreed to work rapidly in follow-on meetings to flesh out the
broad agreements reached in Paris.
At the same time, I have also taken measures to emphasize to
China that the U.S. is concerned about reports of destabilizing
missile-related transfers. In April, I rejected requests for
licenses to export satellite components for a Chinese
communications project because of the involvement of Chinese
companies in unacceptable missile equipment transfers. Just
recently, I approved trade sanctions against two Chinese
companies for that same reason. In addition, I directed that no
further licenses of high-speed computers and no further exports
of satellites to China be authorized until our concerns that
China adhere to accepted international nonproliferation standards'.
are satisfactorily addressed. The U.S. will be coordinating with
other countries in order that these measures not be undercut.
Our experience has demonstrated that such consultations will lead
to effective, multilateral technology transfer restrictions.
I have also instructed U.S. agencies to press vigorously our
concerns about Chinese unfair trading practices. In April, I
directed the U.S. Trade Representative to identify China as a
priority foreign country under the Special 301 provisions of the
Trade Act for failing to protect U.S. intellectual property
3
rights. If China does not make real progress during the 301
investigation, trade action will follow. Beyond intellectual
property protection, my Administration has invited senior Chinese
trade officials to Washington in August for continuation of
consultations begun in June regarding access for U.S. products to
the Chinese market. If these talks fail to produce Chinese
commitments to take substantial measures to improve market
access, the Administration will self-initiate further action
under Section 301 of our trade laws.
We are strictly enforcing the terms of our textile agreement with
China and have already made charges against China's quota because
of illegal textile shipments through third countries totalling
approximately $85 million so far. Following consultations in
July, we expect to make additional charges. If China does not
exert effective control over these illegal shipments, we are
prepared to take additional action against China.
Charges that China exports goods produced with prison labor are a
matter of serious concern. The Customs Service is investigating
these charges. In addition, we have obtained a firm high-level
commitment to prevent the sale of prison labor products to the
United States. We will continue to monitor China's behavior in
this area closely and will strictly enforce relevant legislation
concerning prison labor exports. In particular, I am ordering
the following additional measures: The Department of State will
seek to negotiate a memorandum of understanding with China on
procedures for the prompt investigation of allegations that
specific imports from China were produced by prison labor.
Pending negotiation of this agreement, the U.S. Customs Service
will deny entry to products imported from China when there is
reasonable indication that the products were made by prison
labor. The denial will continue until the Chinese Government or
the Chinese exporter provides credible evidence that the products
were not produced by prison labor.
I am also instructing the U.S. Customs Service to identify an
office to receive information on prison labor exports and
establish procedures for the prompt investigation of reports of
prison labor exports from interested parties. Additional customs
officials will be directed to identify prison labor exports and
aid in uncovering illegal textile transhipments.
:
Although it is not directly related to China's MFN status, I
share your interest in Taiwan's accession to the GATT. As a
major trading economy, Taiwan can make an important contribution
to the global trade system through responsible GATT
participation. The U.S. has a firm position of supporting the
accession of Taiwan on terms acceptable to GATT contracting
parties. The United States will begin to work actively with
other contracting parties to resolve in a favorable manner the
issues relating to Taiwan's GATT accessing. Because China, our
4
tenth largest trading partner, could also make an important
contribution to the global trading system, I will seek to have
the Chinese Government take steps on trade reform so that China's
GATT application can advance and its trade practices can be
brought under GATT disciplines through the Working Party formed
for China in 1987. U.S. support for Taiwan's accession to GATT
as a customs territory should in no way be interpreted as a
departure from the long-standing policy of five administrations
which acknowledges the Chinese position that there is only one
China, and that Taiwan is part of China.
In sum, therefore, I am prepared to address the concerns you and
your colleagues have identified, and I am doing so. But
discontinuing MFN, or attaching conditions to its renewal, would
cause serious harm to American interests and would render futile
pursuit of the initiatives I have outlined, which are discussed
in greater detail in the attachments. Working together, I
believe we will best protect America's interests by remaining
engaged with China and the Chinese people.
Sincerely,
Attachments:
Part I - Human Rights
Part II - Nonproliferation
Part III - Trade and Economic Issues
The Honorable Robert J. Dole
United States Senate
Washington, D.C. 20510
PART I: HUMAN RIGHTS
Human rights concerns have been at the heart of our relationship
with the PRC since the tragic events of June 1989. Every high-
level meeting since that time has at least touched on human
rights issues, and several -- such as the December 1990 visit to
China by Assistant Secretary Schifter -- have been devoted
exclusively to them. We have consistently stressed to the
Chinese leadership that there can be no return to the kind of
relationship we enjoyed before 1989 without substantial
improvements in China's human rights practices.
Our overall approach on human rights issues has consisted of:
Public expression of concern
--
President Bush condemned the brutal suppression of
demonstrations in Tiananmen Square in June 1989, the first
world leader to do so. He declared May 13, 1990 a National
Day in support of Freedom and Human Rights in commemoration
of the 1989 demonstrations, and issued another statement to
mark the anniversary of the crackdown in 1991.
In our human rights reports for 1989 and 1990, we were fair
but hard-hitting, and as accurate as available information
would allow. These reports have drawn high praise from
human rights groups, and harsh condemnations from the
Chinese government.
--
The State Department issued a statement on January 9, 1991
condemning the trials of nonviolent dissidents.
In April 1991 the President met the Dalai Lama at the White
House to demonstrate our respect for His Holiness'
nonviolent approach to conflict resolution and our concern
for human rights problems in Tibet.
Suspension of bilateral programs
On June 6 and June 20, 1989, the President announced the
suspension of a number of bilateral programs and changes in U.S.
approach to multilateral issues until the human rights climate in
China improved. Those suspensions generally remain in effect.
--
A multitude of high-level exchange visits that would
normally have taken place since 1989 have been canceled.
Only a very limited number of visits at and above Assistant
Secretary level have been approved on a case-by-case basis,
and only when they addressed issues of key concern to the
United States, e.g., like human rights, nonproliferation,
unfair trade practices, and narcotics.
--
Military exchange visits have been suspended completely.
2
Work on several existing military equipment and technology
projects has been suspended indefinitely.
We have stopped the transfer of military or dual-use
equipment or technology to Chinese military and security
services.
The U.S. sought to postpone all multilateral development
bank loans to China from June 1989 to January 1990. Since
then, we have supported only those loans that serve the
basic human needs of the Chinese people.
We have suspended grants, loans and insurance guarantees to
China under the Trade and Development Program and OPIC.
We have worked through COCOM to suspend planned
liberalization of export controls to China.
Engagement in dialogue
Through the few high-level visits that have been authorized, and
through regular diplomatic channels, we have engaged the Chinese
government in an unprecedented continuing dialogue on a wide
range of human rights issues.
The Scowcroft-Eagleburger missions of July and December 1989
were devoted primarily to laying out our human rights
concerns and suggesting steps the Chinese could take to
address them.
--
During Chinese Foreign Minister Qian's visit to Washington
in November 1990, President Bush and Secretary Baker
reiterated the need for progress on human rights, and
stressed that human rights is a cornerstone of American
foreign policy.
Assistant Secretary Schifter visited China in December 1990,
the first time our top human rights official has done so.
In sixteen hours of intense discussions with senior Chinese
officials, he spelled out in detail our human rights
concerns in a wide range of areas including accounting of
detainees, release of political prisoners, denial of due
process and fair and open trials, treatment of prisoners,
divergence of Chinese law from international standards,
respect for freedom of religion, abusive implementation of
family planning regulations, and human rights problems in
Tibet. He delivered a list of 151 representative cases of
reported political incarceration, and asked Chinese
authorities to clarify the status of the cases and release
those whose imprisonment violated international norms. He
suggested changes in Chinese laws and judicial processes
that would bring them into conformity with international
standards.
3
Under Secretary Kimmitt in May 1991 reiterated many of the
points made by Assistant Secretary Schifter, and called on
the Chinese government to declare an amnesty for all those
imprisoned for nonviolent political activities. He also
urged the Chinese to implement effectively their claimed
prohibition on export of prison labor products.
Results of actions
Most importantly, the Chinese government has acknowledged the
legitimacy of human rights as a subject of bilateral discussion,
both with us and with other concerned governments. they received
a Congressional delegation devoted exclusively to human rights
concerns in March 1991, and agreed to receive another later this
year. They also agreed to receive human rights delegations to be
sent by the governments of France and Australia. In addition,
they have taken a number of modest but positive steps to improve
the human rights situation in China.
Martial law was lifted in Beijing in January 1990 and in
Lhasa four months later. No part of China is currently
subject to martial law.
Most of those detained after the Tiananmen tragedy were
released by the end of 1989. Chinese authorities announced
the release of nearly 1000 more detainees in 1990, and about
70 have been released so far in 1991. Officials claim that
only 21 still await trial detention in Beijing, and at least
one of these -- labor leader Han Dongfang -- has been
released for medical treatment.
While at least 30 persons have been convicted on political
charges since the beginning of the year, the sentences meted
out to them were generally less severe than those imposed on
similar charges in previous years. THose released without
further punishment included prominent dissidents such as
essayist Liu Xiaobo, journalist Zhang Weiguo, playwright
Wang Peigong, and legal scholar Chen Xiaoping.
Leading dissident Fang Lizhi and his wife, who had obtained
refuge in the U.S. Embassy in Beijing for over a year, were
allowed to leave China in June 1990, and are now at
Princeton.
Most investigations of those involved in the 1989 protests
have ended, and most of our Chinese contacts report that the
oppressive atmosphere of 1989 has lifted significantly.
--
The Chinese have ceased the most odious forms of harassment
of Chinese students and scholars in the U.S.; harassment was
a serious problem in 1989 and early 1990.
--
Relatives of many, though not all, overseas dissidents have
been allowed to leave China and join them abroad. In some
4
of the remaining cases that we have raised with Chinese
officials, passports have subsequently been issued.
Several released dissidents, including Tiananmen hunger
striker Gao Xin and former Arizona State student Yang Wei,
have been allowed to leave the country.
Chinese authorities have undertaken to stop the export to
the U.S. of products made in Chinese prisons. We will
continue to monitor this situation closely, but it appears
that the Chinese government is taking increasingly specific
steps to enforce their prohibition on export of these
products.
--
In response to concerns expressed by Administration
officials and Members of Congress, the Chinese have provided
useful new information on the status of persons reported
detained for religious activities.
--
Economic reforms have resumed, in some cases matching or
exceeding levels reached before 1989. Some limited
political reforms, in important but relatively
noncontroversial areas such as the personnel system, have
continued. An Administrative Procedure Law that became
effective in October 1990 for the first time enables Chinese
citizens to sue abusive officials.
There are indications that further progress may be in the offing.
We are continuing to press the Chinese government to release all
remaining detainees, to commute the sentences of those nonviolent
dissidents already convicted, and to allow the departure of the
remaining relatives of overseas dissidents who wish to leave. We
are hopeful that a combination of dialogue and specifically
targeted pressure will lead to further movement on these and
other remaining issues of concern. And in the longer term, we
are confident that the momentum toward greater freedom and
democratization in China, built up during the decade of reforms
and dramatically reflected in the 1989 demonstrations, will prove
irreversible.
5
PART II: ADMINISTRATION'S ACTIONS WITH RESPECT TO
PROLIFERATION CONCERNS
The United States is engaged in a high-level dialogue with the
Chinese that began early in our relationship. Looking at the
broad trends in China's nonproliferation policy since
normalization in 1979, it is clear that our dialogue has paid off
in important areas, demonstrated by China's evolution toward
international consensus on nonproliferation in areas of great
importance to us. For example, China, which once held an
antagonistic view of multilateral controls on nuclear exports,
joined the IAEA in 1984 and sent observers to the Nuclear
Nonproliferation Treaty Review Conference in 1990.
Middle East/South Asia
China's support for the Middle East arms control initiative is
another case in point. China's participation in the initiative
is a positive step that will strengthen international
nonproliferation efforts and indicates China's resolve to
contribute to efforts to attain stability in the Middle East. In
addition, China's willingness to participate in multilateral
efforts to reduce tension in South Asia will be crucial to
establishing stability in that volatile region.
Moreover, we have seen Chinese arms sales restraint in some areas
where we have vital interests. For example, to the best of our
knowledge, apart from the 1987/88 sale of missiles to Saudi
Arabia, China has not delivered medium-range missiles to the
Middle East. It is clear that in other specific cases China has
taken international concerns into account and declined proposed
missile exports to prospective buyers.
Underscoring Our Concerns
It is because serious concerns remain that we want to maintain a
constructive nonproliferation dialogue with Beijing. We do not
intend to ignore current problems, but isolating China by
dismantling the framework for our relations is not the way to
advance our nonproliferation objectives.
We have the means available to underscore our concerns where
there are differences in our approaches to nonproliferation and
we have used these legislative and executive branch tools. For
:
example, we have imposed trade sanctions mandated by the National
Defense Authorization Act on Chinese entities involved in
missile-related activities. We have also announced the
Administration's decision that, pending progress toward our
nonproliferation objectives, we will not license high speed
computers and will not issue further waivers of legislative
restrictions on satellite exports. These new sanctions have been
imposed in addition to the existing sanctions announced
immediately following the June 1989 assault on Tiananmen and
amplified by Congress in the Department of State Authorization
6
Act for FY 1990-1991. Moreover, we have not certified China
under the bilateral agreement for nuclear cooperation that took
effect in 1985.
Our policy mix of sanctions and cooperation at any given time is
necessarily dependent on Chinese behavior. We are encouraged by
China's indication in June that it is reviewing its policies with
respect to Missile Technology Control Regime (MTCR) and the NPT.
We seek China's adherence to the NPT and the MTCR guidelines and
will encourage the Chinese to take concrete steps toward
adherence to the key multilateral standards for international
behavior established by these institutions. The Administration
will continue to use the legislative authority that already
exists and will take resolute action if the Chinese do not
address favorably our nonproliferation concerns.
7
PART III: TRADE AND ECONOMIC ISSUES
The Administration is committed to achieving with China the same
goals that have guided our trade policy with all other countries.
We seek open markets and the opportunity for U.S. firms and their
products to compete on fair and equal terms. To achieve these
goals, and realize the principles of equality, mutual benefit and
non-discrimination set forth in the U.S.-China Bilateral Trade
Agreement, this Administration has pursued a policy of
negotiation and engagement on trade issues with China. In
particular, the Administration has sought to improve U.S. access
to China's marketplace; to bolster Chinese protection of
intellectual property; to end fraudulent practices by Chinese
textile exporters using false country of origin declarations;
and, to induce Beijing to undertake the economic and trade
reforms required for membership in the GATT.
Reciprocal MFN tariff treatment underpins our ability to work
constructively with the PRC. China's desire to retain access to
the U.S. market has enabled us to engage Chinese leaders even
during periods of tension. We believe that discontinuing MFN, or
attaching conditions to its renewal, would cause serious harm to
our trade interests and erode our ability to influence China's
behavior on key trade issues.
The Past Decade of Bilateral Trade Relations
After decades of adhering to an import-substitution strategy that
focused on minimizing China's reliance on outside sources of
machinery and equipment, China began in the 1980's to seek
outside sources of these goods. It also has increasingly drawn
on foreign technology, expertise, and funds by actively
encouraging joint ventures.
China's opening to the outside world has helped transform its
economy, bolstering reform-oriented sectors that are not directly
controlled by the central government. For example, the state
sector now produces just over half of China's industrial output;
in 1978, its share was 78 percent. China's dynamic rural
industries, which are privately and collectively owned, have
burgeoned. There are 30,000 foreign-invested ventures now in
China, with a total contracted value of $40 billion. The impact
of China's open door has been particularly pronounced in the
southern and coastal provinces, where 90 percent of the foreign
investment and more than three-fourths of China's trade
activities are located. This region, in turn, has become the
primary engine of economic reform in China largely as a result of
the introduction of market concepts to Chinese employees of joint
ventures and to citizens engaging in commercial exchanges with
the West. The economic autonomy fostered by this interaction
contributes to increased political and even individual self-
determination.
8
The United States has been a vital partner in this
transformation. Following Congressional approval of the
bilateral trade agreement, the United States and China
established formal trade relations and reciprocally granted most-
favored-nation (MFN) status in 1980. Growth in our commercial
ties has helped to change China and to bring it into the global
trading system. Since the resumption of normal trade relations,
U.S.-China two-way trade has increased almost 770 percent, from
$2.3 billion in 1979 to over $20 billion last year.
--
We are now China's second-largest trading partner and its
largest export market.
--
China is our tenth-largest trade partner, up from fifteenth
in 1981.
--
Over 1,000 U.S. firms have invested more than $4 billion in
China and another $5 billion in Hong Kong related primarily
to trade with the PRC.
-- In 1990, the United States exported $4.8 billion worth of
goods to China, including:
--
$749 million worth of aircraft
--
$544 million worth of fertilizer
--
$512 million worth of grain
--
$281 million worth of cotton yarn and fabric
--
$273 million worth of chemicals
--
$264 million worth of electric machinery
--
$238 million worth of wood and wood pulp
--
$227 million worth of scientific instruments.
Commercial relations with the United States have exerted positive
influences on China's business and economic practices since 1980.
China has shifted away from total reliance on a strongly
centralized economy, shown greater tolerance for experimentation
with market mechanisms to regulate its domestic economy, and
decentralized and liberalized its foreign trade practices.
Regression in China's Trade Policies
China's opening to the outside world has not been smooth. Over
the past decade, attempts to accelerate the implementation of
market-oriented reforms have been followed by Beijing's
recentralization of control, as concern about the country's
ballooning trade deficit led Beijing to step in to regain some of
the trade authority it had relinquished.
Moreover, throughout the period since the normalization of trade
relations and the granting of reciprocal most-favored-nation
trading status in 1980, China's web of barriers to imports has
made it difficult for many U.S. exporters to gain access to the
Chinese market. U.S. firms have also had difficulty securing
protection for their intellectual property.
9
U.S. trade negotiators have long been engaged with the Chinese
Government, both in bilateral negotiations and in multilateral
consultations at the GATT held to review China's application for
membership. We have sought to ensure that bilateral commercial
relations develop in accord with the principles that underlie our
bilateral trade agreement: equality; mutual benefit; and
nondiscrimination. From 1979 through 1987, Chinese authorities
made some progress in reducing nontariff barriers to imports, in
improving transparency, and in protecting the intellectual
property of foreigners.
This trend has been reversed over the last three years.
--
Since 1988, Chinese trade policies and practices have become
more protectionist, nontariff barriers to imports have
proliferated, and the trade system has become less
transparent. These policies undoubtedly contributed to a 17
percent decline in U.S. sales to China in 1990. China was
the only major foreign market for U.S. goods and services in
which our exports declined in 1990.
Despite intensive bilateral negotiations with Chinese
authorities since the USTR in 1989 placed China on the
"priority watch list" of countries providing inadequate
intellectual property protection--including three rounds of
meetings over the past five months--China has failed to live
up to the commitments contained in the bilateral Memorandum
of Understanding (MOU) signed in May 1989.
At the same time, other problems have developed in our bilateral
trade relationship. For example, to bypass U.S. textile and
apparel quotas, Chinese exporters have increasingly resorted to
shipping these products to the United States via third countries
using false invoices and counterfeit visas. Also of concern to
us has been the apparent lapse in China's commitment to economic
and trade reforms that would bring the country in line with the
GATT's free-trade principles. China's reassertion of central
control over the past few years has called into question its
willingness and ability to undertake the obligations that would
be required of China as a contracting party to the GATT.
Steps the U.S. Government Has Taken and Will Take to
Address Bilateral Trade Problems
In six key areas of our bilateral trade and economic relations,
..
the Administration has taken steps to resolve trade problems. We
are prepared to do more.
On Market Access
Beginning in the fall of 1990, the Administration
resumed sub-cabinet level meetings with the Chinese,
that had been suspended since June 1989, to secure
Chinese actions to reverse the growing list of new
protectionist measures.
10
In April 1991, the Administration formally set in
motion a market access initiative that continued with
the visit to Beijing, in mid-June, of an interagency
delegation to discuss market access issues. In
meetings with senior Chinese officials, U.S. Government
officials raised nine types of market access barriers,
including: the lack of transparency in rules and
regulations; the expansion of import licensing
requirements; the use of import substitution policies;
the proliferation of import bans and quotas; the growth
of standards, testing, and certification requirements,
including discriminatory "quality standards" procedures
for imports; the high level of many import tariffs; the
unnecessary use of certain phytosanitary regulations;
the uncertainties regarding government procurement and
tendering regulations; and the lack of information
regarding China's major development projects.
The Administration has proposed holding another round
of market access consultations in August 1991. If that
round of negotiations fails to yield substantial
commitments from the Chinese authorities to dismantle
market access barriers, the Administration will self-
initiate Section 301 action to address those barriers
the removal of which offers the most potential for
achieving U.S. trade policy objectives and increasing
U.S. exports.
On Intellectual Property Protection
On April 26, 1991, USTR identified the PRC as a
priority foreign country that denies adequate and
effective protection of intellectual property rights.
Accordingly, on May 26, 1991 USTR initiated a Special
Section 301 investigation on the basis of four problem
areas: (1) inadequate copyright protection, (2)
inadequate patent protection, (3) inadequate trade
secret protection and (4) ineffective enforcement of
trademarks. Consultations with the Chinese are
ongoing. The first round of consultations under the
Section 301 investigation occurred in mid-June and a
second has been proposed for August.
The deadline for making a determination under Section
301 is November 26, 1991. This may be extended for
three months if China is making substantial progress in
drafting or implementing measures that will provide
adequate and effective protection of U.S. intellectual
property rights. At that time, the USTR must determine
whether the acts, policies and practices of the PRC are
actionable under Section 301 and what retaliatory
action, if any, is appropriate.
11
If the consultations fail to produce adequate and
effective protection of intellectual property rights,
the Administration will take retaliatory action.
On Textile Transhipments
--
The U.S. Customs Service has been vigilant in
documenting cases of Chinese textile transhipments over
the past year.
--
In August 1990, USTR held consultations with Chinese
authorities on the transhipment issue. Additional
consultations took place in November 1990, March 1991,
and May 1991.
--
The U.S. Government "charged" China's quotas for goods
that were sent to the United States under false country
of origin declarations valued at over $85 million.
--
China has begun to take actions to curtail textile
fraud since the December charges were made. For
example, it issued regulations prohibiting reexports
through a third country to countries that have signed
textile agreements with China. Further, the Chinese
Government has issued provisions for the punishment of
those who violate the regulations.
--
The Administration has prepared more charges valued at
about $14 million that we anticipate will be levied
after consultations with China next month.
--
The Administration will increase the number of U.S.
Customs officials dedicated to investigating
circumvention.
--
If transhipment persists, we will be prepared to take
additional action against China.
On Forced Labor
--
The importation of goods produced with forced, convict
or indentured labor is prohibited by 19 USC Section
1307, which also directs the Secretary of the Treasury
to prescribe regulations for enforcement of the
provision. The Secretary of the Treasury, under 19 CFR :-
Section 12.42, has delegated to the Commissioner of
Customs, authority to determine that a class of goods
is the product of forced labor and exclude those goods.
Customs has been investigating imports alleged to be
the product of forced labor in China. Customs has
interviewed emigres about forced labor practices in
China. Customs is also analyzing import samples to
determine if they match the descriptions provided by
the emigres and others. Additional special agents have
12
been detailed to Hong Kong to assist in the
investigation.
-- Although the letter from Senator Baucus and fourteen
co-signers did not specifically address the issue of
prison labor imports, appropriate action is called for
to fulfill the intent of existing law. The
Administration therefore proposes to negotiate a
memorandum of understanding with China on procedures
for the prompt investigation of allegations that
specific products exports to the U.S. are being
produced by prison labor.
-- Pending negotiation of the MOU, Customs will
temporarily embargo specific products from China when
there is reasonable indication that they are made by
prison labor. Embargoes will be lifted only after the
Chinese Government or the Chinese exporter provides
credible evidence that the products are not produced by
prison labor.
Multilateral Lending to China
-- The G-7 consensus, led by the United States, was
successful in prohibiting all MDB lending to China from
June 1989 to February 1990 in response to the
international outcry against the crackdown by the
Chinese authorities at Tiananmen Square.
-- From February 1990 to July 1990, the G-7 consensus
supported a gradual resumption of World Bank lending to
China for projects that clearly met basic human needs
(BHN). The consensus held firm and actively prohibited
other loans from Board consideration. Only five loans
(totalling $590 million) were approved in WBFY 1990.
This is substantially less than pre-Tiananmen Square
levels of World Bank commitments to china, which were
$1.4 billion in WBFY 1988 and $1.3 billion in WBFY
1989.
--
At the Houston Summit in July 1990, several G-7
countries decided that China's long-term development
needs argued for lending outside the BHN limits favored
by the United States. Accordingly, the G-7 Houston
Summit Declaration of July 1990 on MDB lending to China.
expanded the boundaries of permitted MDB lending to
China to include loans which were environmentally
beneficial or which supported market-oriented economic
reform. Only BHN loans were considered by the World
Bank Board until December 4, 1990 when the market
oriented economic reform loan for Rural Industrial
Technology was approved by the Board. On November 29,
1990, the ADB approved its first loan to China since
Tiananmen Square, Agricultural Bank Project, which the
U.S. did not support. Despite the approval of
infrastructure project loans by the World Bank and the
13
Asian Development Bank, the U.S. has and will continue
to withhold support on all loans that do not meet BHN
criteria.
On GATT Accession
--
Since China applied for GATT membership in July 1986,
the United States has been a leading participant in the
collective efforts of major GATT Contracting Parties to
develop terms for China's GATT participation that will
support the objectives of the GATT and will influence
Chinese Government policies to become, over time, more
compatible with the GATT framework for world trade.
--
U.S. and other major GATT contracting parties' concerns
about China's ability and willingness to live up to
GATT obligations, particularly since June 1989, have
stalled progress in the Working Party established to
consider China's application for membership in the
GATT.
--
The Administration intends to continue to press Beijing
to undertake trade and economic reforms so that its
GATT application can advance and its trade practices be
brought under GATT disciplines.
--
At the same time, the Administration will begin to work
actively with other GATT members to resolve in a
favorable manner the issues relating to Taiwan's GATT
accession. U.S. support for Taiwan's accession as a
customs territory would be consistent both with GATT
legal criteria and the "one-China" policy which
acknowledges the Chinese position and has been adhered
to by successive U.S. administrations.
Taiwan's GATT accession would yield substantial trade
and commercial benefits to the United States and to the
international trading system.
-- Taiwan has indicated that it is prepared to accede
to the GATT as a developed economy, to bind
virtually all its tariffs, and to join the major
non-tariff measure GATT codes.
The Importance of MFN
As highlighted above, the Administration is aggressively seeking
to resolve outstanding bilateral trade issues with the PRC. MFN
underpins our ability to work constructively with the PRC. We
believe that discontinuing MFN, or attaching conditions to its
renewal, would cause serious harm to our trade interests, and
would render futile pursuit of the initiatives outlined above.
It would reduce our leverage in market-access, intellectual
property rights protection, and other trade-related negotiations.
China's desire to retain access to the U.S. market has enabled us
14
to engage Chinese leaders in consultations on bilateral and
multilateral issues even during periods of tension. Because
China is not a GATT member and not bound by GATT trade
disciplines, it is especially important to have many levers that
enable us to engage the Chinese on trade issues.
It would hurt U.S. exporters. If the United Stated rescinds
China's MFN trading status, China will not only discontinue MFN
tariff treatment for the United States, but would likely cease
purchasing billions of dollars of U.S. wheat, aircraft,
fertilizer, cotton yarn and fabric, wood and wood pulp, electric
machinery, scientific equipment, and chemicals. Foreign
competitors, whose goods would be subject to lower tariffs, would
be quick to exploit our departure. Lost shares of China's market
would not easily be regained even if MFN were restored at some
future date.
It would hurt U.S. consumers. Tariffs on the 25 most important
U.S. imports from China would rise from the present average
tariff rate of 8.8 percent to an average rate of 50.5 percent.
These increases would mean sharply higher prices for lower-end
Chinese goods. The costs to U.S. consumers would be largely
borne by poorer Americans, who are primary consumers of low-cost
Chinese products.
It would damage America's reputation as a reliable trade partner.
Our trade competitors will not join us in denying MFN status to
China. Other Chinese trade partners, especially in Asia, urge
that China's MFN status be retained.
It would hurt investors, businesses, and workers in Hong Kong.
Loss of MFN would impede China's integration into the regional
economy, a development crucial to regional stability particularly
as we near the 1997 deadline for Hong Kong's reversion to Chinese
sovereignty. It could cost over 43,000 jobs in Hong Kong and
result in direct revenue losses of approximately $1.2 billion
dollars. Hong Kong's GDP growth could be curtailed by as much as
two percent.
It would set back efforts to bring about meaningful economic
reform in China. A disproportionate burden of the MFN denial
would fall on the primary engine of economic reform in China--the
economies of the southern and coastal provinces. In Guangdong
province, for example, 40 percent of industrial output is
produced for export, half of which goes to the United States.
Sectors that fall outside of the direct control of the central
government have been especially important to China's development
as an exporter; one-third of China's exports currently come from
rural (individual and collectively owned) industries and from
foreign-invested ventures. The foreign ties these provinces and
non-state-owned factories developed with the outside world prior
to Beijing's reassertion of central control in mid-1989 enabled
these provinces to weather the austerity program; without these
foreign markets, Beijing's grip would have been all the tighter.
As Beijing's influence over the regions and sectors most closely
integrated into the global economy has diminished, these regions
15
and sectors have become increasingly sensitive to global economic
conditions. Revocation of China's MFN trading status would cause
unemployment to rise and factory losses to mount in export-
producing regions.
Conclusion
Those who engineered the violence in China in June 1989 are
unlikely to bear the economic costs associated with the denial of
MFN. Instead, those who suffer would be American businesses and
their employees, American consumers, and the people of Hong Kong
and the progressive areas of China.
China's opening to the outside world over the past decade has
accelerated growth in the non-state sectors of the economy;
resulted in strong links between China's coastal regions and the
global economy that have enabled this reformist region to weather
Beijing's periodic efforts to reimpose central government control
over economic activity; and introduced market concepts to a
generation of Chinese managers involved in joint ventures, trade
negotiations, and training in the West. For this process to
continue, China's most-favored-nation treatment in the United
States is essential.
DANIEL PATRICK MOTHINAN, NEW YORK
608 PACKWOOD, OREGON
MAX BAUCUS. MONTANA
BOB DOLL KANSAS
DAVID L BOREM OKLAHOMA
WILLIAM V. ROTH. JR. DELAWARE
BILL BRADLEY. NEW JERSEY
JOHN c. DANFORTH. MISSOURI
GEORGE J. MITCHELL MAINE
JOHN M. CHAFEE RHODE ISLAND
DAVIC-PRYOR ARKANSAS
JOHN HEINZ PENNSYLVANIA
DONALD W. RIEGLE. JR. MICHIGAN
DAVID DURENBERGER MINNESOTA
JOHN D. ROCKEFELLER IV, WEST VIRGINIA
WILLIAM L ARMSTRONG. COLORADO
Hnited States Senate
TOM DASCHLE SOUTH DAKOTA
STEVE SYMMS, IDAHO
JOHN BREAUX, LOUISIANA
COMMITTEE ON FINANCE
WASHINGTON, DC 20510-6200
VANDA a. McMURTRY. STAFF DIRECTOR AND CHIEF COUNSEL
EDMUND + MIHALSKI MINORITY CHIEF OF STAFF
June 19, 1991
Dear Mr. President:
Congress will decide in the next few weeks whether to accept your
recommendation and extend most favored nation trade status to China.
We are writing to share our concerns.
In the debate over the appropriate U.S. policy towards China, one
thing is clear: China's behavior must change. The United States has
serious human rights and foreign policy concerns with China. Every
American remembers the vivid images of the Tiananmen massacre. In the
two years since Tiananmen Square, evidence of democratic reform has
been scant at best. We also have learned of Chinese sales of advanced
missiles to Syria and Pakistan, and of nuclear technology sales to
Algeria. There are credible reports that China has forced political
prisoners to produce goods for export to the U.S.
The United States also has serious economic concerns with China.
The U.S. Trade Representative's annual report on foreign trade
barriers lists ten pages of Chinese barriers. China maintains
restrictions including a preclusive licensing system, discriminatory
testing and certification standards, and outright import bans. China
also fails to protect U.S. intellectual property, resulting in
enormous losses to U.S. producers of films, books, chemicals and
pharmaceuticals. Moreover, the Administration has allowed China to
dictate U.S. policy towards Taiwan, declining to support Taiwan's GATT
application despite clear economic benefits to the U.S.
The United States cannot continue to tolerate Chinese
intransigence. We must tailor active responses to our wide ranging
concerns. But MFN is the wrong tool for the job. Revoking MFN would
not promote human rights in China. Instead, it would punish China's
most progressive regions and Hong Kong.
Revoking MFN also would hurt Americans. China is an important
market for U.S. goods ranging from wheat to airplanes. If MFN were..
revoked, China almost certainly would retaliate against U.S. exports.
The Australians, Canadians, Europeans and Japanese are ready to fill
the void. No other country is contemplating cutting off China's MFN
status.
We believe the Administration must be more active in addressing
American concerns with China. You have taken meaningful steps in some
areas. You have moved to protect U.S. intellectual property under
provisions of the 1988 Trade Act. You also have taken steps to
restrict certain technology transfers to China in response to its
missile and nuclear sales. These steps are examples of the types of
actions the U.S. should take.
Page 2
June 19, 1991
We urge you to take appropriate actions in other areas. Human
rights is a foremost concern. Revoking MFN would be
counterproductive. But other steps can be taken. For example, the
U.S. could reinvigorate its opposition to multilateral loans for
China. The U.S. also could take strong action under U.S. law to
address China's unfair trade barriers and imports produced by prison
labor. In the area of nuclear and missile proliferation, the U.S.
could immediately negotiate for strict, multilateral technology
restrictions conditioned upon Chinese adherence to accepted
international standards. As for Taiwan, the U.S. could immediately
give strong support to Taiwan's GATT application.
These measures do not represent an exhaustive list. But it is
essential that the Administration take concrete steps. If Congress is
to extend China's MFN, we must see tangible evidence that the
Administration is taking action. We look forward to hearing your
response to our concerns.
Sincerely,
Max Baucue
Bue Ril
Nich D Lugar
Air Budie
Richard Shelly
Bae Jay
that H.
Orinin
the McCain
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
01f.
To: Brent Scowcroft From: Robert Pearson
7/12/91
(b)(1)
S
Memorandum
Re: Reply to Letter from Senator Baucus and Others (1 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Legislative Affairs, White House Office of
Series:
Dyer, James W., Files
Subseries:
WHORM Cat.:
File Location:
China MFN [5]
Date Closed:
9/24/2012
OA/ID Number:
08451-009
FOIA/SYS Case #:
2012-1098-F
Appeal Case #:
Re-review Case #:
Appeal Disposition:
P-2/P-5 Review Case #:
Disposition Date:
AR Case #:
MR Case #:
AR Disposition:
MR Disposition:
AR Disposition Date:
MR Disposition Date:
RESTRICTION CODES
Presidential Records Act - |44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA]
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA)
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
gift.
financial institutions [(b)(8) of the FOIA]
(b)(9) Release would disclose geological or geophysical information
PRM. Removed as a personal record misfile.
Withdrawal/Redaction Sheet
(George Bush Library)
Document No.
Subject/Title of Document
Date
Restriction
Class.
and Type
01g. Letter
To: Senator Baucus
n.d.
(b)(1)
S
Re: China's MFN Status (8 pp.)
Collection:
Record Group:
Bush Presidential Records
Office:
Legislative Affairs, White House Office of
Series:
Dyer, James W., Files
Subseries:
WHORM Cat.:
File Location:
China MFN [5]
Date Closed:
9/24/2012
OA/ID Number:
08451-009
FOIA/SYS Case #:
2012-1098-F
Appeal Case #:
Re-review Case #:
Appeal Disposition:
P-2/P-5 Review Case #:
Disposition Date:
AR Case #:
MR Case #:
AR Disposition:
MR Disposition:
AR Disposition Date:
MR Disposition Date:
RESTRICTION CODES
Presidential Records Act - |44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P-1 National Security Classified Information [(a)(1) of the PRA]
(b)(1) National security classified information [(b)(1) of the FOIA]
P-2 Relating to the appointment to Federal office [(a)(2) of the PRA]
(b)(2) Release would disclose internal personnel rules and practices of an
P-3 Release would violate a Federal statute [(a)(3) of the PRA)
agency [(b)(2) of the FOIA]
P-4 Release would disclose trade secrets or confidential commercial or
(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
(b)(4) Release would disclose trade secrets or confidential or financial
P-5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
(b)(6) Release would constitute a clearly unwarranted invasion of
P-6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA}
(b)(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of
(b)(8) Release would disclose information concerning the regulation of
financial institutions [(b)(8) of the FOIA]
gift.
(b)(9) Release would disclose geological or geophysical information
PRM. Removed as a personal record misfile.
7/8/91 1850
CONFIDENTIAL
DRAFT
(Final version to be provided
NSC)
DECLASSIFIED
PER NSC WAIVER, 1500 2021-02 PART I: TRADE AND ECONOMIC ISSUES
By SS NARA, Date 6/23/25
The Administration is committed to achieving with China the same
goals that have guided our trade policy with all other countries.
We seek open markets and the opportunity for U.S. firms and their
products to compete on fair and equal terms. To achieve these
goals, and realize the principles of equality, mutual benefit and
non-discrimination set forth in the U.S.-China Bilateral Trade
Agreement, this Administration has pursued a policy of
negotiation and engagement on trade issues with China. In
particular, the Administration has sought to improve U.S. access
to China's marketplace; to bolster Chinese protection of
intellectual property; to end fraudulent practices by Chinese
textile exporters using false country of origin declarations;
and, to induce Beijing to undertake the economic and trade
reforms required for membership in the GATT.
Reciprocal MFN tariff treatment underpins our ability to work
constructively with the PRC. China's desire to retain access to
the U.S. market has enabled us to engage Chinese leaders in
periods of tension. We believe that discontinuing MFN, or
attaching conditions to its renewal, would cause serious harm to
our trade interests and erode our ability to influence China's
behavior on key trade issues.
A. The Past Decade of Bilateral Trade Relations
After decades of adhering to an import-substitution strategy that
focused on minimizing China's reliance on outside sources of
machinery and equipment, in the 1980's China has sought outside
sources of these goods. It also has increasingly drawn on
foreign technology, expertise, and funds by actively encouraging
joint ventures.
China's opening to the outside world has helped transform its
economy, bolstering reform-oriented sectors that are not directly
controlled by the central government. For example, the state
sector now produces just over half of China's industrial output;
in 1978, its share was 78 percent. China's dynamic rural
industries, which are privately and collectively owned, have
burgeoned. The 30,000 foreign-invested ventures China now has
are valued at $40 billion. The impact of China's opèn door has
been particularly pronounced in coastal areas, where 90 percent
of the foreign investment and more than three-fourths of China's
trade activities are located. This region, in turn, has become
the primary engine of economic reform in China largely as a
result of the introduction of market concepts to Chinese
employees of joint ventures and to citizens engaging in
commercial exchanges with the West. The economic autonomy
fostered by this interaction contributes to increased political
and even individual self-determination.
CONFIDENTIAL
Declassify on : OADR
CONFIDENTIA
DRAFT
The United States has been a vital partner in this
transformation. Following Congressional approval of the
bilateral trade agreement, the United States and China
established formal trade relations and reciprocally granted most-
favored-nation (MFN) status in 1980. Growth in our commercial
ties has helped to change China and to bring it into the global
trading system. Since the resumption of normal trade relations,
U.S.-China two-way trade has increased almost 770 percent, from
$2.3 billion in 1979 to over $20 billion last year.
-- We are now China's second-largest trade and investment
partner and its largest export market.
-- China is our tenth-largest trade partner, up from fifteenth
in 1981.
-- Over 1,000 U.S. firms have invested more than $4 billion in
China and another $5 billion in Hong Kong related primarily
to trade with the PRC.
--
In 1990, the United States exported $4.8 billion worth of
goods to China, including:
--
$749 million worth of aircraft
--
$544 million worth of fertilizer
--
$512 million worth of grain
--
$281 million worth of cotton yarn and fabric
--
$264 million worth of electric machinery
--
$238 million worth of wood and wood pulp
:
$238 million worth of chemicals
:
$227 million worth of scientific instruments.
Commercial relations with the United States have exerted positive
influences on China's business and economic practices since 1980.
China has shifted away from total reliance on a strongly
centralized economy; shown greater tolerance for experimentation
with market mechanisms to regulate its domestic economy; and
decentralized and liberalized its foreign trade practices.
B. Regression in China's Trade Policies
China's opening to the outside world has not been smooth. Over
the past decade, attempts to accelerate the implementation of
market-oriented reforms have been followed by Beijing's
recentralization of control, as concern about the country's
ballooning trade deficit led Beijing to step in to regain some of
the trade authority it had relinquished.
Moreover, throughout the period since the normalization of trade
relations and the granting of reciprocal most-favored-nation
trading status in 1980, China's web of barriers to imports has
made it difficult for many U.S. exporters to gain access to the
Chinese market. U.S. firms have also had difficulty securing
protection for their intellectual property.
CONFIDENTIAL
CONFIDENTIAL
DRAFT
U.S. trade negotiators have long been engaged with the Chinese
Government, both in bilateral negotiations and in multilateral
consultations at the GATT held to review China's application for
membership. We have sought to ensure that bilateral commercial
relations develop in accord with the principles that underlie our
bilateral trade agreement: equality, mutual benefit, and
nondiscrimination. From 1979 through 1987, Chinese authorities
made some progress in dismantling nontariff barriers to imports,
in improving transparency, and in protecting the intellectual
property of foreigners.
This trend has been reversed over the last three years.
Since 1988, Chinese trade policies and practices have become
more protectionist, nontariff barriers to imports have
proliferated, and the trade system has become less
transparent. These policies undoubtedly contributed to a 17
percent decline in U.S. sales to China in 1990. China was
the only major foreign market for U.S. goods and services in
which our exports declined in 1990.
Despite intensive bilateral negotiations with Chinese
authorities since the USTR in 1989 placed China on the
"priority watch list" of countries providing inadequate IPR
protection--including three rounds of meetings over the past
five months--China has failed to live up to the commitments
contained in the bilateral Memorandum of Understanding (MOU)
signed in May 1989.
At the same time, other problems have developed in our bilateral
trade relationship. For example, to bypass U.S. textile and
apparel quotas Chinese exporters have increasingly resorted to
shipping these products to the United States via third countries
using false invoices and counterfeit visas. Also of concern to
us has been the apparent lapse in China's commitment to economic
and trade reforms that would bring the country in line with the
GATT's free-trade principles. China's reassertion of central
control over the past few years has called into question its
willingness and ability to undertake the obligations that would
be required of China as a contracting party to the GATT.
C.
Steps the U.S. Government Has Taken and Will Take to
Address Bilateral Trade Problems
In four key areas of our bilateral trade relations, the
Administration has taken steps to resolve trade problems.
#
prepared to do more.
On Market Access
Beginning in the fall of 1990, the Administration resumed
sub-cabinet level meetings with the Chinese, that had been
suspended since June 1989, to secure Chinese actions to
reverse the growing list of new protectionist measures.
CONFIDENTIAL
CONFIDENTIAL
DRAFT
In May 1991, the Administration formally set in motion a
market access initiative that commenced with the visit to
Beijing, in mid-June, of an interagency delegation to
discuss market access issues. In meetings with senior
Chinese officials, U.S. Government officials raised nine
types of market access barriers, including: the lack of
transparency in rules and regulations; the expansion of
import licensing requirements; the use of import
substitution policies; the proliferation of import bans and
quotas; the growth of standards, testing, and certification
requirements, including discriminatory "quality standards"
procedures for imports; the high level of many import
tariffs; the unnecessary use of certain phytosanitary
regulations; the uncertainties regarding government
procurement and tendering regulations; and the lack of
information regarding China's major development projects.
The Administration has proposed holding another round of
market access consultations in August 1991. If that round
of negotiations fails to yield substantial commitments from
the Chinese authorities to dismantle market access barriers,
the Administration will self-initiate Section 301 action to
address those barriers the removal of which offers the most
potential for achieving U.S. trade policy objectives and
increasing U.S. exports.
On Intellectual Property Protection
On April 26, 1991, USTR identified the PRC as a priority
foreign country that denies adequate and effective
protection of intellectual property rights.
Accordingly, on May 26, 1991 USTR initiated a Special
Section 301 investigation on the basis of four problem
areas: (1) inadequate copyright protection, (2) inade
patent protection, (3) inadequate trade secret protection
and (4) ineffective enforcement of trademarks.
Consultations with the Chinese are ongoing. The first round
of consultations occurred in mid-June and a second has been
proposed for August.
The deadline for making a determination under Section 301 is
November 26, 1991. This may be extended for three months if
China is making substantial progress in drafting or
implementing measures that will provide adequate and
effective protection of U.S. intellectual property rights.
At that time, the USTR must determine whether the acts,
policies and practices of the PRC are actionable under
Section 301 and what retaliatory action, if any, is
appropriate.
CONFIDENTIAL
DRAFT
CONFIDENTIAL
5
If the consultations fail to produce adequate and effective
protection of intellectual property rights, the
Administration will take retaliatory action.
On Textile Transhipments
The U.S. Customs Service has been vigilant in documenting
cases of Chinese textile transhipments over the past year.
In August 1990, USTR held consultations with Chinese
authorities on the transhipment issue. Additional
consultations took place in November 1990, March 1991, and
May 1991.
The U.S. Government "charged" China's quotas for goods that
were sent to the United States under false country of origin
declarations valued at over $85 million.
China has begun to take actions to curtail textile fraud
since the December charges were made. For example, it
issued regulations prohibiting reexports through a third
country to countries that have signed textile agreements
with China. Further, the Chinese Government has issued
provisions for the punishment of those who violate the
regulations.
--
The Administration has prepared more charges valued at about
$14 million that we anticipate will be levied after
consultations with China next month.
--
The Administration will increase the number of U.S. Customs
officials dedicated to investigating circumvention.
--
If transhipment persists, we will be prepared to take
further action against China, beyond charging China's
textile quota the documented amount imported through
transhipment.
On Forced Labor
The importation of goods produced with forced, convict or
indentured labor is prohibited by 19 USC Section 1307, which also
directs the Secretary of the Treasury to prescribe regulations
for enforcement of the provision. The Secretary of the Treasury,
under 19 CFR Section 12.42, has delegated to the Commissioner of
Customs, authority to determine that a class of goods is the
product of forced labor and exclude those goods.
Customs has been investigating imports alleged to be the product
of forced labor in China. Customs has interviewed emigres about
forced labor practices in China. Customs is also analyzing
import samples to determine if they match the descriptions
provided by the emigres and others. Additional special agents
have been detailed to Hong Kong to assist in the investigation.
CONFIDENTIAL
CONFIDENTIAL
DRAFT
Although the letter from Senator Baucus and fourteen co-signers
did not specifically address the issue of prison labor imports,
appropriate action is called for to fulfill the intent of
existing law. The Administration therefore proposes to negotiate
a memorandum of understanding with China on procedures for the
prompt investigation of allegations that specific products
exports to the U.S. are being produced by prison labor.
Pending negotiation of the MOU, Customs will temporarily embargo
specific products from China when there is reasonable indication
that they are made by prison labor. Embargoes will be lifted
only after the Chinese Government or the Chinese exporter
provides credible evidence that the products are not produced by
prison labor.
Multilateral Lending to China
The G-7 consensus, led by the United States, was successful in
prohibiting all MDB lending to China from June 1989 to February
1990 in response to the international outcry against the
crackdown by the Chinese authorities at Tiananmen Square.
From February 1990 to July 1990, the G-7 consensus supported a
gradual resumption of World Bank lending to China for projects
that clearly met basic human needs (BHN). The consensus held
firm and actively prohibited other loans from Board
consideration. Only five loans (totalling $590 million) were
approved in WBFY 1990. This is substantially less that pre-
Tiananmen Square levels of World Bank commitments to china, which
were $1.4 billion in WBFY 1988 and $1.3 billion in WBFY 1989.
At the Houston Summit in July 1990, several G-7 countries decided
that China's long-term development needs argued for lending
outside the BHN limits favored by the U.S. Accordingly, the G-7
Houston Summit Declaration of July 1990 on MDB lending to China
expanded the boundaries of permitted MDB lending to China to
include loans which were environmentally beneficial or which
supported market-oriented economic reform. Only BHN loans were
considered by the World Bank Board until December 4, 1990 when
the market oriented economic reform loan for Rural Industrial
Technology was approved by the Board. On November 29, 1990, the
ADB approved its first loan to China since Tiananmen Square,
Agricultural Bank Project, which the U.S. did not support.
Since March 1991, infrastructure projects outside the Houston
summit guidelines (highways, power plants, bridges, and railways)
have been approved for China by the World Bank and the Asian
Development Bank. The U.S. has and will continue to withhold
support on all non-BHN loans at the Board. In WBFY 1991 (which
ended June 30, 1991), World Bank lending to China totalled $1.6
billion.
On GATT Accession
-- Since China applied for GATT membership in July 1986,
United States has been a leading participant in the
CONFIDENTIAL
CONFIDENTIAL
DRAFT
collective efforts of major GATT Contracting Parties to
develop terms for China's GATT participation that will
support the objectives of the GATT and will influence
Chinese Government policies to become, over time, more
compatible with the GATT framework for world trade.
U.S. and other major GATT contracting parties' concerns
about China's ability and willingness to live up to GATT
obligations, particularly since June 1989, have stalled
progress in the Working Party established to consider
China's application for membership in the GATT.
The Administration intends to continue to press Beijing to
undertake trade and economic reforms so that its GATT
application can advance and its trade practices be brought
under GATT disciplines.
At the same time, the Administration will work actively with
other GATT members to resolve in a favorable manner issues
relating to Taiwan's GATT accession [and support the
formation of a Working Party for the commencement of
accession deliberations } U.S. support for Taiwan's
accession as a customs territory would be consistent both
with GATT legal criteria and the "one-China" policy which
acknowledges the Chinese position and has been adhered to by
successive U.S. Administrations.
Taiwan's GATT accession would yield substantial trade and
commercial benefits to the United States and to the
international trading system.
--
Taiwan has indicated that it is prepared to accede to
the GATT as a developed economy, to bind virtually all
its tariffs, and to join the major non-tariff measure
GATT codes.
D. The Importance of MFN
As highlighted above, the Administration is aggressively seeking
to resolve outstanding bilateral trade issues with the PRC. MFN
underpins our ability to work constructively with the PRC. We
believe that discontinuing MFN, or attaching conditions to its
renewal, would cause serious harm to our trade interests, and
would render futile pursuit of the initiatives outlined above.
It would reduce our leverage in market-access, intellectual
property rights protection, and other trade-related negotiations.
China's desire to retain access to the U.S. market has enabled us
to engage Chinese leaders in consultations on bilateral and
multilateral. issues even during periods of tension. Because
China is not a GATT member and not bound by GATT trade
disciplines, it is especially important to have many levers that
enable us to engage the Chinese on trade issues.
It would hurt U.S. exporters. If the United Stated rescinds
China's MFN trading status, China will not only discontinue MFN
CONFIDENTIAL
CONFIDENTIAL
DRAFT
tariff treatment for the United States, but would likely cease
purchasing billions of dollars of U.S. wheat, aircraft,
fertilizer, cotton yarn and fabric, wood and wood pulp, electric
machinery, scientific equipment, and chemicals. Foreign
competitors, whose goods would be subject to lower tariffs, would
be quick to exploit our departure. Lost shares of China's market
would not easily be regained even if MFN were restored at some
future date.
It would hurt U.S. consumers. Tariffs on the 25 most important
U.S. imports from China would rise from the present average
tariff rate of 8.8 percent to an average rate of 50.5 percent.
These increases would mean sharply higher prices for lower-end
Chinese goods. The costs to U.S. consumers would be largely
borne by poorer Americans, who are primary consumers of low-cost
Chinese products.
It would damage America's reputation as a reliable trade partner.
Our trade competitors will not join us in denying MFN status to
China. Other Chinese trade partners, especially in Asia, urge
that China's MFN status be retained.
It would hurt investors, businesses, and workers in Hong Kong.
Loss of MFN would impede China's integration into the regional
economy, a development crucial to regional stability particularly
as we near the 1997 deadline for Hong Kong's reversion to Chinese
sovereignty. It could cost over 43,000 jobs in Hong Kong and
result in direct revenue losses of approximately $1.2 billion
dollars. Hong Kong's GDP growth could be curtailed by as much as
two percentage points.
It would set back efforts to bring about meaningful economic
reform in China. A disproportionate burden of the MFN denial
would fall on the primary engine of economic reform in China--the
economies of the southern and coastal provinces. In Guangdong
province, for example, 40 percent of industrial output is
produced for export, half of which goes to the United States.
SEctors that fall outside of the direct control of the central
government have been especially important to China's development
as an exporter; one-third of China's exports currently come from
rural (individual and collectively owned) industries and from
foreign-invested ventures. The foreign ties these provinces and
non-state-owned factories developed with the outside world prior
to Beijing's reassertion of central control in mid-1989 enabled
these provinces to weather the austerity program; without these
foreign markets, Beijing's grip would have been all the tighter.
As Beijing's influence over the regions and sectors most closely
integrated into the global economy has diminished, these regions
and sectors have become increasingly sensitive to global economic
conditions. Revocation of China's MFN trading status would cause
unemployment to rise and factory losses to mount in export-
producing regions.
E. Conclusion
CONFIDENTIAL
CONF IDENTIAL
DRAFT
Those who engineered the violence in China in June 1989 are
unlikely to bear the economic costs associated with the denial of
MFN. Instead, those who suffer would be American businesses and
their employees, American consumers, and the people of Hong Kong
and the progressive areas of China.
China's opening to the outside world over the past decade has
accelerated growth in the non-state sectors of the economy;
resulted in strong links between China's coastal regions and the
global economy that have enabled this reformist region to weather
Beijing's periodic efforts to reimpose central government control
over economic activity; and introduced market concepts to a
generation of Chinese managers involved in joint ventures, trade
negotiations, and training in the West. For this process to
continue, China's most-favored-nation treatment in the United
States is essential.
CONFIDENTIAL
PART II:
ADMINISTRATION'S ACTIONS WITH RESPECT TO PROLIFERATION CONCERNS
We are engaged in a high-level dialogue with the Chinese that
began early in our relationship. Looking at the broad trends in
China's nonproliferation policy since normalization in 1979, it is
clear that our dialogue has paid off in important areas, demonstrated
by China's evolution toward international consensus on
nonproliferation in areas of great importance to us. For example,
China, which once held an antagonistic view of multilateral controls
on nuclear exports, joined the IAEA in 1984 and sent observers to the
Nuclear Nonproliferation Treaty Review Conference in 1990.
China's support for the Middle East arms control initiative is
another case in point. China's participation in the initiative is a
positive step that will strengthen international nonproliferation
efforts and indicates China's resolve to contribute to efforts to
attain stability in the Middle East. In addition, China's willingness
to participate in multilateral efforts to reduce tension in South Asia
will be crucial to establishing stability in that volatile region.
Moreover, we have seen Chinese arms sales restraint in some areas
of where we have vital interests. For example, to the best of our
knowledge, apart from the 1987/88 sale of missiles to Saudi Arabia,
China has not delivered medium-range missiles to the Middle East. It
is clear that in other specific cases China has taken international
concerns into account and declined proposed missile exports to
prospective buyers.
It is because serious concerns remain that we want to maintain a
constructive nonproliferation dialogue with Beijing. We do not intend
to ignore current problems, but isolating China by dismantling the
framework for our relations is not the way to advance our
nonproliferation objectives.
We have the means available to underscore our concerns where there
are differences in our approaches to nonproliferation and we have used
these legislative and executive branch tools. For example, we have
imposed trade sanctions mandated by the National Defense Authorization
Act on Chinese entities involved in missile-related activities. We
have also announced the Administration's decision that, pending
progress toward our nonproliferation objectives, we will not license
high speed computers and will not issue further waivers of legislative
restrictions on satellite exports. These new sanctions have been
imposed in addition to the existing sanctions announced immediately
following the June 1989 assault on Tiananmen and amplified by Congress
in the State Authorization Bill for FY90-91. Moreover, we have not
certified China under the bilateral agreement for nuclear cooperation
that took effect in 1985.
Our policy mix of sanctions and cooperation at any given time is
necessarily dependent on Chinese behavior. We are encouraged by
China's indication in June that it is reviewing its policies with
respect to the Missile Technology Control Regime and the NPT. We seek
China's adherence to the NPT and the MTCR guidelines and will do all
we can to promote concrete steps toward Chinese adherence to the key
multilateral standards for international behavior established by these
institutions. The Administration will continue to use the legislative
authority that already exists and will take resolute action if the
Chinese do not address favorably our nonproliferation concerns.
PART III: HUMAN RIGHTS
Human rights concerns have been at the heart of our
relationship with the PRC since the tragic events of June
1989. Every high-level meeting since that time has at least
touched on human rights issues, and several -- such as the
December 1990 visit to China by Assistant Secretary Schifter --
have been devoted exclusively to them. We have consistently
stressed to the Chinese leadership that there can be no return
to the kind of relationship we enjoyed before 1989 without
substantial improvements in China's human rights practices.
Our overall approach on human rights issues has consisted of:
o
Public expressions of concern.
-- President Bush condemned the brutal suppression of
demonstrations in Tiananmen Square in June 1989, the
first world leader to do so. He declared May 13, 1990
a National Day in Support of Freedom and Human Rights
in commemoration of the 1989 demonstrations, and
issued another statement to mark the anniversary of
the crackdown in 1991.
--
In our human rights reports for 1989 and 1990, we
strove to be fair but hard-hitting, and as accurate as
available information would allow. These reports have
drawn high praise from human rights groups, and harsh
condemnations from the Chinese government.
--
The State Department issued a statement on January 9,
1991 condemning the trials of nonviolent dissidents.
--
In April 1991 the President met the Dalai Lama at the
White House to demonstrate our respect for His
Holiness' nonviolent approach to conflict resolution
and our concern for human rights problems in Tibet.
o
Suspension of bilateral programs. On June 6 and June 20,
1989, the President announced the suspension of a number of
bilateral programs and changes in U.S. approach to
multilateral issues until the human rights climate in China :
improved. Those suspensions generally remain in effect.
-- A multitude of high-level exchange visits that would
normally have taken place since 1989 have been
canceled. Only a very limited number of visits at and
above Assistant Secretary level have been approved on
a case-by-case basis, and only when they addressed
issues of key concern to the U.S. like human rights,
nonproliferation, unfair trade practices and narcotics.
- 2 -
--
Military exchange visits have been suspended
completely.
-- Work on several existing military equipment and
technology projects has been suspended indefinitely.
--
We have stopped the transfer of military or dual-use
equipment or technology to Chinese military and
security services.
--
The U.S. sought to postpone all multilateral
development bank loans to China from June 1989 to
January 1990. Since then, we have supported only
those loans that serve the basic human needs of the
Chinese people.
--
We have suspended grants, loans and insurance
guarantees to China under the Trade and Development
Program and OPIC.
--
We have worked through COCOM to suspend planned
liberalization of export controls to China.
o
Engagement in dialogue. Through the few high-level visits
that have been authorized, and through regular diplomatic
channels, we have engaged the Chinese government in an
unprecedented continuing dialogue on a wide range of human
rights issues.
:
The Scowcroft-Eagleburger missions of July and
December 1989 were devoted primarily to laying out our
human rights concerns and suggesting steps the Chinese
could take to address them.
--
During Chinese Foreign Minister Oian's visit to
Washington in November 1990, President Bush and
Secretary Baker reiterated the need for progress on
human rights, and stressed that human rights is a
cornerstone of American foreign policy.
--
Assistant Secretary Schifter visited China in December
1990, the first time our top human rights official has
done so. In 16 hours of intense discussions with
senior Chinese officials, he spelled out in detail our
human rights concerns in a wide range of areas
including accounting of detainees, release of
political prisoners, denial of due process and fair
and open trials, treatment of prisoners, divergence of
Chinese law from international standards, respect for
freedom of religon, abusive implementation of family
planning regulations, and human rights problems in
Tibet. He delivered a list of 151 representative
cases of reported political incarceration, and asked
Chinese authorities to clarify the status of the cases
- 3 -
and release those whose imprisonment violated
international norms. He suggested changes in Chinese
laws and judicial processes that would bring them into
conformity with international standards.
-- Under Secretary Kimmitt in May 1991 reiterated many of
the points made by Assistant Secretary Schifter, and
called on the Chinese government to declare an amnesty
for all those imprisoned for nonviolent political
activities. He also urged the Chinese to implement
effectively their claimed prohibition on export of
prison labor products.
These actions have produced results. Most importantly, the
Chinese government has acknowledged the legitimacy of human
rights as a subject of bilateral discussion, both with us and
with other concerned governments. They received a
Congressional delegation devoted exclusively to human rights
concerns in March 1991, and agreed to receive another later
this year. They also agreed to receive human rights
delegations to be sent by the governments of France and
Australia. In addition, they have taken a number of modest but
positive steps to improve the human rights situation in China:
o
Martial law was lifted in Beijing in January 1990 and in
Lhasa four months later. No part of China is currently
subject to martial law.
O
Most of those detained after the Tiananmen tragedy were
released by the end of 1989. Chinese authorities announced
the release of nearly 1000 more detainees in 1990, and
about 70 have been released so far in 1991. Officials
claim that only 21 still await trial detention in Beijing,
and at least one of these -- labor leader Han Dongfang --
has been released for medical treatment.
o
While at least 30 persons have been convicted on political
charges since the beginning of the year, the sentences
meted out to them were generally less severe than those
imposed on similar charges in previous years. Those
released without further punishment included prominent
dissidents such as essayist Liu Xiaobo, journalist Zhang
Weiguo, playwright Wang Peigong, and legal scholar Chen
..
Xiaoping.
Leading dissident Fang Lizhi and his wife, who had obtained
refuge in the U.S. Embassy in Beijing for over a year, were
allowed to leave China in June 1990, and are now at
Princeton.
Most investigations of those involved in the 1989 protests
have ended, and most of our Chinese contacts report that
the oppressive atmosphere of 1989 has lifted significantly.
- 4 -
The Chinese have ceased the most odious forms of harassment
of Chinese students and scholars in the U.S.; harassment
was a serious problem in 1989 and early 1990.
Relatives of many, though not all, overseas dissidents have
been allowed to leave China and join them abroad. In some
of the remaining cases that we have raised with Chinese
officials, passports have subsequently been issued.
Several released dissidents, including Tiananmen hunger
striker Gao Xin and former Arizona State student Yang Wei,
have been allowed to leave the country.
Chinese authorities have undertaken to stop the export to
the U.S. of products made in Chinese prisons. We will
continue to monitor this situation closely, but it appears
that the Chinese government is taking increasingly specific
steps to enforce their prohibition on export of these
products.
In response to concerns expressed by Administration
officials and Members of Congress, the Chinese have
provided useful new information on the status of persons
reported detained for religious activities.
Economic reforms have resumed, in some cases matching or
exceeding levels reached before 1989. Some limited
political reforms, in important but relatively
noncontroversial areas such as the personnel system, have
continued. An Administrative Procedure Law that became
effective in October 1990 for the first time enables
Chinese citizens to sue abusive officials.
There are indications that further progress may be in the
offing. We are continuing to press the Chinese government to
release all remaining detainees, to commute the sentences of
those nonviolent dissidents already convicted, and to allow the
departure of the remaining relatives of overseas dissidents who
wish to leave. We are hopeful that a combination of dialogue
and specifically targeted pressure will lead to further
movement on these and other remaining issues of concern. And
in the longer term, we are confident that the momentum toward
greater freedom and democratization in China, built up during
:
the decade of reforms and dramatically reflected in the 1989
demonstrations, will prove irreversible.
Prezio
ID# 248968
THE WHITE HOUSE
CORRESPONDENCE TRACKING WORKSHEET
TAWS
INCOMING
DATE RECEIVED: JUNE 24, 1991
NAME OF CORRESPONDENT: THE HONORABLE MAX BAUCUS
SUBJECT: CONCERNS REGARDING MOST FAVORED NATION STATUS
FOR CHINA
ACTION
DISPOSITION
ROUTE TO:
ACT
DATE
TYPE C COMPLETED
OFFICE/AGENCY
(STAFF NAME)
CODE YY/MM/DD RESP D YY/MM/DD
FREDERICK MCCLURE
ORG 91/06/24
C91106/27"
NSSITT
REFERRAL NOTE:
A
n0627
/
/
REFERRAL NOTE:
/
7
/
7
REFERRAL NOTE:
7
7
/
7
REFERRAL NOTE:
/
/
/
/
REFERRAL NOTE:
COMMENTS:
ADDITIONAL CORRESPONDENTS: 14 MEDIA:L INDIVIDUAL CODES: 1210 1220
MAIL
USER CODES: (A)
(B)
(C)
*ACTION CODES:
*DISPOSITION
*OUTGOING
*
*
*
*CORRESPONDENCE:
*
*A-APPROPRIATE ACTION *A-ANSWERED
*TYPE RESP=INITIALS
*
*C-COMMENT/RECOM #B-NON-SPEC-REFERRAL
*
OF SIGNER
*
*D-DRAFT RESPONSE:
*C-COMPLETED
*
CODE = A
*
*F-FURNISH FACT SHEET *S-SUSPENDED
*COMPLETED = DATE OF
*
*I-INFO COPY/NO ACT NEC*
*
OUTGOING
*
*R-DIRECT REPLY W/COPY *
*
*
*S-FOR-SIGNATURE
*
*
*
*X-INTERIM REPLY
*
*
*
REFER QUESTIONS AND ROUTING UPDATES TO CENTRAL REFERENCE
(ROOM 75,OEOB) EXT-2590
KEEP THIS WORKSHEET ATTACHED TO THE ORIGINAL INCOMING
LETTER AT ALL TIMES AND SEND COMPLETED RECORD TO RECORDS
MANAGEMENT.
SENATOR BROCK ADAMS
SENATOR PAUL WELLSTONE
SENATOR DANIEL AKAKA
SENATOR TIMOTHY WIRTH
SENATOR MAX BAUCUS
SENATOR HARRIS WOFFORD
SENATOR LLOYD BENTSEN
SENATOR JOSEPH BIDEN
SENATOR JEFF BINGAMAN
SENATOR DAVID BOREN
SENATOR BILL BRADLEY
SENATOR JOHN BREAUX
SENATOR RICHARD BRYAN
SENATOR DALE BUMPERS
SENATOR QUENTIN BURDICK
SENATOR ROBERT BYRD
SENATOR KENT CONRAD
SENATOR ALAN CRANSTON
SENATOR THOMAS DASCHLE
SENATOR DENNIS DECONCINI
SENATOR ALAN DIXON
SENATOR CHRISTOPHER DODD
SENATOR JAMES EXON
SENATOR WENDELL FORD
SENATOR WYCHE FOWLER
SENATOR JOHN GLENN
SENATOR AL GORE
SENATOR ROBERT GRAHAM
SENATOR TOM HARKIN
SENATOR HOWELL HEFLIN
SENATOR FRITZ HOLLINGS
SENATOR DANIEL INOUYE
SENATOR BENNETT JOHNSTON
SENATOR TED KENNEDY
SENATOR JOHN KERRY
SENATOR BOB KERREY
SENATOR HERB KOHL
SENATOR FRANK LAUTENBERG
SENATOR PATRICK LEAHY
SENATOR CARL LEVIN
SENATOR JOSEPH LIEBERMAN
SENATOR HOWARD METZENBAUM
SENATOR BARBARA MIKULSKI
SENATOR GEORGE MITCHELL
SENATOR DANIEL MOYNIHAN
SENATOR SAM NUNN
SENATOR CLAIBORNE PELL
SENATOR DAVID PRYOR
SENATOR HARRY REID
TOTALS
SENATOR DONALD RIEGLE
SENATOR CHARLES ROBB
1.
No Conditions
SENATOR JOHN ROCKEFELLER
2.
Undecided on Conditions
SENATOR TERRY SANFORD
3.
Mild Condition
SENATOR PAUL SARBANES
4.
Supports Mitchell
SENATOR JIM SASSER
5.
Opposes MFN
SENATOR RICHARD SHELBY
SENATOR PAUL SIMON
SENATOR CHRISTOPHER BOND
SENATOR HANK BROWN
SENATOR CONRAD BURNS
SENATOR JOHN CHAFEE
SENATOR DAN COATS
SENATOR THAD COCHRAN
SENATOR WILLIAM COHEN
SENATOR LARRY CRAIG
SENATOR ALFONSE D'AMATO
SENATOR JOHN DANFORTH
SENATOR ROBERT DOLE
SENATOR PETE DOMENICI
SENATOR DAVE DURENBERGER
SENATOR JAKE GARN
SENATOR SLADE GORTON
SENATOR PHIL GRAMM
SENATOR CHARLES GRASSLEY
SENATOR ORRIN HATCH
SENATOR MARK HATFIELD
SENATOR JESSE HELMS
SENATOR JAMES JEFFORDS
SENATOR NANCY KASSEBAUM
SENATOR ROBERT KASTEN
SENATOR TRENT LOTT
SENATOR RICHARD LUGAR
SENATOR CONNIE MACK
SENATOR JOHN MCCAIN
SENATOR MITCH MCCONNELL
SENATOR FRANK MURKOWSKI
SENATOR DON NICKLES
SENATOR BOB PACKWOOD
SENATOR LARRY PRESSLER
SENATOR WILLIAM ROTH
SENATOR WARREN RUDMAN
SENATOR JOHN SEYMOUR
SENATOR ALAN SIMPSON
SENATOR ROBERT SMITH
SENATOR ARLEN SPECTER
SENATOR TED STEVENS
SENATOR STEVEN SYMMS
SENATOR STROM THURMOND
SENATOR MALCOLM WALLOP
SENATOR JOHN WARNER
TOTALS
1.
No Conditions
2.
Undecided on Conditions
3.
Mild Condition
4.
Supports Mitchell
5.
Opposes MFN
June 25, 91
SENATOR CHRISTOPHER BOND
1
SENATOR HANK BROWN
2
SENATOR CONRAD BURNS
2
SENATOR JOHN CHAFEE
1
SENATOR DAN COATS
2
SENATOR THAD COCHRAN
1
SENATOR WILLIAM COHEN
3
SENATOR LARRY CRAIG
1
SENATOR ALFONSE D'AMATO
4
SENATOR JOHN DANFORTH
1
SENATOR ROBERT DOLE
1
SENATOR PETE DOMENICI
1
SENATOR DAVE DURENBERGER
1
SENATOR JAKE GARN
1
SENATOR SLADE GORTON
5 3
SENATOR PHIL GRAMM
1
SENATOR CHARLES GRASSLEY
21
OK
SENATOR ORRIN HATCH
1
SENATOR MARK HATFIELD
21
one
SENATOR JESSE HELMS
0
SENATOR JAMES JEFFORDS
3
SENATOR NANCY KASSEBAUM
1
SENATOR ROBERT KASTEN
2
SENATOR TRENT LOTT
2
SENATOR RICHARD LUGAR
1
SENATOR CONNIE MACK
$ 5
SENATOR JOHN MCCAIN
1
SENATOR MITCH MCCONNELL
1
SENATOR FRANK MURKOWSKI
1
SENATOR DON NICKLES
1
SENATOR BOB PACKWOOD
11
SENATOR LARRY PRESSLER
1
SENATOR WILLIAM ROTH
1
SENATOR WARREN RUDMAN
1
SENATOR JOHN SEYMOUR
2
SENATOR ALAN SIMPSON
1
SENATOR ROBERT SMITH
3 5
SENATOR ARLEN SPECTER
2
SENATOR TED STEVENS
1
SENATOR STEVEN SYMMS
31
Oic w) GATT
SENATOR STROM THURMOND
1
SENATOR MALCOLM WALLOP
4
SENATOR JOHN WARNER
1
TOTALS
1.
No Conditions
24 28
2.
Undecided on Conditions
10 7
3.
Mild Condition
$4 3
4.
Supports Mitchell
z #2
5.
Opposes MFN
23 5
June 13, 91
SENATOR CHRISTOPHER BOND
1
SENATOR HANK BROWN
2
SENATOR CONRAD BURNS
22
-
SENATOR JOHN CHAFEE
1
SENATOR DAN COATS
2
SENATOR THAD COCHRAN
1
SENATOR WILLIAM COHEN
3
SENATOR LARRY CRAIG
SENATOR ALFONSE D'AMATO
4
SENATOR JOHN DANFORTH
1
SENATOR ROBERT DOLE
1
SENATOR PETE DOMENICI
1
-
SENATOR DAVE DURENBERGER
1
SENATOR JAKE GARN
1
SENATOR SLADE GORTON
5
- (TAIWAN, STUDENTS)
SENATOR PHIL GRAMM
1
SENATOR CHARLES GRASSLEY
2
SENATOR ORRIN HATCH
1
SENATOR MARK HATFIELD
2
-
SENATOR JESSE HELMS
5
SENATOR JAMES JEFFORDS
3
SENATOR NANCY KASSEBAUM
1
-
SENATOR ROBERT KASTEN
2
(STUDENTS)
SENATOR TRENT LOTT
2
.
(MISSILES, TRADE)
SENATOR RICHARD LUGAR
1
SENATOR CONNIE MACK
243 -
SENATOR JOHN MCCAIN
31
-
SENATOR MITCH MCCONNELL
1
SENATOR FRANK MURKOWSKI
1
SENATOR DON NICKLES
1
SENATOR BOB PACKWOOD
3
SENATOR LARRY PRESSLER
3
SENATOR WILLIAM ROTH
L
SENATOR WARREN RUDMAN
1
SENATOR JOHN SEYMOUR
2
(STUDENTS)
SENATOR ALAN SIMPSON
1.
SENATOR ROBERT SMITH
3
SENATOR ARLEN SPECTER
2
SENATOR TED STEVENS
1.
SENATOR STEVEN SYMMS
2
(TAIWAN)
SENATOR STROM THURMOND
1
SENATOR MALCOLM WALLOP
4
(TAIWAN)
SENATOR JOHN WARNER
1
TOTALS
1.
No Conditions
25
24
2.
Undecided on Conditions
11
10
3.
Mild Condition
$
5
4.
Supports Mitchell
2
NEW
2
5. Opposes MFN
2
2
CONFIDENTIAL
TOPIC: CHINA MFN
MEMBER
SUPPORT MFN
CONCERNS
BOND
SUPPORTS
UNCONDITIONALLY -- OFFERED
TO SPEAK ON FLOOR.
BROWN
UNDECIDED
CONCERNS WITH NUCLEAR
PROLIFERATION, TRADE
DEFICIT. DID NOT SUPPORT
PRESIDENT IN THE HOUSE
LAST YEAR.
BURNS
SUPPORTS
CHAFEE
SUPPORTS
COATS
UNDECIDED
MIGHT BE LEANING TOWARDS
ADMINISTRATION -- HAS A
LOT OF CONSTITUENT MAIL
ON THE SUBJECT. BUSINESS
PEOPLE IN INDIANA ARE
PRESSING HIM TO SUPPORT.
HE REMAINS NONCOMMITTAL.
COCHRAN
SUPPORTS
GENERALLY WANTS TO SEE
ISSUES SUCH AS HUMAN
RIGHTS AND PRISON LABOR
ADDRESSED, YET NOT AS
CONDITIONS TO MFN RENEWAL.
COHEN
UNDECIDED
WOULD BE AMENABLE TO
SEEING CONDITIONS SET
DOWN THAT CHINESE ARE ABLE
TO MEET. SIGNED ROTH
LETTER. STAFFER THINKS
AKS SHOULD TALK TO COHEN.
CRAIG
SUPPORTS
COSIGNED BAUCUS LETTER
TO PRESIDENT. IN FAVOR
OF SOME CONDITIONS. WANTS
SOME STIPULATIONS ON HUMAN
RIGHTS.
D'AMATO
OPPOSED
MITCHELL COSPONSOR
DANFORTH
SUPPORTS
DOLE
SUPPORTS
SUPPORT PRESIDENT
DOMENICI
SUPPORTS
IN FAVOR OF MILD
CONDITIONS
DURENBERGER
SUPPORTS
DECLASSIFIED
PER NSC WAIVER, 1500 2021-02
By 55 NARA, Date 6/23/25
GARN
LEANING OP.
WILL PROBABLY GO
AGAINST PRESIDENT.
VOTED AGAINST HIM LAST
YEAR. THINKS IT IS TIME
FOR A MORAL STAND AND
THINKS IF A DEM ADMIN WAS
POWER THE REPUBLICANS
WOULD BE SHARPLY OPPOSED
TO GRANTING P.R.C. MFN
STATUS. VERY CONCERNED
ABOUT TECH TRANSFERS.
GORTON
UNDECIDED
INTERESTED IN INTRODUCING
PELOSI-TYPE LEGISLATION.
WOULD LIKE TO SEE CHINESE
STUDENT IMMIGRATION
PROBLEM SOLVED.
GRAMM
SUPPORTS
DOES NOT WANT TO GET TOO
INVOLVED. DOES BELIEVE
THAT DENIAL OF MFN WOULD
ADVERSELY AFFECT THE U.S.
CONSUMER.
GRASSLEY
LEANING FOR
HATCH
SUPPORTS
HATFIELD
SUPPORTS
THINKS SOME KIND OF
HUMAN RIGHTS MESSAGE
IS NECESSARY. WOULD
NOT VOTE FOR ANY
CONDITIONS THAT WOULD BE
IMPOSSIBLE TO "ENFORCE" OR
PROVE.
HELMS
OPPOSED
HAS INTRODUCED PRISON
LABOR BILL.
JEFFORDS
LEANS OP.
INTERESTED IN MILDER
CONDITIONS THAN WHAT
THE MITCHELL BILL HAS.
WOULD BE INTERESTED IN
REPUBLICAN ALTERNATIVE.
KASSEBAUM
SUPPORTS
SIGNED ON TO BAUCUS
LETTER. CONCERNED
ABOUT ARMS SALES.
KASTEN
UNDECIDED
HAS GRAVE CONCERNS AND IS
LEANING TOWARD OPPOSING
MFN UNLESS A GOOD
ALTERNATIVE IS INTRODUCED.
LOTT
UNDECIDED
LUGAR
SUPPORTS
PUBLICLY SUPPORTS GEORGE
BUSH ON THIS ISSUE. IS
DEBATING MITCHELL ON HIS
BILL. WILLING TO HELP
ASSIST IN ANY WAY ON
ADMINISTRATION POSITION.
COSIGNED BAUCUS LETTER.
MACK
LEANING OP.
VOTED WITH PRESIDENT LAST
YEAR. UPSET THAT
PRESIDENT DID NOT FOLLOW
THROUGH ON HIS PROMISE TO
ENSURE THAT P.R.C. WOULD
CHANGE THEIR WAYS. NOT A
FIRM OPPOSITION BUT HAS
RELEASED 2 PRESS RELEASES
THAT HE HAS A PROBLEM WITH
MFN FOR CHINA.
MCCAIN
UNDECIDED
IS INCLINED TO SUPPORT
THE PRESIDENT BUT IS
STILL DEBATING THE ISSUE.
MCCONNELL
SUPPORTS
WOULD BE INTERESTED IN
COMPROMISE LEGISLATION.
MURKOWSKI
SUPPORTS
WOULD LIKE TO SEE
SOMETHING ADDRESSING
HUMAN RIGHTS ISSUE.
RANKING MINORITY MEMBER
OF EAST ASIAN AND PACIFIC
AFFAIRS SUBCOMMITTEE -
FOREIGN RELATIONS COMM.
NICKLES
SUPPORTS
HAS CONCERNS ABOUT PRISON
LABOR AND MISSILE SALES
BUT IS GENERALLY
SUPPORTIVE OF PRESIDENT.
PACKWOOD
SUPPORTS
NEEDS ADDITIONAL COVERAGE.
PRESSLER
SUPPORTS
TOLD THE PRESIDENT
THAT HE WOULD SUPPORT
HIM -- BUT DID NOT SAY
HE WOULD VOTE FOR MFN
WITHOUT CONDITIONS.
HAS HUMAN RIGHTS CONCERNS
AND WOULD BE VERY
INTERESTED IN LEGISLATION
WITH CONDITIONS INTRODUCED
BY REPUBLICANS
ROTH
UNDECIDED
SIGNED BAUCUS LETTER. SENT
LETTER TO PRESIDENT
CONCERNING TAIWIAN'S
MEMBERSHIP IN GATT.
RUDMAN
SUPPORTS
SUPPORTS PRESIDENT, BUT
MIGHT BE INTERESTED IN
MILD CONDITIONS.
SEYMOUR
UNDECIDED
WOULD LIKE TO SUPPORT
PRESIDENT, BUT
REALISTICALLY, HE NEEDS
"SOME COVER" IN CALIF.,
SO HE WOULD LIKE TO SEE
MAYBE A HUMAN RIGHTS
PROVISION AND STILL NEEDS
TO EVALUATE HIS
CONSTITUENCIES IN-STATE.
SMITH
OPPOSED
WOULD SUPPORT MFN IF
STRONG CONDITIONS WERE
ATTACHED.
SPECTER
UNDECIDED
STILL STUDYING THE ISSUE.
STEVENS
SUPPORTS
STRONG SUPPORTER -- MFN
WITH NO CONDITIONS.
SYMMS
UNDECIDED
SUPPORTS MILD CONDITIONS.
SUPPORTS TAIWAN MEMBERSHIP
TO THE GATT. SEES TAIWAN
AS MAJOR TRUMP CARD.
THURMOND
SUPPORTS
VERY CONCERNED OVER THE
PRISON LABOR ISSUE. MAY
SIGN ON TO HELMS BILL TO
PUT SANCTIONS ON PRODUCTS
PRODUCED BY PRISONERS.
WALLOP
OPPOSED
MITCHELL BILL COSPONSOR.
BELIEVES THE TIME IS NOW
TO PUT DOWN OUR FOOT FOR
CHINA'S HUMAN RIGHTS
ABUSES.
WARNER
SUPPORTS
NOT PREPARED TO GO AGAINST
ANY LEGISLATIVE EFFORT
THAT THE ADMINISTRATION
DOES NOT SUPPORT.
June 13, 91
SENATOR BROCK ADAMS
3
SENATOR PAUL WELLSTONE
4
SENATOR DANIEL AKAKA
4
SENATOR TIMOTHY WIRTH
4
SENATOR MAX BAUCUS
N
SENATOR HARRIS WOFFORD
4
SENATOR LLOYD BENTSEN
ad
SENATOR JOSEPH BIDEN
4
SENATOR JEFF BINGAMAN
2
SENATOR DAVID BOREN
2
/
SENATOR BILL BRADLEY
4
SENATOR JOHN BREAUX
2
SENATOR RICHARD BRYAN
4
SENATOR DALE BUMPERS
SENATOR QUENTIN BURDICK
2
SENATOR ROBERT BYRD
SENATOR KENT CONRAD
2
SENATOR ALAN CRANSTON
4
SENATOR THOMAS DASCHLE
2
\
SENATOR DENNIS DECONCINI
4
SENATOR ALAN DIXON
4
SENATOR CHRISTOPHER DODD
4
SENATOR JAMES EXON
a
SENATOR WENDELL FORD
4
SENATOR WYCHE FOWLER
SENATOR JOHN GLENN
4
SENATOR AL GORE
SENATOR ROBERT GRAHAM
L
SENATOR TOM HARKIN
SENATOR HOWELL HEFLIN
2
\
SENATOR FRITZ HOLLINGS
4
SENATOR DANIEL INOUYE
5
SENATOR BENNETT JOHNSTON
2
SENATOR TED KENNEDY
4
SENATOR JOHN KERRY
4
SENATOR BOB KERREY
4
SENATOR HERB KOHL
SENATOR FRANK LAUTENBERG
SENATOR PATRICK LEAHY
4
SENATOR CARL LEVIN
4
SENATOR JOSEPH LIEBERMAN
3
SENATOR HOWARD METZENBAUM
4
SENATOR BARBARA MIKULSKI
if
SENATOR GEORGE MITCHELL
5
SENATOR DANIEL MOYNIHAN
L
SENATOR SAM NUNN
SENATOR CLAIBORNE PELL
4
SENATOR DAVID PRYOR
2
SENATOR HARRY REID
TOTALS
SENATOR DONALD RIEGLE
3
SENATOR CHARLES ROBB
2
1.
No Conditions
0
SENATOR JOHN ROCKEFELLER
4
2.
Undecided on Conditions
10
SENATOR TERRY SANFORD
& 4
3.
Mild Condition
3
SENATOR PAUL SARBANES
4
4.
Supports Mitchell
29
SENATOR JIM SASSER
4
5.
Opposes MFN
SENATOR RICHARD SHELBY
SENATOR PAUL SIMON
THE WHITE HOUSE
WASHINGTON
July 10, 1991
MEMORANDUM FOR WHITE HOUSE STAFF MESS MEMBERS
FROM:
RICHARD G. TREFRY
per
MILITARY ASSISTANT TO THE PRESIDENT
During the period July 15-22, 1991, while the President is
travelling, the White House Staff Mess will close after the noon
meal is served. There will be no dinner service available during
this period.
#
11 Breaux- would vote note was - floor. not how he
#
Sampril- (all Textiles) -Hills
Eag leburge
#
Dischle- - give
Bropers M9s # to Syria
#
Leken bad # staff
Heflin - textiles - Have you
Born - stap Matibill Leaving frund
#
Wally response will be week
Y
Abercrombie
Y
Clay
Y
Evans
Y
Ackerman
Y
Coleman (TX)
Y
Flake
Y
Andrews (ME)
Y Collins (IL)
Y
Foglietta
Y
Andrews (NJ)
Y
Collins (MI)
Y
Ford (MI)
Y
Annunzio
Y
Condit
Y
Ford (TN)
Y
Anthony
Y
Conyers
Y
Frank (MA)
Y
Applegate
Y
Costello
Y
Frost
Y
Atkins
Y
Cramer
Y
Gaydos
Y
Barnard
Y
DeFazio
Y
Gejdenson
Y
Bennett
Y
Dellums
Y
Gephardt
Y
Berman
Y
Derrick
Y
Gonzalez
Y
Bevill
Y
Dixon
Y
Gordon
Y
Bilbray
Y
Donnelly
Y
Hall (OH)
Y
Bonior
Y
Downey
Y
Harris
Y
Borski
Y
Durbin
Y
Hatcher
Y
Boxer
Y
Dwyer
Y
Hayes (IL)
Y
Browder
Y
Early
Y
Hayes (LA)
Y
Bruce
Y
Eckart
Y
Hefner
Y
Bryant
Y
Edwards (CA)
Y
Hertel
Y
Bustamante
Y
Edwards (TX)
Y
Hochbrueckner
Y
Campbell (CO)
Y
Engel
Y
Horn
Y
Cardin
Y
Erdreich
Y
Hoyer
Y
Carper
Y
Espy
Y
Hubbard
ROLL NO. 203
DEMOCRATIC
-
YEAS
-
Y
Hughes
Y
Martinez
Y
Owens (UT)
Y
Hutto
Y
Mavroules
Y
Pallone
Y
Jefferson
Y
McCurdy
Y
Panetta
Y
Jenkins
Y
McHugh
Y
Parker
Y
Jones (GA)
Y
McNulty
Y
Patterson
Y
Jones (NC)
Y
Mfume
Y
Payne (NJ)
Y
Kanjorski
Y
Miller (CA)
Y
Pelosi
Y
Kennedy
Y
Mineta
Y
Perkins
Y
Kildee
Y
Mink
Y
Poshard
Y
Kleczka
Y
Moakley
Y
Price
Y
Kolter
Y
Mollohan
Y
Rahall
Y
Kostmayer
Y
Moran
Y
Rangel
Y
LaFalce
Y
Mrazek
Y
Ray
Y
Lantos
Y
Natcher
Y
Richardson
Y
Lehman (CA)
Y
Neal (MA)
Y
Rose
Y
Levin (MI)
Y
Neal (NC)
Y
Roybal
Y
Levine (CA)
Y
Nowak
Y
Russo
Y
Lewis (GA)
Y
Oakar
Y
Sabo
Y
Lipinski
Y
Oberstar
Y
Sawyer
Y
Lloyd
Y
Obey
Y
Scheuer
Y
Lowey (NY)
Y
Olin
Y
Schroeder
Y
Manton
Y
Olver
Y
Schumer
Y
Markey
Y
Owens (NY)
Y
Sikorski
ROLL NO. 203
DEMOCRATIC
-
YEAS
- CONTINUED
Y
Sisisky
Y
Waters
Y
Slaughter (NY)
Y
Waxman
Y
Smith (FL)
Y
Weiss
Y
Spratt
Y
Wheat
Y
Staggers
Y
Whitten
Y
Stark
Y
Wilson
Y
Stokes
Y
Wise
Y
Studds
Y
Wolpe
Y
Synar
Y
Yates
Y
Tallon
Y
Yatron
Y
Tauzin
Y
Taylor (MS)
Y
Thomas (GA)
Y
Thornton
Y Torricelli
Y
Towns
Y
Traficant
Y
Traxler
Y
Unsoeld
Y
Valentine
Y
Vento
Y
Visclosky
Y
Washington
ROLL NO. 203
DEMOCRATIC
-
YEAS
- CONTINUED
N
Alexander
N
Dooley
N
Laughlin
N
Anderson
N
Dorgan (ND)
N
Lehman (FL)
N
Andrews (TX)
N
Dymally
N
Long
N
Aspin
N
English
N
Luken
N
AuCoin
N
Fascell
N
Matsui
N
Bacchus
N
Fazio
N
Mazzoli
N
Beilenson
N
Feighan
N
McCloskey
N
Boucher
N
Geren
N
McDermott
N
Brewster
N
Gibbons
N
McMillen (MD)
N
Brooks
N
Glickman
N
Montgomery
N
Brown
N
Guarini
N
Moody
N
Byron
N
Hall (TX)
N
Murphy
N
Carr
N
Hamilton
N
Murtha
N
Chapman
N
Hoagland
N
Nagle
N
Clement
N
Huckaby
N
Ortiz
N
Cooper
N
Johnson (SD)
N
Orton
N
Cox (IL)
N
Johnston
N
Payne (VA)
N
Coyne
N
Jontz
N
Pease
N
Darden
N
Kaptur
N
Penny
N
de la Garza
N
Kennelly
N
Peterson (FL)
N
DeLauro
N
Kopetski
N
Peterson (MN)
N
Dicks
N
Lancaster
N
Pickett
N
Dingell
N
LaRocco
N
Pickle
ROLL NO. 203
DEMOCRATIC
-
NAYS
-
N
Reed
N
Roe
N
Roemer
N
Rostenkowski
N
Rowland
N
Sangmeister
N
Sarpalius
N
Savage
N
Sharp
N
Skaggs
N
Skelton
N
Slattery
N
Smith (IA)
N
Solarz
N
Stallings
N
Stenholm
N
Swett
N
Swift
N
Tanner
N
Torres
N
Volkmer
N
Williams
N
Wyden
ROLL NO. 203
DEMOCRATIC -
NAYS
- CONTINUED
- Foley
- Gray
- Jacobs
- Serrano
ROLL NO. 203
DEMOCRATIC -NOT VOTING -
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Page 1 of 6
$ CHAMBER OF COMMERC TEL No 2024633114
Jul 1,91 12:00 No .004 P.01
U.S. Chamber of Commerce
Washington, D.C. 20062
CHINA MFN ALERT!!!
VOTES ARE IMMINENT
VOTES ARE LIKELY IN BOTH THE HOUSE
AND SENATE IN THE NEXT COUPLE OF
WEEKS (BEGINNING JULY 8).
THE HOUSE RULES COMMITTEE IS
EXPECTED TO MEET TO DETERMINE WHAT
ADDITIONAL AMENDMENTS MAY BE
CONSIDERED. A FULL HOUSE VOTE
WOULD COME SHORTLY THEREAFTER.
THE SENATE MAY ATTEMPT TO SCHEDULE
A VOTE AROUND THE SAME TIME.
DON'T BE FOOLED BY SO-CALLED
"COMPROMISES" (E.G., MITCHELL).
As WRITTEN, THEY ARE TANTAMOUNT TO
DENIAL OF MFN.
PLEASE CONTACT YOUR SENATORS AND
REPRESENTATIVES AND URGE THEM TO VOTE
"NO" ON ANY BILLS WHICH DENY OR PLACE
CONDITIONS ON CONTINUED MFN STATUS
FOR CHINA.
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U. $ CHAMBER OF COMMERC TEL No 2024633114
Jul 1,91 12:00 No 004 P.02
U.S. Chamber of Commerce
LEGISLATIVE AND PUBLIC AFFAIRS
1015 H Street N.W. Washington, D.C. 20062 202/463-5406 Fax 202/453-3173
July 1, 1991
Donald 1. Kross
Vice President
IDENTICAL LETTER SENT TO
ALL SENATORS
The Honorable Brock Adams
United States Senate
Washington, D.C. 20510
Dear Senator Adams:
The U.S. Chamber of Commerce respectfully urges you to support unconditional
extension of "most-favored-nation" (MFN) trading status for China and to oppose any
resolutions, such as S. J. Res. 153 (Cranston, D-CA) and S. 1367 (Mitchell, D-ME), which
would disapprove, or impose conditions on, continuation of MFN for China.
First, MFN is itself a misnomer; there is nothing preferential or special about it.
Such treatment is routine for most industrial nations, and actually less favorable than the
Generalized System of Preferences (GSP), a tariff treatment within and augmenting MFN,
currently granted to more than 100 developing countries. While virtually all Americans are
appalled at the Chinese government's abysmal record on human rights, weapons
proliferation, and trade policy, terminating MFN will not help to improve that record. On
the contrary, denial of MFN will likely worsen these problems by providing the Chinese
government with an excuse to retaliate against U.S. interests, cement its authoritarian rule,
and further exclude U.S. political influence from that country. Such an outcome would hurt
most the very reform-minded people and sectors we are most interested in helping.
Moreover, it would jeopardize nearly $5 billion in U.S. exports and more than 100,000 U.S.
jobs that are dependent on those exports. The only real winners in such a scenario would
be the hardliners themselves and our Japanese and European competitors, whose
governments have given no indication that they are even considering tampering with MFN.
Enclosed are some additional materials which explain the importance of MFN in
greater detail. Please feel free to contact me, or the Chamber's International Division, (202-
463-5460), if you have any questions concerning this matter.
Sincerely,
Donald I conald J. Kroes 9. Kroes
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Page 3 of 6
U. S CHAMBER OF COMMERC TEL No. 2024633114
Jul 1,91 12:00 No. 004 P.03
U.S. Chamber of Commerce
LEGISLATIVE AND PUBLIC AFFAIRS
1615 H Street, N.W. Washington, D.C. 20062 202/463-5406 Fax 202/463-3173
July 1, 1991
Donald J. Kroes
Vice Prevident
IDENTICAL LETTER SENT TO
ALL REPRESENTATIVES
The Honorable Neil Abercrombie
House of Representatives
Washington, D.C. 20515
Dear Representative Abercrombie:
The U.S. Chamber of Commerce respectfully urges you to support unconditional
extension of "most-favored-nation" (MFN) trading status for China and to oppose any
resolutions, such as H. J. Res. 263 (Solomon, R-NY) and H.R. 2212 (Pelosi, D-CA), which
would disapprove, or impose conditions on, continuation of MFN for China.
First, MFN is itself a misnomer; there is nothing preferential or special about it.
Such treatment is routine for most industrial nations, and actually less favorable than the
Generalized System of Preferences (GSP), a tariff treatment within and augmenting MFN,
currently granted to more than 100 developing countries. While virtually all Americans are
appalled at the Chinese government's abysmal record on human rights, weapons
proliferation, and trade policy, terminating MFN will not help to improve that record. On
the contrary, denial of MFN will likely worsen these problems by providing the Chinese
government with an excuse to retaliate against U.S. interests, cement its authoritarian rule,
and further exclude U.S. political influence from that country. Such an outcome would hurt
most the very reform-minded people and sectors we are most interested in helping.
Moreover, it would jeopardize nearly $5 billion in U.S. exports and more than 100,000 U.S.
jobs that are dependent on those exports. The only real winners in such a scenario would
be the hardliners themselves and our Japanese and European competitors, whose
governments have given no indication that they are even considering tampering with MFN.
Enclosed are some additional materials which explain the importance of MFN in
greater detail. Please feel free to contact me, or the Chamber's International Division, (202-
463-5460), if you have any questions concerning this matter.
Sincerely,
Indd 9. Kines
Donald J. Kroes
Enclosure
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U $ CHAMBER OF COMMERC TEL No. 2024633114
Jul 1,91 12:00 No. 004 P.04
U.S. Chamber of Commerce
FACT SHEET ON SO-CALLED
"MOST FAVORED NATION" STATUS FOR CHINA
The U.S. Chamber of Commerce supports extension of "most favored nation" (MFN) status for the Peoples
Republic of China (PRC) as the best means of advancing U.S. national interests, including market-oriented
and democratic economic and political reform efforts in that country.
WHAT IS "MOST FAVORED NATION" STATUS?
Standard tariff treatment extended to over 160 countries. Only eleven countries are currently denied
MFN status.
Neither special nor preferential.
Shared with many countries with whom we have significant policy disagreements.
WHY IS MOST FAVORED NATION STATUS so IMPORTANT?
Foundation for all Sino-U.S. commercial relations, which have taken a decade to build.
Provides basis for continued business with one-fourth of the world's population.
Business contact encourages political and economic reform in China.
Loss of MFN would spark Chinese retaliation, threatening $5 billion in U.S. exports and over 100,000
U.S. jobs.
None of our trading competitors is even considering tampering with China's MFN status. The primary
beneficiaries of a unilateral U.S. pullout would be the hardline central government and our Japanese and
European competitors.
Termination of MFN would seriously damage the Hong Kong economy and the most progressive and
market-oriented coastal provinces which support reform.
U.S. leverage on the full range of our priorities with China, e.g., trade, weapons proliferation, human
rights, would be sharply reduced if MFN were terminated.
WHY NOT IMPOSE CONDITIONS IN EXCHANGE FOR
CONTINUED MOST FAVORED NATION STATUS?
Chinese are likely to reject such conditions as a violation of their sovereignty.
The U.S. is already using existing trade law, export controls, suspension of military and nuclear
cooperation, and other methods to address our various problems with China.
Conditionality would create a huge cloud of uncertainty for U.S. firms dealing with China. This
uncertainty would lead to a disengagement of U.S. business that would undermine larger U.S. interests.
OF
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S CHAMBER OF COMMERC TEL No. 2024633114
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U.S. Chamber of Commerce
WHO WINS AND LOSES IF CHINA'S "MOST
FAVORED NATION" STATUS IS TERMINATED?
LOSERS
WINNERS
Political moderates in China. Termination of
China's hardline central government. The
MFN would effectively cut the legs out from
central government is struggling to retain state
under the moderates by providing the Chinese
control and stifle dissent. Withdrawing MFN
regime with a pretext to cut off whatever
will serve as justification for the central
contacts with the U.S. currently exist.
government to clamp down on the export
market by claiming that further opening of the
U.S. exporters. Loss of MFN will trigger
Chinese market will only make them more
Chinese retaliation against U.S. exporters.
vulnerable to foreign interference. The result:
About $5 billion in U.S. exports and the
liberal, market-oriented reformers will lose
110,000 U.S. jobs they represent would be
clout.
jeopardized, as China would either purchase
similar products from Japan or Europe, or
Our Japanese and European competition. No
forego them altogether. Investment and long-
other advanced industrial nation with whom
term business relations would also be severely
China trades has given any indication that they
weakened.
will terminate MFN status for China, or that
termination of MFN status would serve their
American consumers and retailers. American
interests. The business U.S. companies lose,
consumers would pay a higher price for textiles,
and the influence the U.S. government loses,
electrical appliances, toys, footwear, apparel
will simply be picked up by our competitors.
and other items where China is the low-cost
supplier.
Hong Kong. Over half of all American imports
from China come through Hong Kong.
Termination of MFN will significantly hinder
their banking, insurance, shipping, and legal
services resulting in the loss of up to 43,000
jobs and nearly $12 billion in trade.
The "semi-private" sector in China. China's
coastal provinces produce most of China's
exports to the U.S. It is no coincidence that
these export-oriented provinces are also most
pro-reform and most resistant to central control
from Beijing. Removing MFN would damage
these provinces and seriously weaken the most
progressive forces in contemporary China.
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U.S. Chamber of Commerce
MYTHS ABOUT CHINA MFN
Myth
#1: Most-favored nation status is a reward granted by the United States to selected countries
on 8 preferred basis.
Reality:
In fact, MFN tariff treatment is actually less favorable than that which the U.S. provides
to the vast majority of our trading partners. The United States has MFN treatment with
160 countries. Such treatment provides that nations will not use tariff rates to
discriminate against other nations. However, over 100 developing countries also receive
additional tariff benefits under the Generalized System of Preferences (GSP), in order to
promote trade-based economic development. Only 11 countries do not enjoy the benefits
of GSF or an MFN relationship with the United States. Terminating MFN for China, a
developing country, would deny tariff treatment that is not only routine for most
developed countries, but also already less favorable than that accorded many other
developing countries.
Myth #2:
Removing MFN for China will improve human rights conditions in China.
Reality:
MFN removal will most hurt the progressive, outward-oriented coastal provinces of China
supportive of economic and political reform. The conservative hard liners in Beijing will
also use MFN loss as a rationale to tighten control and delay reform. Chinese contact
with U.S. firms has been a force for positive change; MFN removal will seriously reduce
this presence and lessen U.S. influence across the board.
Myth #3:
Since 1989, the United States has ignored Chinese violations of human rights, non-
profiferation, and trade practice standards. Removing MFN Is needed to signal
American disapproval of Chinese behavior.
Reality:
The U.S. Government imposed various trade sanctions against China following the
Tiananmen Square crackdown. These remain essentially in effect. In contrast, Japan
and the European Community have relaxed their sanctions. In addition, the President
recently prohibited the sale of technology to China for a satellite project and designated
China for trade action for violation of U.S. intellectual property rights.
Myth #4:
Extending MFN for China only if the Chinese meet quantifiable criteria in human
rights, trade, and other areas as determined by the U.S. Congress would be a viable
Reality:
alternative. Attaching tough conditions to MFN extension is tantamount to delayed removal. The
Chinese would be unable to meet such conditions and would resist changing their
behavior if pressured publicly to do so under the threat of MFN loss. Subject. ; the
foundation of our trading relations with China to an annual progress report on a host of
non-trade criteria will create an enormous cloud of uncertainty for U.S. firms doing
business with China. Many firms will simply pull out of China or stop trading rather than
face this unpredictability. Such disengagement from China will only undercut our long-
term national interests.
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U.S. Senate
Republican Policy
Legislative Notice
Committee
Don Nickles, Chairman
Editor. Judy Gorman Prinkey
Rick Lawson, Staff Director
No. 24
July 16, 1991
S. 1367 - United States-China Act of 1991
Calendar No. 149
Reported:
From the Finance Committee, without recommendation, on July 9, 1991 on
a straight party-line vote of 11-9. Hearings were held June 19-20. S. Rept.
102-101. No minority views filed.
NOTEWORTHY
S. 1367 requires the immediate withdrawal of non-discriminatory trade status -
usually called "Most-Favored-Nation" (MFN) status - from the People's Republic
of China (PRC) 15 days after enactment if the President has not certified that the PRC
has not transferred certain missiles and launchers to specified countries.
S. 1367 also forbids the extension of MFN status after July 3, 1992, unless the PRC
meets other enumerated conditions.
S. 1367 is a more stringent version of H.R. 2212, which passed the House of
Representatives (313-112) on July 10. The same day, by a margin of 223-204, the
House passed H.J. Res. 263, an outright disapproval of MFN, not subject to any
conditions, which is identical in its provisions to S.J. Res. 153. (Summaries of H.R.
2212, S.J. Res. 153, and H.J. Res 263 are included in this Notice.)
The President's senior advisors will recommend a veto of either S. 1367 or
S.J. Res. 153.
HIGHLIGHTS
On May 29, President Bush recommended continuation of the PRC's MFN status under
the Jackson-Vanik waiver for the 12-month period beginning July 3, 1991. The PRC's
eligibility for MFN expires on July 3 of each year, unless the President recommends
extension by June 3. (See "Background," below, for fuller procedural explanation.)
Based on the PRC's suppression of the democracy movement in 1989, continued human
rights abuses, and other incidents (such as involvement in proliferation of certain
military technology), supporters of S. 1367 believe that MFN should not be renewed
unless the PRC's record improves.
Passage of S. 1367 (or H.R. 2212) could allow the PRC's MFN status to continue for
another year. But this would be the last year under which the PRC could receive MFN
simply pursuant to the Jackson-Vanik waiver procedure. Beginning in July 1992, the
new standards established by this legislation would apply.
However, under Section 4 of S. 1367, MFN would have to be withdrawn immediately
(i.e., 15 days after enactment) if the President had not certified that the PRC had not
transferred certain missiles and launchers to specified countries. (No parallel provision
exists in H.R. 2212.)
BACKGROUND
What MFN Really Is
The principle of non-discriminatory trade treatment (more commonly known as
"Most-Favored-Nation" [MFN] treatment) is of long standing and is one of the basic
elements of international trade. In general, MFN status refers to trade concessions the
United States accords to a trading partner that are as good as those we accord to all other
countries that are "most favored" in their trade relations with us. The result is that all
countries normally are given MFN treatment and are treated equally, unless they are
specifically denied MFN. MFN works by exclusion, not inclusion; countries have MFN
status unless they are specifically denied it.
As President Bush stated in his May 27 remarks at Yale University, "MFN is not special.
It is not a favor. It is the ordinary basis of trade world-wide."
In the context of U.S. tariff legislation, MFN treatment means that products exported
from MFN countries to the United States are subject to lower rates of duty (found in
Column 1 of the U.S. Tariff Schedules). Non-MFN countries are subject to the higher rates
found in Column 2. Thus, MFN means the more favorable, regular status accorded to the
vast majority of U.S. trading partners. In some cases, the tariff rates between Column 1
and Column 2 differ by a factor of 10. It is not certain how much PRC exports to the United
States might decrease if they were charged the higher Column 2 duties.
Jackson-Vanik
Along with all other communist countries (except Yugoslavia) the PRC's eligibility for
MFN status was revoked under the Trade Agreements Extension Act of 1951. This
ineligibility was modified in 1974 by the Jackson-Vanik amendment (Section 402 of the
Trade Act of 1974, P.L. 93-618; 19 USC 2432), pursuant to which communist countries
can receive MFN status only if (1) the country permits free emigration or (2) the President
determines that a waiver of this requirement would promote free emigration and other
fundamental human rights. The PRC was first granted MFN status upon a waiver from
President Jimmy Carter in 1980.
2
A waiver granting MFN under Jackson-Vanik must be reviewed yearly; the President
must recertify the eligibility of the country in question each year. Prior to the Chadha
decision by the U.S. Supreme Court in 1983, a one-house veto of the President's
certification was provided for in Jackson-Vanik; now, post-Chadha, a resolution of
disapproval (such as S.J.Res. 153 and H.J. Res. 263) must be passed by both houses, and
is subject to presidential veto.
The President called for renewal of the PRC's MFN status on May 29, prior to the June
3 deadline, to prevent MFN from expiring on July 3. The resolution of disapproval must
be passed by August 31, i.e., 60 days from the date MFN would have expired except for
the President's action, as specified in Jackson-Vanik (though now, it must be passed by
both houses). This procedure applies to both S.J. Res. 153 and H.J. Res. 263. With regard
to the Senate floor, S.J. Res. 153 is subject to expedited procedures (specified in Section
153 of the 1974 Trade Act, 19 USC 2193), consisting of 20 hours of debate equally divided.
It is not amendable.
On the other hand, S. 1367 and H.R. 2212 are not worded as resolutions of disapproval
of the yearly Jackson-Vanik recertification and are not subject to the 60-day limit nor
expedited procedures. However, the Majority Leader has expressed his hope that the
Senate might act on this bill in July.
BILL PROVISIONS
Section 3 concerns Most-Favored-Nation status continuation:
Notwithstanding any other provision of law, the President may not provide MFN status
to the PRC under the Jackson-Vanik procedure after July 3, 1992 unless he reports that the
PRC has (1) accounted for citizens detained, accused, or sentenced on account of
nonviolent political expression; (2) released such citizens; (3) ceased exporting
forced-labor goods to the United States; and (4) ceased supplying military assistance to
the Khmer Rouge.
In addition, (5) the PRC must have made significant progress in (A) fulfilling its
commitment to engage in high-level discussions on human rights issues; (B) taking action
to prevent human rights violations in China and Tibet; (C) terminating the harassment of
PRC citizens in the United States; (D) ensuring access of international human rights
monitors to prisoners, trials, and places of detention; (E) providing adequate protection for
U.S. intellectual property rights; (F) removing trade barriers and increasing U.S. imports;
and (G) adopting a policy that adheres to international standards on weapons proliferation.
Finally, (6) the PRC must be adhering to the Joint Declaration on Hong Kong between
the PRC and the United Kingdom.
3
Section 4 addresses the contingency for immediate termination of MFN:
(a) Effective 15 days after enactment, the PRC must be denied MFN unless the
President certifies to the Congress that the PRC has not transferred M-9 or M-11 ballistic
missile launchers to Syria or Iran, and has not transferred M-9 missiles or missile launchers
or M-11 missiles to Pakistan.
(b) If, at any time after enactment, the President determines that any transfer described
in subsection (a) has occurred, he must immediately notify Congress and revoke the PRC's
MFN status.
Differences Between Senate and House Bills (S. 1367 and H.R. 2212)
In general, H.R. 2212 contains far less stringent conditions than S. 1367. The Senate
bill includes in substance all the conditions of the House-passed measure. However, with
reference to S. 1367, H.R. 2212 includes no parallel provisions to the following sections
of the Senate bill:
Sec. 2.
Findings. There is no statement of findings or policy by the Congress in the
House bill. In S. 1367, the bill's Section 2 makes a number of findings, relating
to the PRC's violations of human rights and misbehavior abroad, such as
support for the Khmer Rouge in Cambodia and weapons proliferation.
Sec. 3.
There are no conditions in the House bill parallel to those in S. 1367 requiring
the PRC to (3) cease export of forced-labor goods to the United States; (4) cease
military assistance to the Khmer Rouge in Cambodia; or requiring progress in
(5)(A) fulfilling commitments to engage in discussions on human rights, (E)
providing protection to U.S. intellectual property rights, (F) improving trade
practices, or (G) adopting international standards on weapons proliferation.
Sec. 4.
There is no provision in H.R. 2212 requiring the denial of MFN based on M-9
and M-11 missile and missile launcher sales.
Resolutions of Disapproval (S.J. Res. 153 and H.J. Res. 263)
These are resolutions of disapproval, as specified in the Jackson-Vanik language, and
both contain the identical operative language, quoted below in its entirety:
"Resolved by the Senate and House of Representatives of the United States of
America in Congress assembled, That the Congress does not approve the extension
of the authority contained in section 402(c) of the Trade Act of 1974 recommended
by the President to the Congress on May 29, 1991, with respect to the People's
Republic of China."
4
ADMINISTRATION POSITION
[Excerpts]
"The Administration strongly opposes S.J.Res. 153, which would deny China
most-favored-nation (MFN) trade status, and S. 1367, which would place additional
conditions on MFN renewal.
"Extension of MFN substantially promotes U.S. freedom of emigration and travel
objectives, and its withdrawal would place at risk the substantial gains already achieved
in these areas.
"Extension of MFN is also important for promoting reform in China.
Millions of
Chinese depend on a healthy commercial relationship to justify business and social contacts
with the United States.
"A fundamental pillar of our relationship with the Chinese people, MFN is essential if
we are to stay engaged on a broad range of issues, including human rights, nonproliferation,
prison labor exports, and trade. Eliminating MFN would seriously erode our ability to
influence Chinese behavior on these issues. It would also hurt U.S. exporters and
consumers, and undermine confidence in Hong Kong where the United States has
substantial economic interests.
"Conditional renewal is not acceptable because it would make China less likely to
respond to U.S. concerns. Hardline Chinese leaders would claim that national honor and
sovereignty preclude any concessions to the United States.
"Where particular issues are unresolved and the Chinese are not forthcoming, the
President has the tools necessary to pursue U.S. interests in a targeted fashion. MFN's
withdrawal is the wrong tool because of its indiscriminate impact and adverse effect on all
Chinese, particularly those who continue to seek reform. The Administration believes that
MFN should be renewed unconditionally now on its own merits, as the most effective
means for influencing China's behavior on a range of U.S. interests."
BIPARTISAN SENATE REQUEST FOR EXECUTIVE ACTION
A position on U.S. policy towards the PRC that does not involve either revocation or
conditioning of MFN was signalled in a letter to President Bush on June 19. Signed by
15 Senators (nine of them Republicans, including Republican Leader Dole and Republican
Whip Simpson), the letter expresses concern over the PRC's human rights and foreign
policy record. Singled out is the PRC's behavior with respect to missile sales to Syria and
Pakistan, nuclear technology sales to Algeria, and export to the U.S. of forced-labor
products. In addition, the Senators note their "serious concerns" on economic matters,
including trade barriers, failure to protect U.S. intellectual property rights, and the
Administration's having allowed the PRC "to dictate U.S. policy towards Taiwan" by
"declining to support Taiwan's GATT application despite clear economic benefits to the
U.S."
5
However, in addressing these concerns, the Senators agree with the President's position
on MFN: "But MFN is the wrong tool for the job. Revoking MFN would not promote
human rights in China. Instead, it would punish China's most progressive regions and
Hong Kong. Revoking MFN would also hurt Americans. China is an important market
for U.S. goods ranging from wheat to airplanes. If MFN were revoked, China almost
certainly would retaliate against U.S. exports. The Australians, Canadians, Europeans and
Japanese are ready to fill the void. No other country is contemplating cutting off China's
MFN status."
The Senators note meaningful steps already taken by the President, such as moves to
protect intellectual property under the 1988 Trade Act and steps to restrict technology
transfers. They urge additional measures, such as opposing multilateral loans for the PRC,
taking action under U.S. law to address trade barriers and forced-labor imports, negotiating
for multilateral controls on nuclear and missile proliferation, and supporting Taiwan's
GATT membership.
COSTS
The Congressional Budget Offices expects S. 1367 would have no budgetary effects
through FY 1996.
POSSIBLE AMENDMENTS
Gorton Substitute bill (S. 1469): Similar to S. 1367, without corresponding provisions
relating to Khmer Rouge (Sec. (3)(4)) or immediate termination of MFN for missile
transfers (Sec. 4).
Helms: Forced labor.
Gorton: Chinese students.
Mikulski: Tying MFN to cessation of forced abortion.
Lugar: Administration substitute.
Adams: Chinese students.
MEDIA REFERENCES
"GOP Loyalty to Bush May Be Key in Fight Over China Status," Congressional
Quarterly Weekly Report, June 29, 1991, pp. 1737-1741.
"Baucus Pitted in Fight Over China's MFN Status," The Washington Post, July 14,
1991, p. A6.
Staff Contact: Jim Jatras, 224-2946
6
IN PROGRESS: ROLL NO. 203
YEA-AND-NAY
TIME REMAINING FINAL
AUTHOR (S) :
~
ON PASSAGE
~
DISAPPROVING THE EXTENTION OF MOST FAVORED NATION TREATMENT
~
TO THE PRODUCTS OF CHINA
H J RES 263
YEA
NAY
PRES
NOT
VOTING
DEMOCRATIC
171
92
4
REPUBLICAN
51
112
3
INDEPENDENT
1
TOTALS
223
204
7
TIME REMAINING FINAL
Y
Ballenger
Y
McEwen
Y
Stearns
Y
Barton
Y
McGrath
Y
Walker
Y
Bunning
Y
McMillan (NC)
Y
Weldon
Y
Burton
Y
Molinari
Y
Wolf
Y
Coble
Y
Moorhead
Y
Wylie
Y
Cox (CA)
Y
Morella
Y
Dannemeyer
Y
Paxon
Y
Dickinson
Y
Porter
Y
Doolittle
Y
Quillen
Y
Dornan (CA)
Y
Ravenel
Y
Duncan
Y
Ridge
Y
Edwards (OK)
Y
Riggs
Y
Fish
Y
Ritter
Y
Gilman
Y
Rogers
Y
Hancock
Y
Rohrabacher
Y
Hefley
Y
Ros-Lehtinen
Y
Herger
Y
Schulze
Y
Hunter
Y
Sensenbrenner
Y
James
Y
Shuster
Y
Kasich
Y
Smith (NJ)
Y
Kyl
Y
Smith (TX)
Y
Lewis (FL)
Y
Snowe
Y
McCandless
Y
Solomon
ROLL NO. 203
REPUBLICAN
-
YEAS
-
N
Allard
N
Davis
N
Hobson
N
Archer
N
Dreier
N
Holloway
N
Armey
N
Emerson
N
Horton
N
Baker
N
Ewing
N
Houghton
N
Barrett
N
Fawell
N
Hyde
N
Bateman
N
Fields
N
Ireland
N
Bentley
N
Franks (CT)
N
Johnson (CT)
N
Bereuter
N
Gallegly
N
Johnson (TX)
N
Bilirakis
N
Gallo
N
Klug
N
Bliley
N
Gekas
N
Kolbe
N
Boehlert
N
Gilchrest
N
Lagomarsino
N Boehner
N
Gillmor
N
Leach
N
Broomfield
N
Gingrich
N
Lent
N Callahan
N
Goodling
N
Lewis (CA)
N
Camp
N Goss
N
Lightfoot
N
Campbell (CA)
N
Gradison
N
Livingston
N
Chandler
N
Grandy
N
Lowery (CA)
N Clinger
N
Green
N
Machtley
N
Coleman (MO)
N
Gunderson
N Marlenee
N Combest
N Hammerschmidt
N
Martin
N
Coughlin
N Hansen
N
McCollum
N
Crane
N Hastert
N
McCrery
N Cunningham
N
Henry
N
McDade
ROLL NO. 203
REPUBLICAN
-
NAYS
-
N
Meyers
N
Shaw
N
Michel
N
Shays
N
Miller (OH)
N
Skeen
N
Miller (WA)
N
Slaughter (VA)
N
Morrison
N
Smith (OR)
N
Myers
N Spence
N
Nichols
N
Stump
N
Nussle
N
Sundquist
N
Oxley
N
Taylor (NC)
N
Packard
N
Thomas (CA)
N Petri
N
Thomas (WY)
N
Pursell
N
Upton
N
Ramstad
N
Vander Jagt
N
Regula
N Vucanovich
N
Rhodes
N Walsh
N Rinaldo
N Weber
N
Roberts
N
Young (AK)
N
Roth
N
Young (FL)
N
Roukema
N Zeliff
N
Santorum
N Zimmer
N
Saxton
N
Schaefer
N
Schiff
ROLL NO. 203
REPUBLICAN -
NAYS
- CONTINUED
-
DeLay
- Hopkins
- Inhofe
ROLL NO. 203
REPUBLICAN -NOT VOTING -
34-W)LOTT
1-3-41
3 - Cohen, Jeft, Brown
6-
1
Cchen
SENATOR CHRISTOPHER BOND
SENATOR HANK BROWN
24 /3
Jettords
SENATOR CONRAD BURNS
1
Brown
SENATOR JOHN CHAFEE
1
SENATOR DAN COATS
2
SENATOR THAD COCHRAN
1
SENATOR WILLIAM COHEN
3
SENATOR LARRY CRAIG
1
SENATOR ALFONSE D'AMATO
4
SENATOR JOHN DANFORTH
1
SENATOR ROBERT DOLE
1
1
6
SENATOR PETE DOMENICI
1
SENATOR DAVE DURENBERGER
1.
will
SENATOR JAKE GARN
1>
smith
SENATOR SLADE GORTON
3
soft
SENATOR PHIL GRAMM
1
MIC
SENATOR CHARLES GRASSLEY
1.
DA
SENATOR ORRIN HATCH
1.
SENATOR MARK HATFIELD
1.
Helas
SENATOR JESSE HELMS
5
Gart
SENATOR JAMES JEFFORDS
3
SENATOR NANCY KASSEBAUM
1
SENATOR ROBERT KASTEN
$1.
*
SENATOR TRENT LOTT
2
SENATOR RICHARD LUGAR
1.
SENATOR CONNIE MACK
5
SENATOR JOHN MCCAIN
1
SENATOR MITCH MCCONNELL
1.
SENATOR FRANK MURKOWSKI
1.
SENATOR DON NICKLES
1.
SENATOR BOB PACKWOOD
1.
SENATOR LARRY PRESSLER
1.
SENATOR WILLIAM ROTH
1.
SENATOR WARREN RUDMAN
1.
SENATOR JOHN SEYMOUR
11
SENATOR ALAN SIMPSON
1.
SENATOR ROBERT SMITH
5
SENATOR ARLEN SPECTER
&
SENATOR TED STEVENS
1.
SENATOR STEVEN SYMMS
1-
SENATOR STROM THURMOND
1.
SENATOR MALCOLM WALLOP
#3
SENATOR JOHN WARNER
1.
TOTALS
1.
No Conditions
AM 31
31
33( Corth, Kisten)
2.
Undecided on Conditions
W 4 3
3
3.
Mild Condition
b 4
4
4.
Supports Mitchell
2
2
5.
Opposes MFN
3
3
51
LOTT 2. (34)
Wzllop
THE WHITE HOUSE
WASHINGTON
RECOMMENDED TELEPHONE CALL BY THE PRESIDENT
TO:
Senator James Jeffords (R-VT)
DATE:
July 22, 1991
RECOMMENDED BY:
Frederick D. McClure
PURPOSE:
To urge Senator Jeffords to support Most
Favored Nation trade status for China.
BACKGROUND:
Today the Senate begins work on the Mitchell
bill providing conditional Most Favored
Nation trade status for China. Senator
Jeffords is the lone remaining undecided vote
on this matter. He has told us he is most
concerned about China's human rights policy
and, while he wants to be helpful, he has not
yet agreed to oppose the Mitchell bill and
support our position. A phone call from you,
assuring him that human rights policy is the
correct one, will help us secure his vote.
KEY POINTS:
:
Jim, I hope you had a chance to read my
letter to Max Baucus and Bob Dole
outlining my China policy. I understand
you have strong concerns about China's
human rights violations.
:
Believe me, I share those concerns, and
we are making every possible effort to
improve China's human rights policy, but
I cannot make real progress on human
rights by denying MFN to China -- or
worse, putting conditions on it.
-- Jim, you have my strong commitment on
this area, but I need your vote against
the Mitchell bill.
--
Can I count on you to help me with this
difficult problem?
DATE OF
SUBMISSION:
July 22, 1991
-2-
ACTION:
REPUBLICANS
DEMOCRATS
+ L+ U L -
+LUE- -
-
Bond
Adams
M
Brown
Akaka
of
Burns
Baucus
Chafee
Bentsen
-
Biden
M
Coats
Cochran
Bingaman
? Cohen
? Boren
Craig
1
? Bradley
D'Amato
M
Breaux
-
Danforth
Bryan
3
Dole
d
Bumpers
Domenici
Burdick
Durenberger
?Byrd
Conrad
as
? Garn
? Gorton
-
Cranston
Gramm
? Daschle
DeConcini
Grassley
Hatch
Dixon
? Hatfield
*
Dodd
Helms
-
Exon
-
:
? Jeffords
Ford
Kassebaum
al
? Fowler
Kasten
-
Glenn
M M M M M M M M M M M M M M M M - M M M M M M M M M
Lott
-
? Gore
Lugar
&
Graham
Mack
-
? Harkin
McCain
Heflin
McConnell
Hollings
Murkowski
B
Inouye
Nickles
Johnston
B
Packwood *
-
Kennedy
Pressler
Kerrey
Roth
d
Kerry
Rudman
-
?Kohl
-
Seymour
#
-
Lautenberg
Simpson
al
Leahy
Smith
-
Levin
? Specter
-
Lieberman
-
Stevens
Metzenbaum
*
Symms
-
Mikulski
Thurmond
Mitchell
Wallop
M
Moynihan
Warner
? Nunn
Pell
? Pryor
43
? Reid
Riegle
? Robb
Rockefeller
M-MITCHELL COSPONSORY
Sanford
- BAUCUS LETTER SIGNATORY
Sarbanes
Sasser
? - POSITION UNKNOWN
Shelby
at
Simon
UNDERLINED- HASBEEN TO W.H
Wellstone
- KIMMITT MTG SUGGESTED
Wirth
Wofford
2/18
SENATOR CHRISTOPHER BOND
SENATOR HANK BROWN
SENATOR CONRAD BURNS
SENATOR JOHN CHAFEE
SENATOR DAN COATS
SENATOR THAD COCHRAN
SENATOR WILLIAM COHEN
SENATOR LARRY CRAIG
SENATOR ALFONSE D'AMATO
SENATOR JOHN DANFORTH
SENATOR ROBERT DOLE
SENATOR PETE DOMENICI
SENATOR DAVE DURENBERGER
SENATOR JAKE GARN
SENATOR SLADE GORTON
SENATOR PHIL GRAMM
SENATOR CHARLES GRASSLEY
SENATOR ORRIN HATCH
SENATOR MARK HATFIELD
SENATOR JESSE HELMS
SENATOR JAMES JEFFORDS
SENATOR NANCY KASSEBAUM
SENATOR ROBERT KASTEN
SENATOR TRENT LOTT
SENATOR RICHARD LUGAR
SENATOR CONNIE MACK
SENATOR JOHN MCCAIN
SENATOR MITCH MCCONNELL
SENATOR FRANK MURKOWSKI
SENATOR DON NICKLES
SENATOR BOB PACKWOOD
SENATOR LARRY PRESSLER
SENATOR WILLIAM ROTH
SENATOR WARREN RUDMAN
SENATOR JOHN SEYMOUR
SENATOR ALAN SIMPSON
SENATOR ROBERT SMITH
SENATOR ARLEN SPECTER
SENATOR TED STEVENS
SENATOR STEVEN SYMMS
SENATOR STROM THURMOND
SENATOR MALCOLM WALLOP
SENATOR JOHN WARNER
TOTALS
1.
No Conditions
2.
Undecided on Conditions
3.
Mild Condition
4.
Supports Mitchell
5.
Opposes MFN
CRA91.332
S.L.C.
AMENDMENT NO.
Calendar No.
Purpose: To express Congress' findings with respect to the
trade practices of the People's Republic of China, to
specify additional areas of trade in which the People's
Republic of China needs to make significant progress, to
require the President to take action with respect to cer-
tain trade practices and human rights violations, and for
other purposes.
IN THE SENATE OF THE UNITED STATES-102d Cong-, 1st Sess.
S. 1367
To extend to the People's Republic of China renewal of
nondiscriminatory (most-favored-nation) treatment until
1992 provided certain conditions are met.
Referred to the Committee on
and ordered to be printed
Ordered to lie oh the table and to be printed
AMENDMENTS intended to be proposed by Mr. BINGAMAN
Viz:
1
On page 4, between lines 23 and 24, insert the follow-
2 ing:
3
(10) The United States has failed to use existing laws
4 and other means to respond to, prevent, or discourage the
5 People's Republic of China from-
AMENDMENT No.
802
By
Bingaman
Bill/Res. No.
5.1367
4pqs
CRA91332
S.L.C.
2
1
(A) committing violations of internationally rec-
2
ognized human rights, including the rights of the
3
people of Tibet;
4
(B) taking action that results in the proliferation
5
of dangerous military technology and weapons; and
6
(C) engaging in unfair trade practices against
7
the United States.
8
(11) The Government of the People's Republic of
9 China is engaging in unfair trade practices against the
10 United States which are unreasonable and discriminatory
11 and burden and restrict United States commerce by failing
12 to protect intellectual property rights, raising tariffs, em-
13 ploying regulatory taxes as a surcharge to tariffs, using dis-
14 criminatory customs rates, imposing import quotas and
15 other quantitative restrictions, barring the importation of
16 some items, using licensing and testing requirements to
17 limit imports, and falsifying country of origin documenta-
18 tion to transship textiles to the United States through third
19 countries.
20
On page 5, between lines 11 and 12, insert the follow-
21 ing new section:
22 SEC. 3. PRESIDENTIAL ACTION.
23
1
The President is directed to take the following actions
24 with respect to the People's Republic of China's human
CRA91.332
S.L.C.
3
1 rights violations, weapons proliferation, and unfair trade
2 practices:
3
Substantially lighten restrictions
4
0gy annefers China
5
(2) Interact more forcefully with our allies, es-
6
pecially Japan and European countries, and with the
7
World Bank and other multilateral lending institu-
8
accomplish the restriction
tions, to oncourage them to restrict transfers of
9
technology to China.
10
(2)
Encourage members of the Missile Technol-
11
ogy Control Regime to set up a working group to
12
develop a common policy concerning the People's
13
Republic of China's missile transfers to other coun-
14
tries.
15
3
Direct the United States Trade
16
Representative to take appropriate action pursuant to sec-
17
tion 301 of the Trade Act of 1974 with respect to the trade
18
practices of the People's Republic of China which are un-
19
reasonable, unjustifiable, or discriminatory and which
20
burden or restrict United States Commerce.
21
(4)
Encourage the Human Rights Commission
22
of the United Nations to issue a report on human
23
rights conditions in the People's Republic of China,
24
and to work with our allies and the Union of Soviet
25
Socialist Republics to encourage the Human Rights
26
Commission to issue such a report.
CRA91.332
S.L.C.
4
1
Take any other action the President deems
2
advisable to achieve the purposes of this Act.
3
Redesignate sections 3 through 5 as sections 4
4 through 6, respectively.
5
On page 7, line 5, strike "and".
6
On page 7, between lines 5 and 6, insert the follow-
7 ing:
8
(G) ceasing unfair trade practices against
9
the United States which are unreasonable and
10
discriminatory and burdensome and restrict
11
United States commerce by failing to protect in-
12
tellectual property rights, employing regulatory
13
taxes as a surcharge to tariffs, using discrimina-
14
tory customs rates, imposing import quotas and
15
other quantitative restrictions, barring the im-
16
portation of some items, using licensing and
17
testing requirements to limit imports, and falsi-
18
fying country of origin documentation to trans-
19
ship textiles to the United States through third
20
countries, and
21
On page 7, line 6, strike "(G)" and insert "(H)".
United States Department of State
Washington, D.C. 20520
June 5, 1991
Enclosed you will find the China package that is being sent to
every Member. I hope you find it useful.
Janet Janet G. Mullins