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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:
08451-010
Folder Title:
China MFN [6]
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. Letter
To: Senator Baucus From: President Bush
7/19/91
(b)(1)
Re: China's MFN Status (4 pp.)
01b. Paper
Re: Human Rights/Trade and Economic Issues (15 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 [6]
Pinksheet Number:
MB4343
OA/ID Number:
08451-010
Date Closed:
9/24/2012
FOIA/Sys Case #:
2012-1098-F
Re-review Case #:
P-2/P-5 Review Case #:
THE SECRETARY OF STATE
WASHINGTON
JUN - 4 1991
Dear George:
I am writing to urge you to consider carefully how renewal of
most-favored-nation (MFN) status for the People's Republic of
China serves U.S. interests. I assure you that the
Administration stands with Congress in wanting to see greater
respect for internationally respected human rights, a stronger
Chinese commitment to global nonproliferation objectives and
fair trade, and continuing political and economic reform within
China. I believe strongly that renewal of MFN promotes these
goals.
Many in Congress have urged withdrawing or conditioning MFN
renewal as a means of forcing China to respond favorably to our
concerns. We are convinced that MFN withdrawal would instead
undercut our ability to achieve these goals. We advocate a
more selective, targeted application of pressure, instead of
imposing broad, blunt sanctions on everyone in China, punishing
equally the forces of positive change, entrepreneurs and
ideological hardliners.
Our targeted approach has succeeded in setting the agenda in
our relations with China that focuses on human rights, arms
control, and trade issues--issues that Congress is also deeply
concerned about. Withdrawing MFN (or attaching unattainable
conditions) would undermine the foundation on which the process
of engagement was built. If we shut down our dialogue with
Beijing on these issues, we remove an important incentive for
China to respond to our concerns.
I know that Congress is well informed about what China has done
that has fallen short of our expectations. I hope I can
persuade you to look with an open mind at what China has done
to meet our objectives as well. In every area of concern we
have with China, our continued strategy combining sanctions and
diplomatic engagement has leveraged some favorable action from
Beijing. The Chinese support of the UN in the Persian Gulf is
a prominent example, as is the initiation of human rights
dialogues with us and with other Western countries. I have
enclosed material that elaborates on these points.
The Honorable
George Mitchell,
United States Senate.
- 2 -
Make no mistake, the Administration is not easing its pressure
on China. We have had sanctions in place since the brutal
assault on Tiananmen, have imposed some since then, and are
prepared to take further action to deal with new issues which
may arise. We already have in place legal authorities to
selectively target those practices in China that we find
abhorrent, especially in the areas of human rights,
nonproliferation, and trade. I urge you to read carefully the
enclosed fact sheets that demonstrate ours is a determined,
principled approach, not clouded by illusion or wishful
thinking, and indeed goes beyond actions taken by other Western
democracies.
The point I want to leave with you is that we are working
toward the same objective: like you, we want to see across the
board improvement in our relations with China on the basis of
demonstrated and genuine Chinese commitments to international
standards shared by all civilized nations. We will continue to
advance our interests and ideals as we pursue a process of
engagement with China designed to elicit progress toward our
objectives: adherence to international standards on
nonproliferation, free and fair trade, broader reform, and
respect for human rights throughout China. Most importantly,
renewal of MFN is essential to maintaining America's moral
stake in promoting the process of economic and political reform
in China.
Sincerely,
Jim James A. Baker, III
Enclosures:
1. President's Memorial Day speech
2. Fact sheets on MFN
PROPOSALS TO CONDITION RENEWAL OF CHINA'S MFN STATUS
Conditional renewal of China's MFN status has been
presented as a way to force China to address our human
rights and other concerns. It is in fact a high-risk
approach that holds the single most powerful instrument we
have for promoting reform in China as hostage to reactions
of a small group of hardline leaders in Beijing.
Continuing MFN is in the U.S. interest. By facilitating
trade, it acts as a key catalyst to reform, keeps China
open to the outside world, sustains a wide range of
contacts with the Chinese people and provides incentive for
China to stay engaged on issues of vital interest to us.
Conditionality overlooks the importance of MFN for these
long-term objectives and, in effect, accepts them as
expendable in the quest for more limited, short-term goals.
MFN conditionality risks making the Chinese less apt--not
more--to take positive steps on issues of concern to us.
Confronted with a public ultimatum to change policies,
nationalist and hardline elements of the Chinese leadership
are likely to argue-effectively--that national pride and
the need to preserve sovereign authority do not permit
concessions under such duress. Positive actions which the
Chinese might have been willing to take in the context of
negotiation could become politically impossible. The
bilateral dialogue on human rights that we succeeded in
establishing could be the first casualty.
:
Attempts to craft even "soft" (i.e., realistic)
conditionality would be counterproductive. With the
situation on key issues continuing to evolve and so
many Congressional perspectives on what constitutes
acceptable conditions, the end product is likely to
include provisions that provoke the Chinese to
disengage or do not accurately address the current
state of affairs.
--
Many of the objectives contained in earlier
conditionality legislation (e.g., the lifting of
martial law, freeing of prominent dissident Fang Lizhi
and release of Tiananmen detainees) were eventually
achieved through our strategy of engagement. This
strategy is working and should continue.
Conditional MFN renewal would severely handicap U.S.
business in China. No other foreign companies in China
face the uncertainty of MFN withdrawal by their
government. U.S. companies can't make long-term business
decisions knowing that the renewal of MFN trade status--a
fundamental operating condition--will depend on the
subjective judgments of Congress regarding China's
political behavior.
-2-
Renewal of MFN under the Jackson-Vanik already entails
risks which many U.S. companies find burdensome.
Additional conditions would greatly increase those
risks and discourage U.S. companies from trading and
investing in China, leaving the China market to our
competitors and costing American jobs in the process.
MFN is the basis for trade that we have with most
countries of the world, even those with which we have
serious human rights and other concerns. If we start
down the road of attaching new political conditions to
trade, U.S. global competitiveness will suffer.
Legislative ultimatums on the Chinese Government are likely
to create a hostile environment that will work against the
expansion of contacts between American and Chinese people
and institutions. Despite our bilateral differences, China
has continued to permit a wide range of contacts, including
emigration, student travel and academic exchanges. MFN
conditionality will give ammunition to old-line
conservatives in China who want to restrict the
liberalizing impact of contact with the U.S.
Other more targeted means, aside from MFN withdrawal, are
available to pursue specific U.S. interests, and the
Administration is prepared to use them. To underscore our
concerns about possible Chinese proliferation, we recently
sanctioned a Chinese enterprise for transferring missile
equipment in violation of international guidelines. We are
also informing the Chinese Government that we will not be
licensing high-speed computers to China or waiving
legislative restrictions on satellite exports until we
reach an understanding on the export of missile technology
and equipment. In the trade area, we recently designated
China under the Special 301 provisions for an
investigation--and possible trade action--because of
inadequate protection of U.S. intellectual property
rights. We are also pressing China at a high-level on
market access and have broad trade authority to use as
leverage, if necessary.
--
Our post-Tiananmen sanctions on military sales,
munitions list licenses, OPIC and TDP programs remain
in place. The U.S. still leads the Western
democracies in the scope and impact of sanctions on
China.
Fact Sheet
Chinese Attitudes Toward MFN Renewal
Our posts in China have been actively soliciting views on
MFN from a very broad range of Chinese citizens. We have
paid particular attention to the opinions of those who are
known to favor further reforms and democratization, and to
those who would be most at risk if repression deepened. We
have also discussed the MFN issue with hundreds of Chinese
students and scholars in the U.S.
Our Embassy and Consulates have reported nearly unanimous
support for renewal of MFN among all sectors of the Chinese
population. While Chinese government officials have tended
to reiterate their government's official arguments, those
who want more reform and democracy in China have actually
used significantly stronger language in urging renewal.
The Washington Post correspondent in Beijing quoted a
Chinese intellectual offering a toast to MFN renewal,
saying "if it was taken away, we would not be able to
meet and talk."
In the same report, a student at Beijing University
(which led the 1989 demonstrations) argued against
conditionality, saying that students "don't agree that
economic blackmail should be used to bring about
democracy in China."
Two of the most prominent dissidents now active in
China acknowledged to us recently that withdrawal of
MFN would seriously jeopardize their ability to
continue speaking out against repression.
Among Chinese students and scholars in the West, the range
of opinion is much more diverse, but still overwhelmingly
in favor of renewal in some form.
In a recent random poll conducted by Chinese scholars
among their colleagues throughout the U.S., only 12
out of 402 supported withdrawal of MFN. Most of the
remainder favored unconditional renewal or modest
conditions.
Of the letters we have received on MFN from many
Chinese in the West, one to the President from England
best reflects the general trend of thought: "As a
Chinese student from the poorest province in China, I
understand what a disastrous effect could a revocation
of China's MFN status bring to my poor parents, who,
as many ordinary Chinese, desperately need, and in
fact have already benefitted from, the influence of
the West. Do not shut up the door that was opened
only after thousands and millions of people sacrificed
their lives. I support your policy on China's MFN."
MFN Decision and AIMS
MFN Decision Advances U.S. Interests. Continuing China's MFN
status preserves a PRC stake in moving toward the international
consensus on nuclear, missile, and CW nonproliferation, an
objective the Administration and Congress share.
Engagement Pays Off in the Long Run. Beginning in the
mid-eighties, both China's policies and the global
nonproliferation context began to change. China, which once
held an antagonistic view of multilateral controls on nuclear
exports, joined the IAEA in 1984 and sent observers to the NPT
Review Conference in 1990. China's 1987 sale of CSS-2 missiles
to Saudi Arabia pre-dated the INF Agreement, the establishment
of the Missile Technology Control Regime. In 1989, China made a
public commitment to refrain from medium-range missile
deliveries to the Middle East--and has kept to that commitment.
Nuclear Proliferation. Our expression of concern about
Sino-Algerian nuclear cooperation has led to commitments by both
countries to place the cooperation under IAEA safeguards and
their pledges that the cooperation is strictly for peaceful
purposes. We await the next step, i.e. Algeria's discussions
with the IAEA. We view favorably China's public position on
nuclear exports, but would like to see China take the further
steps of joining the NPT and adopting Nuclear Suppliers
Guidelines. Serious concerns remain; the Administration will
not ignore current problems in this area.
Missiles. We have engaged in intensive dialogue with Beijing on
its missile export policy. It is clear that in some cases China
has declined proposed missile exports because of foreign policy
considerations. More broadly, the Chinese Ambassador said
recently that China supports effective international control on
military sales, including missiles. That statement constitutes
a modest step toward our objective of a PRC commitment to
observe MTCR guidelines. China's missile export policy remains
a high priority in our bilateral dialogue; problems that
originated before the establishment of the MTCR have not
disappeared, but we have seen some progress over the past
half-decade. China's proliferation policy is gradually changing
in a favorable direction. We aim to accelerate that trend.
Chemical Weapons. China is on record opposing the manufacture
and transfer of chemical weapons, and is participating in
multilateral efforts to ban chemical weapons. We have made some
progress on the subject of controls over exports of CW
precursors, and we hope to advance discussions in this vital
area.
Next Steps. We are encouraged by progress in some areas and
still see a need for progress in others. It is because of our
continuing concerns that we want to maintain a constructive
nonproliferation dialogue with Beijing. Under Secretary Kimmitt
raised these issues in Beijing in May, and Under Secretary
Bartholomew will follow up during his upcoming visit to China.
ECONOMIC EFFECTS OF MFN WITHDRAWAL
-- U.S. Exporters and Investors Would Be Hurt. If MFN is
withdrawn, Chinese trade retaliation is certain, including
reciprocal loss of MFN status for U.S. exports to China and
possibly other administrative measures to market access.
Since no other countries would be withdrawing China's
MFN status, U.S. companies would be put at a
competitive disadvantage. Major exports at stake and
their sales in 1990 include:
--Wheat $511 million
--Aircraft/Aerospace Equipment $749 million
--Fertilizer $544 million
--Cotton $259 million
--Timber/paper $281 million
--Computers & Electric Products $860 million
--Chemicals $273 million
O
U.S. joint ventures in China, which now total almost
1,000 and have invested capital of over $4 billion,
would pay higher duties on U.S.-made components and
their exports to the U.S. would be subject to higher
non-MFN U.S. duties
-- Consumers Would Suffer. U.S. consumers and retailers would
have to pay the sharply higher non-MFN duty rates on
Chinese-made imports, including footwear, clothing and toys
and electrical products. Examples include:
MFN Duty (%)
non-MFN Duty (%)
Footwear
6.0
35.0
Sweaters
6.0
60.0
Stuffed Toys
6.8
70.0
Fans
4.7
35.0
-- Other Tools At Our Disposal to Resolve Key Trade Concerns.
We have ongoing discussions with the Chinese on key
economic and trade issues, including market access,
intellectual property protection (where China was recently
identified under Special 301), textile transshipments and
dumping. We have made progress in some areas and utilized
existing legislation to take additional action where
necessary. China has expressed a willingness to stay
engaged to resolve our concerns. Withdrawing MFN would
seriously weaken our negotiating position on these issues.
IMPACT OF MFN WITHDRAWAL ON HONG KONG AND U.S. BUSINESS THERE
Impact on Hong Kong's Economy. The health of Hong Kong's
economy is increasingly tied to the growth of south China's
export industry. Approximately 2,500 Hong Kong enterprises
have shifted their export-bound production facilities to
the Pearl River delta in Guangdong Province. An additional
10,000-15,000 south China enterprises do assembly work for
Hong Kong companies.
China is Hong Kong's largest trading partner, accounting
for 39 percent of total 1990 trade. Re-exports, which grew
by 20 percent in 1990, underpin Hong Kong's trade
performance.
According to the Hong Kong Government, loss of MFN
status could cut Chinese re-exports via Hong Kong by up
to 44 percent or $4.6 billion.
First-year effects could include $1.2 billion in lost
income and 43,000 jobs or 1.5 percent of Hong Kong's
labor force.
-- Body Blow to Local Confidence. MFN denial would further
erode local confidence, already badly shaken by Tiananmen,
in the run-up to resumption of Chinese sovereignty in
1997.
o The drop in confidence would accelerate outward
migration from Hong Kong, which now exceeds 50,000 a
year and includes many professionals and managers.
-- U.S. Business Interests Would Be Hurt. The U.S. has the
largest number of regional headquarters in Hong Kong, with
over 40 percent of the total or 252 offices. Almost half
are engaged in trading activities with China, a principal
market and source of supply.
O
U.S. investment of over $6 billion accounts for almost
one-quarter of foreign direct investment in Hong Kong.
A 1990 American Chamber of Commerce survey indicated
that 70 percent of the approximately 900 U.S. member
firms would be adversely affected and 50 percent would
consider reducing staff.
CHINA'S EMIGRATION AND FOREIGN TRAVEL POLICIES
Emigration
-- China's relatively free emigration policies have continued
since the renewal of MFN status in 1990. In FY 1990,
16,751 U.S. immigrant visas were issued in the PRC. The
U.S. numerical limitation for immigrants from China was
fully met.
The principal restraint on increased emigration continues
to be the capacity and willingness of other nations to
absorb Chinese immigrants, not Chinese policy.
Foreign Travel Policies
-- China continues to adhere to a relatively open foreign
travel policy. According to Chinese officials, 255,000
persons were issued passports for private travel of all
kinds in 1990, a more than three-fold increase from 1986.
U.S. diplomatic posts in China issued 60,687 nonimmigrant
visas in FY 1990. Last year, 33,800 nonimmigrant visas
were issued worldwide to Chinese students and tourists, a
19 percent increase over FY 1989 and an 84 percent increase
over FY 1988.
-- Chinese officials report that several thousand students
have returned from overseas for visits after June 1989 and
have been allowed to depart again under expedited
procedures. We cannot verify these figures, but we are not
aware of any cases in which Chinese living in the U.S. who
returned to China for visits after June 1989 were prevented
from leaving again.
-- Foreign travel officially sponsored by the Chinese
Government continued to decline in FY 1990, reflecting
economic austerity measures and concern about extended
delays in the return of officially sponsored scholars to
China.
-- In February 1990, China issued a new directive requiring
recent college graduates and fourth-year undergraduates to
work for five years before applying for overseas study,
with some exceptions. This directive has undoubtedly
forced some students to defer their plans for overseas
study. However, its full impact is unclear since student
visa applications and issuances continue to increase.
-- We are aware of a small number of individuals who have had
difficulty in obtaining permission to travel abroad,
apparently because of the political activities of their
relatives in the U.S. We have discussed these cases with
Chinese authorities, who have indicated a willingness to
address the issue.
U.S.-CHINA TRADE AND INVESTMENT
U.S.-China Trade
($ billions)
1979*
1988
1989
1990
%Chg 89-90
Total Trade
2.3
13.5
17.8
20.0
12
US Exports
1.7
5.0
5.8
4.8
-17
US Imports
0.6
8.5
12.0
15.2
27
Trade Balance
1.1
-3.5
-6.2
-10.4
-68
* Last year before U.S. granted MFN status to China.
U.S. Exports to China
($ millions)
1990
Cereals
512
Computers & Electric Products
860
Aircraft & Parts
749
Fertilizer
544
Chemicals
273
Prof. & Sci. Instruments
227
Iron & Steel
44
Cotton Yarn & Fabric
281
Electric Machinery
264
Plastics & Resins
166
Chinese Exports to the U.S.
($ millions)
1990
Apparel
3,197
Toys, Games, Sporting Goods
2,139
Electric Machinery
1,926
Footwear
1,477
Travel Goods
874
Petroleum
661
Fish
396
Plastics
387
Iron & Steel
247
Furniture, Lamps, Bedding
276
- 2 -
Selected Chinese Import Tariffs
Commodity
MFN Tariff (%)
Non-MFN Tariff(%)
Wheat
0
0
Aircraft & Parts
6
11
Fertilizers
30
40
Cotton
30
40
Rough Wood
3
8
Polycarboxylic Acids
15
20
Specialized Machinery
20
30
Selected U.S. Import Tariffs
Commodity
MFN Tariff (%)
Non-MFN Tariff (%)
Manufactured Articles
0-32
0-110
Apparel
0-34.6
25-90
Telecommunications
2.4-8.5
35
Footwear
0-48
10-84
Travel goods, handbags
4.6-20
35-90
Petroleum, oils
$.105/bb1
$.21/bb1
Sources of Foreign Investment in China, 1979-89
(Contracted value, $ billions)
Cum.
010
1979-86
1987
1988
1989
Total
Share
National Total
19.99
4.32
6.19
6.29
36.80
100.
Hong Kong, Macau
12.40
2.36
4.16
3.73
22.66
61.
United States
2.72
0.36
0.38
0.65
4.11
11.:
Japan
1.91
0.39
0.37
0.52
3.18
8.
Others
2.96
1.21
1.27
1.39
6.84
18.
SECMEC 1692
ROBERT C BYRD. WEST VIRGINIA. CHAIRMAN
DANIEL K INDUYE HAWAII
MARK 0 HATFIELD OREGON
ERNEST F HOLLINGS SOUTH CAROLINA
TED STEVENS. ALASKA
J BENNETT JOHNSTON LOUISIANA
JAMES A MCCLURE IDAHO
QUENTIN N BURDICK NORTH DAKOTA
JAKE GARN UTAH
PATRICK J LEAHY VERMONT
THAD COCHRAN MISSISSIPPI
JIM SASSER TENNESSEE
ROBERT W KASTEN. JR. WISCONSIN
United States Senate
DENNIS DECONCINI ARIZONA
ALFONSE M D'AMATO NEW YORK
DALE BUMPERS ARKANSAS
WARREN RUDMAN NEW HAMPSHIRE
FRANK R LAUTENBERG NEW JERSEY
COMMITTEE ON APPROPRIATIONS
ARLEN SPECTER PENNSYLVANIA
TOM HARKIN IDWA
PETE V DOMENICI. NEW MEXICO
BARBARA A MIKULSKI MARYLAND
WASHINGTON, DC 20510-6025
CHARLES E GRASSLEY IOWA
HARRY REID NEVADA
DON NICKLES OKLAHOMA
BROCK ADAMS WASHINGTON
PHIL GRAMM TEXAS
WYCHE FOWLER JR GEORGIA
J ROBERT KERREY NEBRASKA
JAMES M ENGLISH STAFF DIRECTOR
J KEITH KENNEDY MINORITY STAFF DIRECTOR
July 18, 1991
Dear Colleague:
When the Senate considers S.1367, the China Most
Favored Nation bill, we will offer an amendment establishing
an additional condition for the granting of MFN status.
Our amendment states that before MFN trade benefits can
be extended to the People's Republic, the President must
certify to the Congress that the PRC government does not
support or administer any program of coercive abortion or
involuntary sterilization. This provision was added to the
Pelosi China MFN bill, which was recently approved in the
House of Representatives.
For several years, there have been reports from the PRC
that, as part of China's family planning efforts, women have
been physically forced to submit to abortions and
sterilization. If true, these reports represent a repugnant
policy and a gross abuse of human rights.
This year's State Department human rights report on
China says: "Physical compulsion to submit to abortion or
sterilization is not authorized but continues to occur as
officials strive to meet population targets. Reports of
forced abortions and sterilizations continue, though well
below the levels of the early 1980's. While recognizing
that abuses occur, officials maintain that China does not
condone forced abortion or sterilization and that abuses by
local officials are punished. They admit, however, that
punishment is rare and have yet to provide documentation of
any punishments.'
In recent years the Congress has approved legislation
to fund the United Nations Population Fund (UNFPA), which
maintains an office in China, but that legislation has been
vetoed. UNFPA plays no role in abortions--forced or
voluntary--and the Congress has made sure that no UNFPA
funds would be spent in China as a result of the U.S.
contribution. Nevertheless, President Bush has vetoed the
foreign aid bill over this provision, and he and other
opponents of UNFPA funding have cited the alleged Chinese
practice of forced abortions and sterilizations.
Page 2
If these practices are occuring as the official policy
of the central Chinese government, then we believe it would
be immoral and irresponsible for the U.S. to extend MFN
benefits.
We hope you will support our amendment. If you would
like to cosponsor, please have your staff call Mark Mahaney
(Sen. Mikulski) at x44654 or David Harwood (Sen. Wirth) at
x45852.
Sincerely,
Jim Wuth
Barlara a Muhush
Timothy E. Wirth
Barbara A. Mikulski
FRA91.321
S.L.C.
AMENDMENT NO.
Calendar No.
Purpose: To require the President to undertake efforts to
ensure that other countries impose trade restrictions
against China if restrictions are imposed by the United
States.
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 on the table and to be printed
AMENDMENT intended to be proposed by Mr. KERREY
Viz:
1
At the appropriate place, insert the following new sec-
2 tion:
3 SEC. - SANCTIONS BY OTHER COUNTRIES.
4
If, pursuant to this Act, the People's Republic of
5 China is denied nondiscriminatory (most-favored-nation)
6 treatment, or such treatment is terminated, the President
7 shall immediately undertake efforts to ensure that members
8 of the General Agreement on Tariffs and Trade take simi-
9 lar action with respect to the People's Republic of China.
J. ROBERT KERREY
NEBRASKA
United States Senate
WASHINGTON, DC 20510
July 11, 1991
CHINA-MFN
Dear Colleague:
When the Senate considers S. 1367, providing conditional
extension of most favored nation (MFN) status for China, I
intend to offer an amendment requiring the President to seek
the cooperation of other nations in imposing similar sanctions
against China if the United States revokes China's MFN
treatment.
The purpose of my amendment (see reverse) is to help
ensure that the United States does not "go it alone" in
imposing trade sanctions against China. By enlisting an
international response to the policies of the Chinese
government, U.S. policy is made more effective, and the burden
of enforcing that policy does not fall disproportionately on
U.S. businesses.
I urge you to join me in ensuring that any action by the
United States to impose sanctions against the Chinese is taken
in concert with other trading nations.
If your staff has any questions regarding my amendment,
please have them contact Tim Galvin at 4-6551.
Sincerely,
38
J. Robert Kerrey
(see reverse)
ROBERT C BYRD. WEST VIRGINIA CHAIRMAN
DANIEL K INDUYE HAWAII
MARK 0 MATFIELD. OREGON
ERNEST F HOLLINGS. SOUTH CAROLINA
TED STEVENS ALASKA
J BENNETT JOHNSTON LOUISIANA
JAMES A MCCLURE IDAHO
QUENTIN N BURDICK NORTH DAKOTA
JAKE GARN, UTAH
PATRICK J LEANY. VERMONT
THAD COCHRAN MISSISSIPPI
JIM SASSER TENNESSEE
ROBERT W KASTEN JR. WISCONSIN
United States Senate
DENNIS DECONCINE ARIZONA
ALFONSE M D AMATO. NEW YORK
DALE BUMPERS. ARKANSAS
WARREN RUDMAN, NEW HAMPSHIRE
COMMITTEE ON APPROPRIATIONS
FRANK R LAUTENBERG NEW JERSEY
ARLEN SPECTER. PENNSYLVANIA
TOM HARKIN IDWA
PETE V DOMENICI NEW MEXICO
WASHINGTON, DC 20510-6025
BARBARA A MIKULSKI MARYLAND
CHARLES E GRASSLEY IDWA
MARRY REID NEVADA
DON NICKLES OKLAHOMA
BROCK ADAMS. WASHINGTON
PHIL GRAMM TEXAS
WYCHE FOWLER JR GEORGIA
J ROBERT KERREY NEBRASKA
Cc SB,JW,AC
JAMES M ENGLISH STAFF DIRECTOR
J KEITH KENNEDY MINORITY STAFF DIRECTOR
July 18, 1991
Dear Colleague:
When the Senate considers S.1367, the China Most
Favored Nation bill, we will offer an amendment establishing
an additional condition for the granting of MFN status.
Our amendment states that before MFN trade benefits can
be extended to the People's Republic, the President must
certify to the Congress that the PRC government does not
support or administer any program of coercive abortion or
involuntary sterilization. This provision was added to the
Pelosi China MFN bill, which was recently approved in the
House of Representatives.
For several years, there have been reports from the PRC
that, as part of China's family planning efforts, women have
been physically forced to submit to abortions and
sterilization. If true, these reports represent a repugnant
policy and a gross abuse of human rights.
This year's State Department human rights report on
China says: "Physical compulsion to submit to abortion or
sterilization is not authorized but continues to occur as
officials strive to meet population targets. Reports of
forced abortions and sterilizations continue, though well
below the levels of the early 1980's. While recognizing
that abuses occur, officials maintain that China does not
condone forced abortion or sterilization and that abuses by
local officials are punished. They admit, however, that
punishment is rare and have yet to provide documentation of
any punishments."
In recent years the Congress has approved legislation
to fund the United Nations Population Fund (UNFPA), which
maintains an office in China, but that legislation has been
vetoed. UNFPA plays no role in abortions--forced or
voluntary--and the Congress has made sure that no UNFPA
funds would be spent in China as a result of the U.S.
contribution. Nevertheless, President Bush has vetoed the
foreign aid bill over this provision, and he and other
opponents of UNFPA funding have cited the alleged Chinese
practice of forced abortions and sterilizations.
Page 2
If these practices are occuring as the official policy
of the central Chinese government, then we believe it would
be immoral and irresponsible for the U.S. to extend MFN
benefits.
We hope you will support our amendment. If you would
like to cosponsor, please have your staff call Mark Mahaney
(Sen. Mikulski) at x44654 or David Harwood (Sen. Wirth) at
x45852.
Sincerely,
Jim Wuth
Barlara a Muhuh
Timothy E. Wirth
Barbara A. Mikulski
FRA91.321
Kerrey Andt
AMENDMENT NO.
Calendar No.
Purpose: To require the President to undertake efforts to
ensure that other countries impose trade restrictions
against China if restrictions are imposed by the United
States.
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 on the table and to be printed
AMENDMENT intended to be/proposed by Mr. KERREY
Viz:
1
At the appropriate place, insert the following new sec-
2 tion:
3 SEC.
. SANCTIONS BY OTHER COUNTRIES.
4
If, pursuant to this Act, the People's Republic of
5 China is denied nondiscriminatory (most-favored-nation)
6 treatment, or such treatment is terminated, the President
7 shall immediately undertake efforts to ensure that members
8 of the General Agreement on Tariffs and Trade take simi-
9 lar action with respect to the People's Republic of China.
8
202 371 0909 AmerFreedomColtr
07/24/91 16:30
002
American Council for Free Asia
Chairman
Can Louis Issmin
Prevident 131 Mon onsultants
MEMORANDUM
Advisors Council
(Partier Listing
Nations security schools
TO:
DOUG PAAL/JIM DYER
Council hairman
Major Ceneral Mark Singland
Members of Compress
FROM:
GARY L. JARMIN
Sen Bath corth
Kep 'rent (Miv.)
sen steve symme (Idebol
Dennis B- his
DATE:
24 JULY 1991
Anthon
D. David Bradne.
John 5 Bunkers
Han (lair Murgener
SUBJECT: ACFA MFN LOBBYING REPORT
lameson Campaigne $
Michael Connells
Fukene Delgaodic
Hun Docald Devine
In light of yesterday's vote on the Mitchell bill, I guess we all deserve a pat
P-of 10. Dobriesks
Ron Deciser
on the back for a job well done. I'm glad the American Council for Free
Henn Maziel
Robert Heckman
Asia was able to help out.
Do.: A Keene
Mon lack Kemp
Inmestary 10
Philip ANTION loss
For the record, ACFA spent over almost $30,000 to generate roughly 3,000
Mon Donald Luken
Prof Ben Lvie
mailgrams to key, targeted Senators. We are now urging our grass-roots
Deniel 1.00
lem Norten
contacts to concentrate on writing the 44 Senators who supported the
Prof Henry Panjurer
Pror +dmard Morel
President to thank them for their vote and urging them to stand firm on this
Hon Williams simes
Prof Fiseo 1981
issue.
Hrin Charles Wilson
Don't hesitate to contact me if we can be of any additional assistance. We
stand ready to help whenever possible.
GLJ/tdd
ACFR
214 Massachusetts Avenue, N.E.
Suite 300
Washington, D.C. 20002
202/544-2820
THE WHITE HOUSE
WASHINGTON
July 19, 1991
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 accession. 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,
CyBul
P.S. At the recently concluded G-7 Summit in London, the leaders
of these Western Democracies all urged renewal of MFN.
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 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.
JUL 22 (LEG. DAY JUL 8) 1991
(Date)
Roll Call Vote
Legislative
NO. 141
SUBJECT
Bingaman Amat. 802
YEAS
NAYS
Adams
Akaka
Baucus
/
Bentsen
Biden
2
Bingaman
Bond
Boren
Bradley
Breaux
Brown
Bryan
Bumpers
Burdick
Burns
7
Byrd
Chafee
Coats
Cochran
Cohen
Conrad
Craig
Cranston
D'Amato
Danforth
Daschle
DeConcini
Dixon
Dodd
Dole
Domenici
Durenberger
Exon
Ford
Fowler
Garn
Glenn
Gore
Gorton
Graham. Florida
Gramm. Texas
Grassley
Harkin
Hatch
Heflin
Helms
Hollings
Inouye
Jeffords
Johnston
Kassebaum
Kasten
Kennedy
Kerrey, Nebraska
Kerry, Massachusetts
Kohl
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
3
Metzenbaum
Mikulski
4
Mitchell
Moynihan
Murkowski
Nickles
Nunn
2
Packwood
Pell
Pressler
Pryor
Reid
Riegle
Robb
Rockefeller
Roth
Rudman
5
Sanford
Sarbanes
Sasser
Seymour
Shelby
Simon
Simpson
Smith
Specter
Stevens
Symms
Thurmond
Wallop
Warner
Wellstone
Wirth
Wofford
GPO 1991 42-718 im
55
35
CRA91.326
S.L.C
AMENDMENT NO.
Calendar No.
Purpose: To provide a private cause of action and for treble
damage for violations of the prohibition against importa-
tion of goods made with forced labor, 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 on the table and to be printed
AMENDMENT intended to be proposed by Mr. HELMS
Viz:
1
At the appropriate place in the bill, insert the follow-
2 ing new section:
3
SEC. * ENFORCEMENT BY PRIVATE PERSONS OF PROHIBITION
4
AGAINST IMPORTATION OF CONVICT-MADE
5
GOODS.
6
Section 307 of the Tariff Act of 1930 (19 U.S.C.
7 1307) is amended—
8
(1) by striking "All goods" and inserting "(a)
9
IN GENERAL.-All goods";
CRA91.326
S.L.C.
2
1
(2) by striking 'Forced Labor, and insert-
2
ing "(b) FORCED LABOR.-'Forced Labor, ; and
3
(3) by adding at the end thereof the following
4
new subsections:
5
"(c) PENALTIES.-(1) With respect to any violation of
6 subsection (a), an order under this section shall require the
7 person to pay a civil penalty of-
8
(A) $10,000 for one violation;
9
(B) $100,000 in the case of a person previous-
10
ly subject to one order under this section; or
11
(C) $1,000,000 in the case of a person previ-
12
ously subject to more than one order under this sec-
13
tion.
14
"(2)(A) Before imposing an order described in para-
15 graph (1) against a person for a violation of subsection (a),
16 the Secretary of the Treasury shall provide the person with
17 notice and, upon request made within a reasonable time (of
18 not less than 30 days, as established by the Secretary of the
19 Treasury) of the date of the notice, a hearing respecting the
20 violation.
21
"(B) Any hearing so requested shall be conducted
22 before an administrative law judge. The hearing shall be
23 conducted in accordance with the requirements of section
24 554 of title 5, United States Code. The hearing shall be
25 held at the nearest practicable place to the place where the
CRA91.326
S.L.G.
3
1 person resides or of the place where the alleged violation
2 occurred. If no hearing is so requested, the Secretary of the
3 Treasury's imposition of the order shall constitute a final
4 and unappealable order.
5
"(C) If the administrative law judge determines, upon
6 the preponderance of the evidence received, that a person
7 named in the complaint has violated subsection (a), the
8 administrative law judge shall state his findings of fact and
9 issue and cause to be served on such person an order de-
10 scribed in paragraph (1).
11
"(3) The decision and order of an administrative law
12 judge shall become the final agency decision and order of
13 the Secretary of the Treasury unless, within 30 days, the
14 Secretary of the Treasury modifies or vacates the decision
15 and order, in which case the decision and order of the Sec-
16 retary of the Treasury shall become a final order under this
17 subsection. The Secretary of the Treasury may not delegate
18 his authority under this paragraph.
19
"(4) A person adversely affected by a final order re-
20 specting an assessment may, within 45 days after the date
21 the final order is issued, file a petition in the Court of
22 Appeals for the appropriate circuit for review of the order.
23
"(5) If a person fails to comply with a final order
24 issued under this subsection against the person, the Attor-
25 ney General shall file a suit to seek compliance with the
CRA91.326
S.L.C.
4
1 order in any appropriate circuit court of the United States.
2 In any such suit, the validity and appropriateness of the
3 final order shall not be subject to review.
4
"(d) ENFORCEMENT BY PRIVATE PERSONS.-(1) The
5 prohibitions contained in subsection (a) may be enforced
6 by civil actions in appropriate United States district courts
7 without regard to the amount in controversy and in appro-
8 priate State or local courts of general jurisdiction. A civil
9 action shall be commenced within 1 year after the plaintiff
10 obtains knowledge that the alleged violation of subsection
11 (a) has occurred, or reasonably should have obtained such
12 knowledge, except that the court shall continue such civil
13 case brought pursuant to this section if an administrative
14 hearing pursuant to subsection (c)(2) has commenced and
15 is being diligently conducted so as to reach an expeditious
16 conclusion.
17
"(2)(A) Except as provided in paragraph (3)-
18
(i) any person to whom any prohibited product
19
has been offered for purchase or in reasonable likeli-
20
hood will be offered for purchase, or
21
"(ii) any public interest group or human rights
22
organization,
23 may commence a civil suit on behalf of that person, group,
24 or organization-
CRA91.326
S.L.C.
5
1
(I) to enjoin any person, including the United
2
States and any other governmental instrumentality or
3
agency (to the extent permitted by the 11th Amend-
4
ment to the Constitution), who is alleged to be in
5
violation of any provision of this title or regulation
6
issued under the authority of this title;
7
(II) to compel the Secretary of the Treasury to
8
enforce the penalties set forth in or authorized pursu-
9
ant to subsection (c); or
10
'(III) against the Secretary of the Treasury
11
where there is an alleged failure of the Secretary to
12
perform any act or duty under subsection (a) which
13
is not discretionary with the Secretary.
14
"(B) The district court shall have jurisdiction, without
15 regard to the amount in controversy or the citizenship of
16 the parties, to enforce any such provision or regulation, or
17 to order the Secretary to perform such act or duty, as the
18 case may be.
19
"(3) No action may be commenced under paragraph
20 (2)(A)(ii)(III)-
21
"(A) prior to 60 days after written notice of the
22
violation has been given to the Secretary, and to any
23
alleged violator of this section or any regulation
24
issued hereunder;
CRA91.326
S.L.C.
6
1
'(B) if the Secretary of the Treasury has com-
2
menced an action to impose a penalty pursuant to
3
subsection (c); or
4
"(C) if the United States has commenced and is
5
diligently prosecuting a criminal action in a court of
6
the United States or State to address a violation of
7
any such provision or regulations.
8
"(e) TREBLE DAMAGES.-Any person in competition
9 with a person importing goods, wares, articles, or mer-
10 chandise prohibited by subsection (a), who is injured as a
11 result of such violation, may bring an action in a court of
12 the United States and shall recover three-fold the amount
13 of the damages sustained by such violation.
N119
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AP-US-CHINA, UPDATE
URGENT
SENATE VOTES CONDITIONS ON CHINA'S TRADE STATUS; BUSH VETO SEEN
UPDATES WITH VOTE
BY JIM DRINKARD
ASSOCIATED PRESS WRITER
WASHINGTON (AP) -- THE SENATE VOTED TUESDAY TO IMPOSE A LONG LIST OF
STRICT NEW CONDITIONS ON RENEWAL OF CHINA'S NORMAL TRADE STATUS IN
1992, JOINING THE HOUSE IN DEALING A STRONG REBUKE TO PRESIDENT BUSH'S
POLICY TOWARD BEIJING.
BUT THE 55-44 VOTE, PROMPTED BY CONGRESSIONAL CONCERN OVER CHINA'S
RECORD ON HUMAN RIGHTS, TRADE AND ARMS SALES, FELL FAR SHORT OF THE
TWO-THIRDS MAJORITY THAT WOULD BE NEEDED TO OVERRIDE A CERTAIN
PRESIDENTIAL VETO.
THE SENATE AND HOUSE NOW MUST NEGOTIATE THE DIFFERENCES BETWEEN,
THEIR VERSIONS OF THE BILL, AND SENATE MAJORITY LEADER GEORGE MITCHELL,
D-MAINE, HAS PROMISED TO SEE THE VETO BATTLE THROUGH TO A CONCLUSION,
EVEN THOUGH BUSH APPEARED VIRTUALLY CERTAIN TO WIN IT.
THE PRESIDENT CONTENDS THAT CONGRESS' REQUIREMENTS WOULD POSE AN
IMPOSSIBLE BARRIER TO RENEWAL OF WHAT IS CALLED **MOST-FAVORED NATION''
TRADE STATUS, RESULTING IN A CUTOFF OF MOST TRADE AND ABANDONMENT OF A
RARE OPENING TO PROD BEIJING TOWARD ECONOMIC AND POLITICAL REFORM.
**THIS IS ONE OF THOSE CLOSE ISSUES WHERE ONE CAN MAKE STRONG
ARGUMENTS ON BOTH SIDES AND WHERE THE PRESIDENT IS A LEGITIMATE
EXPERT,'' SAID SEN. PHIL GRAMM, R-TEXAS, ALLUDING TO BUSH'S FORMER
STATUS AS THE U.S. ENVOY TO CHINA. "I BELIEVE WE OUGHT TO GIVE THE
PRESIDENT THE BENEFIT OF THE DOUBT.''
AP-WX-07-23-91 2015EDT
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11Tm
JD
THE WHITE HOUSE
WASHINGTON
June 3, 1991
MEMORANDUM TO GOVERNOR SUNUNU
THROUGH:
Fred McClure
for
FROM:
Jim Dyer/M
RE:
MFN China
This paper outlines a program to secure approval of the
President's request for an extension of Most Favored Nation
Status for China. Given strong opposition to this decision from
Democrats and conservative Republicans alike, we will be forced
into a veto strategy in the Senate. In pursuing this strategy,
we assume that Hill Democrats will seek to force us to accept
conditional MFN that threatens our relationship with the Chinese.
They will also attempt to pass a resolution of disapproval of the
President's request.
We must try to obtain 34 votes (probably all Republicans) to
sustain a veto of both a simple MFN extension and a conditional
MFN.
Congressional Procedures
The President's formal notification of intention to extend MFN
was sent to Congress on May 28th. Congress now has 90 calendar
days to pass a joint resolution of disapproval through both
Houses. Should the President veto the resolution, Congress has
15 calendar days to override that veto.
Legislative Action - Senate
We propose a series of meetings with the President beginning on
Tuesday. In the Senate, our goal is simply to get 34 votes.
Given Majority Leader Mitchell's early opposition this will be a
partisan, personal fight. Should Mitchell press hard on all 57
Democrats to support his MFN with strict conditions approach, we
must avail ourselves of Republican reticence to take sides with
Mitchell against the President.
Initially, we must welcome support from Bentsen, Baucus, et. al.,
but we should start with the assumption that we need 34
Republicans. The best barometer of our current position is last
year's Senate vote on HR 2712, the Chinese Student Immigration
Bill. The vote to sustain the President's veto was 62-37 with 8
Republicans joining all 54 Democrats opposing the President.
of those 37 Republicans, we have lost Heinz (PA), McClure (ID)
and Humphrey (NH). We have no chance of getting Heinz'
successor. We must work hard to hold Humphrey's successor
(R. Smith) and McClure's successor (Craig).
of the eight Republicans lost, our best chances are to peel back
their successors Brown and Seymour. Seymour is especially
critical given his reelection needs and his large Asian
population. Other Republicans in this category include Cohen,
Gorton, Helms, Kasten and Pressler.
We have another category of Republicans who advised us "never
again" after last years vote. They were with us, but
reluctantly. Already, two of them, Wallop and D'Amato have
cosponsored Mitchell's bill. Others in this category include
Coats, Grassley, Symms, Mack and Lott.
When you fold these vulnerabilities into our vote analysis, we
are much weaker this year than last. Indeed, we may have to add
Packwood to this group despite his strong pro-export position.
We intend to bring all these Senators to meet with the President;
we propose at least 2 meetings each week until all have been
personally contacted. We Will include Republicans from the
Finance Committee, Foreign Relations Committee, as well as
Republicans who may have supported us before, but who are now
wavering for political or ideological reasons.
Legislative Action - House
We are going to have to undertake a modest level of activity in
the House, despite our reliance on a Senate veto strategy. The
House has already begun hearings. There are Democrats and
Republicans who want to help us. An overwhelming vote against a
straight up extension damages us and heightens the political
pressure on vulnerable Republican Senators who will feel less
isolated if there are in excess of one hundred or so votes
against blocking MFN. Because the bill that passes the House
will probably be a GOP bill (Solomon NY), we must do all we can
to lessen the pressure on wavering GOP Senators.
We are developing a series of legislative activities for the
House and we will advise you of our plans in this regard as soon
as possible.
Other Activities
Public Diplomacy
We will need a strong effort in public diplomacy at several
fronts:
They include:
-- Mobilization of the business community behind MFN. A special
attention will be paid to the defense and aerospace community to
get them focused on the job losses inherent in this threat to our
trade policies.
-- Mobilize activities in the Asian community. We need to dispel
the notion that the Asian community does not support the
President's policy.
-- Chinese students: our information is that many of them support
MFN. Voicing that support publicly deflects criticism that we
are insensitive to human rights.
Cabinet Activities
We will use Secretaries Baker, Mosbacher and Brady along with
Ambassador Hills whenever possible. Their schedules are being
cleared for individual briefings. The State Department will be
the lead agency in this effort. We are assembling briefing teams
at the subcabinet level to compliment Cabinet level activities.
We need to provide information to the Hill and the media on a
broad range of issues including nuclear proliferation, trade
opportunities, human rights progress, textiles, slave labor,
support for the Khmer Rouge in Cambodia and other areas.
Congressional Schedule
The Senate Foreign Relations Committee will be scheduling
hearings as early as June 13th to review the President's request.
House Ways and Means will hold its first hearing June 12th with
Secretary Eagleburger testifying. Other hearings will follow as
Finance, Ways and Means, Foreign Relations and Foreign Affairs
Committees all assume some jurisdiction for any resolution of
disapproval.
We are also exploring opportunities for special meetings with the
Senate Steering Committee, Policy Committee and other venues.
We are establishing a working group within the White House
including NSC, Legislative, Public Diplomacy and Cabinet Affairs
to develop a more detailed plan which we will have for you
shortly.
This week we will have sent information packages along with the
President's speech at Yale to all 535 members of Congress. Out
Subcabinet briefing teams will be in place this week. I am
appending a calendar of suggested events aimed at getting us out
of the box quickly on this issue. Our initial goal is to get our
message out, to urge members to keep their powder dry and then to
build hard veto strength in the Senate.
JUNE
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
3
4
5
6
7
*POTUS MTG W/
*MEETING W/
*POTUS MEETING W/
SENATORS (BIPART)
BUSINESS GROUPS(T
HOUSE (BIPART)
10
11
*WAYS& MEANS COM
*MEETING W/
13
14
(EAGLEBURGER)
ASIAN GROUPS(T)
*9:15 POTUS W/
*HFAC HEARING (T)
SENATE FINANCE
*FINANCE COMM
*SFRC - GOP (TBD)
HEARING (T)
17
18
19
20
21
*10:00 POTUS MTG W/
*MTG W/ AEROSPACE
SELECTED REPUBLIC
IND. GROUPS (T)
SENATORS
24
25
26
27
28
*10:00 POTUS MTG W/
*POTUS MTG W/ SELE
SELECTED SENATE
REPUBL. SENATORS
GOP MEMBERS
*MTG W/ CHINESE
STUDENT GROUPS
31
JULY
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
1
2
3
4
5
SENATE - OUT
HOUSE - - OUT
8
9
10
11
12
HOUSE & SENATE
RETURN
15
16
17
18
19
22
23
24
25
26
29
30
31
JUN 4 '91 17:09 FROM NSC
PAGE. 002
NATIONAL SECURITY COUNCIL
WASHINGTON D.C. 20506
June 4, 1991
MEMORANDUM TO: Members of China/MFN Task Force
FROM:
Douglas Paal, NSC
SUBJECT:
Agenda, June 5, 1991
Meeting:
Wednesday, June 5, 1991, 10:00-11:00 a.m., OEOB,
Room 476
PARTICIPANTS:
Please phone 202-395-5746 with your
participant's name and date of birth.
AGENDA
I.
NSC - Introduction/status report.
II.
State - Briefing packages for House/Senate. (Please bring
copies for each Department/Agency.)
III. All - Target groups and associations. Identify briefing
team members for Hill calls.
IV. White House Communications - Op Ed strategy.
27th. 28
Chnese American -State (Houstan)
Charber- POTUS muches
Laeffer- corditor- call
NATIONAL SECURITY COUNCIL
Symms
McCain
Brown
Craig
Seymour
Dole
Lugar
Murkowski
Boren
Simpson
Lieberman
Bentsen
Robb
Baucus
J. Kerry
Coats
Grassley
THE WHITE HOUSE
WASHINGTON
Dear Mr. Liu:
Thank you for your recent letter concerning
the United States relations with the People's
Republic of China.
I have asked my staff to respond to this issue
in more detail, but I did want you to know I
read your letter and appreciated your sharing
your views with me.
Best wishes.
Sincerely,
CyTbl
Mr. Dongzi Liu
Department of Physics
University of Maryland
College Park, Maryland 20742
140
May 14, 1991
Dear Mr. President :
You must feel very happy because you are the leader
of the strongest country and the people in America have the
highest living standard in the world. As one of the world leader
DO you think every Chinese people also deserves a better life ?
I am a Chinese student who came here under CUSPEA
program in 1989. As a Chinese citizen, I really concern about
our nation's MFN status.
You must have heard a lot from those "Democracy "or "Hum
Rights" fighters. I can hardly agree with them because they are
spending my money to deny my motherland's MFN status. Would y:
mind nearinga few words from me ?
I also fought for democracy and spent several daysand nights Orl
Tiananmen Square. But now I think China need mere smooth transiti:
When you determine whether you are doing right thing for
Chinese human rights. you have to ask majority of Chinese people
what do they need ? By denying the right of several people who
want to bring China into chaos, we keep the right for most of
the people to live a normal life and work for a better life.
When I went back this winter vacation, I found things were
quite different from Western reports. A lot of Chinese just don't
like some bad guys' behavior in USA. I don't think these yuys really
care about China because they are not working hard in study and the
probably care more about their "Green Card".
If you deny MFN for China, a lot of Chinese including
my parents. my friends and relatives would be nurt seriously. So I hop
you can extend MFN for China. Chinese people will thank you not
for democracy. human right or an independent Tibet but for your
helping them living a better life. Thank you for your attention.
Sincerely yours
Driyzi Lin
Dongzi Liu
06/11/91 12:50
T
202 395 7350
NSC LEGISLATIVE
P.02
POINTS TO BE MADE FOR MEETING WITH
REPUBLICAN SENATORS
-- In my message to the Congress arguing the case for MFN for
China, I told you I want to work with you.
-- Today, I would like to begin with a few points and then get
your views.
-- First, I firmly believe MFN is the strongest tool we have to
bring about long-term positive change in China. Ten years
of trade and openness SET IN MOTION the forces we saw in
those protests at Tiananmen.
-- We should not put this tremendous advantage at risk. We
should not give the hardliners in China an opportunity -- by
our placing conditions on MFN -- so that they can resist, so
that they can defeat their reformist rivals.
--
Second, our China policy is a package approach. When there
are opportunities to cooperate with China -- in the UN,
Korea, Cambodia -- we will do SO.
-- Just last week the Chinese took a major step in agreeing to
join the talks in Paris on my Middle East Arms Control
initiative.
-- This is a positive development because it may open the way
to make progress on the proliferation problems in the
region, and it goes to the heart of the reasons for
extending MFN for China.
-- You get more flies with honey than with vinegar.
-- Nonetheless, where there are problems with China, I will not
kowtow, I will take action. I have already done so on human
rights, trade, and proliferation.
06/11/91 12:51
T 202 395 7350
NSC LEGISLATIVE
P.03
2
-- You know we still have sanctions on OPIC, TDP, international
lending that is not for Basic Human Needs, all military
sales and high-level exchanges.
--
We have designated China a priority country under Special
301 for copyright pirating; we have lifted Chinese textile
visas in retaliation for illegal third-country transfers; we
will soon begin market access talks.
--
The Chinese have responded with a buying mission, and they
say more will follow.
-- We are pressing China to conform to international standards
on missile transfers. There will be no new satellite
licenses or high-speed computer transfers to China until it
meets those standards. There will be no transfers of
missile technology or equipment to Chinese companies engaged
in proliferation.
-- I am not sitting on my hands. I am prepared to do more when
circumstances require.
-- Third, we need to step back from the emotions of the moment
and calculate our long-term national interests.
-- We are the only trading nation in the world that would
contemplate removing or conditioning MFN. If we pull back,
we isolate ourselves, not China.
-- We may not like it, but China is a necessary part of the
solution to some important problems. It has a veto in the
UN Security Council.
-- The system that rules China today will not change
dramatically overnight. But that system cannot insulate
itself from inevitable change.
06/11/91 12:52
E 202 395 7350
NSC LEGISLATIVE
P.01
3
--- I believe the best course is to use economic involvement --
and all the human interchanges that go with it -- to
encourage long-term evolution in China. I think the
announcement on Middle East Arms Control helps prove the
point.
-- Now I would like to hear your views.
-- There is a process in place to deal with China and MFN. I am
asking you today to look carefully at the big picture.
--
Please don't rush to a conclusion. Give us a chance to
address your concerns before you decide.
SENT BY:The TICKET CENTER
; 6-11-91 ; 7:16PM : LEGISLATIVE AFFAIRS-
2024566221;# 1
THE WHITE HOUSE
WASHINGTON
MEETING WITH REPUBLICAN SENATORS
DATE:
June 12, 1991
LOCATION:
Cabinet Room
TIME:
9:00 a.m. (45 minutes)
FROM:
Frederick D. McClure 70
I. PURPOSE
To meet with key Republican Senators to discuss MFN for
China.
II. BACKGROUND
This meeting is a continuation of your Congressional
consultations on how best to secure MFN status for China.
Today's group consists of Republicans who will need a "hard
sell" on the issue. This group is largely drawn from the
conservative Senators who are unhappy with China's
activities in human rights, trade and nuclear proliferation.
This group will be among the most difficult to convince that
granting MFN, without conditions, is sound trade and foreign
policy. There are also supportive Republicans from the
leadership among the invitees.
III. PARTICIPANTS
See Attachment A.
IV. PRESS PLAN
White House Press Pool.
V.
SEQUENCE OF EVENTS
Participants will be met in the West Lobby and escorted to
the Cabinet Room for the meeting with you.
Attachment A: Participants List
Attachment B: Talking Points (to be provided by NSC)
SENT BY:The TICKET CENTER
; 6-11-91 ; 7:16PM ; LEGISLATIVE AFFAIRS-
2024566221:# 2
Attachment A
Participants List
The President
The Vice President
James Baker, Secretary of State
Richard Darman, Director, Office of Management and Budget
Senator Robert Dole (R-KS), Senate Minority Leader
Senator Alan Simpson (R-WY), Assistant Minority Leader
Senator Thad Cochran (R-MS)
Senator Larry Craig (R-ID)
Senator Phil Gramm (R-TX)
Senator Robert Kasten (R-WI)
Senator Trent Lott (MS)
Senator Frank Murkowski (R-AK)
Senator Don Nickles (R-OK)
Senator Robert Smith (R-NH)
Senator Steven Symms (R-ID)
Senator Strom Thurmond (R-SC)
Senator Malcolm Wallop (R-WY)
White House Participation
John Sununu, Chief of Staff
Brent Scrowcroft, Assistant to the President for National
Security Affairs
Philip Brady, Assistant to the President and Staff Secretary
Andy Card, Deputy to the Chief of Staff
David Demarest, Assistant to the President for Communications
Marlin Pitzwater, Assistant to the President and Press Secretary
Boyden Gray, Counsel to the President
Ede Holiday, Assistant to the President and Secretary of the
Cabinet
Fred McClure, Assistant to the President for Legislative Affairs
Roger Porter, Assistant to the President for Economic and
Domestic Policy
James W. Dyer, Deputy Assistant to the President for Legislative
Affairs (Senate)
Steve Hart, Deputy Assistant to the President and Director of
Legislative Affairs
Virginia Lampley, Special Assistant to the President and Senior
Director of Legislative Affairs, NSC
Douglas Paal, Director of Asian Affairs, NSC
Others
Janet Mullins, Assistant Secretary of State for Legislative
Affairs
Bill Kristol, Chief of Staff to the Vice President
Bill Gribbin, Assistant to the Vice President for Legislative Affairs
THE WHITE HOUSE
Jim
WASHINGTON
FYI
JUNE 21, 1991
Jeff
MEMORANDUM FOR GOVERNOR SUNUNU
THROUGH:
DAVID DEMAREST, ASSISTANT TO THE PRESIDENT FOR
COMMUNICATIONS
FROM:
BOBBIE KILBERG, DEPUTY ASSISTANT TO THE PRESIDENT
FOR PUBLIC LIAISON
JEFF VOGT, ASSOCIATE DIRECTOR, PUBLIC LIAISON
SUBJECT:
PROPOSED COMMITTEE FOR MFN
We are working to assemble a bipartisan "peer" group committee in
support of MFN. This would be similar in concept to the
committee which Congressman Solarz created during the Gulf vote.
Few Democrat Members in the House and Senate choose to be out
front on this issue. We have, however, listed potential
prospects for this purpose.
We would like the proposed co-chairs to take the initiative,
approaching leading figures supportive of MFN to join their
group. The participants in this committee would engage in
similar activities as in the Gulf vote: targeted advertisements,
op-ed pieces to major and targeted markets, group and individual
visits and letters to the Hill and TV appearances promoting the
Administration's position.
We have compiled the following list of names for your
consideration as people we plan to approach to join the effort
which we hope that Robinson and Jones would spearhead. Please
let us know if you have additional comments or changes. Thank
you.
CO-CHAIRMEN
Jim Jones
Chairman, American Stock Exchange
Chairman, American Business Conference
Jim Robinson
Chairman, American Express Corporation
Chairman, ACTPN
PROPOSED CORE BUSINESS/ASSOCIATION LEADERS ON COMMITTEE:
Mr. Dwayne Andreas, Chairman
Archer-Daniels Midland
Mr. Maurice R. Greenberg, Chairman
American International Group, Inc.
Mr. Jerry Jasinowski, President
National Association of Manufacturers
Mr. Drew Lewis, Chairman, Union Pacific
Chairman, The Business Roundtable
Mr. C.J. (Pete) Silas, Chairman & CEO
Phillips Petroleum
Chairman, U.S. Chamber of Commerce
Mr. Dave Tappan, former Chairman
Fluor Corporation
Mr. Kay Whitmore, Chairman
Eastman Kodak
Other CEOs of corporations doing business in China.
SENATE/HOUSE:
(TBD by Legislative Affairs, however, tentative list below.)
Senator Dole
Senator Lugar
Senator Max Baucus
Congressman Robert Michel
Congressman Bill Archer
Congressman Phil Crane
Congressman Sam Gibbons
OTHER LEADING FIGURES:
Richard Allen, former NSC Advisor
Bill Brock, former U.S. Trade Representative
Frank Carlucci, former NSC Advisor
Dick Holbrook, former Assistant Secretary of State in Carter
Administration
Jean Kirkpatrick, former U.S. Representative to the United
Nations
Ambassador James Lilley, former Ambassador to China
Gaston Sigur, former Assistant Secretary of State
Cyrus Vance, former Secretary of State in Carter Administration
Cap Weinberger, former Secretary of Defense
AGRICULTURE LEADERS:
Secretary John R. Block, President
National Agricultural Advisory Committee (over 80 ag groups
represented -- very active in fast track debate)
Secretary Earl Butz
Secretary Orville L. Freeman
Secretary Clifford M. Hardin
Secretary Richard E. Lyng
Dean Kleckner, President, American Farm Bureau
Ron Ravinius/Carl Schwensen, President/Exec. Vice President,
National Association of Wheat Growers
CHINESE STUDENT LEADERS:
Representatives from the Chinese-American Students Association
(including 5 students who met with the President during his visit
2 in California.)
Director, Chinese Student Center, Harvard University
Various leading Chinese students in California and elsewhere.
ASIAN AMERICAN BUSINESS LEADERS:
Mr. Henry Y Hwang, Chairman and President
Far East National Bank
(to form Committee of Asian American corporate CEOs)
Mrs. Florence Fang, Asian Week; media interests.
CHINESE-AMERICAN SCHOLARS:
Professor John Tsu, John F. Kennedy University
(to form committee of scholars/University professors)
Professor Chi Wang, Georgetown University
MISCELLANEOUS:
Consumer Groups such as Consumer Alert, Citizens for A Sound
Economy and Consumers Union.
Mr. John Gardiner, former President, University of California
Leonard Woodcock, former President of AFL-CIO's United Auto
Workers
cc:
Jim Dyer
Sichan Siv
Doug Paal
SENATE RECORD VOTE ANALYSIS
101st Congress
Vote No. 1
January 25, 1990, 2:31 p.m.
2d Session
Page S-382 (Temp. Record)
CHINESE STUDENTS/Veto
SUBJECT:
The Emergency Chinese Adjustment of Status Facilitation Act of 1989
H.R. 2712. Passage, upon
reconsideration, the objections of the President not withstanding.
ACTION: VETO SUSTAINED, 62-37
SYNOPSIS:
On July 31, 1989, the House passed H.R. 2712, the Emergency Chinese Adjustment of Status
Facilitation Act, by voice vote. The Senate amended and passed the bill by voice vote on August 4.
1989. Following conference, the House passed the conference report to H.R. 2712, 403-0, on November 19, 1989. and
the Senate passed the conference report by voice vote on November 20, 1989.
H.R. 2712 assists Chinese nationals in the United States by: (1) waiving the two-year home country residence
requirement for nationals of the People's Republic of China in the United States on an exchange visitor (J) visa
(student, teacher, research); (2) continuing the legal status of nonimmigrant Chinese nationals lawfully in the United
States as of June 5, 1989, for change of status purposes; (3) permitting Chinese nationals lawfully present in the
United States as of June 5, 1989, on (F), (J), or (M) visas (student, exchange visitor, vocational student) to work
(4) requiring the Attorney General to send explanatory notices of visa expirations (instead of deportation notices)
Chinese aliens during the deferred departure period. As well, H.R. 2712, as amended, would allow Chinese nation
who fear persecution as a result of their opposition to Chinese policies of mandatory sterilization and/or abortion
be granted asylum in the United States.
On November 30, 1989, President Bush returned H.R. 2712 to the House of Representatives unsigned. In
memorandum of disapproval accompanying the bill, the President asserted the bill was unnecessary because he
already extended additional protection to Chinese nationals covered by the Attorney General's June 6, 1989
deferring their enforced departure. Specifically, the President issued an executive order on November 30, 1989.
waive the two year home country residence requirement until January 1, 1994; (2) assure continued lawful immig:
status for Chinese individuals who were lawfully in the United States on June 5, 1989; (3) authorize employment
Chinese nationals in the United States on June 5, 1989; and (4) send notice of expiration of nonimmigrant
rather than institute deportation proceedings for individuals eligible for deferral of enforced departure
(See other side)
YEAS
(62)
NAYS
(37)
NOT VOTING (1)
Republicans
Democrats
Republicans
Democrats
Republicans (0)
Democrats (1)
(8 or 18%)
(54 or 100%)
(37 or 82%)
(0 or 0%)
Armstrong
Adams
Johnston
Bond
Lott
Breaux
Boschwitz
Baucus
Kennedy
Burns
Lugar
Cohen
Bentsen
Kerrey
Chafee
Mack
Gorton
Biden
Kerry
Coats
McCain
Helms
Bingaman
Kohl
Cochran
McClure
EXPLANATION OF ABSENCE:
Kasten
Boren
Lautenberg
D'Amato
McConnell
1-Official Business
Pressler
Bradley
Leahy
Danforth
Murkowski
2-Necessarily Absent
Wilson
Bryan
Levin
Dole
Nickles
3-Illiness
Bumpers
Lieberman
Domenici
Packwood
4-Other
Burdick
Matsunaga
Durenberger
Roth
Byrd
Metzenbaum
Garn
Rudman
SYMBOLS:
Conrad
Mikulski
Gramm
Simpson
AY-Announced Yea
Cranston
Mitchell
Grassley
Specter
Daschle
Moynihan
Hatch
AN-Announced Nay
Stevens
PY-Paired Yea
DeConcini
Nunn
Hatfield
Symms
Dixon
Pell
Heinz
Thurmond
PN-Paired Nay
Dodd
Pryor
Humphrey
Wallop
Exon
Reid
Jeffords
Warner
Ford
Riegle
Kassebaum
Fowler
Robb
Glenn
Rockefeller
Gore
Sanford
Graham
Sarbanes
Harkin
Sasser
Heflin
Shelby
Hollings
Simon
Inouye
Wirth
Compiled and written by the staff of the Senate Republican Policy Committee
William L. Armstrong, Chairman
11. 26. 91 10:28AM *Sen. Finance, Minority
FUZ
A. Extension of MFN for One Year
MFN for China is extended for one year (to July 3,
1992). On July 3, 1992, MFN for China may not be
renewed unless the President certifies that China
has met the following conditions:
1. Has accounted for citizens detained, accused
or sentenced as a result of Tiananmen Square;
and
2.
Has released citizens who were imprisoned as
a result of Tiananmen Square.
B.
Overall Significant Progress Conditions
On July 3, 1992, the President must also certify
that China (including Tibet) has made overall
11. 26. 91 10:28AM *Sen. Finance, Minority
P 0 3
significant progress in:
1.
Taking appropriate action to prevent human
rights violations;
2.
Ceasing of religious persecution and release
of religious leaders detained;
3.
Ensuring freedom from torture and
establishment of humane prison conditions;
4.
Removing restrictions on Voice of America
broadcasts;
5.
Allowing human rights groups access to
prisoners and trials.
6.
Terminating intimidation and harassment of
Chinese students in the United States; and
7.
Terminating prohibitions on peaceful assembly
and demonstration imposed after June 3, 1989;
8.
Moderating its position on Taiwan's GATT
accession;
9.
Adhering to the United Kingdom-China Joint
11. 26. 91 10:28AM *Sen. Finance, Minority
P 0 4
Declaration on Hong Kong;
10. Fulfilling its commitment to engage in high
level discussions on human rights;
11. Providing adequate protection of intellectual
property rights;
12. Providing U.S. exporters fair market access
and removal of a variety of non-
tariff barriers;
13. Ceasing unfair trade practices;
14. Adopting a policy which stops nuclear and
missile proliferation
(NOTE: This provision contains a special
definition which states that any
transfer of ballistic missiles is not
significant progress);
15. Assuring the U.S. that it does not, and will
not assist any nuclear weapon state in
acquiring nuclear weapons or devices and will
11. 26. 91 10: 28AM *Sen. Finances Minority
P O 5
not contribute to nuclear proliferation;
If MFN is revoked for any reason, the President
must urge our GATT partners to take similar
action.
C.
SLAVE LABOR
Current law prohibits the importation of goods
made by convict or forced labor. The conference
report establishes civil penalties (between
$100,000 and $1 million) for knowing violations of
the convict labor import law.
Executive Office of the President
Office of Legislative Affairs
HILL
FACSIMILE TRANSMITTAL SHEET
Number of Pages including cover
5
Date: 11/26/91
To:
Janet Mullins
Fax Number:
647-2762
Office Number:
Comments:
From:
Jim Dyer
Fax Number:
Office Number:
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
CHINACON
Discussion Draft
HLU
In lieu of the matter proposed to be inserted by the
Senate amendment insert the following:
1 SECTION 1. SHORT TITLE.
2
This Act may be cited as the "United States-China
3 Act of 1991".
4 SEC. 2. FINDINGS AND POLICY.
5
(a) FINDINGS.-The Congress makes the following
6 findings:
7
(1) The Chinese people have provided a dramat-
8
ic demonstration of their desire for democratic free-
9
doms. Thousands of courageous Chinese students
10
and workers, men and women, demonstrated on
11
June 4, 1989, that they were willing to die, or face
12
imprisonment or exile, in pursuit of democratic self-
13
determination and human rights.
14
(2) The Government of the People's Republic of
15
China, which is a member of the United Nations and
16
obligated to uphold the Charter of the United Na-
17
tions and the Universal Declaration of Human
18
Rights, continues to engage in flagrant violations of
19
internationally recognized human rights, including-
20
(A) torture and cruel, inhuman, or degrad-
21
ing treatment or punishment;
I **** IB 26. "II
CHINA.CON
Discussion Draft
HLC
2
1
(B) prolonged detention without charges
2
and trial and sentencing of persons solely for
3
the nonviolent expression of their political
4
views;
5
(C) arbitrary arrest and the
6
unacknowledged detention of persons; and
7
(D) use of forced labor of prisoners to
8
produce cheap products for export to countries,
9
including the United States, in violation of
10
international labor treaties and United States
11
law.
12
(3) The Government of the People's Republic of
13
China has denied Chinese citizens who support the
14
pro-democracy movement and others the right of
15
free, unimpeded emigration.
16
(4) The Government of the People's Republic of
17
China has restricted the number of students permit-
18
ted to study abroad, required some college students
19
to attend military indoctrination courses, and re-
20
quired university graduates to work 5 years after
21
graduation and to pay large sums of money before
22
being eligible to apply for study outside China.
23
(5) The Government of the People's Republic of
24
China continues to violate the internationally recog-
25
nized human rights of the people of Tibet and uses
November 23. 1991 (10:10 a.m.) sacueutd *u*s* NISO:IO IS 29. TIT
would
3
1
the People's Liberation Army and police forces to in-
2
timidate and repress Tibetan and Chinese citizens
3
peacefully demonstrating for democratic change and
4
religious freedom.
5
(6) The Government of the People's Republic of
6
China is engaging in unfair trade practices against
7
the United States by failing to protect intellectual
8
property rights, raising tariffs, employing taxes as a
9
surcharge on tariffs, using discriminatory customs
10
rates, imposing import quotas and other quantitative
11
restrictions, barring the importation of some items,
12
using licensing and testing requirements to limit ira-
13
ports, and falsifying country of origin documentation
14
to transship textiles to the United States through
15
third countries.
16
(7) The Government of the People's Republic of
17
China has not demonstrated its willingness and in-
18
tention to participate as a full and responsible party
19
in good faith efforts to control the proliferation of
20
dangerous military technology and weapons, includ-
21
ing biological, chemical, and nuclear weapons
22
technologies.
23
(8) The Government of the People's Republic of
24
China has interfered with the movement toward self-
November 23, 1891 (10:10 a.m.)
AITIOUIN "ues* Wa9O:lO I6 26. TIT
CHINA.CON
Discussion Draft
HLC
4
1
rule by the people of Hong Kong in their political,
2
cultural, and economic activities.
3
(9) The President of the United States has sus-
4
pended all government-to-government sales and com-
5
mercial exports of defense articles and services to
6
China and issued an Executive order to treat sympa-
7
thetically requests by Chinese students in the United
8
States to extend their stay.
9
(10) United States policy toward China has
10
failed to prevent or discourage the People's Republic
11
of China from-
12
(A) committing violations of internationally
13
recognized human rights, including the rights of
14
the people of Tibet;
15
(B) taking action that results in the prolif-
16
eration of dangerous military technology and
17
weapons; and
18
(C) engaging in unfair trade practices
19
against the United States.
20
(b) POLICY.-It is the sense of the Congress that-
21
(1) with respect to the actions of the People's
22
Republic of China in the areas of human rights,
23
weapons proliferation, and unfair trade practices,
24
the President should take such actions as necessary
November 23. 1991 (10:10 a.m.)
and
AITIOUIN * * * WI90:10 I6 29. I
CHINA
Discussion Draft
HLC
5
1
to achieve the purposes of this Act, including, but
2
not limited to-
3
(A) instructing the United States delega-
4
tion to the United Nations Commission on
5
Human Rights to actively seek the appointment
6
of a special rapporteur to investigate violations
7
of internationally recognized human rights in
8
China and to seek allied and Soviet support for
9
such an investigation;
10
(B) directing the United States Trade
11
Representative to take appropriate action pur-
12
suant to section 301 of the Trade Act of 1974
13
with respect to the trade practices of the Peo-
14
ple's Republic of China which are unreasonable,
15
unjustifiable, or discriminatory and which bur-
16
den or restrict United States commerce;
17
(C) interacting more forcefully with our al-
18
lies, especially Japan and European countries,
19
to accomplish the restriction of transfers of
20
technology to China; and
21
(D) encouraging members of the Missile
22
Technology Control Regime, and other coun-
23
tries, as appropriate, to set up a working group
24
to develop a common policy concerning missile
* u e s * NI9O:1O I6 299 11
CHINA.CON
Discussion Draft
HLC
6
1
transfers to other countries by the People's Re-
2
public of China;
3
(2) the sanctions being applied against the Peo-
4
ple's Republic of China on the date of enactment of
5
this Act should be continued and strictly enforced;
6
and
7
(3) the President should submit the report re-
8
quired by the Joint Resolution relating to the ap-
9
proval and implementation of the proposed agree-
10
ment for nuclear cooperation between the United
11
States and the People's Republic of China (Public
12
Law 99-183; 99 Stat. 1174).
13 SEC. 3. ADDITIONAL OBJECTIVES WHICH THE GOVERN-
14
MENT OF CHINA MUST MEET IN ORDER TO
15
RECEIVE NONDIBCRIMINATORY TREATMENT.
16
(a) IN GENERAL-The President may not recom-
17 mend the continuation of a waiver in 1992 for a 12-month
18 period under section 402(d) of the Trade Act of 1974 for
19 the People's Republic of China unless the President re-
20 ports in the document required to be submitted by such
21 section that the government of that country-
22
(1) has, in regard to the events that led up to,
23
and occurred during and after, the violent repression
24
of dissent in Tiananmen Square on June 3, 1989-
*u*s* NI9O:TO I6 29. III
CHINA.CON
Discussion Draft
HLC
7
1
(A) provided an accounting of citizens who
2
were detained, accused, or sentenced as a result
3
of the nonviolent expression of their political be-
4
liefs during those events; and
5
(B) released citizens who were imprisoned
6
after such detention, accusation, or sentencing;
7
and
8
(2) has made overall significant progress in
9
achieving the objectives outlined in each of the cate-
10
gories of-
11
(A) human rights, as described in subsec-
12
tion (b);
13
(B) trade, as described in subsection (c);
14
and
15
(C) weapons proliferation, as described in
16
subsection (d):
17
(b) HUMAN RIGHTS.-The human rights objectives
18 described in this subsection are--
19
(1) taking appropriate action to prevent gross
20
violations of internationally recognized human rights
21
in the People's Republic of China, including Tibet;
22
(2) preventing exports of products made by
23
prisoners and detainees assigned to labor camps,
24
prisons, detention centers, and other facilities hold-
25
ing detainees, and allowing United States officials
KITIOUID * u e * 16 29. TII
U.S. Senate
Republican Policy
Legislative Notice
Committee
Editor, Judy Gorman Prinkey
Don Nickles, Chairman
Rick Lawson, Staff Director
No. 54
February 6, 1992
H.R. 2212 - United States-China Act of 1991
Reported:
From the Committee of Conference on November 26, 1991. H. Rept.
No. 102-392.
NOTEWORTHY
The Conference Report to H.R. 2212 prohibits the President from extending
nondiscriminatory trade status - usually called "Most-Favored-Nation" (MFN)
status - to the People's Republic of China (PRC) during 1992 unless he reports to
the Congress that: (1) the PRC has accounted for and released Chinese citizens
repressed for political reasons; and (2) has made significant progress on human rights,
trade, and weapons proliferation.
The Conference Report, which is not amendable, was approved by the House of
Representatives on November 26, 1991, by a vote of 409 to 21; the original H.R.
2212 passed the House on July 10, 1991, 313 to 112. The Conference Report is
considerably weaker than the original Senate bill, S. 1367, which passed the Senate
on July 23, 1991, by a margin of 55 to 41.
Under both the House and Senate bills, most of the human-rights and other criteria
were conditions which the PRC must meet prior to renewal of MFN. In the
Conference Report, most of these criteria require only that the PRC demonstrate
"substantial progress" for MFN to be extended.
Language in both the Senate and House bills requiring the PRC to stop coercive
abortion and involuntary sterilization as a condition of MFN has been deleted from
the Conference Report.
The Conference Report (Section 7(6)(B)) specifies that the PRC may not be
determined to have made "significant progress" on arms proliferation if the President
determines that on or after November 26, 1991, the PRC has transferred to Syria or
Iran: (1) M-9 or M-11 ballistic missiles or missile launchers; or (2) material,
equipment, or technology which would contribute significantly to the manufacture
of a nuclear device.
Senate language regarding PRC support for the Khmer Rouge in Cambodia has been
deleted.
The President has promised to veto any legislation restricting extension of MFN to
the PRC.
For a fuller explanation of the legal definition of MFN and its current application to the
PRC, see Legislative Notice No. 24, of July 16, 1991, available from the Republican Policy
Committee.
MAJOR PROVISIONS
(With Notes Comparing the House and Senate Bills)
Section 2. Findings and Policy.
The Congress finds that the government of the PRC has taken a number of actions
contrary to the Chinese people's desire for democratic freedoms, including torture,
detention without trial, forced labor, denial of emigration, and restrictions on foreign study;
in addition, the PRC government has repressed the people of Tibet, engaged in unfair trade
practices with the United States, has failed to demonstrate good faith in controlling
dangerous military technology (biological, chemical, nuclear), and interfered in the
movement toward self-rule in Hong Kong. The President has suspended
government-to-government defense sales and has, by Executive Order, allowed Chinese
students in the U.S. to extend their stay, but this policy has failed to discourage the PRC
from committing human rights violations, taking action that results in proliferation of
dangerous military technology, and engaging in unfair trade practices.
The Congress states that the President is to take actions necessary to achieve the
purposes of this Act, including but not limited to: supporting the appointment of a United
Nations Commission on Human Rights "special rapporteur" to investigate human rights
violations; directing the U.S. Trade Representative to take appropriate actions under Sec.
301 (which authorizes actions to enforce U.S. rights under trade agreements to protect the
rights of U.S. persons) of the 1974 Trade Act with respect to PRC practices that are
"unreasonable, unjustifiable, or discriminatory and which burden or restrict United States
commerce"; "interacting more forcefully with our allies, especially Japan and European
countries, to accomplish restriction of technology transfers"; and encouraging the setting
up of an international working group to develop common policy concerning PRC missile
transfers. In addition, the sanctions in this Act should be "continued and strictly enforced,"
and the President should submit the report concerning U.S.-PRC nuclear cooperation
required by P.L. 99-183, 99 Stat. 1174.
NOTE:
This section drops language in the Senate bill regarding PRC support for the
genocidal Khmer Rouge in Cambodia, and language relating to guidelines
for corporate activity.
2
Section 3. Additional Objectives Which the Government of China Must
Meet in Order to Receive Nondiscriminatory Treatment.
Subsection (a). The President may not recommend continuation of the PRC's MFN
status (which expires on June 3, 1992) pursuant to Section 402(d) of the 1974 Trade Act,
i.e., the Jackson-Vanik Amendment, which allows MFN status for communist countries
only upon a waiver from the President, which must be renewed yearly, unless the President
reports that the PRC -
1.
Has accounted for and released Chinese citizens repressed for political reasons in
connection with the "violent repression of dissent in Tiananmen Square on June 3,
1989," and
2.
Has "made overall significant progress" in achieving the objectives outlined in each
of the categories of human rights (described in Subsection (b)), trade (Subsection
(c)), and weapons proliferation (Subsection (d)). (See below.)
Subsection (b). Human rights objectives detailed in the Conference Report include:
prevention of "gross violation of internationally recognized human rights," imports of
products made by forced labor, religious persecution, removing restrictions on freedom of
the press and Voice of America broadcasts, terminating harassment of Chinese citizens in
the United States, ensuring access by international human rights monitors, ending torture,
ending prohibitions on peaceful assembly, fulfilling commitments on human rights, and
adhering to the Joint Declaration on Hong Kong between Britain and the PRC.
NOTE: These objectives fall into the "significant progress" requirement in
Subsection (a) in the Conference Report, but in both the Senate and House
bills many of these human rights criteria required compliance by the PRC
as a condition for MFN extension. In addition, the Conference Report drops
language appearing in both the Senate and House bills regarding the PRC's
program of coercive abortion and involuntary sterilization.
Subsection (c). Trade objectives in the Conference Report include: protection of U.S.
intellectual property rights (patents, copyrights, etc.), providing American exporters fair
access to Chinese markets through the removal of tariff and nontariff barriers and through
increased purchases of U.S. goods and services, and "ceasing unfair trade practices against
the United States which are unreasonable and discriminatory and which burden or restrict
United States commerce."
NOTE:
Language regarding PRC trade policy was a prior condition for MFN in the
original House bill but is part of the "significant progress" criteria in the
Conference Report.
Subsection (d). The weapons proliferation objectives in the Conference Report
include the PRC's "adopting a national policy which adheres to, and ceasing activities
inconsistent with" international limitations and controls contained in the Missile
Technology Control Regime (established in 1987 to restrict sensitive missile-relevant
transfers based on an annex of missile equipment and technology), and standards and
guidelines concerning nuclear, chemical, and biological arms proliferation. In addition, it
3
is a U.S. objective that the PRC should take "clear and unequivocal steps to ensure that
[it] is not assisting and will not assist any nonnuclear state, directly, in acquiring nuclear
explosive devices or the materials and components for such devices."
NOTE: The Conference Report (Section 7(6)(B)) specifies that the PRC may not be
determined to have made "significant progress" in this area if the President
determines that on or after November 26, 1991, the PRC has transferred to
Syria or Iran: (1) M-9 or M-11 ballistic missiles or missile launchers; or (2)
material, equipment, or technology which would contribute significantly to
the manufacture of a nuclear device. Senate language regarding PRC
support for the Khmer Rouge in Cambodia has been deleted.
Section 4. Sanctions By Other Countries.
If the President decides not to seek an extension of the PRC's MFN status, he shall,
during the 30-day period beginning on the date he would have recommended a
Jackson-Vanik waiver (i.e., June 3 to July 3, 1992) undertake efforts to ensure that other
GATT members take similar action toward the PRC as enacted in this legislation.
NOTE: This is a modification of language appearing in the Senate bill; no
comparable provision appeared in the House bill.
Section 5. Enforcement of Prohibition Against Importation of
Convict-Made Goods.
The Tariff Act of 1930 (also called the Smoot-Hawley Act) prohibits the importation of
goods made by convict or forced labor. The Conference Report modifies Section 307 of
Smoot-Hawley to provide penalties for importation or attempted importation of prohibited
goods: $10,000 for one violation, $100,000 for two violations, and $1 million for three or
more violations.
NOTE:
No such prohibition appeared in the House bill. The Conference Report
adds a "knowing or should have known" standard to the Senate language.
Section 6. Report by the President.
If the President recommends extension of MFN during 1992, he must submit, in addition
to the report required under Jackson-Vanik, a report on PRC compliance with Section 3 of
this Act.
NOTE:
The Conference Report language is from the House bill; the Senate provision
was similar.
4
Section 7. Definitions.
This section explains terms found in the Act, including "gross violations of human
rights, "missile technology control regime," and "significant progress."
NOTE:
This section has language taken from both the House and Senate bills.
ADMINISTRATION POSITION
The Administration stands by the position stated at the time the Senate considered S.
1367. Excerpts from the original Administration policy statement of July 15, 1991, follow:
"The Administration strongly opposes
S. 1367, which would place additional
conditions on MFN renewal. If [S. 1367] is presented to the President, his senior advisors
will recommend a veto.
"The President extended China's MFN waiver because he determined that China met
the legal requirments under the Jackson-Vanik amendment and that continuing MFN would
serve broad U.S. economic and foreign policy interests and promote reform in China.
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.
MFN
withdrawal would hurt all Chinese, but would hurt most those Chinese, particularly in the
market-oriented coastal provinces, who have the greatest stake in economic reform.
"A fundamental pillar of our relationship with the Chinese people, MFN is essential if
we are to stay engaged with China 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
substntial 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. Imposing new conditions for
renewal would, in effect, hold our single most powerful instrument for influencing China
- trade and the openness which it brings - hostage to the reactions of the Chinese
government.
"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 becaue of its indiscriminate impact and adverse effect on all
Chinese, particularly those who continue to seek reform.
"
Staff Contact: James Jatras, 224-2946.
01/30/92 15:30
= 202 395 7350
NSC LEGISLATIVE
P.02
FROM USTR
PAGE. 002
JAN 28 '92 13:27
THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C. 20506
The Honorable Max S. Baucus
United States Senate
Washington, D.C. 20510-2602
Dear Senator Baucus:
with debate over China's Most-Favored-Nation (MFN) trade status
once again about to begin in the Senate, I want to stress in the
strongest possible terms the President's and my continuing
commitment to maintaining unconditional MFN for China. I would
like to bring you up to date on several fronts where the
Administration has made progress with the Chinese as outlined in
the commitment that the President made in his letter of last
July 19.
MFN now underpins a U.S. -China trade relationship that exceeds
$23 billion in two-way trade, with a substantial and growing
market for U.S. aircraft, wheat, fertilizer, cotton, and wood
products among others. Trade with China has led to the creation
of thousands of jobs for U.S. workers and farmers, and, it has
helped to underwrite the current prosperity of Hong Kong.
We nonetheless continue our efforts to resolve the serious trade
problems that we have with China. As instructed by the President
last July, U.S. trade agencies, including USTR, have taken
vigorous measures to rectify those problems. At the direction of
the President, I ordered the initiation of a Special 301 and
investigation into China's intellectual property rights practices
and a Section 301 investigation into the denial of access for
U.S. exports to Chinese markets. The Administration has also
taken vigorous action with regard to Chinese textile
transshipments.
These policy measures have begun to bear fruit. We concluded an
agreement with China on January 17 that will considerably improve
protection for copyrights, patents, trade secrets and other U.S.
intellectual property. In the process, the Chinese have agreed
to join two major international conventions for the protection of
intellectual property and to make significant changes in their
laws and regulations to implement the stipulations both of these
conventions and of our bilateral agreement.
01/30/92 15:31
T 202 395 7350
NSC LEGISLATIVE
F.03
JAN 29 '92 13:27 FROM USTR
PAGE. 003
The Honorable Max S. Baucus
Page 2
As you know, because of this agreement, the two leading industry
associations, PMA and IIPA, both came out strongly in support of
renewal of unconditional MFN.
In the current 301 investigation into market access questions, we
are also pressing China to make significant structural changes in
its still highly protectionist trade regime and to eliminate
market barriers to U.S. exports. In this regard, we have asked
the Chinese to bring their trade regime up to international
standards as expressed by the principles and stipulations of the
General Agreement on Tariffs and Trade (GATT). Although our
talks with China on market access issues have just hit full
stride, we have made some initial progress in beginning the
process of reducing prohibitively high tariffs, import licensing
requirements, and in improving transparency.
The Customs Service has increased greatly its investigation into
suspected illegal Chinese textile transshipments. Moreover,
recent raide on importers of Chinese textiles in the United
States should provide an additional deterrent to fraud.
Substantial charges have been made against China's textile
quotas, and the Chinese have been informed that additional
countermeasures may be necessary.
The Administration is continuing to work with our trading
partners to resolve the issues associated with Taiwan's accession
to the GATT. I believe that Taiwan's accession to the GATT will
make an important contribution to the global trading system and
continue to support it. At the same time, it is clear that
China's entry into the GATT would also be of benefit to the
international trade community. It is also clear, however, that
before China can accede to the GATT as a contracting party, China
must demonstrate that it has complied with GATT requirements.
I urge you to continue to support unconditional MFN for China.
As always, 1 look forward to working with you in our efforts to
encourage China to improve its foreign trade regime and to become
standing. a full member of the international trade community in good
Sincerely,
Carla A. Hills
** TOTAL PAGE. 003 **
THE WHITE HOUSE
WASHINGTON
February 24, 1992
RECOMMENDED TELEPHONE CALL BY THE PRESIDENT
TO:
SENATOR HANK BROWN (R-CO)
SENATOR JAMES JEFFORDS (R-VT)
SENATOR DON NICKLES (R-OK)
DATE:
February 24, 1992
RECOMMENDED BY:
Nicholas E. Calio
PURPOSE:
To ask these Senators to vote against the
Conference Report on H.R. 2212, the China MFN
bill.
BACKGROUND:
Tomorrow afternoon at 4:30 p.m., the Senate
will vote on the Conference Report to H.R.
2212, a bill conditioning Most Favored Nation
status for China. Last year the House
approved this report by a large veto-proof
margin. Last summer this bill passed the
Senate by a vote of 55-44-1, demonstrating
ample veto strength.
In canvassing Senators, we have found some
softness developing on our side, resulting
from concerns over China's purported missile
sales to Third World countries. All three
Senators on this list supported us on China
MFN, however, they all have concerns about
continued Chinese activities in this area.
It is important that we hold their votes in
preparation for what will certainly be a
major foreign policy debate once this bill is
vetoed. Deputy Secretary of State Lawrence
Eagleburger has previously briefed these
three Senators on this issue and Ambassador
Carla Hills will call Senator Jeffords prior
to your call.
KEY POINTS:
:
I need you to continue to vote with me
against George Mitchell's conditional
China MFN bill.
--
Tomorrow Jim Baker will be briefing you
on our most recent efforts to get the
Chinese to adhere to the Missile
Technology Control Regime (MTCR).
-2-
:
This is an important step forward in our
efforts to control or stop the sale of
missiles to the Third World countries.
:
I know you have other concerns in this
area and we are prepared to address
them, but pulling the plug on MFN takes
away one of our most effective tools in
dealing with the Chinese.
|
The record will show that we have not
only made substantial progress in
controlling missile sales, but in trade
and human rights issues as well. I am
committed to continuing this progress,
but we can only do this by engaging the
Chinese -- not by walking away from
them.
|
Will you stick with me and help me solve
this tremendously difficult problem?
DATE OF
SUBMISSION:
February 24, 1992
Senator Hank Brown (R-CO)
ACTION:
Senator James Jeffords (R-VT)
ACTION:
Senator Don Nickles (R-OK)
ACTION:
Roll Call Vote
Legislative
NO. 31
SUBJECT CONFERENCE REPORT
ON H.R. 2212
YEAS
NAYS
/
Adams
Akaka
Baucus
Bentsen
2
Biden
3
Bingaman
Bond
/
4
Boren
Bradley
Breaux
Brown
Bryan
Bumpers
2
Burdick
Burns
Byrd
Chafee
Coats
Cochran
Cohen
Conrad
Craig
Cranston
D'Amato
Danforth
Daschle
DeConcini
Dixon
Dodd
Dole
Domenici
Durenberger
Exon
Ford
Fowler
Garn
Glenn
Gore
Gorton
Graham, Florida
Gramm, Texas
Grassley
Harkin
Hatch
Hatfield
Heflin
Helms
5
Hollings
Inouye
Jeffords
Johnston
Kassebaum
Kasten
Kennedy
Kerrey, Nebrasks
+
Kerry, Massachusetts
6
Kohl
Lautenberg
Leahy
Levin
7
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Metsenbaum
Mikulski
8
Mitchell
Moynihan
Murkowski
Nickles
Nunn
Packwood
3
Pell
Pressler
Pryor
Reid
Riegle
Robb
Rockefeller
Roth
Rudman
Sanford
Sarbanes
Sasser
Seymour
4
Shelby
Simon
Simpeon
Smith
Specter
Stevens
Symms
Thurmond
9
Wallop
Warner
5
10
Wellstone
11
Wirth
12
Wofford
CPO 1991 43-T18 two)
59
39
WILLIAM S. COHEN
ROBERT S. TYRER
ADMINISTRATIVE ASSISTANT
MAINE
United States Senate
WASHINGTON, DC 20510-1901
3/18/92
Jim:
Here's an article by David Li, the chief executive of the
Bank of East Asia in Hong Kong.
Mr. Li is coming to the U.S. for a visit the first week in
April, and it is Senator Cohen's request that a brief courtesy
call/photo with the President be scheduled. Senator Cohen is
setting up meetings for Mr. Li with the Senate leadership as
well. Senator Cohen believes Mr. Li is a dynamic and influential
figure who could be of value to the administration as an informal
sounding board and liaison on issues regarding mainland China.
Please let me know how it looks -- thanks for your help.
Pal
Hong Kong Standard, Feb. 8, 1992
Analysis
Optimistic forecast for HK politics
D
OMESTIC politics is a
Bank of East Asia chief
During this time, the differ-
serve as Hongkong's consti-
new topic for Hongkong
speakers After all. Hongkong
executive David Li
ent political elements in the
tution from 1 July 1997,
council will have to decide
historically has had a repu-
yesterday delivered a
guarantees political conti-
whether they are political
nuity. According to this docu-
tation for being a largely
speech titled 'Hongkong:
"pressure groups" or "par-
ment, the governance of
apolitical place.
Politics in Transition' to
ties". At the moment, there is
Hongkong will remain
Since its inception, Hong-
the Japan-Hongkong
only one group which could
Executive-led. Equally im-
kong has been very much a
Society in Tokyo. Here
be called a political party by
portant. the business com-
refugee territory. with most of
international definition.
its population having fled
are excerpts of his
munity will retain a strong
address.
Certainly, a merging of pol.
voice in the Government
economic and political uncer-
itical groups into a few trans-
through both the Executive
tainty in China for the rela-
parent parties would cut
and Legislative Councils.
tive stability of Hongkong.
down on the seeming cacoph-
The policy-making Execu-
Even today. the majority of
had previously been a wholly
ony coming out of the Legis-
Hongkong adults either came
tive Council. comprising ap-
appointed body and
lative Council. Such a devel-
pointed representatives from
to the territory as refugees
unfortunately was widely re-
opment might, thereby, en-
themselves or are the children
key sectors of the community,
garded as a "rubber stamp".
hance the efficiency of the
of refugees.
will continue to play a vital
Last September saw the in
legislative process. But we
advisory role for the adminis-
Over the years, this shared
troduction of direct elections
must be aware that there
tration. Likewise, the con-
refugee experience has bred
for 18 council seats.
would be a price, as a valuable
tinuation of the functional
in Hongkong a strong scepti-
The functional constituen
diversity of opinion gives way
constituency seats in the
cism about politics. It was
system is unique. It formal-
to party platforms.
Legislative Council will en-
only recently that this scepti-
ises the historical model of the
As you can see, I am am-
sure that business retains its
cism has begun to weaken
Hongkong Government.
bivalent on this question. But
ability to debate and amend
amone the younger gener.
whereby the administration
then, I am an independent.
proposed legislation.
ation
actively seeks out the views
However. I am not ambivalent
Beyond political continuity.
While generally satisfied
the business community on
on the question of over-
these arrangements will work
with the manner in which the
key legislation.
DAVID LI: Gradual and pragmatic change ensures stability.
legislation.
to promote policy consistency
territory has been adminis-
Inevitably. it has taken the
tered. Hongkong people have
be over. Those of you who
Where then are politics in
As the public becomes more
and administrative efficiency.
"new look" Legislative Coun-
become more politically ac-
have visited Hongkong over
Hongkong heading?
politically aware, the danger
It should be apparent that I
cil time to find its feet. There
the last few months or who
tive. This is to be expected,
At the moment. we are in a
exists that the administration
am optimistic about the future
has been much political
given Hongkong's increased
follow our press may be
"transitional". or "learning",
may respond to calls for
of Hongkong politics. The
jockeying and jousting, as dif-
prosperity. education levels
concerned about the impli-
phase. In the short run, there
greater accountability by try-
way forward may not always
ferent groups stake out their
and exposure to world affairs.
cations of all these develop-
is admittedly a danger of de-
ing to legislate all problems
be clear, but change - if and
position and make their views
ments. Don't be.
Increased interest in poli-
creased legislative efficiency.
away.
when it comes - will be
known.
People in economies with
But in the longer term. this
While it is important that
tics has largely manifested
gradual and pragmatic, giving
Fortunately, things now ap-
"established" political sys-
will be more than offset by
the administration heed
the public. the business com-
itself in calls for greater pub-
pear to be settling down. With
tems often forget the long
lic participation in the
gains in the overall effective-
"grassroots" concerns, falling
munity, the administration
hindsight, one could - in fact
"learning curve" they went
running of Hongkong.
ness of government.
into the same trap as the
and Hongkong's apprentice
- draw encouragement from
through before their present
As the "new look" Legislat-
United States and "Dying the
politicians ample time to
In response. the adminis-
the relative speed with which
institutions reached ma-
ive Council gains experience.
Death of a Thousand Laws"
adapt to the new situation.
tration has gradually adapted
the various old and new politi-
turity.
it will press the adminis-
would do Hongkong no good.
the territory's political struc-
The development of a more
cal forces have found equilib-
Hongkong does not want an
tration to be more account-
In this context, it is encour-
representative and more ac-
ture to allow for greater
rium.
American, a British, or a
able and more transparent.
aging that members of the
"grassroots" involvement in
countable government will
This is not to say that Hong-
Japanese-style political sys-
This will benefit everyone. not
"new look" Legislative Coun-
put Hongkong politics on a
government.
kong has seen the end of
tem. Hongkong wants a
least the international busi-
cil have taken the initiative in
firmer footing. Stability will
The first elective element
political controversy. and a
Hongkong-style political sys-
ness community.
warning the administration
be ensured, with Hongkong
was added to the Legislative
few of our "old guard" may
tem. And it is going to take
In other words. we are in a
against this trend.
remaining a highly competi-
Council in the mid-1980s. with
never be able to adjust to the
time. effort and patience to
period when the Legislative
What about the longer-term
tive and attractive inter-
the creation of functional
new. more open style. But the
discover what exactly works
Council is seeking to define a
outlook?
national centre for business,
costituency seats. The council
"teething period" appears to
best for Hongkong.
constructive role for itself.
The Basic Law, which will
trade and finance.