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    "title": "China MFN [5]",
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    "ocrText": "Originally Processed With FOIA(s):\nFOIA Number:\n2012-1098-F\n2012-1098-F\nFOIA\nMARKER\nThis is not a textual record. This is used as an\nadministrative marker by the George Bush Presidential\nLibrary Staff.\nRecord Group/Collection:\nGeorge H.W. Bush Presidential Records\nCollection/Office of Origin:\nLegislative Affairs, White House Office of\nSeries:\nDyer, James W., Files\nSubseries:\nOA/ID Number:\n08451\nFolder ID Number:\n08451-009\nFolder Title:\nChina MFN [5]\nStack:\nRow:\nSection:\nShelf:\nPosition:\nG\n20\n11\n6\n1\nWithdrawal/Redaction Sheet\n(George Bush Library)\nDoc. No. / Type\nSubject/Title\nDate\nRestriction\nClassification\n01a. Memorandum To: President Bush From: Brent Scowcroft\nn.d.\n(b)(1)\nRe: Reply to Senator Baucus' Letter on China MFN (1 pp.)\n01b. Letter\nTo: Senator Baucus\nn.d.\n(b)(1)\nRe: China's MFN Status (4 pp.)\n01c. Paper\nRe: Human Rights/Trade and Economic Issues (15 pp.)\nn.d.\n(b)(1)\n01d. Letter\nTo: Senator Dole\nn.d.\n(b)(1)\nRe: China's MFN Status (4 pp.)\n01e. Paper\nRe: Human Rights/Trade and Economic Issues (15 pp.)\nn.d.\n(b)(1)\n01f. Memorandum\nTo: Brent Scowcroft From: Robert Pearson\n7/12/91\n(b)(1)\nS\nRe: Reply to Letter from Senator Baucus and Others (1 pp.)\n01g. Letter\nTo: Senator Baucus\nn.d.\n(b)(1)\nS\nRe: China's MFN Status (8 pp.)\n01h. Paper\nRe: Trade and Economic Issues (14 pp.)\n7/8/91\n(b)(1)\n02. List\nChina MFN (5 pp.)\nn.d.\n(b)(1)\nPage 1 of 1\nCollection:\nRecord Group:\nBush Presidential Records\nOffice:\nLegislative Affairs, White House Office of\nSeries:\nDyer, James W., Files\nSubseries:\nWHORM Cat.:\nFile Location:\nChina MFN [5]\nPinksheet Number:\nMB4342\nOA/ID Number:\n08451-009\nDate Closed:\n9/24/2012\nFOIA/Sys Case #:\n2012-1098-F\nRe-review Case #:\nP-2/P-5 Review Case #:\n4887\nNATIONAL SECURITY COUNCIL\nWASHINGTON D.C. 20506\nJuly 17, 1991\nACTION\nMEMORANDUM FOR BRENT SCOWCROFT\nFROM:\nTIMOTHY CARNEY\nSUBJECT:\nReply to Senator Baucus on China MFN\nAt Tab A is a letter to Senator Baucus and Senator Dole regarding\nMFN for China. Our intent would be to hold the letter for\nrelease until 24-48 hours before debate begins in the Senate. We\nthink debate could begin early next week but so far Senator\nMitchell has not made known his preference on timing.\nConcurrence by: Mike Andricos\nRECOMMENDATION\nThat you recommend the President sign the letter at Tab A.\nAttachments\nTab I Scowcroft/President\nTab A\nLetter to Senator Baucus\nTab B\nIncoming Correspondence\nTab II\nState Drafts\n4887\nTHE WHITE HOUSE\nWASHINGTON\nACTION\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nBRENT SCOWCROFT\nSUBJECT:\nReply to Senator Baucus' Letter on China MFN\nPurpose\nTo reply to Senator Baucus and Senator Dole, with copies to the\nothers on their letter regarding most-favored-nation trading\nstatus for China. Our intent is to forward your response to the\nsignatories shortly before the Senate begins debate on the\nsubject, which could be early next week.\nBackground\nThe letter Senator Baucus initiated underscores serious U.S.\nconcerns about Chinese human rights; economic and trade\npractices; missile and nuclear technology proliferation; and\ngeneral foreign policy. The signatories maintain that revoking\nMFN is the wrong tool to effect the imperative need for Chinese\nbehavior to change. But, they argue for a more active\nAdministration response in addressing these American concerns.\nYour reply, with its attachment, sets forth the philosophy that\nstrong, targeted measures must be used when necessary; cites a\nnumber of sanctions already in effect; and touches on imminent\ndiscussion of Chinese human rights matters which you plan at the\nG-7 Summit. Your letter squarely addresses three issues said to\nfigure in pre-debate discussion on the Hill by: promising\nresolute actions if China does not favorably address our missile\nand nuclear nonproliferation concerns; detailing your\ninstructions to press on China's unfair trading practices\nincluding, specifically, possible further action under Section\n301; and affirming U.S. support for Taiwan's accession to GATT\nwhile maintaining a one-China policy.\nRECOMMENDATION\nThat you sign the letters at Tab A.\nAttachments\nTab A\nPresidential Letter for Signature\nTab B\nIncoming Correspondence\nCC:\nVice President\nChief of Staff\nTHE WHITE HOUSE\nWASHINGTON\nDear Senator Baucus:\nI appreciated receiving your views on the importance of renewing\nChina's most-favored-nation (MFN) trade status while also seeking\nto achieve progress with the Chinese on issues of vital concern\nto the American people. We clearly share the same goals. We\nwant to see China return to the path of reform, show greater\nrespect for human rights, adhere to international norms on\nweapons sales, and practice fair trade. China should contribute\nto international stability and not detract from it.\nYou rightly note that withdrawing MFN would hurt not only\nAmericans but also the people of Hong Kong and the millions in\nChina who are working for progressive change. Continuing MFN is\nessential to protect American consumers and exporters, and to\nsupport the economic forces that have been driving reform in\nChina for more than a decade. It is no accident that the process\nof reform accelerated with the increase in foreign businesses\noperating in that nation. Those who would end political and\neconomic reform in China have the most to gain if MFN were\nwithdrawn. It is the economic forces pressing for the loosening\nof state control and increased personal freedom that would suffer\nthe most. Other losers would be the thousands of American\nworkers and farmers who together produced in 1990 almost $5\nbillion in exports to China.\nSince we started the process of normalizing contacts with China\nin the 1970s, there has been strong bipartisan support for the\nU.S. -China relationship. Building on the three U.S.-China\ncommuniques, U.S. interaction with the government and people of\nChina has produced demonstrable progress. That interaction must\ncontinue despite the recent severe setbacks. Nevertheless, I\nsupport the view that strong measures are needed to address our\nconcerns in China and have not hesitated to use them in a\ntargeted fashion. To underscore our deep dismay about human\nrights violations, I have kept in place a number of sanctions\nsince the Tiananmen Square crackdown which have affected arms\nsales, high-level contacts, U.S. economic programs and U.S.\nsupport for multilateral development bank lending to China.\nThe U.S. is currently the only nation maintaining its Tiananmen\nsanctions and refusing to normalize relations until China makes\nsubstantial progress on human rights. For example, while all our\nallies and other World Bank members have supported virtually all\nof the last sixteen World Bank loans to China, we have declined\n2\nto support seven because the loans would not serve basic human\nneeds.\nAt the London Summit, we raised China's human rights practices\nwith our G-7 allies and encouraged them to continue to stress to\nChina's leaders, as we have repeatedly, the importance that\ndemocratic governments attach to human rights. We made clear\nthat the U.S. will continue its policy of supporting only those\nmultilateral development loans for China that serve basic human\nneeds (BHN), and our view that any non-BHN lending to China help\nto promote market-oriented economic reform.\nTo advance our nonproliferation objectives, I recently authorized\na number of steps aimed at engaging the Chinese on their weapons\ntransfer policies and making clear our dissatisfaction with\ntransfers that contribute to regional instability. The Under\nSecretary of State for International Security Affairs recently\ntraveled to Beijing for a detailed discussion of nonproliferation\nissues, including our specific concerns about Chinese exports.\nHe pressed for China's adherence to the Nuclear Nonproliferation\nTreaty and the Missile Technology Control Regime, actions I\ncalled for in my commencement speech at Yale University on\nMay 27. We are pleased with the constructive role China played\nin the July 8-9 Middle East arms control talks in Paris. The\nChinese endorsed all the key objectives of my Middle East arms\ncontrol initiative (such as efforts to freeze and ultimately\neliminate surface-to-surface missiles and block the production\nand acquisition of nuclear useable material). The Chinese also\nagreed to work rapidly in follow-on meetings to flesh out the\nbroad agreements reached in Paris.\nAt the same time, I have also taken measures to emphasize to\nChina that the U.S. is concerned about reports of destabilizing\nmissile-related transfers. In April, I rejected requests for\nlicenses to export satellite components for a Chinese\ncommunications project because of the involvement of Chinese\ncompanies in unacceptable missile equipment transfers. Just\nrecently, I approved trade sanctions against two Chinese\ncompanies for that same reason. In addition, I directed that no\nfurther licenses of high-speed computers and no further exports\nof satellites to China be authorized until our concerns that\nChina adhere to accepted international nonproliferation standards\n:\nare satisfactorily addressed. The U.S. will be coordinating with\nother countries in order that these measures not be undercut.\nOur experience has demonstrated that such consultations will lead\nto effective, multilateral technology transfer restrictions.\nI have also instructed U.S. agencies to press vigorously our\nconcerns about Chinese unfair trading practices. In April, I\ndirected the U.S. Trade Representative to identify China as a\npriority foreign country under the Special 301 provisions of the\nTrade Act for failing to protect U.S. intellectual property\n3\nrights. If China does not make real progress during the 301\ninvestigation, trade action will follow. Beyond intellectual\nproperty protection, my Administration has invited senior Chinese\ntrade officials to Washington in August for continuation of\nconsultations begun in June regarding access for U.S. products to\nthe Chinese market. If these talks fail to produce Chinese\ncommitments to take substantial measures to improve market\naccess, the Administration will self-initiate further action\nunder Section 301 of our trade laws.\nWe are strictly enforcing the terms of our textile agreement with\nChina and have already made charges against China's quota because\nof illegal textile shipments through third countries totalling\napproximately $85 million so far. Following consultations in\nJuly, we expect to make additional charges. If China does not\nexert effective control over these illegal shipments, we are\nprepared to take additional action against China.\nCharges that China exports goods produced with prison labor are a\nmatter of serious concern. The Customs Service is investigating\nthese charges. In addition, we have obtained a firm high-level\ncommitment to prevent the sale of prison labor products to the\nUnited States. We will continue to monitor China's behavior in\nthis area closely and will strictly enforce relevant legislation\nconcerning prison labor exports. In particular, I am ordering\nthe following additional measures: The Department of State will\nseek to negotiate a memorandum of understanding with China on\nprocedures for the prompt investigation of allegations that\nspecific imports from China were produced by prison labor.\nPending negotiation of this agreement, the U.S. Customs Service\nwill deny entry to products imported from China when there is\nreasonable indication that the products were made by prison\nlabor. The denial will continue until the Chinese Government or\nthe Chinese exporter provides credible evidence that the products\nwere not produced by prison labor.\nI am also instructing the U.S. Customs Service to identify an\noffice to receive information on prison labor exports and\nestablish procedures for the prompt investigation of reports of\nprison labor exports from interested parties. Additional customs\nofficials will be directed to identify prison labor exports and\naid in uncovering illegal textile transhipments.\nAlthough it is not directly related to China's MFN status, I\nshare your interest in Taiwan's accession to the GATT. As a\nmajor trading economy, Taiwan can make an important contribution\nto the global trade system through responsible GATT\nparticipation. The U.S. has a firm position of supporting the\naccession of Taiwan on terms acceptable to GATT contracting\nparties. The United States will begin to work actively with\nother contracting parties to resolve in a favorable manner the\nissues relating to Taiwan's GATT accessing. Because China, our\n4\ntenth largest trading partner, could also make an important\ncontribution to the global trading system, I will seek to have\nthe Chinese Government take steps on trade reform so that China's\nGATT application can advance and its trade practices can be\nbrought under GATT disciplines through the Working Party formed\nfor China in 1987. U.S. support for Taiwan's accession to GATT\nas a customs territory should in no way be interpreted as a\ndeparture from the long-standing policy of five administrations\nwhich acknowledges the Chinese position that there is only one\nChina, and that Taiwan is part of China.\nIn sum, therefore, I am prepared to address the concerns you and\nyour colleagues have identified, and I am doing so. But\ndiscontinuing MFN, or attaching conditions to its renewal, would\ncause serious harm to American interests and would render futile\npursuit of the initiatives I have outlined, which are discussed\nin greater detail in the attachments. Working together, I\nbelieve we will best protect America's interests by remaining\nengaged with China and the Chinese people.\nSincerely,\nAttachments:\nPart I - Human Rights\nPart II - Nonproliferation\nPart III - Trade and Economic Issues\nThe Honorable Max S. Baucus\nUnited States Senate\nWashington, D.C. 20510\nPART I: HUMAN RIGHTS\nHuman rights concerns have been at the heart of our relationship\nwith the PRC since the tragic events of June 1989. Every high-\nlevel meeting since that time has at least touched on human\nrights issues, and several -- such as the December 1990 visit to\nChina by Assistant Secretary Schifter -- have been devoted\nexclusively to them. We have consistently stressed to the\nChinese leadership that there can be no return to the kind of\nrelationship we enjoyed before 1989 without substantial\nimprovements in China's human rights practices.\nOur overall approach on human rights issues has consisted of:\nPublic expression of concern\nPresident Bush condemned the brutal suppression of\ndemonstrations in Tiananmen Square in June 1989, the first\nworld leader to do so. He declared May 13, 1990 a National\nDay in support of Freedom and Human Rights in commemoration\nof the 1989 demonstrations, and issued another statement to\nmark the anniversary of the crackdown in 1991.\n--\nIn our human rights reports for 1989 and 1990, we were fair\nbut hard-hitting, and as accurate as available information\nwould allow. These reports have drawn high praise from\nhuman rights groups, and harsh condemnations from the\nChinese government.\n--\nThe State Department issued a statement on January 9, 1991\ncondemning the trials of nonviolent dissidents.\n--\nIn April 1991 the President met the Dalai Lama at the White\nHouse to demonstrate our respect for His Holiness'\nnonviolent approach to conflict resolution and our concern\nfor human rights problems in Tibet.\nSuspension of bilateral programs\nOn June 6 and June 20, 1989, the President announced the\nsuspension of a number of bilateral programs and changes in U.S.\napproach to multilateral issues until the human rights climate in\nChina improved. Those suspensions generally remain in effect.\n--\nA multitude of high-level exchange visits that would\nnormally have taken place since 1989 have been canceled.\nOnly a very limited number of visits at and above Assistant\nSecretary level have been approved on a case-by-case basis,\nand only when they addressed issues of key concern to the\nUnited States, e.g., like human rights, nonproliferation,\nunfair trade practices, and narcotics.\nMilitary exchange visits have been suspended completely.\n2\nWork on several existing military equipment and technology\nprojects has been suspended indefinitely.\nWe have stopped the transfer of military or dual-use\nequipment or technology to Chinese military and security\nservices.\nThe U.S. sought to postpone all multilateral development\nbank loans to China from June 1989 to January 1990. Since\nthen, we have supported only those loans that serve the\nbasic human needs of the Chinese people.\nWe have suspended grants, loans and insurance guarantees to\nChina under the Trade and Development Program and OPIC.\n--\nWe have worked through COCOM to suspend planned\nliberalization of export controls to China.\nEngagement in dialogue\nThrough the few high-level visits that have been authorized, and\nthrough regular diplomatic channels, we have engaged the Chinese\ngovernment in an unprecedented continuing dialogue on a wide\nrange of human rights issues.\n--\nThe Scowcroft-Eagleburger missions of July and December 1989\nwere devoted primarily to laying out our human rights\nconcerns and suggesting steps the Chinese could take to\naddress them.\n--\nDuring Chinese Foreign Minister Oian's visit to Washington\nin November 1990, President Bush and Secretary Baker\nreiterated the need for progress on human rights, and\nstressed that human rights is a cornerstone of American\nforeign policy.\nAssistant Secretary Schifter visited China in December 1990,\nthe first time our top human rights official has done so.\nIn sixteen hours of intense discussions with senior Chinese\nofficials, he spelled out in detail our human rights\nconcerns in a wide range of areas including accounting of\ndetainees, release of political prisoners, denial of due\nprocess and fair and open trials, treatment of prisoners,\ndivergence of Chinese law from international standards,\nrespect for freedom of religion, abusive implementation of\nfamily planning regulations, and human rights problems in\nTibet. He delivered a list of 151 representative cases of\nreported political incarceration, and asked Chinese\nauthorities to clarify the status of the cases and release\nthose whose imprisonment violated international norms. He\nsuggested changes in Chinese laws and judicial processes\nthat would bring them into conformity with international\nstandards.\n3\nUnder Secretary Kimmitt in May 1991 reiterated many of the\npoints made by Assistant Secretary Schifter, and called on\nthe Chinese government to declare an amnesty for all those\nimprisoned for nonviolent political activities. He also\nurged the Chinese to implement effectively their claimed\nprohibition on export of prison labor products.\nResults of actions\nMost importantly, the Chinese government has acknowledged the\nlegitimacy of human rights as a subject of bilateral discussion,\nboth with us and with other concerned governments. they received\na Congressional delegation devoted exclusively to human rights\nconcerns in March 1991, and agreed to receive another later this\nyear. They also agreed to receive human rights delegations to be\nsent by the governments of France and Australia. In addition,\nthey have taken a number of modest but positive steps to improve\nthe human rights situation in China.\nMartial law was lifted in Beijing in January 1990 and in\nLhasa four months later. No part of China is currently\nsubject to martial law.\nMost of those detained after the Tiananmen tragedy were\nreleased by the end of 1989. Chinese authorities announced\nthe release of nearly 1000 more detainees in 1990, and about\n70 have been released so far in 1991. Officials claim that\nonly 21 still await trial detention in Beijing, and at least\none of these -- labor leader Han Dongfang -- has been\nreleased for medical treatment.\nWhile at least 30 persons have been convicted on political\ncharges since the beginning of the year, the sentences meted\nout to them were generally less severe than those imposed on\nsimilar charges in previous years. THose released without\nfurther punishment included prominent dissidents such as\nessayist Liu Xiaobo, journalist Zhang Weiguo, playwright\nWang Peigong, and legal scholar Chen Xiaoping.\nLeading dissident Fang Lizhi and his wife, who had obtained\nrefuge in the U.S. Embassy in Beijing for over a year, were\nallowed to leave China in June 1990, and are now at\nPrinceton.\n--\nMost investigations of those involved in the 1989 protests\nhave ended, and most of our Chinese contacts report that the\noppressive atmosphere of 1989 has lifted significantly.\n--\nThe Chinese have ceased the most odious forms of harassment\nof Chinese students and scholars in the U.S.; harassment was\na serious problem in 1989 and early 1990.\nRelatives of many, though not all, overseas dissidents have\nbeen allowed to leave China and join them abroad. In some\n4\nof the remaining cases that we have raised with Chinese\nofficials, passports have subsequently been issued.\nSeveral released dissidents, including Tiananmen hunger\nstriker Gao Xin and former Arizona State student Yang Wei,\nhave been allowed to leave the country.\nChinese authorities have undertaken to stop the export to\nthe U.S. of products made in Chinese prisons. We will\ncontinue to monitor this situation closely, but it appears\nthat the Chinese government is taking increasingly specific\nsteps to enforce their prohibition on export of these\nproducts.\n--\nIn response to concerns expressed by Administration\nofficials and Members of Congress, the Chinese have provided\nuseful new information on the status of persons reported\ndetained for religious activities.\n--\nEconomic reforms have resumed, in some cases matching or\nexceeding levels reached before 1989. Some limited\npolitical reforms, in important but relatively\nnoncontroversial areas such as the personnel system, have\ncontinued. An Administrative Procedure Law that became\neffective in October 1990 for the first time enables Chinese\ncitizens to sue abusive officials.\nThere are indications that further progress may be in the offing.\nWe are continuing to press the Chinese government to release all\nremaining detainees, to commute the sentences of those nonviolent\ndissidents already convicted, and to allow the departure of the\nremaining relatives of overseas dissidents who wish to leave. We\nare hopeful that a combination of dialogue and specifically\ntargeted pressure will lead to further movement on these and\nother remaining issues of concern. And in the longer term, we\nare confident that the momentum toward greater freedom and\ndemocratization in China, built up during the decade of reforms\nand dramatically reflected in the 1989 demonstrations, will prove\nirreversible.\n5\nPART II: ADMINISTRATION'S ACTIONS WITH RESPECT TO\nPROLIFERATION CONCERNS\nThe United States is engaged in a high-level dialogue with the\nChinese that began early in our relationship. Looking at the\nbroad trends in China's nonproliferation policy since\nnormalization in 1979, it is clear that our dialogue has paid off\nin important areas, demonstrated by China's evolution toward\ninternational consensus on nonproliferation in areas of great\nimportance to us. For example, China, which once held an\nantagonistic view of multilateral controls on nuclear exports,\njoined the IAEA in 1984 and sent observers to the Nuclear\nNonproliferation Treaty Review Conference in 1990.\nMiddle East/South Asia\nChina's support for the Middle East arms control initiative is\nanother case in point. China's participation in the initiative\nis a positive step that will strengthen international\nnonproliferation efforts and indicates China's resolve to\ncontribute to efforts to attain stability in the Middle East. In\naddition, China's willingness to participate in multilateral\nefforts to reduce tension in South Asia will be crucial to\nestablishing stability in that volatile region.\nMoreover, we have seen Chinese arms sales restraint in some areas\nwhere we have vital interests. For example, to the best of our\nknowledge, apart from the 1987/88 sale of missiles to Saudi\nArabia, China has not delivered medium-range missiles to the\nMiddle East. It is clear that in other specific cases China has\ntaken international concerns into account and declined proposed\nmissile exports to prospective buyers.\nUnderscoring Our Concerns\nIt is because serious concerns remain that we want to maintain a\nconstructive nonproliferation dialogue with Beijing. We do not\nintend to ignore current problems, but isolating China by\ndismantling the framework for our relations is not the way to\nadvance our nonproliferation objectives.\nWe have the means available to underscore our concerns where\nthere are differences in our approaches to nonproliferation and\nwe have used these legislative and executive branch tools. For\nexample, we have imposed trade sanctions mandated by the National\nDefense Authorization Act on Chinese entities involved in\nmissile-related activities. We have also announced the\nAdministration's decision that, pending progress toward our\nnonproliferation objectives, we will not license high speed\ncomputers and will not issue further waivers of legislative\nrestrictions on satellite exports. These new sanctions have been\nimposed in addition to the existing sanctions announced\nimmediately following the June 1989 assault on Tiananmen and\namplified by Congress in the Department of State Authorization\n6\nAct for FY 1990-1991. Moreover, we have not certified China\nunder the bilateral agreement for nuclear cooperation that took\neffect in 1985.\nOur policy mix of sanctions and cooperation at any given time is\nnecessarily dependent on Chinese behavior. We are encouraged by\nChina's indication in June that it is reviewing its policies with\nrespect to Missile Technology Control Regime (MTCR) and the NPT.\nWe seek China's adherence to the NPT and the MTCR guidelines and\nwill encourage the Chinese to take concrete steps toward\nadherence to the key multilateral standards for international\nbehavior established by these institutions. The Administration\nwill continue to use the legislative authority that already\nexists and will take resolute action if the Chinese do not\naddress favorably our nonproliferation concerns.\n7\nPART III: TRADE AND ECONOMIC ISSUES\nThe Administration is committed to achieving with China the same\ngoals that have guided our trade policy with all other countries.\nWe seek open markets and the opportunity for U.S. firms and their\nproducts to compete on fair and equal terms. To achieve these\ngoals, and realize the principles of equality, mutual benefit and\nnon-discrimination set forth in the U.S. -China Bilateral Trade\nAgreement, this Administration has pursued a policy of\nnegotiation and engagement on trade issues with China. In\nparticular, the Administration has sought to improve U.S. access\nto China's marketplace; to bolster Chinese protection of\nintellectual property; to end fraudulent practices by Chinese\ntextile exporters using false country of origin declarations;\nand, to induce Beijing to undertake the economic and trade\nreforms required for membership in the GATT.\nReciprocal MFN tariff treatment underpins our ability to work\nconstructively with the PRC. China's desire to retain access to\nthe U.S. market has enabled us to engage Chinese leaders even\nduring periods of tension. We believe that discontinuing MFN, or\nattaching conditions to its renewal, would cause serious harm to\nour trade interests and erode our ability to influence China's\nbehavior on key trade issues.\nThe Past Decade of Bilateral Trade Relations\nAfter decades of adhering to an import-substitution strategy that\nfocused on minimizing China's reliance on outside sources of\nmachinery and equipment, China began in the 1980's to seek\noutside sources of these goods. It also has increasingly drawn\non foreign technology, expertise, and funds by actively\nencouraging joint ventures.\nChina's opening to the outside world has helped transform its\neconomy, bolstering reform-oriented sectors that are not directly\ncontrolled by the central government. For example, the state\nsector now produces just over half of China's industrial output;\nin 1978, its share was 78 percent. China's dynamic rural\nindustries, which are privately and collectively owned, have\nburgeoned. There are 30,000 foreign-invested ventures now in\nChina, with a total contracted value of $40 billion. The impact\nof China's open door has been particularly pronounced in the\nsouthern and coastal provinces, where 90 percent of the foreign\ninvestment and more than three-fourths of China's trade\nactivities are located. This region, in turn, has become the\nprimary engine of economic reform in China largely as a result of\nthe introduction of market concepts to Chinese employees of joint\nventures and to citizens engaging in commercial exchanges with\nthe West. The economic autonomy fostered by this interaction\ncontributes to increased political and even individual self-\ndetermination.\n8\nThe United States has been a vital partner in this\ntransformation. Following Congressional approval of the\nbilateral trade agreement, the United States and China\nestablished formal trade relations and reciprocally granted most-\nfavored-nation (MFN) status in 1980. Growth in our commercial\nties has helped to change China and to bring it into the global\ntrading system. Since the resumption of normal trade relations,\nU.S.-China two-way trade has increased almost 770 percent, from\n$2.3 billion in 1979 to over $20 billion last year.\n-- We are now China's second-largest trading partner and its\nlargest export market.\n--\nChina is our tenth-largest trade partner, up from fifteenth\nin 1981.\n--\nOver 1,000 U.S. firms have invested more than $4 billion in\nChina and another $5 billion in Hong Kong related primarily\nto trade with the PRC.\n--\nIn 1990, the United States exported $4.8 billion worth of\ngoods to China, including:\n--\n$749 million worth of aircraft\n--\n$544 million worth of fertilizer\n--\n$512 million worth of grain\n--\n$281 million worth of cotton yarn and fabric\n--\n$273 million worth of chemicals\n--\n$264 million worth of electric machinery\n--\n$238 million worth of wood and wood pulp\n--\n$227 million worth of scientific instruments.\nCommercial relations with the United States have exerted positive\ninfluences on China's business and economic practices since 1980.\nChina has shifted away from total reliance on a strongly\ncentralized economy, shown greater tolerance for experimentation\nwith market mechanisms to regulate its domestic economy, and\ndecentralized and liberalized its foreign trade practices.\nRegression in China's Trade Policies\nChina's opening to the outside world has not been smooth. Over\nthe past decade, attempts to accelerate the implementation of\nmarket-oriented reforms have been followed by Beijing's\nrecentralization of control, as concern about the country's\nballooning trade deficit led Beijing to step in to regain some of\nthe trade authority it had relinquished.\nMoreover, throughout the period since the normalization of trade\nrelations and the granting of reciprocal most-favored-nation\ntrading status in 1980, China's web of barriers to imports has\nmade it difficult for many U.S. exporters to gain access to the\nChinese market. U.S. firms have also had difficulty securing\nprotection for their intellectual property.\n9\nU.S. trade negotiators have long been engaged with the Chinese\nGovernment, both in bilateral negotiations and in multilateral\nconsultations at the GATT held to review China's application for\nmembership. We have sought to ensure that bilateral commercial\nrelations develop in accord with the principles that underlie our\nbilateral trade agreement: equality; mutual benefit; and\nnondiscrimination. From 1979 through 1987, Chinese authorities\nmade some progress in reducing nontariff barriers to imports, in\nimproving transparency, and in protecting the intellectual\nproperty of foreigners.\nThis trend has been reversed over the last three years.\n--\nSince 1988, Chinese trade policies and practices have become\nmore protectionist, nontariff barriers to imports have\nproliferated, and the trade system has become less\ntransparent. These policies undoubtedly contributed to a 17\npercent decline in U.S. sales to China in 1990. China was\nthe only major foreign market for U.S. goods and services in\nwhich our exports declined in 1990.\n--\nDespite intensive bilateral negotiations with Chinese\nauthorities since the USTR in 1989 placed China on the\n\"priority watch list\" of countries providing inadequate\nintellectual property protection--including three rounds of\nmeetings over the past five months--China has failed to live\nup to the commitments contained in the bilateral Memorandum\nof Understanding (MOU) signed in May 1989.\nAt the same time, other problems have developed in our bilateral\ntrade relationship. For example, to bypass U.S. textile and\napparel quotas, Chinese exporters have increasingly resorted to\nshipping these products to the United States via third countries\nusing false invoices and counterfeit visas. Also of concern to\nus has been the apparent lapse in China's commitment to economic\nand trade reforms that would bring the country in line with the\nGATT's free-trade principles. China's reassertion of central\ncontrol over the past few years has called into question its\nwillingness and ability to undertake the obligations that would\nbe required of China as a contracting party to the GATT.\nSteps the U.S. Government Has Taken and Will Take to\nAddress Bilateral Trade Problems\nIn six key areas of our bilateral trade and economic relations,\n:\nthe Administration has taken steps to resolve trade problems. We\nare prepared to do more.\nOn Market Access\n--\nBeginning in the fall of 1990, the Administration\nresumed sub-cabinet level meetings with the Chinese,\nthat had been suspended since June 1989, to secure\nChinese actions to reverse the growing list of new\nprotectionist measures.\n10\nIn April 1991, the Administration formally set in\nmotion a market access initiative that continued with\nthe visit to Beijing, in mid-June, of an interagency\ndelegation to discuss market access issues. In\nmeetings with senior Chinese officials, U.S. Government\nofficials raised nine types of market access barriers,\nincluding: the lack of transparency in rules and\nregulations; the expansion of import licensing\nrequirements; the use of import substitution policies;\nthe proliferation of import bans and quotas; the growth\nof standards, testing, and certification requirements,\nincluding discriminatory \"quality standards\" procedures\nfor imports; the high level of many import tariffs; the\nunnecessary use of certain phytosanitary regulations;\nthe uncertainties regarding government procurement and\ntendering regulations; and the lack of information\nregarding China's major development projects.\nThe Administration has proposed holding another round\nof market access consultations in August 1991. If that\nround of negotiations fails to yield substantial\ncommitments from the Chinese authorities to dismantle\nmarket access barriers, the Administration will self-\ninitiate Section 301 action to address those barriers\nthe removal of which offers the most potential for\nachieving U.S. trade policy objectives and increasing\nU.S. exports.\nOn Intellectual Property Protection\nOn April 26, 1991, USTR identified the PRC as a\npriority foreign country that denies adequate and\neffective protection of intellectual property rights.\nAccordingly, on May 26, 1991 USTR initiated a Special\nSection 301 investigation on the basis of four problem\nareas: (1) inadequate copyright protection, (2)\ninadequate patent protection, (3) inadequate trade\nsecret protection and (4) ineffective enforcement of\ntrademarks. Consultations with the Chinese are\nongoing. The first round of consultations under the\nSection 301 investigation occurred in mid-June and a\nsecond has been proposed for August.\nThe deadline for making a determination under Section\n:\n301 is November 26, 1991. This may be extended for\nthree months if China is making substantial progress in\ndrafting or implementing measures that will provide\nadequate and effective protection of U.S. intellectual\nproperty rights. At that time, the USTR must determine\nwhether the acts, policies and practices of the PRC are\nactionable under Section 301 and what retaliatory\naction, if any, is appropriate.\n11\n--\nIf the consultations fail to produce adequate and\neffective protection of intellectual property rights,\nthe Administration will take retaliatory action.\nOn Textile Transhipments\n--\nThe U.S. Customs Service has been vigilant in\ndocumenting cases of Chinese textile transhipments over\nthe past year.\n--\nIn August 1990, USTR held consultations with Chinese\nauthorities on the transhipment issue. Additional\nconsultations took place in November 1990, March 1991,\nand May 1991.\n--\nThe U.S. Government \"charged\" China's quotas for goods\nthat were sent to the United States under false country\nof origin declarations valued at over $85 million.\n--\nChina has begun to take actions to curtail textile\nfraud since the December charges were made. For\nexample, it issued regulations prohibiting reexports\nthrough a third country to countries that have signed\ntextile agreements with China. Further, the Chinese\nGovernment has issued provisions for the punishment of\nthose who violate the regulations.\n--\nThe Administration has prepared more charges valued at\nabout $14 million that we anticipate will be levied\nafter consultations with China next month.\n--\nThe Administration will increase the number of U.S.\nCustoms officials dedicated to investigating\ncircumvention.\n--\nIf transhipment persists, we will be prepared to take\nadditional action against China.\nOn Forced Labor\n--\nThe importation of goods produced with forced, convict\nor indentured labor is prohibited by 19 USC Section\n1307, which also directs the Secretary of the Treasury\nto prescribe regulations for enforcement of the\nprovision. The Secretary of the Treasury, under 19 CFR\nSection 12.42, has delegated to the Commissioner of\nCustoms, authority to determine that a class of goods\nis the product of forced labor and exclude those goods.\n--\nCustoms has been investigating imports alleged to be\nthe product of forced labor in China. Customs has\ninterviewed emigres about forced labor practices in\nChina. Customs is also analyzing import samples to\ndetermine if they match the descriptions provided by\nthe emigres and others. Additional special agents have\n12\nbeen detailed to Hong Kong to assist in the\ninvestigation.\nAlthough the letter from Senator Baucus and fourteen\nco-signers did not specifically address the issue of\nprison labor imports, appropriate action is called for\nto fulfill the intent of existing law. The\nAdministration therefore proposes to negotiate a\nmemorandum of understanding with China on procedures\nfor the prompt investigation of allegations that\nspecific products exports to the U.S. are being\nproduced by prison labor.\n--\nPending negotiation of the MOU, Customs will\ntemporarily embargo specific products from China when\nthere is reasonable indication that they are made by\nprison labor. Embargoes will be lifted only after the\nChinese Government or the Chinese exporter provides\ncredible evidence that the products are not produced by\nprison labor.\nMultilateral Lending to China\n--\nThe G-7 consensus, led by the United States, was\nsuccessful in prohibiting all MDB lending to China from\nJune 1989 to February 1990 in response to the\ninternational outcry against the crackdown by the\nChinese authorities at Tiananmen Square.\n--\nFrom February 1990 to July 1990, the G-7 consensus\nsupported a gradual resumption of World Bank lending to\nChina for projects that clearly met basic human needs\n(BHN) The consensus held firm and actively prohibited\nother loans from Board consideration. Only five loans\n(totalling $590 million) were approved in WBFY 1990.\nThis is substantially less than pre-Tiananmen Square\nlevels of World Bank commitments to china, which were\n$1.4 billion in WBFY 1988 and $1.3 billion in WBFY\n1989.\n--\nAt the Houston Summit in July 1990, several G-7\ncountries decided that China's long-term development\nneeds argued for lending outside the BHN limits favored\nby the United States. Accordingly, the G-7 Houston\nSummit Declaration of July 1990 on MDB lending to China\nexpanded the boundaries of permitted MDB lending to\nChina to include loans which were environmentally\nbeneficial or which supported market-oriented economic\nreform. Only BHN loans were considered by the World\nBank Board until December 4, 1990 when the market\noriented economic reform loan for Rural Industrial\nTechnology was approved by the Board. On November 29,\n1990, the ADB approved its first loan to China since\nTiananmen Square, Agricultural Bank Project, which the\nU.S. did not support. Despite the approval of\ninfrastructure project loans by the World Bank and the\n13\nAsian Development Bank, the U.S. has and will continue\nto withhold support on all loans that do not meet BHN\ncriteria.\nOn GATT Accession\n--\nSince China applied for GATT membership in July 1986,\nthe United States has been a leading participant in the\ncollective efforts of major GATT Contracting Parties to\ndevelop terms for China's GATT participation that will\nsupport the objectives of the GATT and will influence\nChinese Government policies to become, over time, more\ncompatible with the GATT framework for world trade.\n--\nU.S. and other major GATT contracting parties' concerns\nabout China's ability and willingness to live up to\nGATT obligations, particularly since June 1989, have\nstalled progress in the Working Party established to\nconsider China's application for membership in the\nGATT.\n--\nThe Administration intends to continue to press Beijing\nto undertake trade and economic reforms so that its\nGATT application can advance and its trade practices be\nbrought under GATT disciplines.\n--\nAt the same time, the Administration will begin to work\nactively with other GATT members to resolve in a\nfavorable manner the issues relating to Taiwan's GATT\naccession. U.S. support for Taiwan's accession as a\ncustoms territory would be consistent both with GATT\nlegal criteria and the \"one-China\" policy which\nacknowledges the Chinese position and has been adhered\nto by successive U.S. administrations.\nTaiwan's GATT accession would yield substantial trade\nand commercial benefits to the United States and to the\ninternational trading system.\n--\nTaiwan has indicated that it is prepared to accede\nto the GATT as a developed economy, to bind\nvirtually all its tariffs, and to join the major\nnon-tariff measure GATT codes.\nThe Importance of MFN\nAs highlighted above, the Administration is aggressively seeking\nto resolve outstanding bilateral trade issues with the PRC. MFN\nunderpins our ability to work constructively with the PRC. We\nbelieve that discontinuing MFN, or attaching conditions to its\nrenewal, would cause serious harm to our trade interests, and\nwould render futile pursuit of the initiatives outlined above.\nIt would reduce our leverage in market-access, intellectual\nproperty rights protection, and other trade-related negotiations.\nChina's desire to retain access to the U.S. market has enabled us\n14\nto engage Chinese leaders in consultations on bilateral and\nmultilateral issues even during periods of tension. Because\nChina is not a GATT member and not bound by GATT trade\ndisciplines, it is especially important to have many levers that\nenable us to engage the Chinese on trade issues.\nIt would hurt U.S. exporters. If the United Stated rescinds\nChina's MFN trading status, China will not only discontinue MFN\ntariff treatment for the United States, but would likely cease\npurchasing billions of dollars of U.S. wheat, aircraft,\nfertilizer, cotton yarn and fabric, wood and wood pulp, electric\nmachinery, scientific equipment, and chemicals. Foreign\ncompetitors, whose goods would be subject to lower tariffs, would\nbe quick to exploit our departure. Lost shares of China's market\nwould not easily be regained even if MFN were restored at some\nfuture date.\nIt would hurt U.S. consumers. Tariffs on the 25 most important\nU.S. imports from China would rise from the present average\ntariff rate of 8.8 percent to an average rate of 50.5 percent.\nThese increases would mean sharply higher prices for lower-end\nChinese goods. The costs to U.S. consumers would be largely\nborne by poorer Americans, who are primary consumers of low-cost\nChinese products.\nIt would damage America's reputation as a reliable trade partner.\nOur trade competitors will not join us in denying MFN status to\nChina. Other Chinese trade partners, especially in Asia, urge\nthat China's MFN status be retained.\nIt would hurt investors, businesses, and workers in Hong Kong.\nLoss of MFN would impede China's integration into the regional\neconomy, a development crucial to regional stability particularly\nas we near the 1997 deadline for Hong Kong's reversion to Chinese\nsovereignty. It could cost over 43,000 jobs in Hong Kong and\nresult in direct revenue losses of approximately $1.2 billion\ndollars. Hong Kong's GDP growth could be curtailed by as much as\ntwo percent.\nIt would set back efforts to bring about meaningful economic\nreform in China. A disproportionate burden of the MFN denial\nwould fall on the primary engine of economic reform in China--the\neconomies of the southern and coastal provinces. In Guangdong\nprovince, for example, 40 percent of industrial output is\nproduced for export, half of which goes to the United States.\n:\nSectors that fall outside of the direct control of the central\ngovernment have been especially important to China's development\nas an exporter; one-third of China's exports currently come from\nrural (individual and collectively owned) industries and from\nforeign-invested ventures. The foreign ties these provinces and\nnon-state-owned factories developed with the outside world prior\nto Beijing's reassertion of central control in mid-1989 enabled\nthese provinces to weather the austerity program; without these\nforeign markets, Beijing's grip would have been all the tighter.\nAs Beijing's influence over the regions and sectors most closely\nintegrated into the global economy has diminished, these regions\n15\nand sectors have become increasingly sensitive to global economic\nconditions. Revocation of China's MFN trading status would cause\nunemployment to rise and factory losses to mount in export-\nproducing regions.\nConclusion\nThose who engineered the violence in China in June 1989 are\nunlikely to bear the economic costs associated with the denial of\nMFN. Instead, those who suffer would be American businesses and\ntheir employees, American consumers, and the people of Hong Kong\nand the progressive areas of China.\nChina's opening to the outside world over the past decade has\naccelerated growth in the non-state sectors of the economy;\nresulted in strong links between China's coastal regions and the\nglobal economy that have enabled this reformist region to weather\nBeijing's periodic efforts to reimpose central government control\nover economic activity; and introduced market concepts to a\ngeneration of Chinese managers involved in joint ventures, trade\nnegotiations, and training in the West. For this process to\ncontinue, China's most-favored-nation treatment in the United\nStates is essential.\nTHE WHITE HOUSE\nWASHINGTON\nDear Senator Dole:\nI appreciated receiving your views on the importance of renewing\nChina's most-favored-nation (MFN) trade status while also seeking\nto achieve progress with the Chinese on issues of vital concern\nto the American people. We clearly share the same goals. We\nwant to see China return to the path of reform, show greater\nrespect for human rights, adhere to international norms on\nweapons sales, and practice fair trade. China should contribute\nto international stability and not detract from it.\nYou rightly note that withdrawing MFN would hurt not only\nAmericans but also the people of Hong Kong and the millions in\nChina who are working for progressive change. Continuing MFN is\nessential to protect American consumers and exporters, and to\nsupport the economic forces that have been driving reform in\nChina for more than a decade. It is no accident that the process\nof reform accelerated with the increase in foreign businesses\noperating in that nation. Those who would end political and\neconomic reform in China have the most to gain if MFN were\nwithdrawn. It is the economic forces pressing for the loosening\nof state control and increased personal freedom that would suffer\nthe most. Other losers would be the thousands of American\nworkers and farmers who together produced in 1990 almost $5\nbillion in exports to China.\nSince we started the process of normalizing contacts with China\nin the 1970s, there has been strong bipartisan support for the\nU.S.-China relationship. Building on the three U.S.-China\ncommuniques, U.S. interaction with the government and people of\nChina has produced demonstrable progress. That interaction must\ncontinue despite the recent severe setbacks. Nevertheless, I\nsupport the view that strong measures are needed to address our\nconcerns in China and have not hesitated to use them in a\ntargeted fashion. To underscore our deep dismay about human\nrights violations, I have kept in place a number of sanctions\nsince the Tiananmen Square crackdown which have affected arms\nsales, high-level contacts, U.S. economic programs and U.S.\nsupport for multilateral development bank lending to China.\nThe U.S. is currently the only nation maintaining its Tiananmen\nsanctions and refusing to normalize relations until China makes\nsubstantial progress on human rights. For example, while all our\nallies and other World Bank members have supported virtually all\nof the last sixteen World Bank loans to China, we have declined\n2\nto support seven because the loans would not serve basic human\nneeds.\nAt the London Summit, we raised China's human rights practices\nwith our G-7 allies and encouraged them to continue to stress to\nChina's leaders, as we have repeatedly, the importance that\ndemocratic governments attach to human rights. We made clear\nthat the U.S. will continue its policy of supporting only those\nmultilateral development loans for China that serve basic human\nneeds (BHN), and our view that any non-BHN lending to China help\nto promote market-oriented economic reform.\nTo advance our nonproliferation objectives, I recently authorized\na number of steps aimed at engaging the Chinese on their weapons\ntransfer policies and making clear our dissatisfaction with\ntransfers that contribute to regional instability. The Under\nSecretary of State for International Security Affairs recently\ntraveled to Beijing for a detailed discussion of nonproliferation\nissues, including our specific concerns about Chinese exports.\nHe pressed for China's adherence to the Nuclear Nonproliferation\nTreaty and the Missile Technology Control Regime, actions I\ncalled for in my commencement speech at Yale University on\nMay 27. We are pleased with the constructive role China played\nin the July 8-9 Middle East arms control talks in Paris. The\nChinese endorsed all the key objectives of my Middle East arms\ncontrol initiative (such as efforts to freeze and ultimately\neliminate surface-to-surface missiles and block the production\nand acquisition of nuclear useable material). The Chinese also\nagreed to work rapidly in follow-on meetings to flesh out the\nbroad agreements reached in Paris.\nAt the same time, I have also taken measures to emphasize to\nChina that the U.S. is concerned about reports of destabilizing\nmissile-related transfers. In April, I rejected requests for\nlicenses to export satellite components for a Chinese\ncommunications project because of the involvement of Chinese\ncompanies in unacceptable missile equipment transfers. Just\nrecently, I approved trade sanctions against two Chinese\ncompanies for that same reason. In addition, I directed that no\nfurther licenses of high-speed computers and no further exports\nof satellites to China be authorized until our concerns that\nChina adhere to accepted international nonproliferation standards'.\nare satisfactorily addressed. The U.S. will be coordinating with\nother countries in order that these measures not be undercut.\nOur experience has demonstrated that such consultations will lead\nto effective, multilateral technology transfer restrictions.\nI have also instructed U.S. agencies to press vigorously our\nconcerns about Chinese unfair trading practices. In April, I\ndirected the U.S. Trade Representative to identify China as a\npriority foreign country under the Special 301 provisions of the\nTrade Act for failing to protect U.S. intellectual property\n3\nrights. If China does not make real progress during the 301\ninvestigation, trade action will follow. Beyond intellectual\nproperty protection, my Administration has invited senior Chinese\ntrade officials to Washington in August for continuation of\nconsultations begun in June regarding access for U.S. products to\nthe Chinese market. If these talks fail to produce Chinese\ncommitments to take substantial measures to improve market\naccess, the Administration will self-initiate further action\nunder Section 301 of our trade laws.\nWe are strictly enforcing the terms of our textile agreement with\nChina and have already made charges against China's quota because\nof illegal textile shipments through third countries totalling\napproximately $85 million so far. Following consultations in\nJuly, we expect to make additional charges. If China does not\nexert effective control over these illegal shipments, we are\nprepared to take additional action against China.\nCharges that China exports goods produced with prison labor are a\nmatter of serious concern. The Customs Service is investigating\nthese charges. In addition, we have obtained a firm high-level\ncommitment to prevent the sale of prison labor products to the\nUnited States. We will continue to monitor China's behavior in\nthis area closely and will strictly enforce relevant legislation\nconcerning prison labor exports. In particular, I am ordering\nthe following additional measures: The Department of State will\nseek to negotiate a memorandum of understanding with China on\nprocedures for the prompt investigation of allegations that\nspecific imports from China were produced by prison labor.\nPending negotiation of this agreement, the U.S. Customs Service\nwill deny entry to products imported from China when there is\nreasonable indication that the products were made by prison\nlabor. The denial will continue until the Chinese Government or\nthe Chinese exporter provides credible evidence that the products\nwere not produced by prison labor.\nI am also instructing the U.S. Customs Service to identify an\noffice to receive information on prison labor exports and\nestablish procedures for the prompt investigation of reports of\nprison labor exports from interested parties. Additional customs\nofficials will be directed to identify prison labor exports and\naid in uncovering illegal textile transhipments.\n:\nAlthough it is not directly related to China's MFN status, I\nshare your interest in Taiwan's accession to the GATT. As a\nmajor trading economy, Taiwan can make an important contribution\nto the global trade system through responsible GATT\nparticipation. The U.S. has a firm position of supporting the\naccession of Taiwan on terms acceptable to GATT contracting\nparties. The United States will begin to work actively with\nother contracting parties to resolve in a favorable manner the\nissues relating to Taiwan's GATT accessing. Because China, our\n4\ntenth largest trading partner, could also make an important\ncontribution to the global trading system, I will seek to have\nthe Chinese Government take steps on trade reform so that China's\nGATT application can advance and its trade practices can be\nbrought under GATT disciplines through the Working Party formed\nfor China in 1987. U.S. support for Taiwan's accession to GATT\nas a customs territory should in no way be interpreted as a\ndeparture from the long-standing policy of five administrations\nwhich acknowledges the Chinese position that there is only one\nChina, and that Taiwan is part of China.\nIn sum, therefore, I am prepared to address the concerns you and\nyour colleagues have identified, and I am doing so. But\ndiscontinuing MFN, or attaching conditions to its renewal, would\ncause serious harm to American interests and would render futile\npursuit of the initiatives I have outlined, which are discussed\nin greater detail in the attachments. Working together, I\nbelieve we will best protect America's interests by remaining\nengaged with China and the Chinese people.\nSincerely,\nAttachments:\nPart I - Human Rights\nPart II - Nonproliferation\nPart III - Trade and Economic Issues\nThe Honorable Robert J. Dole\nUnited States Senate\nWashington, D.C. 20510\nPART I: HUMAN RIGHTS\nHuman rights concerns have been at the heart of our relationship\nwith the PRC since the tragic events of June 1989. Every high-\nlevel meeting since that time has at least touched on human\nrights issues, and several -- such as the December 1990 visit to\nChina by Assistant Secretary Schifter -- have been devoted\nexclusively to them. We have consistently stressed to the\nChinese leadership that there can be no return to the kind of\nrelationship we enjoyed before 1989 without substantial\nimprovements in China's human rights practices.\nOur overall approach on human rights issues has consisted of:\nPublic expression of concern\n--\nPresident Bush condemned the brutal suppression of\ndemonstrations in Tiananmen Square in June 1989, the first\nworld leader to do so. He declared May 13, 1990 a National\nDay in support of Freedom and Human Rights in commemoration\nof the 1989 demonstrations, and issued another statement to\nmark the anniversary of the crackdown in 1991.\nIn our human rights reports for 1989 and 1990, we were fair\nbut hard-hitting, and as accurate as available information\nwould allow. These reports have drawn high praise from\nhuman rights groups, and harsh condemnations from the\nChinese government.\n--\nThe State Department issued a statement on January 9, 1991\ncondemning the trials of nonviolent dissidents.\nIn April 1991 the President met the Dalai Lama at the White\nHouse to demonstrate our respect for His Holiness'\nnonviolent approach to conflict resolution and our concern\nfor human rights problems in Tibet.\nSuspension of bilateral programs\nOn June 6 and June 20, 1989, the President announced the\nsuspension of a number of bilateral programs and changes in U.S.\napproach to multilateral issues until the human rights climate in\nChina improved. Those suspensions generally remain in effect.\n--\nA multitude of high-level exchange visits that would\nnormally have taken place since 1989 have been canceled.\nOnly a very limited number of visits at and above Assistant\nSecretary level have been approved on a case-by-case basis,\nand only when they addressed issues of key concern to the\nUnited States, e.g., like human rights, nonproliferation,\nunfair trade practices, and narcotics.\n--\nMilitary exchange visits have been suspended completely.\n2\nWork on several existing military equipment and technology\nprojects has been suspended indefinitely.\nWe have stopped the transfer of military or dual-use\nequipment or technology to Chinese military and security\nservices.\nThe U.S. sought to postpone all multilateral development\nbank loans to China from June 1989 to January 1990. Since\nthen, we have supported only those loans that serve the\nbasic human needs of the Chinese people.\nWe have suspended grants, loans and insurance guarantees to\nChina under the Trade and Development Program and OPIC.\nWe have worked through COCOM to suspend planned\nliberalization of export controls to China.\nEngagement in dialogue\nThrough the few high-level visits that have been authorized, and\nthrough regular diplomatic channels, we have engaged the Chinese\ngovernment in an unprecedented continuing dialogue on a wide\nrange of human rights issues.\nThe Scowcroft-Eagleburger missions of July and December 1989\nwere devoted primarily to laying out our human rights\nconcerns and suggesting steps the Chinese could take to\naddress them.\n--\nDuring Chinese Foreign Minister Qian's visit to Washington\nin November 1990, President Bush and Secretary Baker\nreiterated the need for progress on human rights, and\nstressed that human rights is a cornerstone of American\nforeign policy.\nAssistant Secretary Schifter visited China in December 1990,\nthe first time our top human rights official has done so.\nIn sixteen hours of intense discussions with senior Chinese\nofficials, he spelled out in detail our human rights\nconcerns in a wide range of areas including accounting of\ndetainees, release of political prisoners, denial of due\nprocess and fair and open trials, treatment of prisoners,\ndivergence of Chinese law from international standards,\nrespect for freedom of religion, abusive implementation of\nfamily planning regulations, and human rights problems in\nTibet. He delivered a list of 151 representative cases of\nreported political incarceration, and asked Chinese\nauthorities to clarify the status of the cases and release\nthose whose imprisonment violated international norms. He\nsuggested changes in Chinese laws and judicial processes\nthat would bring them into conformity with international\nstandards.\n3\nUnder Secretary Kimmitt in May 1991 reiterated many of the\npoints made by Assistant Secretary Schifter, and called on\nthe Chinese government to declare an amnesty for all those\nimprisoned for nonviolent political activities. He also\nurged the Chinese to implement effectively their claimed\nprohibition on export of prison labor products.\nResults of actions\nMost importantly, the Chinese government has acknowledged the\nlegitimacy of human rights as a subject of bilateral discussion,\nboth with us and with other concerned governments. they received\na Congressional delegation devoted exclusively to human rights\nconcerns in March 1991, and agreed to receive another later this\nyear. They also agreed to receive human rights delegations to be\nsent by the governments of France and Australia. In addition,\nthey have taken a number of modest but positive steps to improve\nthe human rights situation in China.\nMartial law was lifted in Beijing in January 1990 and in\nLhasa four months later. No part of China is currently\nsubject to martial law.\nMost of those detained after the Tiananmen tragedy were\nreleased by the end of 1989. Chinese authorities announced\nthe release of nearly 1000 more detainees in 1990, and about\n70 have been released so far in 1991. Officials claim that\nonly 21 still await trial detention in Beijing, and at least\none of these -- labor leader Han Dongfang -- has been\nreleased for medical treatment.\nWhile at least 30 persons have been convicted on political\ncharges since the beginning of the year, the sentences meted\nout to them were generally less severe than those imposed on\nsimilar charges in previous years. THose released without\nfurther punishment included prominent dissidents such as\nessayist Liu Xiaobo, journalist Zhang Weiguo, playwright\nWang Peigong, and legal scholar Chen Xiaoping.\nLeading dissident Fang Lizhi and his wife, who had obtained\nrefuge in the U.S. Embassy in Beijing for over a year, were\nallowed to leave China in June 1990, and are now at\nPrinceton.\nMost investigations of those involved in the 1989 protests\nhave ended, and most of our Chinese contacts report that the\noppressive atmosphere of 1989 has lifted significantly.\n--\nThe Chinese have ceased the most odious forms of harassment\nof Chinese students and scholars in the U.S.; harassment was\na serious problem in 1989 and early 1990.\n--\nRelatives of many, though not all, overseas dissidents have\nbeen allowed to leave China and join them abroad. In some\n4\nof the remaining cases that we have raised with Chinese\nofficials, passports have subsequently been issued.\nSeveral released dissidents, including Tiananmen hunger\nstriker Gao Xin and former Arizona State student Yang Wei,\nhave been allowed to leave the country.\nChinese authorities have undertaken to stop the export to\nthe U.S. of products made in Chinese prisons. We will\ncontinue to monitor this situation closely, but it appears\nthat the Chinese government is taking increasingly specific\nsteps to enforce their prohibition on export of these\nproducts.\n--\nIn response to concerns expressed by Administration\nofficials and Members of Congress, the Chinese have provided\nuseful new information on the status of persons reported\ndetained for religious activities.\n--\nEconomic reforms have resumed, in some cases matching or\nexceeding levels reached before 1989. Some limited\npolitical reforms, in important but relatively\nnoncontroversial areas such as the personnel system, have\ncontinued. An Administrative Procedure Law that became\neffective in October 1990 for the first time enables Chinese\ncitizens to sue abusive officials.\nThere are indications that further progress may be in the offing.\nWe are continuing to press the Chinese government to release all\nremaining detainees, to commute the sentences of those nonviolent\ndissidents already convicted, and to allow the departure of the\nremaining relatives of overseas dissidents who wish to leave. We\nare hopeful that a combination of dialogue and specifically\ntargeted pressure will lead to further movement on these and\nother remaining issues of concern. And in the longer term, we\nare confident that the momentum toward greater freedom and\ndemocratization in China, built up during the decade of reforms\nand dramatically reflected in the 1989 demonstrations, will prove\nirreversible.\n5\nPART II: ADMINISTRATION'S ACTIONS WITH RESPECT TO\nPROLIFERATION CONCERNS\nThe United States is engaged in a high-level dialogue with the\nChinese that began early in our relationship. Looking at the\nbroad trends in China's nonproliferation policy since\nnormalization in 1979, it is clear that our dialogue has paid off\nin important areas, demonstrated by China's evolution toward\ninternational consensus on nonproliferation in areas of great\nimportance to us. For example, China, which once held an\nantagonistic view of multilateral controls on nuclear exports,\njoined the IAEA in 1984 and sent observers to the Nuclear\nNonproliferation Treaty Review Conference in 1990.\nMiddle East/South Asia\nChina's support for the Middle East arms control initiative is\nanother case in point. China's participation in the initiative\nis a positive step that will strengthen international\nnonproliferation efforts and indicates China's resolve to\ncontribute to efforts to attain stability in the Middle East. In\naddition, China's willingness to participate in multilateral\nefforts to reduce tension in South Asia will be crucial to\nestablishing stability in that volatile region.\nMoreover, we have seen Chinese arms sales restraint in some areas\nwhere we have vital interests. For example, to the best of our\nknowledge, apart from the 1987/88 sale of missiles to Saudi\nArabia, China has not delivered medium-range missiles to the\nMiddle East. It is clear that in other specific cases China has\ntaken international concerns into account and declined proposed\nmissile exports to prospective buyers.\nUnderscoring Our Concerns\nIt is because serious concerns remain that we want to maintain a\nconstructive nonproliferation dialogue with Beijing. We do not\nintend to ignore current problems, but isolating China by\ndismantling the framework for our relations is not the way to\nadvance our nonproliferation objectives.\nWe have the means available to underscore our concerns where\nthere are differences in our approaches to nonproliferation and\nwe have used these legislative and executive branch tools. For\n:\nexample, we have imposed trade sanctions mandated by the National\nDefense Authorization Act on Chinese entities involved in\nmissile-related activities. We have also announced the\nAdministration's decision that, pending progress toward our\nnonproliferation objectives, we will not license high speed\ncomputers and will not issue further waivers of legislative\nrestrictions on satellite exports. These new sanctions have been\nimposed in addition to the existing sanctions announced\nimmediately following the June 1989 assault on Tiananmen and\namplified by Congress in the Department of State Authorization\n6\nAct for FY 1990-1991. Moreover, we have not certified China\nunder the bilateral agreement for nuclear cooperation that took\neffect in 1985.\nOur policy mix of sanctions and cooperation at any given time is\nnecessarily dependent on Chinese behavior. We are encouraged by\nChina's indication in June that it is reviewing its policies with\nrespect to Missile Technology Control Regime (MTCR) and the NPT.\nWe seek China's adherence to the NPT and the MTCR guidelines and\nwill encourage the Chinese to take concrete steps toward\nadherence to the key multilateral standards for international\nbehavior established by these institutions. The Administration\nwill continue to use the legislative authority that already\nexists and will take resolute action if the Chinese do not\naddress favorably our nonproliferation concerns.\n7\nPART III: TRADE AND ECONOMIC ISSUES\nThe Administration is committed to achieving with China the same\ngoals that have guided our trade policy with all other countries.\nWe seek open markets and the opportunity for U.S. firms and their\nproducts to compete on fair and equal terms. To achieve these\ngoals, and realize the principles of equality, mutual benefit and\nnon-discrimination set forth in the U.S.-China Bilateral Trade\nAgreement, this Administration has pursued a policy of\nnegotiation and engagement on trade issues with China. In\nparticular, the Administration has sought to improve U.S. access\nto China's marketplace; to bolster Chinese protection of\nintellectual property; to end fraudulent practices by Chinese\ntextile exporters using false country of origin declarations;\nand, to induce Beijing to undertake the economic and trade\nreforms required for membership in the GATT.\nReciprocal MFN tariff treatment underpins our ability to work\nconstructively with the PRC. China's desire to retain access to\nthe U.S. market has enabled us to engage Chinese leaders even\nduring periods of tension. We believe that discontinuing MFN, or\nattaching conditions to its renewal, would cause serious harm to\nour trade interests and erode our ability to influence China's\nbehavior on key trade issues.\nThe Past Decade of Bilateral Trade Relations\nAfter decades of adhering to an import-substitution strategy that\nfocused on minimizing China's reliance on outside sources of\nmachinery and equipment, China began in the 1980's to seek\noutside sources of these goods. It also has increasingly drawn\non foreign technology, expertise, and funds by actively\nencouraging joint ventures.\nChina's opening to the outside world has helped transform its\neconomy, bolstering reform-oriented sectors that are not directly\ncontrolled by the central government. For example, the state\nsector now produces just over half of China's industrial output;\nin 1978, its share was 78 percent. China's dynamic rural\nindustries, which are privately and collectively owned, have\nburgeoned. There are 30,000 foreign-invested ventures now in\nChina, with a total contracted value of $40 billion. The impact\nof China's open door has been particularly pronounced in the\nsouthern and coastal provinces, where 90 percent of the foreign\ninvestment and more than three-fourths of China's trade\nactivities are located. This region, in turn, has become the\nprimary engine of economic reform in China largely as a result of\nthe introduction of market concepts to Chinese employees of joint\nventures and to citizens engaging in commercial exchanges with\nthe West. The economic autonomy fostered by this interaction\ncontributes to increased political and even individual self-\ndetermination.\n8\nThe United States has been a vital partner in this\ntransformation. Following Congressional approval of the\nbilateral trade agreement, the United States and China\nestablished formal trade relations and reciprocally granted most-\nfavored-nation (MFN) status in 1980. Growth in our commercial\nties has helped to change China and to bring it into the global\ntrading system. Since the resumption of normal trade relations,\nU.S.-China two-way trade has increased almost 770 percent, from\n$2.3 billion in 1979 to over $20 billion last year.\n--\nWe are now China's second-largest trading partner and its\nlargest export market.\n--\nChina is our tenth-largest trade partner, up from fifteenth\nin 1981.\n--\nOver 1,000 U.S. firms have invested more than $4 billion in\nChina and another $5 billion in Hong Kong related primarily\nto trade with the PRC.\n-- In 1990, the United States exported $4.8 billion worth of\ngoods to China, including:\n--\n$749 million worth of aircraft\n--\n$544 million worth of fertilizer\n--\n$512 million worth of grain\n--\n$281 million worth of cotton yarn and fabric\n--\n$273 million worth of chemicals\n--\n$264 million worth of electric machinery\n--\n$238 million worth of wood and wood pulp\n--\n$227 million worth of scientific instruments.\nCommercial relations with the United States have exerted positive\ninfluences on China's business and economic practices since 1980.\nChina has shifted away from total reliance on a strongly\ncentralized economy, shown greater tolerance for experimentation\nwith market mechanisms to regulate its domestic economy, and\ndecentralized and liberalized its foreign trade practices.\nRegression in China's Trade Policies\nChina's opening to the outside world has not been smooth. Over\nthe past decade, attempts to accelerate the implementation of\nmarket-oriented reforms have been followed by Beijing's\nrecentralization of control, as concern about the country's\nballooning trade deficit led Beijing to step in to regain some of\nthe trade authority it had relinquished.\nMoreover, throughout the period since the normalization of trade\nrelations and the granting of reciprocal most-favored-nation\ntrading status in 1980, China's web of barriers to imports has\nmade it difficult for many U.S. exporters to gain access to the\nChinese market. U.S. firms have also had difficulty securing\nprotection for their intellectual property.\n9\nU.S. trade negotiators have long been engaged with the Chinese\nGovernment, both in bilateral negotiations and in multilateral\nconsultations at the GATT held to review China's application for\nmembership. We have sought to ensure that bilateral commercial\nrelations develop in accord with the principles that underlie our\nbilateral trade agreement: equality; mutual benefit; and\nnondiscrimination. From 1979 through 1987, Chinese authorities\nmade some progress in reducing nontariff barriers to imports, in\nimproving transparency, and in protecting the intellectual\nproperty of foreigners.\nThis trend has been reversed over the last three years.\n--\nSince 1988, Chinese trade policies and practices have become\nmore protectionist, nontariff barriers to imports have\nproliferated, and the trade system has become less\ntransparent. These policies undoubtedly contributed to a 17\npercent decline in U.S. sales to China in 1990. China was\nthe only major foreign market for U.S. goods and services in\nwhich our exports declined in 1990.\nDespite intensive bilateral negotiations with Chinese\nauthorities since the USTR in 1989 placed China on the\n\"priority watch list\" of countries providing inadequate\nintellectual property protection--including three rounds of\nmeetings over the past five months--China has failed to live\nup to the commitments contained in the bilateral Memorandum\nof Understanding (MOU) signed in May 1989.\nAt the same time, other problems have developed in our bilateral\ntrade relationship. For example, to bypass U.S. textile and\napparel quotas, Chinese exporters have increasingly resorted to\nshipping these products to the United States via third countries\nusing false invoices and counterfeit visas. Also of concern to\nus has been the apparent lapse in China's commitment to economic\nand trade reforms that would bring the country in line with the\nGATT's free-trade principles. China's reassertion of central\ncontrol over the past few years has called into question its\nwillingness and ability to undertake the obligations that would\nbe required of China as a contracting party to the GATT.\nSteps the U.S. Government Has Taken and Will Take to\nAddress Bilateral Trade Problems\nIn six key areas of our bilateral trade and economic relations,\n..\nthe Administration has taken steps to resolve trade problems. We\nare prepared to do more.\nOn Market Access\nBeginning in the fall of 1990, the Administration\nresumed sub-cabinet level meetings with the Chinese,\nthat had been suspended since June 1989, to secure\nChinese actions to reverse the growing list of new\nprotectionist measures.\n10\nIn April 1991, the Administration formally set in\nmotion a market access initiative that continued with\nthe visit to Beijing, in mid-June, of an interagency\ndelegation to discuss market access issues. In\nmeetings with senior Chinese officials, U.S. Government\nofficials raised nine types of market access barriers,\nincluding: the lack of transparency in rules and\nregulations; the expansion of import licensing\nrequirements; the use of import substitution policies;\nthe proliferation of import bans and quotas; the growth\nof standards, testing, and certification requirements,\nincluding discriminatory \"quality standards\" procedures\nfor imports; the high level of many import tariffs; the\nunnecessary use of certain phytosanitary regulations;\nthe uncertainties regarding government procurement and\ntendering regulations; and the lack of information\nregarding China's major development projects.\nThe Administration has proposed holding another round\nof market access consultations in August 1991. If that\nround of negotiations fails to yield substantial\ncommitments from the Chinese authorities to dismantle\nmarket access barriers, the Administration will self-\ninitiate Section 301 action to address those barriers\nthe removal of which offers the most potential for\nachieving U.S. trade policy objectives and increasing\nU.S. exports.\nOn Intellectual Property Protection\nOn April 26, 1991, USTR identified the PRC as a\npriority foreign country that denies adequate and\neffective protection of intellectual property rights.\nAccordingly, on May 26, 1991 USTR initiated a Special\nSection 301 investigation on the basis of four problem\nareas: (1) inadequate copyright protection, (2)\ninadequate patent protection, (3) inadequate trade\nsecret protection and (4) ineffective enforcement of\ntrademarks. Consultations with the Chinese are\nongoing. The first round of consultations under the\nSection 301 investigation occurred in mid-June and a\nsecond has been proposed for August.\nThe deadline for making a determination under Section\n301 is November 26, 1991. This may be extended for\nthree months if China is making substantial progress in\ndrafting or implementing measures that will provide\nadequate and effective protection of U.S. intellectual\nproperty rights. At that time, the USTR must determine\nwhether the acts, policies and practices of the PRC are\nactionable under Section 301 and what retaliatory\naction, if any, is appropriate.\n11\nIf the consultations fail to produce adequate and\neffective protection of intellectual property rights,\nthe Administration will take retaliatory action.\nOn Textile Transhipments\n--\nThe U.S. Customs Service has been vigilant in\ndocumenting cases of Chinese textile transhipments over\nthe past year.\n--\nIn August 1990, USTR held consultations with Chinese\nauthorities on the transhipment issue. Additional\nconsultations took place in November 1990, March 1991,\nand May 1991.\n--\nThe U.S. Government \"charged\" China's quotas for goods\nthat were sent to the United States under false country\nof origin declarations valued at over $85 million.\n--\nChina has begun to take actions to curtail textile\nfraud since the December charges were made. For\nexample, it issued regulations prohibiting reexports\nthrough a third country to countries that have signed\ntextile agreements with China. Further, the Chinese\nGovernment has issued provisions for the punishment of\nthose who violate the regulations.\n--\nThe Administration has prepared more charges valued at\nabout $14 million that we anticipate will be levied\nafter consultations with China next month.\n--\nThe Administration will increase the number of U.S.\nCustoms officials dedicated to investigating\ncircumvention.\n--\nIf transhipment persists, we will be prepared to take\nadditional action against China.\nOn Forced Labor\n--\nThe importation of goods produced with forced, convict\nor indentured labor is prohibited by 19 USC Section\n1307, which also directs the Secretary of the Treasury\nto prescribe regulations for enforcement of the\nprovision. The Secretary of the Treasury, under 19 CFR :-\nSection 12.42, has delegated to the Commissioner of\nCustoms, authority to determine that a class of goods\nis the product of forced labor and exclude those goods.\nCustoms has been investigating imports alleged to be\nthe product of forced labor in China. Customs has\ninterviewed emigres about forced labor practices in\nChina. Customs is also analyzing import samples to\ndetermine if they match the descriptions provided by\nthe emigres and others. Additional special agents have\n12\nbeen detailed to Hong Kong to assist in the\ninvestigation.\n-- Although the letter from Senator Baucus and fourteen\nco-signers did not specifically address the issue of\nprison labor imports, appropriate action is called for\nto fulfill the intent of existing law. The\nAdministration therefore proposes to negotiate a\nmemorandum of understanding with China on procedures\nfor the prompt investigation of allegations that\nspecific products exports to the U.S. are being\nproduced by prison labor.\n-- Pending negotiation of the MOU, Customs will\ntemporarily embargo specific products from China when\nthere is reasonable indication that they are made by\nprison labor. Embargoes will be lifted only after the\nChinese Government or the Chinese exporter provides\ncredible evidence that the products are not produced by\nprison labor.\nMultilateral Lending to China\n-- The G-7 consensus, led by the United States, was\nsuccessful in prohibiting all MDB lending to China from\nJune 1989 to February 1990 in response to the\ninternational outcry against the crackdown by the\nChinese authorities at Tiananmen Square.\n-- From February 1990 to July 1990, the G-7 consensus\nsupported a gradual resumption of World Bank lending to\nChina for projects that clearly met basic human needs\n(BHN). The consensus held firm and actively prohibited\nother loans from Board consideration. Only five loans\n(totalling $590 million) were approved in WBFY 1990.\nThis is substantially less than pre-Tiananmen Square\nlevels of World Bank commitments to china, which were\n$1.4 billion in WBFY 1988 and $1.3 billion in WBFY\n1989.\n--\nAt the Houston Summit in July 1990, several G-7\ncountries decided that China's long-term development\nneeds argued for lending outside the BHN limits favored\nby the United States. Accordingly, the G-7 Houston\nSummit Declaration of July 1990 on MDB lending to China.\nexpanded the boundaries of permitted MDB lending to\nChina to include loans which were environmentally\nbeneficial or which supported market-oriented economic\nreform. Only BHN loans were considered by the World\nBank Board until December 4, 1990 when the market\noriented economic reform loan for Rural Industrial\nTechnology was approved by the Board. On November 29,\n1990, the ADB approved its first loan to China since\nTiananmen Square, Agricultural Bank Project, which the\nU.S. did not support. Despite the approval of\ninfrastructure project loans by the World Bank and the\n13\nAsian Development Bank, the U.S. has and will continue\nto withhold support on all loans that do not meet BHN\ncriteria.\nOn GATT Accession\n--\nSince China applied for GATT membership in July 1986,\nthe United States has been a leading participant in the\ncollective efforts of major GATT Contracting Parties to\ndevelop terms for China's GATT participation that will\nsupport the objectives of the GATT and will influence\nChinese Government policies to become, over time, more\ncompatible with the GATT framework for world trade.\n--\nU.S. and other major GATT contracting parties' concerns\nabout China's ability and willingness to live up to\nGATT obligations, particularly since June 1989, have\nstalled progress in the Working Party established to\nconsider China's application for membership in the\nGATT.\n--\nThe Administration intends to continue to press Beijing\nto undertake trade and economic reforms so that its\nGATT application can advance and its trade practices be\nbrought under GATT disciplines.\n--\nAt the same time, the Administration will begin to work\nactively with other GATT members to resolve in a\nfavorable manner the issues relating to Taiwan's GATT\naccession. U.S. support for Taiwan's accession as a\ncustoms territory would be consistent both with GATT\nlegal criteria and the \"one-China\" policy which\nacknowledges the Chinese position and has been adhered\nto by successive U.S. administrations.\nTaiwan's GATT accession would yield substantial trade\nand commercial benefits to the United States and to the\ninternational trading system.\n-- Taiwan has indicated that it is prepared to accede\nto the GATT as a developed economy, to bind\nvirtually all its tariffs, and to join the major\nnon-tariff measure GATT codes.\nThe Importance of MFN\nAs highlighted above, the Administration is aggressively seeking\nto resolve outstanding bilateral trade issues with the PRC. MFN\nunderpins our ability to work constructively with the PRC. We\nbelieve that discontinuing MFN, or attaching conditions to its\nrenewal, would cause serious harm to our trade interests, and\nwould render futile pursuit of the initiatives outlined above.\nIt would reduce our leverage in market-access, intellectual\nproperty rights protection, and other trade-related negotiations.\nChina's desire to retain access to the U.S. market has enabled us\n14\nto engage Chinese leaders in consultations on bilateral and\nmultilateral issues even during periods of tension. Because\nChina is not a GATT member and not bound by GATT trade\ndisciplines, it is especially important to have many levers that\nenable us to engage the Chinese on trade issues.\nIt would hurt U.S. exporters. If the United Stated rescinds\nChina's MFN trading status, China will not only discontinue MFN\ntariff treatment for the United States, but would likely cease\npurchasing billions of dollars of U.S. wheat, aircraft,\nfertilizer, cotton yarn and fabric, wood and wood pulp, electric\nmachinery, scientific equipment, and chemicals. Foreign\ncompetitors, whose goods would be subject to lower tariffs, would\nbe quick to exploit our departure. Lost shares of China's market\nwould not easily be regained even if MFN were restored at some\nfuture date.\nIt would hurt U.S. consumers. Tariffs on the 25 most important\nU.S. imports from China would rise from the present average\ntariff rate of 8.8 percent to an average rate of 50.5 percent.\nThese increases would mean sharply higher prices for lower-end\nChinese goods. The costs to U.S. consumers would be largely\nborne by poorer Americans, who are primary consumers of low-cost\nChinese products.\nIt would damage America's reputation as a reliable trade partner.\nOur trade competitors will not join us in denying MFN status to\nChina. Other Chinese trade partners, especially in Asia, urge\nthat China's MFN status be retained.\nIt would hurt investors, businesses, and workers in Hong Kong.\nLoss of MFN would impede China's integration into the regional\neconomy, a development crucial to regional stability particularly\nas we near the 1997 deadline for Hong Kong's reversion to Chinese\nsovereignty. It could cost over 43,000 jobs in Hong Kong and\nresult in direct revenue losses of approximately $1.2 billion\ndollars. Hong Kong's GDP growth could be curtailed by as much as\ntwo percent.\nIt would set back efforts to bring about meaningful economic\nreform in China. A disproportionate burden of the MFN denial\nwould fall on the primary engine of economic reform in China--the\neconomies of the southern and coastal provinces. In Guangdong\nprovince, for example, 40 percent of industrial output is\nproduced for export, half of which goes to the United States.\nSectors that fall outside of the direct control of the central\ngovernment have been especially important to China's development\nas an exporter; one-third of China's exports currently come from\nrural (individual and collectively owned) industries and from\nforeign-invested ventures. The foreign ties these provinces and\nnon-state-owned factories developed with the outside world prior\nto Beijing's reassertion of central control in mid-1989 enabled\nthese provinces to weather the austerity program; without these\nforeign markets, Beijing's grip would have been all the tighter.\nAs Beijing's influence over the regions and sectors most closely\nintegrated into the global economy has diminished, these regions\n15\nand sectors have become increasingly sensitive to global economic\nconditions. Revocation of China's MFN trading status would cause\nunemployment to rise and factory losses to mount in export-\nproducing regions.\nConclusion\nThose who engineered the violence in China in June 1989 are\nunlikely to bear the economic costs associated with the denial of\nMFN. Instead, those who suffer would be American businesses and\ntheir employees, American consumers, and the people of Hong Kong\nand the progressive areas of China.\nChina's opening to the outside world over the past decade has\naccelerated growth in the non-state sectors of the economy;\nresulted in strong links between China's coastal regions and the\nglobal economy that have enabled this reformist region to weather\nBeijing's periodic efforts to reimpose central government control\nover economic activity; and introduced market concepts to a\ngeneration of Chinese managers involved in joint ventures, trade\nnegotiations, and training in the West. For this process to\ncontinue, China's most-favored-nation treatment in the United\nStates is essential.\nDANIEL PATRICK MOTHINAN, NEW YORK\n608 PACKWOOD, OREGON\nMAX BAUCUS. MONTANA\nBOB DOLL KANSAS\nDAVID L BOREM OKLAHOMA\nWILLIAM V. ROTH. JR. DELAWARE\nBILL BRADLEY. NEW JERSEY\nJOHN c. DANFORTH. MISSOURI\nGEORGE J. MITCHELL MAINE\nJOHN M. CHAFEE RHODE ISLAND\nDAVIC-PRYOR ARKANSAS\nJOHN HEINZ PENNSYLVANIA\nDONALD W. RIEGLE. JR. MICHIGAN\nDAVID DURENBERGER MINNESOTA\nJOHN D. ROCKEFELLER IV, WEST VIRGINIA\nWILLIAM L ARMSTRONG. COLORADO\nHnited States Senate\nTOM DASCHLE SOUTH DAKOTA\nSTEVE SYMMS, IDAHO\nJOHN BREAUX, LOUISIANA\nCOMMITTEE ON FINANCE\nWASHINGTON, DC 20510-6200\nVANDA a. McMURTRY. STAFF DIRECTOR AND CHIEF COUNSEL\nEDMUND + MIHALSKI MINORITY CHIEF OF STAFF\nJune 19, 1991\nDear Mr. President:\nCongress will decide in the next few weeks whether to accept your\nrecommendation and extend most favored nation trade status to China.\nWe are writing to share our concerns.\nIn the debate over the appropriate U.S. policy towards China, one\nthing is clear: China's behavior must change. The United States has\nserious human rights and foreign policy concerns with China. Every\nAmerican remembers the vivid images of the Tiananmen massacre. In the\ntwo years since Tiananmen Square, evidence of democratic reform has\nbeen scant at best. We also have learned of Chinese sales of advanced\nmissiles to Syria and Pakistan, and of nuclear technology sales to\nAlgeria. There are credible reports that China has forced political\nprisoners to produce goods for export to the U.S.\nThe United States also has serious economic concerns with China.\nThe U.S. Trade Representative's annual report on foreign trade\nbarriers lists ten pages of Chinese barriers. China maintains\nrestrictions including a preclusive licensing system, discriminatory\ntesting and certification standards, and outright import bans. China\nalso fails to protect U.S. intellectual property, resulting in\nenormous losses to U.S. producers of films, books, chemicals and\npharmaceuticals. Moreover, the Administration has allowed China to\ndictate U.S. policy towards Taiwan, declining to support Taiwan's GATT\napplication despite clear economic benefits to the U.S.\nThe United States cannot continue to tolerate Chinese\nintransigence. We must tailor active responses to our wide ranging\nconcerns. But MFN is the wrong tool for the job. Revoking MFN would\nnot promote human rights in China. Instead, it would punish China's\nmost progressive regions and Hong Kong.\nRevoking MFN also would hurt Americans. China is an important\nmarket for U.S. goods ranging from wheat to airplanes. If MFN were..\nrevoked, China almost certainly would retaliate against U.S. exports.\nThe Australians, Canadians, Europeans and Japanese are ready to fill\nthe void. No other country is contemplating cutting off China's MFN\nstatus.\nWe believe the Administration must be more active in addressing\nAmerican concerns with China. You have taken meaningful steps in some\nareas. You have moved to protect U.S. intellectual property under\nprovisions of the 1988 Trade Act. You also have taken steps to\nrestrict certain technology transfers to China in response to its\nmissile and nuclear sales. These steps are examples of the types of\nactions the U.S. should take.\nPage 2\nJune 19, 1991\nWe urge you to take appropriate actions in other areas. Human\nrights is a foremost concern. Revoking MFN would be\ncounterproductive. But other steps can be taken. For example, the\nU.S. could reinvigorate its opposition to multilateral loans for\nChina. The U.S. also could take strong action under U.S. law to\naddress China's unfair trade barriers and imports produced by prison\nlabor. In the area of nuclear and missile proliferation, the U.S.\ncould immediately negotiate for strict, multilateral technology\nrestrictions conditioned upon Chinese adherence to accepted\ninternational standards. As for Taiwan, the U.S. could immediately\ngive strong support to Taiwan's GATT application.\nThese measures do not represent an exhaustive list. But it is\nessential that the Administration take concrete steps. If Congress is\nto extend China's MFN, we must see tangible evidence that the\nAdministration is taking action. We look forward to hearing your\nresponse to our concerns.\nSincerely,\nMax Baucue\nBue Ril\nNich D Lugar\nAir Budie\nRichard Shelly\nBae Jay\nthat H.\nOrinin\nthe McCain\nWithdrawal/Redaction Sheet\n(George Bush Library)\nDocument No.\nSubject/Title of Document\nDate\nRestriction\nClass.\nand Type\n01f.\nTo: Brent Scowcroft From: Robert Pearson\n7/12/91\n(b)(1)\nS\nMemorandum\nRe: Reply to Letter from Senator Baucus and Others (1 pp.)\nCollection:\nRecord Group:\nBush Presidential Records\nOffice:\nLegislative Affairs, White House Office of\nSeries:\nDyer, James W., Files\nSubseries:\nWHORM Cat.:\nFile Location:\nChina MFN [5]\nDate Closed:\n9/24/2012\nOA/ID Number:\n08451-009\nFOIA/SYS Case #:\n2012-1098-F\nAppeal Case #:\nRe-review Case #:\nAppeal Disposition:\nP-2/P-5 Review Case #:\nDisposition Date:\nAR Case #:\nMR Case #:\nAR Disposition:\nMR Disposition:\nAR Disposition Date:\nMR Disposition Date:\nRESTRICTION CODES\nPresidential Records Act - |44 U.S.C. 2204(a)]\nFreedom of Information Act - [5 U.S.C. 552(b)]\nP-1 National Security Classified Information [(a)(1) of the PRA]\n(b)(1) National security classified information [(b)(1) of the FOIA]\nP-2 Relating to the appointment to Federal office [(a)(2) of the PRA]\n(b)(2) Release would disclose internal personnel rules and practices of an\nP-3 Release would violate a Federal statute [(a)(3) of the PRA]\nagency [(b)(2) of the FOIA]\nP-4 Release would disclose trade secrets or confidential commercial or\n(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]\nfinancial information [(a)(4) of the PRA)\n(b)(4) Release would disclose trade secrets or confidential or financial\nP-5 Release would disclose confidential advice between the President\ninformation [(b)(4) of the FOIA]\nand his advisors, or between such advisors [a)(5) of the PRA]\n(b)(6) Release would constitute a clearly unwarranted invasion of\nP-6 Release would constitute a clearly unwarranted invasion of\npersonal privacy [(b)(6) of the FOIA]\npersonal privacy [(a)(6) of the PRA]\n(b)(7) Release would disclose information compiled for law enforcement\npurposes [(b)(7) of the FOIA]\nC. Closed in accordance with restrictions contained in donor's deed of\n(b)(8) Release would disclose information concerning the regulation of\ngift.\nfinancial institutions [(b)(8) of the FOIA]\n(b)(9) Release would disclose geological or geophysical information\nPRM. Removed as a personal record misfile.\nWithdrawal/Redaction Sheet\n(George Bush Library)\nDocument No.\nSubject/Title of Document\nDate\nRestriction\nClass.\nand Type\n01g. Letter\nTo: Senator Baucus\nn.d.\n(b)(1)\nS\nRe: China's MFN Status (8 pp.)\nCollection:\nRecord Group:\nBush Presidential Records\nOffice:\nLegislative Affairs, White House Office of\nSeries:\nDyer, James W., Files\nSubseries:\nWHORM Cat.:\nFile Location:\nChina MFN [5]\nDate Closed:\n9/24/2012\nOA/ID Number:\n08451-009\nFOIA/SYS Case #:\n2012-1098-F\nAppeal Case #:\nRe-review Case #:\nAppeal Disposition:\nP-2/P-5 Review Case #:\nDisposition Date:\nAR Case #:\nMR Case #:\nAR Disposition:\nMR Disposition:\nAR Disposition Date:\nMR Disposition Date:\nRESTRICTION CODES\nPresidential Records Act - |44 U.S.C. 2204(a)]\nFreedom of Information Act - [5 U.S.C. 552(b)]\nP-1 National Security Classified Information [(a)(1) of the PRA]\n(b)(1) National security classified information [(b)(1) of the FOIA]\nP-2 Relating to the appointment to Federal office [(a)(2) of the PRA]\n(b)(2) Release would disclose internal personnel rules and practices of an\nP-3 Release would violate a Federal statute [(a)(3) of the PRA)\nagency [(b)(2) of the FOIA]\nP-4 Release would disclose trade secrets or confidential commercial or\n(b)(3) Release would violate a Federal statute [(b)(3) of the FOIA]\nfinancial information [(a)(4) of the PRA]\n(b)(4) Release would disclose trade secrets or confidential or financial\nP-5 Release would disclose confidential advice between the President\ninformation [(b)(4) of the FOIA]\nand his advisors, or between such advisors [a)(5) of the PRA]\n(b)(6) Release would constitute a clearly unwarranted invasion of\nP-6 Release would constitute a clearly unwarranted invasion of\npersonal privacy [(b)(6) of the FOIA]\npersonal privacy [(a)(6) of the PRA}\n(b)(7) Release would disclose information compiled for law enforcement\npurposes [(b)(7) of the FOIA]\nC. Closed in accordance with restrictions contained in donor's deed of\n(b)(8) Release would disclose information concerning the regulation of\nfinancial institutions [(b)(8) of the FOIA]\ngift.\n(b)(9) Release would disclose geological or geophysical information\nPRM. Removed as a personal record misfile.\n7/8/91 1850\nCONFIDENTIAL\nDRAFT\n(Final version to be provided\nNSC)\nDECLASSIFIED\nPER NSC WAIVER, 1500 2021-02 PART I: TRADE AND ECONOMIC ISSUES\nBy SS NARA, Date 6/23/25\nThe Administration is committed to achieving with China the same\ngoals that have guided our trade policy with all other countries.\nWe seek open markets and the opportunity for U.S. firms and their\nproducts to compete on fair and equal terms. To achieve these\ngoals, and realize the principles of equality, mutual benefit and\nnon-discrimination set forth in the U.S.-China Bilateral Trade\nAgreement, this Administration has pursued a policy of\nnegotiation and engagement on trade issues with China. In\nparticular, the Administration has sought to improve U.S. access\nto China's marketplace; to bolster Chinese protection of\nintellectual property; to end fraudulent practices by Chinese\ntextile exporters using false country of origin declarations;\nand, to induce Beijing to undertake the economic and trade\nreforms required for membership in the GATT.\nReciprocal MFN tariff treatment underpins our ability to work\nconstructively with the PRC. China's desire to retain access to\nthe U.S. market has enabled us to engage Chinese leaders in\nperiods of tension. We believe that discontinuing MFN, or\nattaching conditions to its renewal, would cause serious harm to\nour trade interests and erode our ability to influence China's\nbehavior on key trade issues.\nA. The Past Decade of Bilateral Trade Relations\nAfter decades of adhering to an import-substitution strategy that\nfocused on minimizing China's reliance on outside sources of\nmachinery and equipment, in the 1980's China has sought outside\nsources of these goods. It also has increasingly drawn on\nforeign technology, expertise, and funds by actively encouraging\njoint ventures.\nChina's opening to the outside world has helped transform its\neconomy, bolstering reform-oriented sectors that are not directly\ncontrolled by the central government. For example, the state\nsector now produces just over half of China's industrial output;\nin 1978, its share was 78 percent. China's dynamic rural\nindustries, which are privately and collectively owned, have\nburgeoned. The 30,000 foreign-invested ventures China now has\nare valued at $40 billion. The impact of China's opèn door has\nbeen particularly pronounced in coastal areas, where 90 percent\nof the foreign investment and more than three-fourths of China's\ntrade activities are located. This region, in turn, has become\nthe primary engine of economic reform in China largely as a\nresult of the introduction of market concepts to Chinese\nemployees of joint ventures and to citizens engaging in\ncommercial exchanges with the West. The economic autonomy\nfostered by this interaction contributes to increased political\nand even individual self-determination.\nCONFIDENTIAL\nDeclassify on : OADR\nCONFIDENTIA\nDRAFT\nThe United States has been a vital partner in this\ntransformation. Following Congressional approval of the\nbilateral trade agreement, the United States and China\nestablished formal trade relations and reciprocally granted most-\nfavored-nation (MFN) status in 1980. Growth in our commercial\nties has helped to change China and to bring it into the global\ntrading system. Since the resumption of normal trade relations,\nU.S.-China two-way trade has increased almost 770 percent, from\n$2.3 billion in 1979 to over $20 billion last year.\n-- We are now China's second-largest trade and investment\npartner and its largest export market.\n-- China is our tenth-largest trade partner, up from fifteenth\nin 1981.\n-- Over 1,000 U.S. firms have invested more than $4 billion in\nChina and another $5 billion in Hong Kong related primarily\nto trade with the PRC.\n--\nIn 1990, the United States exported $4.8 billion worth of\ngoods to China, including:\n--\n$749 million worth of aircraft\n--\n$544 million worth of fertilizer\n--\n$512 million worth of grain\n--\n$281 million worth of cotton yarn and fabric\n--\n$264 million worth of electric machinery\n--\n$238 million worth of wood and wood pulp\n:\n$238 million worth of chemicals\n:\n$227 million worth of scientific instruments.\nCommercial relations with the United States have exerted positive\ninfluences on China's business and economic practices since 1980.\nChina has shifted away from total reliance on a strongly\ncentralized economy; shown greater tolerance for experimentation\nwith market mechanisms to regulate its domestic economy; and\ndecentralized and liberalized its foreign trade practices.\nB. Regression in China's Trade Policies\nChina's opening to the outside world has not been smooth. Over\nthe past decade, attempts to accelerate the implementation of\nmarket-oriented reforms have been followed by Beijing's\nrecentralization of control, as concern about the country's\nballooning trade deficit led Beijing to step in to regain some of\nthe trade authority it had relinquished.\nMoreover, throughout the period since the normalization of trade\nrelations and the granting of reciprocal most-favored-nation\ntrading status in 1980, China's web of barriers to imports has\nmade it difficult for many U.S. exporters to gain access to the\nChinese market. U.S. firms have also had difficulty securing\nprotection for their intellectual property.\nCONFIDENTIAL\nCONFIDENTIAL\nDRAFT\nU.S. trade negotiators have long been engaged with the Chinese\nGovernment, both in bilateral negotiations and in multilateral\nconsultations at the GATT held to review China's application for\nmembership. We have sought to ensure that bilateral commercial\nrelations develop in accord with the principles that underlie our\nbilateral trade agreement: equality, mutual benefit, and\nnondiscrimination. From 1979 through 1987, Chinese authorities\nmade some progress in dismantling nontariff barriers to imports,\nin improving transparency, and in protecting the intellectual\nproperty of foreigners.\nThis trend has been reversed over the last three years.\nSince 1988, Chinese trade policies and practices have become\nmore protectionist, nontariff barriers to imports have\nproliferated, and the trade system has become less\ntransparent. These policies undoubtedly contributed to a 17\npercent decline in U.S. sales to China in 1990. China was\nthe only major foreign market for U.S. goods and services in\nwhich our exports declined in 1990.\nDespite intensive bilateral negotiations with Chinese\nauthorities since the USTR in 1989 placed China on the\n\"priority watch list\" of countries providing inadequate IPR\nprotection--including three rounds of meetings over the past\nfive months--China has failed to live up to the commitments\ncontained in the bilateral Memorandum of Understanding (MOU)\nsigned in May 1989.\nAt the same time, other problems have developed in our bilateral\ntrade relationship. For example, to bypass U.S. textile and\napparel quotas Chinese exporters have increasingly resorted to\nshipping these products to the United States via third countries\nusing false invoices and counterfeit visas. Also of concern to\nus has been the apparent lapse in China's commitment to economic\nand trade reforms that would bring the country in line with the\nGATT's free-trade principles. China's reassertion of central\ncontrol over the past few years has called into question its\nwillingness and ability to undertake the obligations that would\nbe required of China as a contracting party to the GATT.\nC.\nSteps the U.S. Government Has Taken and Will Take to\nAddress Bilateral Trade Problems\nIn four key areas of our bilateral trade relations, the\nAdministration has taken steps to resolve trade problems.\n#\nprepared to do more.\nOn Market Access\nBeginning in the fall of 1990, the Administration resumed\nsub-cabinet level meetings with the Chinese, that had been\nsuspended since June 1989, to secure Chinese actions to\nreverse the growing list of new protectionist measures.\nCONFIDENTIAL\nCONFIDENTIAL\nDRAFT\nIn May 1991, the Administration formally set in motion a\nmarket access initiative that commenced with the visit to\nBeijing, in mid-June, of an interagency delegation to\ndiscuss market access issues. In meetings with senior\nChinese officials, U.S. Government officials raised nine\ntypes of market access barriers, including: the lack of\ntransparency in rules and regulations; the expansion of\nimport licensing requirements; the use of import\nsubstitution policies; the proliferation of import bans and\nquotas; the growth of standards, testing, and certification\nrequirements, including discriminatory \"quality standards\"\nprocedures for imports; the high level of many import\ntariffs; the unnecessary use of certain phytosanitary\nregulations; the uncertainties regarding government\nprocurement and tendering regulations; and the lack of\ninformation regarding China's major development projects.\nThe Administration has proposed holding another round of\nmarket access consultations in August 1991. If that round\nof negotiations fails to yield substantial commitments from\nthe Chinese authorities to dismantle market access barriers,\nthe Administration will self-initiate Section 301 action to\naddress those barriers the removal of which offers the most\npotential for achieving U.S. trade policy objectives and\nincreasing U.S. exports.\nOn Intellectual Property Protection\nOn April 26, 1991, USTR identified the PRC as a priority\nforeign country that denies adequate and effective\nprotection of intellectual property rights.\nAccordingly, on May 26, 1991 USTR initiated a Special\nSection 301 investigation on the basis of four problem\nareas: (1) inadequate copyright protection, (2) inade\npatent protection, (3) inadequate trade secret protection\nand (4) ineffective enforcement of trademarks.\nConsultations with the Chinese are ongoing. The first round\nof consultations occurred in mid-June and a second has been\nproposed for August.\nThe deadline for making a determination under Section 301 is\nNovember 26, 1991. This may be extended for three months if\nChina is making substantial progress in drafting or\nimplementing measures that will provide adequate and\neffective protection of U.S. intellectual property rights.\nAt that time, the USTR must determine whether the acts,\npolicies and practices of the PRC are actionable under\nSection 301 and what retaliatory action, if any, is\nappropriate.\nCONFIDENTIAL\nDRAFT\nCONFIDENTIAL\n5\nIf the consultations fail to produce adequate and effective\nprotection of intellectual property rights, the\nAdministration will take retaliatory action.\nOn Textile Transhipments\nThe U.S. Customs Service has been vigilant in documenting\ncases of Chinese textile transhipments over the past year.\nIn August 1990, USTR held consultations with Chinese\nauthorities on the transhipment issue. Additional\nconsultations took place in November 1990, March 1991, and\nMay 1991.\nThe U.S. Government \"charged\" China's quotas for goods that\nwere sent to the United States under false country of origin\ndeclarations valued at over $85 million.\nChina has begun to take actions to curtail textile fraud\nsince the December charges were made. For example, it\nissued regulations prohibiting reexports through a third\ncountry to countries that have signed textile agreements\nwith China. Further, the Chinese Government has issued\nprovisions for the punishment of those who violate the\nregulations.\n--\nThe Administration has prepared more charges valued at about\n$14 million that we anticipate will be levied after\nconsultations with China next month.\n--\nThe Administration will increase the number of U.S. Customs\nofficials dedicated to investigating circumvention.\n--\nIf transhipment persists, we will be prepared to take\nfurther action against China, beyond charging China's\ntextile quota the documented amount imported through\ntranshipment.\nOn Forced Labor\nThe importation of goods produced with forced, convict or\nindentured labor is prohibited by 19 USC Section 1307, which also\ndirects the Secretary of the Treasury to prescribe regulations\nfor enforcement of the provision. The Secretary of the Treasury,\nunder 19 CFR Section 12.42, has delegated to the Commissioner of\nCustoms, authority to determine that a class of goods is the\nproduct of forced labor and exclude those goods.\nCustoms has been investigating imports alleged to be the product\nof forced labor in China. Customs has interviewed emigres about\nforced labor practices in China. Customs is also analyzing\nimport samples to determine if they match the descriptions\nprovided by the emigres and others. Additional special agents\nhave been detailed to Hong Kong to assist in the investigation.\nCONFIDENTIAL\nCONFIDENTIAL\nDRAFT\nAlthough the letter from Senator Baucus and fourteen co-signers\ndid not specifically address the issue of prison labor imports,\nappropriate action is called for to fulfill the intent of\nexisting law. The Administration therefore proposes to negotiate\na memorandum of understanding with China on procedures for the\nprompt investigation of allegations that specific products\nexports to the U.S. are being produced by prison labor.\nPending negotiation of the MOU, Customs will temporarily embargo\nspecific products from China when there is reasonable indication\nthat they are made by prison labor. Embargoes will be lifted\nonly after the Chinese Government or the Chinese exporter\nprovides credible evidence that the products are not produced by\nprison labor.\nMultilateral Lending to China\nThe G-7 consensus, led by the United States, was successful in\nprohibiting all MDB lending to China from June 1989 to February\n1990 in response to the international outcry against the\ncrackdown by the Chinese authorities at Tiananmen Square.\nFrom February 1990 to July 1990, the G-7 consensus supported a\ngradual resumption of World Bank lending to China for projects\nthat clearly met basic human needs (BHN). The consensus held\nfirm and actively prohibited other loans from Board\nconsideration. Only five loans (totalling $590 million) were\napproved in WBFY 1990. This is substantially less that pre-\nTiananmen Square levels of World Bank commitments to china, which\nwere $1.4 billion in WBFY 1988 and $1.3 billion in WBFY 1989.\nAt the Houston Summit in July 1990, several G-7 countries decided\nthat China's long-term development needs argued for lending\noutside the BHN limits favored by the U.S. Accordingly, the G-7\nHouston Summit Declaration of July 1990 on MDB lending to China\nexpanded the boundaries of permitted MDB lending to China to\ninclude loans which were environmentally beneficial or which\nsupported market-oriented economic reform. Only BHN loans were\nconsidered by the World Bank Board until December 4, 1990 when\nthe market oriented economic reform loan for Rural Industrial\nTechnology was approved by the Board. On November 29, 1990, the\nADB approved its first loan to China since Tiananmen Square,\nAgricultural Bank Project, which the U.S. did not support.\nSince March 1991, infrastructure projects outside the Houston\nsummit guidelines (highways, power plants, bridges, and railways)\nhave been approved for China by the World Bank and the Asian\nDevelopment Bank. The U.S. has and will continue to withhold\nsupport on all non-BHN loans at the Board. In WBFY 1991 (which\nended June 30, 1991), World Bank lending to China totalled $1.6\nbillion.\nOn GATT Accession\n-- Since China applied for GATT membership in July 1986,\nUnited States has been a leading participant in the\nCONFIDENTIAL\nCONFIDENTIAL\nDRAFT\ncollective efforts of major GATT Contracting Parties to\ndevelop terms for China's GATT participation that will\nsupport the objectives of the GATT and will influence\nChinese Government policies to become, over time, more\ncompatible with the GATT framework for world trade.\nU.S. and other major GATT contracting parties' concerns\nabout China's ability and willingness to live up to GATT\nobligations, particularly since June 1989, have stalled\nprogress in the Working Party established to consider\nChina's application for membership in the GATT.\nThe Administration intends to continue to press Beijing to\nundertake trade and economic reforms so that its GATT\napplication can advance and its trade practices be brought\nunder GATT disciplines.\nAt the same time, the Administration will work actively with\nother GATT members to resolve in a favorable manner issues\nrelating to Taiwan's GATT accession [and support the\nformation of a Working Party for the commencement of\naccession deliberations } U.S. support for Taiwan's\naccession as a customs territory would be consistent both\nwith GATT legal criteria and the \"one-China\" policy which\nacknowledges the Chinese position and has been adhered to by\nsuccessive U.S. Administrations.\nTaiwan's GATT accession would yield substantial trade and\ncommercial benefits to the United States and to the\ninternational trading system.\n--\nTaiwan has indicated that it is prepared to accede to\nthe GATT as a developed economy, to bind virtually all\nits tariffs, and to join the major non-tariff measure\nGATT codes.\nD. The Importance of MFN\nAs highlighted above, the Administration is aggressively seeking\nto resolve outstanding bilateral trade issues with the PRC. MFN\nunderpins our ability to work constructively with the PRC. We\nbelieve that discontinuing MFN, or attaching conditions to its\nrenewal, would cause serious harm to our trade interests, and\nwould render futile pursuit of the initiatives outlined above.\nIt would reduce our leverage in market-access, intellectual\nproperty rights protection, and other trade-related negotiations.\nChina's desire to retain access to the U.S. market has enabled us\nto engage Chinese leaders in consultations on bilateral and\nmultilateral. issues even during periods of tension. Because\nChina is not a GATT member and not bound by GATT trade\ndisciplines, it is especially important to have many levers that\nenable us to engage the Chinese on trade issues.\nIt would hurt U.S. exporters. If the United Stated rescinds\nChina's MFN trading status, China will not only discontinue MFN\nCONFIDENTIAL\nCONFIDENTIAL\nDRAFT\ntariff treatment for the United States, but would likely cease\npurchasing billions of dollars of U.S. wheat, aircraft,\nfertilizer, cotton yarn and fabric, wood and wood pulp, electric\nmachinery, scientific equipment, and chemicals. Foreign\ncompetitors, whose goods would be subject to lower tariffs, would\nbe quick to exploit our departure. Lost shares of China's market\nwould not easily be regained even if MFN were restored at some\nfuture date.\nIt would hurt U.S. consumers. Tariffs on the 25 most important\nU.S. imports from China would rise from the present average\ntariff rate of 8.8 percent to an average rate of 50.5 percent.\nThese increases would mean sharply higher prices for lower-end\nChinese goods. The costs to U.S. consumers would be largely\nborne by poorer Americans, who are primary consumers of low-cost\nChinese products.\nIt would damage America's reputation as a reliable trade partner.\nOur trade competitors will not join us in denying MFN status to\nChina. Other Chinese trade partners, especially in Asia, urge\nthat China's MFN status be retained.\nIt would hurt investors, businesses, and workers in Hong Kong.\nLoss of MFN would impede China's integration into the regional\neconomy, a development crucial to regional stability particularly\nas we near the 1997 deadline for Hong Kong's reversion to Chinese\nsovereignty. It could cost over 43,000 jobs in Hong Kong and\nresult in direct revenue losses of approximately $1.2 billion\ndollars. Hong Kong's GDP growth could be curtailed by as much as\ntwo percentage points.\nIt would set back efforts to bring about meaningful economic\nreform in China. A disproportionate burden of the MFN denial\nwould fall on the primary engine of economic reform in China--the\neconomies of the southern and coastal provinces. In Guangdong\nprovince, for example, 40 percent of industrial output is\nproduced for export, half of which goes to the United States.\nSEctors that fall outside of the direct control of the central\ngovernment have been especially important to China's development\nas an exporter; one-third of China's exports currently come from\nrural (individual and collectively owned) industries and from\nforeign-invested ventures. The foreign ties these provinces and\nnon-state-owned factories developed with the outside world prior\nto Beijing's reassertion of central control in mid-1989 enabled\nthese provinces to weather the austerity program; without these\nforeign markets, Beijing's grip would have been all the tighter.\nAs Beijing's influence over the regions and sectors most closely\nintegrated into the global economy has diminished, these regions\nand sectors have become increasingly sensitive to global economic\nconditions. Revocation of China's MFN trading status would cause\nunemployment to rise and factory losses to mount in export-\nproducing regions.\nE. Conclusion\nCONFIDENTIAL\nCONF IDENTIAL\nDRAFT\nThose who engineered the violence in China in June 1989 are\nunlikely to bear the economic costs associated with the denial of\nMFN. Instead, those who suffer would be American businesses and\ntheir employees, American consumers, and the people of Hong Kong\nand the progressive areas of China.\nChina's opening to the outside world over the past decade has\naccelerated growth in the non-state sectors of the economy;\nresulted in strong links between China's coastal regions and the\nglobal economy that have enabled this reformist region to weather\nBeijing's periodic efforts to reimpose central government control\nover economic activity; and introduced market concepts to a\ngeneration of Chinese managers involved in joint ventures, trade\nnegotiations, and training in the West. For this process to\ncontinue, China's most-favored-nation treatment in the United\nStates is essential.\nCONFIDENTIAL\nPART II:\nADMINISTRATION'S ACTIONS WITH RESPECT TO PROLIFERATION CONCERNS\nWe are engaged in a high-level dialogue with the Chinese that\nbegan early in our relationship. Looking at the broad trends in\nChina's nonproliferation policy since normalization in 1979, it is\nclear that our dialogue has paid off in important areas, demonstrated\nby China's evolution toward international consensus on\nnonproliferation in areas of great importance to us. For example,\nChina, which once held an antagonistic view of multilateral controls\non nuclear exports, joined the IAEA in 1984 and sent observers to the\nNuclear Nonproliferation Treaty Review Conference in 1990.\nChina's support for the Middle East arms control initiative is\nanother case in point. China's participation in the initiative is a\npositive step that will strengthen international nonproliferation\nefforts and indicates China's resolve to contribute to efforts to\nattain stability in the Middle East. In addition, China's willingness\nto participate in multilateral efforts to reduce tension in South Asia\nwill be crucial to establishing stability in that volatile region.\nMoreover, we have seen Chinese arms sales restraint in some areas\nof where we have vital interests. For example, to the best of our\nknowledge, apart from the 1987/88 sale of missiles to Saudi Arabia,\nChina has not delivered medium-range missiles to the Middle East. It\nis clear that in other specific cases China has taken international\nconcerns into account and declined proposed missile exports to\nprospective buyers.\nIt is because serious concerns remain that we want to maintain a\nconstructive nonproliferation dialogue with Beijing. We do not intend\nto ignore current problems, but isolating China by dismantling the\nframework for our relations is not the way to advance our\nnonproliferation objectives.\nWe have the means available to underscore our concerns where there\nare differences in our approaches to nonproliferation and we have used\nthese legislative and executive branch tools. For example, we have\nimposed trade sanctions mandated by the National Defense Authorization\nAct on Chinese entities involved in missile-related activities. We\nhave also announced the Administration's decision that, pending\nprogress toward our nonproliferation objectives, we will not license\nhigh speed computers and will not issue further waivers of legislative\nrestrictions on satellite exports. These new sanctions have been\nimposed in addition to the existing sanctions announced immediately\nfollowing the June 1989 assault on Tiananmen and amplified by Congress\nin the State Authorization Bill for FY90-91. Moreover, we have not\ncertified China under the bilateral agreement for nuclear cooperation\nthat took effect in 1985.\nOur policy mix of sanctions and cooperation at any given time is\nnecessarily dependent on Chinese behavior. We are encouraged by\nChina's indication in June that it is reviewing its policies with\nrespect to the Missile Technology Control Regime and the NPT. We seek\nChina's adherence to the NPT and the MTCR guidelines and will do all\nwe can to promote concrete steps toward Chinese adherence to the key\nmultilateral standards for international behavior established by these\ninstitutions. The Administration will continue to use the legislative\nauthority that already exists and will take resolute action if the\nChinese do not address favorably our nonproliferation concerns.\nPART III: HUMAN RIGHTS\nHuman rights concerns have been at the heart of our\nrelationship with the PRC since the tragic events of June\n1989. Every high-level meeting since that time has at least\ntouched on human rights issues, and several -- such as the\nDecember 1990 visit to China by Assistant Secretary Schifter --\nhave been devoted exclusively to them. We have consistently\nstressed to the Chinese leadership that there can be no return\nto the kind of relationship we enjoyed before 1989 without\nsubstantial improvements in China's human rights practices.\nOur overall approach on human rights issues has consisted of:\no\nPublic expressions of concern.\n-- President Bush condemned the brutal suppression of\ndemonstrations in Tiananmen Square in June 1989, the\nfirst world leader to do so. He declared May 13, 1990\na National Day in Support of Freedom and Human Rights\nin commemoration of the 1989 demonstrations, and\nissued another statement to mark the anniversary of\nthe crackdown in 1991.\n--\nIn our human rights reports for 1989 and 1990, we\nstrove to be fair but hard-hitting, and as accurate as\navailable information would allow. These reports have\ndrawn high praise from human rights groups, and harsh\ncondemnations from the Chinese government.\n--\nThe State Department issued a statement on January 9,\n1991 condemning the trials of nonviolent dissidents.\n--\nIn April 1991 the President met the Dalai Lama at the\nWhite House to demonstrate our respect for His\nHoliness' nonviolent approach to conflict resolution\nand our concern for human rights problems in Tibet.\no\nSuspension of bilateral programs. On June 6 and June 20,\n1989, the President announced the suspension of a number of\nbilateral programs and changes in U.S. approach to\nmultilateral issues until the human rights climate in China :\nimproved. Those suspensions generally remain in effect.\n-- A multitude of high-level exchange visits that would\nnormally have taken place since 1989 have been\ncanceled. Only a very limited number of visits at and\nabove Assistant Secretary level have been approved on\na case-by-case basis, and only when they addressed\nissues of key concern to the U.S. like human rights,\nnonproliferation, unfair trade practices and narcotics.\n- 2 -\n--\nMilitary exchange visits have been suspended\ncompletely.\n-- Work on several existing military equipment and\ntechnology projects has been suspended indefinitely.\n--\nWe have stopped the transfer of military or dual-use\nequipment or technology to Chinese military and\nsecurity services.\n--\nThe U.S. sought to postpone all multilateral\ndevelopment bank loans to China from June 1989 to\nJanuary 1990. Since then, we have supported only\nthose loans that serve the basic human needs of the\nChinese people.\n--\nWe have suspended grants, loans and insurance\nguarantees to China under the Trade and Development\nProgram and OPIC.\n--\nWe have worked through COCOM to suspend planned\nliberalization of export controls to China.\no\nEngagement in dialogue. Through the few high-level visits\nthat have been authorized, and through regular diplomatic\nchannels, we have engaged the Chinese government in an\nunprecedented continuing dialogue on a wide range of human\nrights issues.\n:\nThe Scowcroft-Eagleburger missions of July and\nDecember 1989 were devoted primarily to laying out our\nhuman rights concerns and suggesting steps the Chinese\ncould take to address them.\n--\nDuring Chinese Foreign Minister Oian's visit to\nWashington in November 1990, President Bush and\nSecretary Baker reiterated the need for progress on\nhuman rights, and stressed that human rights is a\ncornerstone of American foreign policy.\n--\nAssistant Secretary Schifter visited China in December\n1990, the first time our top human rights official has\ndone so. In 16 hours of intense discussions with\nsenior Chinese officials, he spelled out in detail our\nhuman rights concerns in a wide range of areas\nincluding accounting of detainees, release of\npolitical prisoners, denial of due process and fair\nand open trials, treatment of prisoners, divergence of\nChinese law from international standards, respect for\nfreedom of religon, abusive implementation of family\nplanning regulations, and human rights problems in\nTibet. He delivered a list of 151 representative\ncases of reported political incarceration, and asked\nChinese authorities to clarify the status of the cases\n- 3 -\nand release those whose imprisonment violated\ninternational norms. He suggested changes in Chinese\nlaws and judicial processes that would bring them into\nconformity with international standards.\n-- Under Secretary Kimmitt in May 1991 reiterated many of\nthe points made by Assistant Secretary Schifter, and\ncalled on the Chinese government to declare an amnesty\nfor all those imprisoned for nonviolent political\nactivities. He also urged the Chinese to implement\neffectively their claimed prohibition on export of\nprison labor products.\nThese actions have produced results. Most importantly, the\nChinese government has acknowledged the legitimacy of human\nrights as a subject of bilateral discussion, both with us and\nwith other concerned governments. They received a\nCongressional delegation devoted exclusively to human rights\nconcerns in March 1991, and agreed to receive another later\nthis year. They also agreed to receive human rights\ndelegations to be sent by the governments of France and\nAustralia. In addition, they have taken a number of modest but\npositive steps to improve the human rights situation in China:\no\nMartial law was lifted in Beijing in January 1990 and in\nLhasa four months later. No part of China is currently\nsubject to martial law.\nO\nMost of those detained after the Tiananmen tragedy were\nreleased by the end of 1989. Chinese authorities announced\nthe release of nearly 1000 more detainees in 1990, and\nabout 70 have been released so far in 1991. Officials\nclaim that only 21 still await trial detention in Beijing,\nand at least one of these -- labor leader Han Dongfang --\nhas been released for medical treatment.\no\nWhile at least 30 persons have been convicted on political\ncharges since the beginning of the year, the sentences\nmeted out to them were generally less severe than those\nimposed on similar charges in previous years. Those\nreleased without further punishment included prominent\ndissidents such as essayist Liu Xiaobo, journalist Zhang\nWeiguo, playwright Wang Peigong, and legal scholar Chen\n..\nXiaoping.\nLeading dissident Fang Lizhi and his wife, who had obtained\nrefuge in the U.S. Embassy in Beijing for over a year, were\nallowed to leave China in June 1990, and are now at\nPrinceton.\nMost investigations of those involved in the 1989 protests\nhave ended, and most of our Chinese contacts report that\nthe oppressive atmosphere of 1989 has lifted significantly.\n- 4 -\nThe Chinese have ceased the most odious forms of harassment\nof Chinese students and scholars in the U.S.; harassment\nwas a serious problem in 1989 and early 1990.\nRelatives of many, though not all, overseas dissidents have\nbeen allowed to leave China and join them abroad. In some\nof the remaining cases that we have raised with Chinese\nofficials, passports have subsequently been issued.\nSeveral released dissidents, including Tiananmen hunger\nstriker Gao Xin and former Arizona State student Yang Wei,\nhave been allowed to leave the country.\nChinese authorities have undertaken to stop the export to\nthe U.S. of products made in Chinese prisons. We will\ncontinue to monitor this situation closely, but it appears\nthat the Chinese government is taking increasingly specific\nsteps to enforce their prohibition on export of these\nproducts.\nIn response to concerns expressed by Administration\nofficials and Members of Congress, the Chinese have\nprovided useful new information on the status of persons\nreported detained for religious activities.\nEconomic reforms have resumed, in some cases matching or\nexceeding levels reached before 1989. Some limited\npolitical reforms, in important but relatively\nnoncontroversial areas such as the personnel system, have\ncontinued. An Administrative Procedure Law that became\neffective in October 1990 for the first time enables\nChinese citizens to sue abusive officials.\nThere are indications that further progress may be in the\noffing. We are continuing to press the Chinese government to\nrelease all remaining detainees, to commute the sentences of\nthose nonviolent dissidents already convicted, and to allow the\ndeparture of the remaining relatives of overseas dissidents who\nwish to leave. We are hopeful that a combination of dialogue\nand specifically targeted pressure will lead to further\nmovement on these and other remaining issues of concern. And\nin the longer term, we are confident that the momentum toward\ngreater freedom and democratization in China, built up during\n:\nthe decade of reforms and dramatically reflected in the 1989\ndemonstrations, will prove irreversible.\nPrezio\nID# 248968\nTHE WHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\nTAWS\nINCOMING\nDATE RECEIVED: JUNE 24, 1991\nNAME OF CORRESPONDENT: THE HONORABLE MAX BAUCUS\nSUBJECT: CONCERNS REGARDING MOST FAVORED NATION STATUS\nFOR CHINA\nACTION\nDISPOSITION\nROUTE TO:\nACT\nDATE\nTYPE C COMPLETED\nOFFICE/AGENCY\n(STAFF NAME)\nCODE YY/MM/DD RESP D YY/MM/DD\nFREDERICK MCCLURE\nORG 91/06/24\nC91106/27\"\nNSSITT\nREFERRAL NOTE:\nA\nn0627\n/\n/\nREFERRAL NOTE:\n/\n7\n/\n7\nREFERRAL NOTE:\n7\n7\n/\n7\nREFERRAL NOTE:\n/\n/\n/\n/\nREFERRAL NOTE:\nCOMMENTS:\nADDITIONAL CORRESPONDENTS: 14 MEDIA:L INDIVIDUAL CODES: 1210 1220\nMAIL\nUSER CODES: (A)\n(B)\n(C)\n*ACTION CODES:\n*DISPOSITION\n*OUTGOING\n*\n*\n*\n*CORRESPONDENCE:\n*\n*A-APPROPRIATE ACTION *A-ANSWERED\n*TYPE RESP=INITIALS\n*\n*C-COMMENT/RECOM #B-NON-SPEC-REFERRAL\n*\nOF SIGNER\n*\n*D-DRAFT RESPONSE:\n*C-COMPLETED\n*\nCODE = A\n*\n*F-FURNISH FACT SHEET *S-SUSPENDED\n*COMPLETED = DATE OF\n*\n*I-INFO COPY/NO ACT NEC*\n*\nOUTGOING\n*\n*R-DIRECT REPLY W/COPY *\n*\n*\n*S-FOR-SIGNATURE\n*\n*\n*\n*X-INTERIM REPLY\n*\n*\n*\nREFER QUESTIONS AND ROUTING UPDATES TO CENTRAL REFERENCE\n(ROOM 75,OEOB) EXT-2590\nKEEP THIS WORKSHEET ATTACHED TO THE ORIGINAL INCOMING\nLETTER AT ALL TIMES AND SEND COMPLETED RECORD TO RECORDS\nMANAGEMENT.\nSENATOR BROCK ADAMS\nSENATOR PAUL WELLSTONE\nSENATOR DANIEL AKAKA\nSENATOR TIMOTHY WIRTH\nSENATOR MAX BAUCUS\nSENATOR HARRIS WOFFORD\nSENATOR LLOYD BENTSEN\nSENATOR JOSEPH BIDEN\nSENATOR JEFF BINGAMAN\nSENATOR DAVID BOREN\nSENATOR BILL BRADLEY\nSENATOR JOHN BREAUX\nSENATOR RICHARD BRYAN\nSENATOR DALE BUMPERS\nSENATOR QUENTIN BURDICK\nSENATOR ROBERT BYRD\nSENATOR KENT CONRAD\nSENATOR ALAN CRANSTON\nSENATOR THOMAS DASCHLE\nSENATOR DENNIS DECONCINI\nSENATOR ALAN DIXON\nSENATOR CHRISTOPHER DODD\nSENATOR JAMES EXON\nSENATOR WENDELL FORD\nSENATOR WYCHE FOWLER\nSENATOR JOHN GLENN\nSENATOR AL GORE\nSENATOR ROBERT GRAHAM\nSENATOR TOM HARKIN\nSENATOR HOWELL HEFLIN\nSENATOR FRITZ HOLLINGS\nSENATOR DANIEL INOUYE\nSENATOR BENNETT JOHNSTON\nSENATOR TED KENNEDY\nSENATOR JOHN KERRY\nSENATOR BOB KERREY\nSENATOR HERB KOHL\nSENATOR FRANK LAUTENBERG\nSENATOR PATRICK LEAHY\nSENATOR CARL LEVIN\nSENATOR JOSEPH LIEBERMAN\nSENATOR HOWARD METZENBAUM\nSENATOR BARBARA MIKULSKI\nSENATOR GEORGE MITCHELL\nSENATOR DANIEL MOYNIHAN\nSENATOR SAM NUNN\nSENATOR CLAIBORNE PELL\nSENATOR DAVID PRYOR\nSENATOR HARRY REID\nTOTALS\nSENATOR DONALD RIEGLE\nSENATOR CHARLES ROBB\n1.\nNo Conditions\nSENATOR JOHN ROCKEFELLER\n2.\nUndecided on Conditions\nSENATOR TERRY SANFORD\n3.\nMild Condition\nSENATOR PAUL SARBANES\n4.\nSupports Mitchell\nSENATOR JIM SASSER\n5.\nOpposes MFN\nSENATOR RICHARD SHELBY\nSENATOR PAUL SIMON\nSENATOR CHRISTOPHER BOND\nSENATOR HANK BROWN\nSENATOR CONRAD BURNS\nSENATOR JOHN CHAFEE\nSENATOR DAN COATS\nSENATOR THAD COCHRAN\nSENATOR WILLIAM COHEN\nSENATOR LARRY CRAIG\nSENATOR ALFONSE D'AMATO\nSENATOR JOHN DANFORTH\nSENATOR ROBERT DOLE\nSENATOR PETE DOMENICI\nSENATOR DAVE DURENBERGER\nSENATOR JAKE GARN\nSENATOR SLADE GORTON\nSENATOR PHIL GRAMM\nSENATOR CHARLES GRASSLEY\nSENATOR ORRIN HATCH\nSENATOR MARK HATFIELD\nSENATOR JESSE HELMS\nSENATOR JAMES JEFFORDS\nSENATOR NANCY KASSEBAUM\nSENATOR ROBERT KASTEN\nSENATOR TRENT LOTT\nSENATOR RICHARD LUGAR\nSENATOR CONNIE MACK\nSENATOR JOHN MCCAIN\nSENATOR MITCH MCCONNELL\nSENATOR FRANK MURKOWSKI\nSENATOR DON NICKLES\nSENATOR BOB PACKWOOD\nSENATOR LARRY PRESSLER\nSENATOR WILLIAM ROTH\nSENATOR WARREN RUDMAN\nSENATOR JOHN SEYMOUR\nSENATOR ALAN SIMPSON\nSENATOR ROBERT SMITH\nSENATOR ARLEN SPECTER\nSENATOR TED STEVENS\nSENATOR STEVEN SYMMS\nSENATOR STROM THURMOND\nSENATOR MALCOLM WALLOP\nSENATOR JOHN WARNER\nTOTALS\n1.\nNo Conditions\n2.\nUndecided on Conditions\n3.\nMild Condition\n4.\nSupports Mitchell\n5.\nOpposes MFN\nJune 25, 91\nSENATOR CHRISTOPHER BOND\n1\nSENATOR HANK BROWN\n2\nSENATOR CONRAD BURNS\n2\nSENATOR JOHN CHAFEE\n1\nSENATOR DAN COATS\n2\nSENATOR THAD COCHRAN\n1\nSENATOR WILLIAM COHEN\n3\nSENATOR LARRY CRAIG\n1\nSENATOR ALFONSE D'AMATO\n4\nSENATOR JOHN DANFORTH\n1\nSENATOR ROBERT DOLE\n1\nSENATOR PETE DOMENICI\n1\nSENATOR DAVE DURENBERGER\n1\nSENATOR JAKE GARN\n1\nSENATOR SLADE GORTON\n5 3\nSENATOR PHIL GRAMM\n1\nSENATOR CHARLES GRASSLEY\n21\nOK\nSENATOR ORRIN HATCH\n1\nSENATOR MARK HATFIELD\n21\none\nSENATOR JESSE HELMS\n0\nSENATOR JAMES JEFFORDS\n3\nSENATOR NANCY KASSEBAUM\n1\nSENATOR ROBERT KASTEN\n2\nSENATOR TRENT LOTT\n2\nSENATOR RICHARD LUGAR\n1\nSENATOR CONNIE MACK\n$ 5\nSENATOR JOHN MCCAIN\n1\nSENATOR MITCH MCCONNELL\n1\nSENATOR FRANK MURKOWSKI\n1\nSENATOR DON NICKLES\n1\nSENATOR BOB PACKWOOD\n11\nSENATOR LARRY PRESSLER\n1\nSENATOR WILLIAM ROTH\n1\nSENATOR WARREN RUDMAN\n1\nSENATOR JOHN SEYMOUR\n2\nSENATOR ALAN SIMPSON\n1\nSENATOR ROBERT SMITH\n3 5\nSENATOR ARLEN SPECTER\n2\nSENATOR TED STEVENS\n1\nSENATOR STEVEN SYMMS\n31\nOic w) GATT\nSENATOR STROM THURMOND\n1\nSENATOR MALCOLM WALLOP\n4\nSENATOR JOHN WARNER\n1\nTOTALS\n1.\nNo Conditions\n24 28\n2.\nUndecided on Conditions\n10 7\n3.\nMild Condition\n$4 3\n4.\nSupports Mitchell\nz #2\n5.\nOpposes MFN\n23 5\nJune 13, 91\nSENATOR CHRISTOPHER BOND\n1\nSENATOR HANK BROWN\n2\nSENATOR CONRAD BURNS\n22\n-\nSENATOR JOHN CHAFEE\n1\nSENATOR DAN COATS\n2\nSENATOR THAD COCHRAN\n1\nSENATOR WILLIAM COHEN\n3\nSENATOR LARRY CRAIG\nSENATOR ALFONSE D'AMATO\n4\nSENATOR JOHN DANFORTH\n1\nSENATOR ROBERT DOLE\n1\nSENATOR PETE DOMENICI\n1\n-\nSENATOR DAVE DURENBERGER\n1\nSENATOR JAKE GARN\n1\nSENATOR SLADE GORTON\n5\n- (TAIWAN, STUDENTS)\nSENATOR PHIL GRAMM\n1\nSENATOR CHARLES GRASSLEY\n2\nSENATOR ORRIN HATCH\n1\nSENATOR MARK HATFIELD\n2\n-\nSENATOR JESSE HELMS\n5\nSENATOR JAMES JEFFORDS\n3\nSENATOR NANCY KASSEBAUM\n1\n-\nSENATOR ROBERT KASTEN\n2\n(STUDENTS)\nSENATOR TRENT LOTT\n2\n.\n(MISSILES, TRADE)\nSENATOR RICHARD LUGAR\n1\nSENATOR CONNIE MACK\n243 -\nSENATOR JOHN MCCAIN\n31\n-\nSENATOR MITCH MCCONNELL\n1\nSENATOR FRANK MURKOWSKI\n1\nSENATOR DON NICKLES\n1\nSENATOR BOB PACKWOOD\n3\nSENATOR LARRY PRESSLER\n3\nSENATOR WILLIAM ROTH\nL\nSENATOR WARREN RUDMAN\n1\nSENATOR JOHN SEYMOUR\n2\n(STUDENTS)\nSENATOR ALAN SIMPSON\n1.\nSENATOR ROBERT SMITH\n3\nSENATOR ARLEN SPECTER\n2\nSENATOR TED STEVENS\n1.\nSENATOR STEVEN SYMMS\n2\n(TAIWAN)\nSENATOR STROM THURMOND\n1\nSENATOR MALCOLM WALLOP\n4\n(TAIWAN)\nSENATOR JOHN WARNER\n1\nTOTALS\n1.\nNo Conditions\n25\n24\n2.\nUndecided on Conditions\n11\n10\n3.\nMild Condition\n$\n5\n4.\nSupports Mitchell\n2\nNEW\n2\n5. Opposes MFN\n2\n2\nCONFIDENTIAL\nTOPIC: CHINA MFN\nMEMBER\nSUPPORT MFN\nCONCERNS\nBOND\nSUPPORTS\nUNCONDITIONALLY -- OFFERED\nTO SPEAK ON FLOOR.\nBROWN\nUNDECIDED\nCONCERNS WITH NUCLEAR\nPROLIFERATION, TRADE\nDEFICIT. DID NOT SUPPORT\nPRESIDENT IN THE HOUSE\nLAST YEAR.\nBURNS\nSUPPORTS\nCHAFEE\nSUPPORTS\nCOATS\nUNDECIDED\nMIGHT BE LEANING TOWARDS\nADMINISTRATION -- HAS A\nLOT OF CONSTITUENT MAIL\nON THE SUBJECT. BUSINESS\nPEOPLE IN INDIANA ARE\nPRESSING HIM TO SUPPORT.\nHE REMAINS NONCOMMITTAL.\nCOCHRAN\nSUPPORTS\nGENERALLY WANTS TO SEE\nISSUES SUCH AS HUMAN\nRIGHTS AND PRISON LABOR\nADDRESSED, YET NOT AS\nCONDITIONS TO MFN RENEWAL.\nCOHEN\nUNDECIDED\nWOULD BE AMENABLE TO\nSEEING CONDITIONS SET\nDOWN THAT CHINESE ARE ABLE\nTO MEET. SIGNED ROTH\nLETTER. STAFFER THINKS\nAKS SHOULD TALK TO COHEN.\nCRAIG\nSUPPORTS\nCOSIGNED BAUCUS LETTER\nTO PRESIDENT. IN FAVOR\nOF SOME CONDITIONS. WANTS\nSOME STIPULATIONS ON HUMAN\nRIGHTS.\nD'AMATO\nOPPOSED\nMITCHELL COSPONSOR\nDANFORTH\nSUPPORTS\nDOLE\nSUPPORTS\nSUPPORT PRESIDENT\nDOMENICI\nSUPPORTS\nIN FAVOR OF MILD\nCONDITIONS\nDURENBERGER\nSUPPORTS\nDECLASSIFIED\nPER NSC WAIVER, 1500 2021-02\nBy 55 NARA, Date 6/23/25\nGARN\nLEANING OP.\nWILL PROBABLY GO\nAGAINST PRESIDENT.\nVOTED AGAINST HIM LAST\nYEAR. THINKS IT IS TIME\nFOR A MORAL STAND AND\nTHINKS IF A DEM ADMIN WAS\nPOWER THE REPUBLICANS\nWOULD BE SHARPLY OPPOSED\nTO GRANTING P.R.C. MFN\nSTATUS. VERY CONCERNED\nABOUT TECH TRANSFERS.\nGORTON\nUNDECIDED\nINTERESTED IN INTRODUCING\nPELOSI-TYPE LEGISLATION.\nWOULD LIKE TO SEE CHINESE\nSTUDENT IMMIGRATION\nPROBLEM SOLVED.\nGRAMM\nSUPPORTS\nDOES NOT WANT TO GET TOO\nINVOLVED. DOES BELIEVE\nTHAT DENIAL OF MFN WOULD\nADVERSELY AFFECT THE U.S.\nCONSUMER.\nGRASSLEY\nLEANING FOR\nHATCH\nSUPPORTS\nHATFIELD\nSUPPORTS\nTHINKS SOME KIND OF\nHUMAN RIGHTS MESSAGE\nIS NECESSARY. WOULD\nNOT VOTE FOR ANY\nCONDITIONS THAT WOULD BE\nIMPOSSIBLE TO \"ENFORCE\" OR\nPROVE.\nHELMS\nOPPOSED\nHAS INTRODUCED PRISON\nLABOR BILL.\nJEFFORDS\nLEANS OP.\nINTERESTED IN MILDER\nCONDITIONS THAN WHAT\nTHE MITCHELL BILL HAS.\nWOULD BE INTERESTED IN\nREPUBLICAN ALTERNATIVE.\nKASSEBAUM\nSUPPORTS\nSIGNED ON TO BAUCUS\nLETTER. CONCERNED\nABOUT ARMS SALES.\nKASTEN\nUNDECIDED\nHAS GRAVE CONCERNS AND IS\nLEANING TOWARD OPPOSING\nMFN UNLESS A GOOD\nALTERNATIVE IS INTRODUCED.\nLOTT\nUNDECIDED\nLUGAR\nSUPPORTS\nPUBLICLY SUPPORTS GEORGE\nBUSH ON THIS ISSUE. IS\nDEBATING MITCHELL ON HIS\nBILL. WILLING TO HELP\nASSIST IN ANY WAY ON\nADMINISTRATION POSITION.\nCOSIGNED BAUCUS LETTER.\nMACK\nLEANING OP.\nVOTED WITH PRESIDENT LAST\nYEAR. UPSET THAT\nPRESIDENT DID NOT FOLLOW\nTHROUGH ON HIS PROMISE TO\nENSURE THAT P.R.C. WOULD\nCHANGE THEIR WAYS. NOT A\nFIRM OPPOSITION BUT HAS\nRELEASED 2 PRESS RELEASES\nTHAT HE HAS A PROBLEM WITH\nMFN FOR CHINA.\nMCCAIN\nUNDECIDED\nIS INCLINED TO SUPPORT\nTHE PRESIDENT BUT IS\nSTILL DEBATING THE ISSUE.\nMCCONNELL\nSUPPORTS\nWOULD BE INTERESTED IN\nCOMPROMISE LEGISLATION.\nMURKOWSKI\nSUPPORTS\nWOULD LIKE TO SEE\nSOMETHING ADDRESSING\nHUMAN RIGHTS ISSUE.\nRANKING MINORITY MEMBER\nOF EAST ASIAN AND PACIFIC\nAFFAIRS SUBCOMMITTEE -\nFOREIGN RELATIONS COMM.\nNICKLES\nSUPPORTS\nHAS CONCERNS ABOUT PRISON\nLABOR AND MISSILE SALES\nBUT IS GENERALLY\nSUPPORTIVE OF PRESIDENT.\nPACKWOOD\nSUPPORTS\nNEEDS ADDITIONAL COVERAGE.\nPRESSLER\nSUPPORTS\nTOLD THE PRESIDENT\nTHAT HE WOULD SUPPORT\nHIM -- BUT DID NOT SAY\nHE WOULD VOTE FOR MFN\nWITHOUT CONDITIONS.\nHAS HUMAN RIGHTS CONCERNS\nAND WOULD BE VERY\nINTERESTED IN LEGISLATION\nWITH CONDITIONS INTRODUCED\nBY REPUBLICANS\nROTH\nUNDECIDED\nSIGNED BAUCUS LETTER. SENT\nLETTER TO PRESIDENT\nCONCERNING TAIWIAN'S\nMEMBERSHIP IN GATT.\nRUDMAN\nSUPPORTS\nSUPPORTS PRESIDENT, BUT\nMIGHT BE INTERESTED IN\nMILD CONDITIONS.\nSEYMOUR\nUNDECIDED\nWOULD LIKE TO SUPPORT\nPRESIDENT, BUT\nREALISTICALLY, HE NEEDS\n\"SOME COVER\" IN CALIF.,\nSO HE WOULD LIKE TO SEE\nMAYBE A HUMAN RIGHTS\nPROVISION AND STILL NEEDS\nTO EVALUATE HIS\nCONSTITUENCIES IN-STATE.\nSMITH\nOPPOSED\nWOULD SUPPORT MFN IF\nSTRONG CONDITIONS WERE\nATTACHED.\nSPECTER\nUNDECIDED\nSTILL STUDYING THE ISSUE.\nSTEVENS\nSUPPORTS\nSTRONG SUPPORTER -- MFN\nWITH NO CONDITIONS.\nSYMMS\nUNDECIDED\nSUPPORTS MILD CONDITIONS.\nSUPPORTS TAIWAN MEMBERSHIP\nTO THE GATT. SEES TAIWAN\nAS MAJOR TRUMP CARD.\nTHURMOND\nSUPPORTS\nVERY CONCERNED OVER THE\nPRISON LABOR ISSUE. MAY\nSIGN ON TO HELMS BILL TO\nPUT SANCTIONS ON PRODUCTS\nPRODUCED BY PRISONERS.\nWALLOP\nOPPOSED\nMITCHELL BILL COSPONSOR.\nBELIEVES THE TIME IS NOW\nTO PUT DOWN OUR FOOT FOR\nCHINA'S HUMAN RIGHTS\nABUSES.\nWARNER\nSUPPORTS\nNOT PREPARED TO GO AGAINST\nANY LEGISLATIVE EFFORT\nTHAT THE ADMINISTRATION\nDOES NOT SUPPORT.\nJune 13, 91\nSENATOR BROCK ADAMS\n3\nSENATOR PAUL WELLSTONE\n4\nSENATOR DANIEL AKAKA\n4\nSENATOR TIMOTHY WIRTH\n4\nSENATOR MAX BAUCUS\nN\nSENATOR HARRIS WOFFORD\n4\nSENATOR LLOYD BENTSEN\nad\nSENATOR JOSEPH BIDEN\n4\nSENATOR JEFF BINGAMAN\n2\nSENATOR DAVID BOREN\n2\n/\nSENATOR BILL BRADLEY\n4\nSENATOR JOHN BREAUX\n2\nSENATOR RICHARD BRYAN\n4\nSENATOR DALE BUMPERS\nSENATOR QUENTIN BURDICK\n2\nSENATOR ROBERT BYRD\nSENATOR KENT CONRAD\n2\nSENATOR ALAN CRANSTON\n4\nSENATOR THOMAS DASCHLE\n2\n\\\nSENATOR DENNIS DECONCINI\n4\nSENATOR ALAN DIXON\n4\nSENATOR CHRISTOPHER DODD\n4\nSENATOR JAMES EXON\na\nSENATOR WENDELL FORD\n4\nSENATOR WYCHE FOWLER\nSENATOR JOHN GLENN\n4\nSENATOR AL GORE\nSENATOR ROBERT GRAHAM\nL\nSENATOR TOM HARKIN\nSENATOR HOWELL HEFLIN\n2\n\\\nSENATOR FRITZ HOLLINGS\n4\nSENATOR DANIEL INOUYE\n5\nSENATOR BENNETT JOHNSTON\n2\nSENATOR TED KENNEDY\n4\nSENATOR JOHN KERRY\n4\nSENATOR BOB KERREY\n4\nSENATOR HERB KOHL\nSENATOR FRANK LAUTENBERG\nSENATOR PATRICK LEAHY\n4\nSENATOR CARL LEVIN\n4\nSENATOR JOSEPH LIEBERMAN\n3\nSENATOR HOWARD METZENBAUM\n4\nSENATOR BARBARA MIKULSKI\nif\nSENATOR GEORGE MITCHELL\n5\nSENATOR DANIEL MOYNIHAN\nL\nSENATOR SAM NUNN\nSENATOR CLAIBORNE PELL\n4\nSENATOR DAVID PRYOR\n2\nSENATOR HARRY REID\nTOTALS\nSENATOR DONALD RIEGLE\n3\nSENATOR CHARLES ROBB\n2\n1.\nNo Conditions\n0\nSENATOR JOHN ROCKEFELLER\n4\n2.\nUndecided on Conditions\n10\nSENATOR TERRY SANFORD\n& 4\n3.\nMild Condition\n3\nSENATOR PAUL SARBANES\n4\n4.\nSupports Mitchell\n29\nSENATOR JIM SASSER\n4\n5.\nOpposes MFN\nSENATOR RICHARD SHELBY\nSENATOR PAUL SIMON\nTHE WHITE HOUSE\nWASHINGTON\nJuly 10, 1991\nMEMORANDUM FOR WHITE HOUSE STAFF MESS MEMBERS\nFROM:\nRICHARD G. TREFRY\nper\nMILITARY ASSISTANT TO THE PRESIDENT\nDuring the period July 15-22, 1991, while the President is\ntravelling, the White House Staff Mess will close after the noon\nmeal is served. There will be no dinner service available during\nthis period.\n#\n11 Breaux- would vote note was - floor. not how he\n#\nSampril- (all Textiles) -Hills\nEag leburge\n#\nDischle- - give\nBropers M9s # to Syria\n#\nLeken bad # staff\nHeflin - textiles - Have you\nBorn - stap Matibill Leaving frund\n#\nWally response will be week\nY\nAbercrombie\nY\nClay\nY\nEvans\nY\nAckerman\nY\nColeman (TX)\nY\nFlake\nY\nAndrews (ME)\nY Collins (IL)\nY\nFoglietta\nY\nAndrews (NJ)\nY\nCollins (MI)\nY\nFord (MI)\nY\nAnnunzio\nY\nCondit\nY\nFord (TN)\nY\nAnthony\nY\nConyers\nY\nFrank (MA)\nY\nApplegate\nY\nCostello\nY\nFrost\nY\nAtkins\nY\nCramer\nY\nGaydos\nY\nBarnard\nY\nDeFazio\nY\nGejdenson\nY\nBennett\nY\nDellums\nY\nGephardt\nY\nBerman\nY\nDerrick\nY\nGonzalez\nY\nBevill\nY\nDixon\nY\nGordon\nY\nBilbray\nY\nDonnelly\nY\nHall (OH)\nY\nBonior\nY\nDowney\nY\nHarris\nY\nBorski\nY\nDurbin\nY\nHatcher\nY\nBoxer\nY\nDwyer\nY\nHayes (IL)\nY\nBrowder\nY\nEarly\nY\nHayes (LA)\nY\nBruce\nY\nEckart\nY\nHefner\nY\nBryant\nY\nEdwards (CA)\nY\nHertel\nY\nBustamante\nY\nEdwards (TX)\nY\nHochbrueckner\nY\nCampbell (CO)\nY\nEngel\nY\nHorn\nY\nCardin\nY\nErdreich\nY\nHoyer\nY\nCarper\nY\nEspy\nY\nHubbard\nROLL NO. 203\nDEMOCRATIC\n-\nYEAS\n-\nY\nHughes\nY\nMartinez\nY\nOwens (UT)\nY\nHutto\nY\nMavroules\nY\nPallone\nY\nJefferson\nY\nMcCurdy\nY\nPanetta\nY\nJenkins\nY\nMcHugh\nY\nParker\nY\nJones (GA)\nY\nMcNulty\nY\nPatterson\nY\nJones (NC)\nY\nMfume\nY\nPayne (NJ)\nY\nKanjorski\nY\nMiller (CA)\nY\nPelosi\nY\nKennedy\nY\nMineta\nY\nPerkins\nY\nKildee\nY\nMink\nY\nPoshard\nY\nKleczka\nY\nMoakley\nY\nPrice\nY\nKolter\nY\nMollohan\nY\nRahall\nY\nKostmayer\nY\nMoran\nY\nRangel\nY\nLaFalce\nY\nMrazek\nY\nRay\nY\nLantos\nY\nNatcher\nY\nRichardson\nY\nLehman (CA)\nY\nNeal (MA)\nY\nRose\nY\nLevin (MI)\nY\nNeal (NC)\nY\nRoybal\nY\nLevine (CA)\nY\nNowak\nY\nRusso\nY\nLewis (GA)\nY\nOakar\nY\nSabo\nY\nLipinski\nY\nOberstar\nY\nSawyer\nY\nLloyd\nY\nObey\nY\nScheuer\nY\nLowey (NY)\nY\nOlin\nY\nSchroeder\nY\nManton\nY\nOlver\nY\nSchumer\nY\nMarkey\nY\nOwens (NY)\nY\nSikorski\nROLL NO. 203\nDEMOCRATIC\n-\nYEAS\n- CONTINUED\nY\nSisisky\nY\nWaters\nY\nSlaughter (NY)\nY\nWaxman\nY\nSmith (FL)\nY\nWeiss\nY\nSpratt\nY\nWheat\nY\nStaggers\nY\nWhitten\nY\nStark\nY\nWilson\nY\nStokes\nY\nWise\nY\nStudds\nY\nWolpe\nY\nSynar\nY\nYates\nY\nTallon\nY\nYatron\nY\nTauzin\nY\nTaylor (MS)\nY\nThomas (GA)\nY\nThornton\nY Torricelli\nY\nTowns\nY\nTraficant\nY\nTraxler\nY\nUnsoeld\nY\nValentine\nY\nVento\nY\nVisclosky\nY\nWashington\nROLL NO. 203\nDEMOCRATIC\n-\nYEAS\n- CONTINUED\nN\nAlexander\nN\nDooley\nN\nLaughlin\nN\nAnderson\nN\nDorgan (ND)\nN\nLehman (FL)\nN\nAndrews (TX)\nN\nDymally\nN\nLong\nN\nAspin\nN\nEnglish\nN\nLuken\nN\nAuCoin\nN\nFascell\nN\nMatsui\nN\nBacchus\nN\nFazio\nN\nMazzoli\nN\nBeilenson\nN\nFeighan\nN\nMcCloskey\nN\nBoucher\nN\nGeren\nN\nMcDermott\nN\nBrewster\nN\nGibbons\nN\nMcMillen (MD)\nN\nBrooks\nN\nGlickman\nN\nMontgomery\nN\nBrown\nN\nGuarini\nN\nMoody\nN\nByron\nN\nHall (TX)\nN\nMurphy\nN\nCarr\nN\nHamilton\nN\nMurtha\nN\nChapman\nN\nHoagland\nN\nNagle\nN\nClement\nN\nHuckaby\nN\nOrtiz\nN\nCooper\nN\nJohnson (SD)\nN\nOrton\nN\nCox (IL)\nN\nJohnston\nN\nPayne (VA)\nN\nCoyne\nN\nJontz\nN\nPease\nN\nDarden\nN\nKaptur\nN\nPenny\nN\nde la Garza\nN\nKennelly\nN\nPeterson (FL)\nN\nDeLauro\nN\nKopetski\nN\nPeterson (MN)\nN\nDicks\nN\nLancaster\nN\nPickett\nN\nDingell\nN\nLaRocco\nN\nPickle\nROLL NO. 203\nDEMOCRATIC\n-\nNAYS\n-\nN\nReed\nN\nRoe\nN\nRoemer\nN\nRostenkowski\nN\nRowland\nN\nSangmeister\nN\nSarpalius\nN\nSavage\nN\nSharp\nN\nSkaggs\nN\nSkelton\nN\nSlattery\nN\nSmith (IA)\nN\nSolarz\nN\nStallings\nN\nStenholm\nN\nSwett\nN\nSwift\nN\nTanner\nN\nTorres\nN\nVolkmer\nN\nWilliams\nN\nWyden\nROLL NO. 203\nDEMOCRATIC -\nNAYS\n- CONTINUED\n- Foley\n- Gray\n- Jacobs\n- Serrano\nROLL NO. 203\nDEMOCRATIC -NOT VOTING -\n7-01-91 2:28p EverFax COCUSA International Division\nPage 1 of 6\n$ CHAMBER OF COMMERC TEL No 2024633114\nJul 1,91 12:00 No .004 P.01\nU.S. Chamber of Commerce\nWashington, D.C. 20062\nCHINA MFN ALERT!!!\nVOTES ARE IMMINENT\nVOTES ARE LIKELY IN BOTH THE HOUSE\nAND SENATE IN THE NEXT COUPLE OF\nWEEKS (BEGINNING JULY 8).\nTHE HOUSE RULES COMMITTEE IS\nEXPECTED TO MEET TO DETERMINE WHAT\nADDITIONAL AMENDMENTS MAY BE\nCONSIDERED. A FULL HOUSE VOTE\nWOULD COME SHORTLY THEREAFTER.\nTHE SENATE MAY ATTEMPT TO SCHEDULE\nA VOTE AROUND THE SAME TIME.\nDON'T BE FOOLED BY SO-CALLED\n\"COMPROMISES\" (E.G., MITCHELL).\nAs WRITTEN, THEY ARE TANTAMOUNT TO\nDENIAL OF MFN.\nPLEASE CONTACT YOUR SENATORS AND\nREPRESENTATIVES AND URGE THEM TO VOTE\n\"NO\" ON ANY BILLS WHICH DENY OR PLACE\nCONDITIONS ON CONTINUED MFN STATUS\nFOR CHINA.\nBush Library Photocopy\nPreservation\n7-01-91 2:28p EverFax COCUSA International Division\nPage 2 of 6\nU. $ CHAMBER OF COMMERC TEL No 2024633114\nJul 1,91 12:00 No 004 P.02\nU.S. Chamber of Commerce\nLEGISLATIVE AND PUBLIC AFFAIRS\n1015 H Street N.W. Washington, D.C. 20062 202/463-5406 Fax 202/453-3173\nJuly 1, 1991\nDonald 1. Kross\nVice President\nIDENTICAL LETTER SENT TO\nALL SENATORS\nThe Honorable Brock Adams\nUnited States Senate\nWashington, D.C. 20510\nDear Senator Adams:\nThe U.S. Chamber of Commerce respectfully urges you to support unconditional\nextension of \"most-favored-nation\" (MFN) trading status for China and to oppose any\nresolutions, such as S. J. Res. 153 (Cranston, D-CA) and S. 1367 (Mitchell, D-ME), which\nwould disapprove, or impose conditions on, continuation of MFN for China.\nFirst, MFN is itself a misnomer; there is nothing preferential or special about it.\nSuch treatment is routine for most industrial nations, and actually less favorable than the\nGeneralized System of Preferences (GSP), a tariff treatment within and augmenting MFN,\ncurrently granted to more than 100 developing countries. While virtually all Americans are\nappalled at the Chinese government's abysmal record on human rights, weapons\nproliferation, and trade policy, terminating MFN will not help to improve that record. On\nthe contrary, denial of MFN will likely worsen these problems by providing the Chinese\ngovernment with an excuse to retaliate against U.S. interests, cement its authoritarian rule,\nand further exclude U.S. political influence from that country. Such an outcome would hurt\nmost the very reform-minded people and sectors we are most interested in helping.\nMoreover, it would jeopardize nearly $5 billion in U.S. exports and more than 100,000 U.S.\njobs that are dependent on those exports. The only real winners in such a scenario would\nbe the hardliners themselves and our Japanese and European competitors, whose\ngovernments have given no indication that they are even considering tampering with MFN.\nEnclosed are some additional materials which explain the importance of MFN in\ngreater detail. Please feel free to contact me, or the Chamber's International Division, (202-\n463-5460), if you have any questions concerning this matter.\nSincerely,\nDonald I conald J. Kroes 9. Kroes\nBush Library Photocopy\nEnclosure\nPreservation\nCONTAPIRITY\nof\nJoin the U.S. Chamber.\nBecause the fight goes on.\nOHIO\n7-01-91 2:28p EverFax COCUSA International Division\nPage 3 of 6\nU. S CHAMBER OF COMMERC TEL No. 2024633114\nJul 1,91 12:00 No. 004 P.03\nU.S. Chamber of Commerce\nLEGISLATIVE AND PUBLIC AFFAIRS\n1615 H Street, N.W. Washington, D.C. 20062 202/463-5406 Fax 202/463-3173\nJuly 1, 1991\nDonald J. Kroes\nVice Prevident\nIDENTICAL LETTER SENT TO\nALL REPRESENTATIVES\nThe Honorable Neil Abercrombie\nHouse of Representatives\nWashington, D.C. 20515\nDear Representative Abercrombie:\nThe U.S. Chamber of Commerce respectfully urges you to support unconditional\nextension of \"most-favored-nation\" (MFN) trading status for China and to oppose any\nresolutions, such as H. J. Res. 263 (Solomon, R-NY) and H.R. 2212 (Pelosi, D-CA), which\nwould disapprove, or impose conditions on, continuation of MFN for China.\nFirst, MFN is itself a misnomer; there is nothing preferential or special about it.\nSuch treatment is routine for most industrial nations, and actually less favorable than the\nGeneralized System of Preferences (GSP), a tariff treatment within and augmenting MFN,\ncurrently granted to more than 100 developing countries. While virtually all Americans are\nappalled at the Chinese government's abysmal record on human rights, weapons\nproliferation, and trade policy, terminating MFN will not help to improve that record. On\nthe contrary, denial of MFN will likely worsen these problems by providing the Chinese\ngovernment with an excuse to retaliate against U.S. interests, cement its authoritarian rule,\nand further exclude U.S. political influence from that country. Such an outcome would hurt\nmost the very reform-minded people and sectors we are most interested in helping.\nMoreover, it would jeopardize nearly $5 billion in U.S. exports and more than 100,000 U.S.\njobs that are dependent on those exports. The only real winners in such a scenario would\nbe the hardliners themselves and our Japanese and European competitors, whose\ngovernments have given no indication that they are even considering tampering with MFN.\nEnclosed are some additional materials which explain the importance of MFN in\ngreater detail. Please feel free to contact me, or the Chamber's International Division, (202-\n463-5460), if you have any questions concerning this matter.\nSincerely,\nIndd 9. Kines\nDonald J. Kroes\nEnclosure\nBush Library Photocopy\nPreservation\nOF\nEXPARTMENT\nJoin the U.S. Chamber.\nBecause the fight goes on.\nONLINE\n7-01-91 2:28p EverFax COCUSA International Division\nPage 4 of 6\nU $ CHAMBER OF COMMERC TEL No. 2024633114\nJul 1,91 12:00 No. 004 P.04\nU.S. Chamber of Commerce\nFACT SHEET ON SO-CALLED\n\"MOST FAVORED NATION\" STATUS FOR CHINA\nThe U.S. Chamber of Commerce supports extension of \"most favored nation\" (MFN) status for the Peoples\nRepublic of China (PRC) as the best means of advancing U.S. national interests, including market-oriented\nand democratic economic and political reform efforts in that country.\nWHAT IS \"MOST FAVORED NATION\" STATUS?\nStandard tariff treatment extended to over 160 countries. Only eleven countries are currently denied\nMFN status.\nNeither special nor preferential.\nShared with many countries with whom we have significant policy disagreements.\nWHY IS MOST FAVORED NATION STATUS so IMPORTANT?\nFoundation for all Sino-U.S. commercial relations, which have taken a decade to build.\nProvides basis for continued business with one-fourth of the world's population.\nBusiness contact encourages political and economic reform in China.\nLoss of MFN would spark Chinese retaliation, threatening $5 billion in U.S. exports and over 100,000\nU.S. jobs.\nNone of our trading competitors is even considering tampering with China's MFN status. The primary\nbeneficiaries of a unilateral U.S. pullout would be the hardline central government and our Japanese and\nEuropean competitors.\nTermination of MFN would seriously damage the Hong Kong economy and the most progressive and\nmarket-oriented coastal provinces which support reform.\nU.S. leverage on the full range of our priorities with China, e.g., trade, weapons proliferation, human\nrights, would be sharply reduced if MFN were terminated.\nWHY NOT IMPOSE CONDITIONS IN EXCHANGE FOR\nCONTINUED MOST FAVORED NATION STATUS?\nChinese are likely to reject such conditions as a violation of their sovereignty.\nThe U.S. is already using existing trade law, export controls, suspension of military and nuclear\ncooperation, and other methods to address our various problems with China.\nConditionality would create a huge cloud of uncertainty for U.S. firms dealing with China. This\nuncertainty would lead to a disengagement of U.S. business that would undermine larger U.S. interests.\nOF\nBush Library Photocopy\nJoin the U.S. Chamber.\nBecause the fight goes on.\nPreservation\n7-01-91 2:28p EverFax COCUSA International Division\nPage 5 of 6\nS CHAMBER OF COMMERC TEL No. 2024633114\nJul 1,91 12:00 No. 004 P.05\nU.S. Chamber of Commerce\nWHO WINS AND LOSES IF CHINA'S \"MOST\nFAVORED NATION\" STATUS IS TERMINATED?\nLOSERS\nWINNERS\nPolitical moderates in China. Termination of\nChina's hardline central government. The\nMFN would effectively cut the legs out from\ncentral government is struggling to retain state\nunder the moderates by providing the Chinese\ncontrol and stifle dissent. Withdrawing MFN\nregime with a pretext to cut off whatever\nwill serve as justification for the central\ncontacts with the U.S. currently exist.\ngovernment to clamp down on the export\nmarket by claiming that further opening of the\nU.S. exporters. Loss of MFN will trigger\nChinese market will only make them more\nChinese retaliation against U.S. exporters.\nvulnerable to foreign interference. The result:\nAbout $5 billion in U.S. exports and the\nliberal, market-oriented reformers will lose\n110,000 U.S. jobs they represent would be\nclout.\njeopardized, as China would either purchase\nsimilar products from Japan or Europe, or\nOur Japanese and European competition. No\nforego them altogether. Investment and long-\nother advanced industrial nation with whom\nterm business relations would also be severely\nChina trades has given any indication that they\nweakened.\nwill terminate MFN status for China, or that\ntermination of MFN status would serve their\nAmerican consumers and retailers. American\ninterests. The business U.S. companies lose,\nconsumers would pay a higher price for textiles,\nand the influence the U.S. government loses,\nelectrical appliances, toys, footwear, apparel\nwill simply be picked up by our competitors.\nand other items where China is the low-cost\nsupplier.\nHong Kong. Over half of all American imports\nfrom China come through Hong Kong.\nTermination of MFN will significantly hinder\ntheir banking, insurance, shipping, and legal\nservices resulting in the loss of up to 43,000\njobs and nearly $12 billion in trade.\nThe \"semi-private\" sector in China. China's\ncoastal provinces produce most of China's\nexports to the U.S. It is no coincidence that\nthese export-oriented provinces are also most\npro-reform and most resistant to central control\nfrom Beijing. Removing MFN would damage\nthese provinces and seriously weaken the most\nprogressive forces in contemporary China.\nBush Library Photocopy\nPreservation\nOF\nJoin the U.S. Chamber.\nBecause the fight goes on.\n-7-01-91 2:28p EverFax COCUSA International Division\nPage 6 of\n$ CHAMBER OF COMMERC TEL No. 2024633114\nJul 1,91 12:00 No. 004 P.06\nU.S. Chamber of Commerce\nMYTHS ABOUT CHINA MFN\nMyth\n#1: Most-favored nation status is a reward granted by the United States to selected countries\non 8 preferred basis.\nReality:\nIn fact, MFN tariff treatment is actually less favorable than that which the U.S. provides\nto the vast majority of our trading partners. The United States has MFN treatment with\n160 countries. Such treatment provides that nations will not use tariff rates to\ndiscriminate against other nations. However, over 100 developing countries also receive\nadditional tariff benefits under the Generalized System of Preferences (GSP), in order to\npromote trade-based economic development. Only 11 countries do not enjoy the benefits\nof GSF or an MFN relationship with the United States. Terminating MFN for China, a\ndeveloping country, would deny tariff treatment that is not only routine for most\ndeveloped countries, but also already less favorable than that accorded many other\ndeveloping countries.\nMyth #2:\nRemoving MFN for China will improve human rights conditions in China.\nReality:\nMFN removal will most hurt the progressive, outward-oriented coastal provinces of China\nsupportive of economic and political reform. The conservative hard liners in Beijing will\nalso use MFN loss as a rationale to tighten control and delay reform. Chinese contact\nwith U.S. firms has been a force for positive change; MFN removal will seriously reduce\nthis presence and lessen U.S. influence across the board.\nMyth #3:\nSince 1989, the United States has ignored Chinese violations of human rights, non-\nprofiferation, and trade practice standards. Removing MFN Is needed to signal\nAmerican disapproval of Chinese behavior.\nReality:\nThe U.S. Government imposed various trade sanctions against China following the\nTiananmen Square crackdown. These remain essentially in effect. In contrast, Japan\nand the European Community have relaxed their sanctions. In addition, the President\nrecently prohibited the sale of technology to China for a satellite project and designated\nChina for trade action for violation of U.S. intellectual property rights.\nMyth #4:\nExtending MFN for China only if the Chinese meet quantifiable criteria in human\nrights, trade, and other areas as determined by the U.S. Congress would be a viable\nReality:\nalternative. Attaching tough conditions to MFN extension is tantamount to delayed removal. The\nChinese would be unable to meet such conditions and would resist changing their\nbehavior if pressured publicly to do so under the threat of MFN loss. Subject. ; the\nfoundation of our trading relations with China to an annual progress report on a host of\nnon-trade criteria will create an enormous cloud of uncertainty for U.S. firms doing\nbusiness with China. Many firms will simply pull out of China or stop trading rather than\nface this unpredictability. Such disengagement from China will only undercut our long-\nterm national interests.\nBush Library Photocopy\nPreservation\nOF EXTERNED\nJoin the U.S. Chamber.\nBecause the fight goes on.\n9th Hame\nall letters out ASAP\n3 letters 5\n4 area\nPreservation\nBush Library Photocopy\nU.S. Senate\nRepublican Policy\nLegislative Notice\nCommittee\nDon Nickles, Chairman\nEditor. Judy Gorman Prinkey\nRick Lawson, Staff Director\nNo. 24\nJuly 16, 1991\nS. 1367 - United States-China Act of 1991\nCalendar No. 149\nReported:\nFrom the Finance Committee, without recommendation, on July 9, 1991 on\na straight party-line vote of 11-9. Hearings were held June 19-20. S. Rept.\n102-101. No minority views filed.\nNOTEWORTHY\nS. 1367 requires the immediate withdrawal of non-discriminatory trade status -\nusually called \"Most-Favored-Nation\" (MFN) status - from the People's Republic\nof China (PRC) 15 days after enactment if the President has not certified that the PRC\nhas not transferred certain missiles and launchers to specified countries.\nS. 1367 also forbids the extension of MFN status after July 3, 1992, unless the PRC\nmeets other enumerated conditions.\nS. 1367 is a more stringent version of H.R. 2212, which passed the House of\nRepresentatives (313-112) on July 10. The same day, by a margin of 223-204, the\nHouse passed H.J. Res. 263, an outright disapproval of MFN, not subject to any\nconditions, which is identical in its provisions to S.J. Res. 153. (Summaries of H.R.\n2212, S.J. Res. 153, and H.J. Res 263 are included in this Notice.)\nThe President's senior advisors will recommend a veto of either S. 1367 or\nS.J. Res. 153.\nHIGHLIGHTS\nOn May 29, President Bush recommended continuation of the PRC's MFN status under\nthe Jackson-Vanik waiver for the 12-month period beginning July 3, 1991. The PRC's\neligibility for MFN expires on July 3 of each year, unless the President recommends\nextension by June 3. (See \"Background,\" below, for fuller procedural explanation.)\nBased on the PRC's suppression of the democracy movement in 1989, continued human\nrights abuses, and other incidents (such as involvement in proliferation of certain\nmilitary technology), supporters of S. 1367 believe that MFN should not be renewed\nunless the PRC's record improves.\nPassage of S. 1367 (or H.R. 2212) could allow the PRC's MFN status to continue for\nanother year. But this would be the last year under which the PRC could receive MFN\nsimply pursuant to the Jackson-Vanik waiver procedure. Beginning in July 1992, the\nnew standards established by this legislation would apply.\nHowever, under Section 4 of S. 1367, MFN would have to be withdrawn immediately\n(i.e., 15 days after enactment) if the President had not certified that the PRC had not\ntransferred certain missiles and launchers to specified countries. (No parallel provision\nexists in H.R. 2212.)\nBACKGROUND\nWhat MFN Really Is\nThe principle of non-discriminatory trade treatment (more commonly known as\n\"Most-Favored-Nation\" [MFN] treatment) is of long standing and is one of the basic\nelements of international trade. In general, MFN status refers to trade concessions the\nUnited States accords to a trading partner that are as good as those we accord to all other\ncountries that are \"most favored\" in their trade relations with us. The result is that all\ncountries normally are given MFN treatment and are treated equally, unless they are\nspecifically denied MFN. MFN works by exclusion, not inclusion; countries have MFN\nstatus unless they are specifically denied it.\nAs President Bush stated in his May 27 remarks at Yale University, \"MFN is not special.\nIt is not a favor. It is the ordinary basis of trade world-wide.\"\nIn the context of U.S. tariff legislation, MFN treatment means that products exported\nfrom MFN countries to the United States are subject to lower rates of duty (found in\nColumn 1 of the U.S. Tariff Schedules). Non-MFN countries are subject to the higher rates\nfound in Column 2. Thus, MFN means the more favorable, regular status accorded to the\nvast majority of U.S. trading partners. In some cases, the tariff rates between Column 1\nand Column 2 differ by a factor of 10. It is not certain how much PRC exports to the United\nStates might decrease if they were charged the higher Column 2 duties.\nJackson-Vanik\nAlong with all other communist countries (except Yugoslavia) the PRC's eligibility for\nMFN status was revoked under the Trade Agreements Extension Act of 1951. This\nineligibility was modified in 1974 by the Jackson-Vanik amendment (Section 402 of the\nTrade Act of 1974, P.L. 93-618; 19 USC 2432), pursuant to which communist countries\ncan receive MFN status only if (1) the country permits free emigration or (2) the President\ndetermines that a waiver of this requirement would promote free emigration and other\nfundamental human rights. The PRC was first granted MFN status upon a waiver from\nPresident Jimmy Carter in 1980.\n2\nA waiver granting MFN under Jackson-Vanik must be reviewed yearly; the President\nmust recertify the eligibility of the country in question each year. Prior to the Chadha\ndecision by the U.S. Supreme Court in 1983, a one-house veto of the President's\ncertification was provided for in Jackson-Vanik; now, post-Chadha, a resolution of\ndisapproval (such as S.J.Res. 153 and H.J. Res. 263) must be passed by both houses, and\nis subject to presidential veto.\nThe President called for renewal of the PRC's MFN status on May 29, prior to the June\n3 deadline, to prevent MFN from expiring on July 3. The resolution of disapproval must\nbe passed by August 31, i.e., 60 days from the date MFN would have expired except for\nthe President's action, as specified in Jackson-Vanik (though now, it must be passed by\nboth houses). This procedure applies to both S.J. Res. 153 and H.J. Res. 263. With regard\nto the Senate floor, S.J. Res. 153 is subject to expedited procedures (specified in Section\n153 of the 1974 Trade Act, 19 USC 2193), consisting of 20 hours of debate equally divided.\nIt is not amendable.\nOn the other hand, S. 1367 and H.R. 2212 are not worded as resolutions of disapproval\nof the yearly Jackson-Vanik recertification and are not subject to the 60-day limit nor\nexpedited procedures. However, the Majority Leader has expressed his hope that the\nSenate might act on this bill in July.\nBILL PROVISIONS\nSection 3 concerns Most-Favored-Nation status continuation:\nNotwithstanding any other provision of law, the President may not provide MFN status\nto the PRC under the Jackson-Vanik procedure after July 3, 1992 unless he reports that the\nPRC has (1) accounted for citizens detained, accused, or sentenced on account of\nnonviolent political expression; (2) released such citizens; (3) ceased exporting\nforced-labor goods to the United States; and (4) ceased supplying military assistance to\nthe Khmer Rouge.\nIn addition, (5) the PRC must have made significant progress in (A) fulfilling its\ncommitment to engage in high-level discussions on human rights issues; (B) taking action\nto prevent human rights violations in China and Tibet; (C) terminating the harassment of\nPRC citizens in the United States; (D) ensuring access of international human rights\nmonitors to prisoners, trials, and places of detention; (E) providing adequate protection for\nU.S. intellectual property rights; (F) removing trade barriers and increasing U.S. imports;\nand (G) adopting a policy that adheres to international standards on weapons proliferation.\nFinally, (6) the PRC must be adhering to the Joint Declaration on Hong Kong between\nthe PRC and the United Kingdom.\n3\nSection 4 addresses the contingency for immediate termination of MFN:\n(a) Effective 15 days after enactment, the PRC must be denied MFN unless the\nPresident certifies to the Congress that the PRC has not transferred M-9 or M-11 ballistic\nmissile launchers to Syria or Iran, and has not transferred M-9 missiles or missile launchers\nor M-11 missiles to Pakistan.\n(b) If, at any time after enactment, the President determines that any transfer described\nin subsection (a) has occurred, he must immediately notify Congress and revoke the PRC's\nMFN status.\nDifferences Between Senate and House Bills (S. 1367 and H.R. 2212)\nIn general, H.R. 2212 contains far less stringent conditions than S. 1367. The Senate\nbill includes in substance all the conditions of the House-passed measure. However, with\nreference to S. 1367, H.R. 2212 includes no parallel provisions to the following sections\nof the Senate bill:\nSec. 2.\nFindings. There is no statement of findings or policy by the Congress in the\nHouse bill. In S. 1367, the bill's Section 2 makes a number of findings, relating\nto the PRC's violations of human rights and misbehavior abroad, such as\nsupport for the Khmer Rouge in Cambodia and weapons proliferation.\nSec. 3.\nThere are no conditions in the House bill parallel to those in S. 1367 requiring\nthe PRC to (3) cease export of forced-labor goods to the United States; (4) cease\nmilitary assistance to the Khmer Rouge in Cambodia; or requiring progress in\n(5)(A) fulfilling commitments to engage in discussions on human rights, (E)\nproviding protection to U.S. intellectual property rights, (F) improving trade\npractices, or (G) adopting international standards on weapons proliferation.\nSec. 4.\nThere is no provision in H.R. 2212 requiring the denial of MFN based on M-9\nand M-11 missile and missile launcher sales.\nResolutions of Disapproval (S.J. Res. 153 and H.J. Res. 263)\nThese are resolutions of disapproval, as specified in the Jackson-Vanik language, and\nboth contain the identical operative language, quoted below in its entirety:\n\"Resolved by the Senate and House of Representatives of the United States of\nAmerica in Congress assembled, That the Congress does not approve the extension\nof the authority contained in section 402(c) of the Trade Act of 1974 recommended\nby the President to the Congress on May 29, 1991, with respect to the People's\nRepublic of China.\"\n4\nADMINISTRATION POSITION\n[Excerpts]\n\"The Administration strongly opposes S.J.Res. 153, which would deny China\nmost-favored-nation (MFN) trade status, and S. 1367, which would place additional\nconditions on MFN renewal.\n\"Extension of MFN substantially promotes U.S. freedom of emigration and travel\nobjectives, and its withdrawal would place at risk the substantial gains already achieved\nin these areas.\n\"Extension of MFN is also important for promoting reform in China.\nMillions of\nChinese depend on a healthy commercial relationship to justify business and social contacts\nwith the United States.\n\"A fundamental pillar of our relationship with the Chinese people, MFN is essential if\nwe are to stay engaged on a broad range of issues, including human rights, nonproliferation,\nprison labor exports, and trade. Eliminating MFN would seriously erode our ability to\ninfluence Chinese behavior on these issues. It would also hurt U.S. exporters and\nconsumers, and undermine confidence in Hong Kong where the United States has\nsubstantial economic interests.\n\"Conditional renewal is not acceptable because it would make China less likely to\nrespond to U.S. concerns. Hardline Chinese leaders would claim that national honor and\nsovereignty preclude any concessions to the United States.\n\"Where particular issues are unresolved and the Chinese are not forthcoming, the\nPresident has the tools necessary to pursue U.S. interests in a targeted fashion. MFN's\nwithdrawal is the wrong tool because of its indiscriminate impact and adverse effect on all\nChinese, particularly those who continue to seek reform. The Administration believes that\nMFN should be renewed unconditionally now on its own merits, as the most effective\nmeans for influencing China's behavior on a range of U.S. interests.\"\nBIPARTISAN SENATE REQUEST FOR EXECUTIVE ACTION\nA position on U.S. policy towards the PRC that does not involve either revocation or\nconditioning of MFN was signalled in a letter to President Bush on June 19. Signed by\n15 Senators (nine of them Republicans, including Republican Leader Dole and Republican\nWhip Simpson), the letter expresses concern over the PRC's human rights and foreign\npolicy record. Singled out is the PRC's behavior with respect to missile sales to Syria and\nPakistan, nuclear technology sales to Algeria, and export to the U.S. of forced-labor\nproducts. In addition, the Senators note their \"serious concerns\" on economic matters,\nincluding trade barriers, failure to protect U.S. intellectual property rights, and the\nAdministration's having allowed the PRC \"to dictate U.S. policy towards Taiwan\" by\n\"declining to support Taiwan's GATT application despite clear economic benefits to the\nU.S.\"\n5\nHowever, in addressing these concerns, the Senators agree with the President's position\non MFN: \"But MFN is the wrong tool for the job. Revoking MFN would not promote\nhuman rights in China. Instead, it would punish China's most progressive regions and\nHong Kong. Revoking MFN would also hurt Americans. China is an important market\nfor U.S. goods ranging from wheat to airplanes. If MFN were revoked, China almost\ncertainly would retaliate against U.S. exports. The Australians, Canadians, Europeans and\nJapanese are ready to fill the void. No other country is contemplating cutting off China's\nMFN status.\"\nThe Senators note meaningful steps already taken by the President, such as moves to\nprotect intellectual property under the 1988 Trade Act and steps to restrict technology\ntransfers. They urge additional measures, such as opposing multilateral loans for the PRC,\ntaking action under U.S. law to address trade barriers and forced-labor imports, negotiating\nfor multilateral controls on nuclear and missile proliferation, and supporting Taiwan's\nGATT membership.\nCOSTS\nThe Congressional Budget Offices expects S. 1367 would have no budgetary effects\nthrough FY 1996.\nPOSSIBLE AMENDMENTS\nGorton Substitute bill (S. 1469): Similar to S. 1367, without corresponding provisions\nrelating to Khmer Rouge (Sec. (3)(4)) or immediate termination of MFN for missile\ntransfers (Sec. 4).\nHelms: Forced labor.\nGorton: Chinese students.\nMikulski: Tying MFN to cessation of forced abortion.\nLugar: Administration substitute.\nAdams: Chinese students.\nMEDIA REFERENCES\n\"GOP Loyalty to Bush May Be Key in Fight Over China Status,\" Congressional\nQuarterly Weekly Report, June 29, 1991, pp. 1737-1741.\n\"Baucus Pitted in Fight Over China's MFN Status,\" The Washington Post, July 14,\n1991, p. A6.\nStaff Contact: Jim Jatras, 224-2946\n6\nIN PROGRESS: ROLL NO. 203\nYEA-AND-NAY\nTIME REMAINING FINAL\nAUTHOR (S) :\n~\nON PASSAGE\n~\nDISAPPROVING THE EXTENTION OF MOST FAVORED NATION TREATMENT\n~\nTO THE PRODUCTS OF CHINA\nH J RES 263\nYEA\nNAY\nPRES\nNOT\nVOTING\nDEMOCRATIC\n171\n92\n4\nREPUBLICAN\n51\n112\n3\nINDEPENDENT\n1\nTOTALS\n223\n204\n7\nTIME REMAINING FINAL\nY\nBallenger\nY\nMcEwen\nY\nStearns\nY\nBarton\nY\nMcGrath\nY\nWalker\nY\nBunning\nY\nMcMillan (NC)\nY\nWeldon\nY\nBurton\nY\nMolinari\nY\nWolf\nY\nCoble\nY\nMoorhead\nY\nWylie\nY\nCox (CA)\nY\nMorella\nY\nDannemeyer\nY\nPaxon\nY\nDickinson\nY\nPorter\nY\nDoolittle\nY\nQuillen\nY\nDornan (CA)\nY\nRavenel\nY\nDuncan\nY\nRidge\nY\nEdwards (OK)\nY\nRiggs\nY\nFish\nY\nRitter\nY\nGilman\nY\nRogers\nY\nHancock\nY\nRohrabacher\nY\nHefley\nY\nRos-Lehtinen\nY\nHerger\nY\nSchulze\nY\nHunter\nY\nSensenbrenner\nY\nJames\nY\nShuster\nY\nKasich\nY\nSmith (NJ)\nY\nKyl\nY\nSmith (TX)\nY\nLewis (FL)\nY\nSnowe\nY\nMcCandless\nY\nSolomon\nROLL NO. 203\nREPUBLICAN\n-\nYEAS\n-\nN\nAllard\nN\nDavis\nN\nHobson\nN\nArcher\nN\nDreier\nN\nHolloway\nN\nArmey\nN\nEmerson\nN\nHorton\nN\nBaker\nN\nEwing\nN\nHoughton\nN\nBarrett\nN\nFawell\nN\nHyde\nN\nBateman\nN\nFields\nN\nIreland\nN\nBentley\nN\nFranks (CT)\nN\nJohnson (CT)\nN\nBereuter\nN\nGallegly\nN\nJohnson (TX)\nN\nBilirakis\nN\nGallo\nN\nKlug\nN\nBliley\nN\nGekas\nN\nKolbe\nN\nBoehlert\nN\nGilchrest\nN\nLagomarsino\nN Boehner\nN\nGillmor\nN\nLeach\nN\nBroomfield\nN\nGingrich\nN\nLent\nN Callahan\nN\nGoodling\nN\nLewis (CA)\nN\nCamp\nN Goss\nN\nLightfoot\nN\nCampbell (CA)\nN\nGradison\nN\nLivingston\nN\nChandler\nN\nGrandy\nN\nLowery (CA)\nN Clinger\nN\nGreen\nN\nMachtley\nN\nColeman (MO)\nN\nGunderson\nN Marlenee\nN Combest\nN Hammerschmidt\nN\nMartin\nN\nCoughlin\nN Hansen\nN\nMcCollum\nN\nCrane\nN Hastert\nN\nMcCrery\nN Cunningham\nN\nHenry\nN\nMcDade\nROLL NO. 203\nREPUBLICAN\n-\nNAYS\n-\nN\nMeyers\nN\nShaw\nN\nMichel\nN\nShays\nN\nMiller (OH)\nN\nSkeen\nN\nMiller (WA)\nN\nSlaughter (VA)\nN\nMorrison\nN\nSmith (OR)\nN\nMyers\nN Spence\nN\nNichols\nN\nStump\nN\nNussle\nN\nSundquist\nN\nOxley\nN\nTaylor (NC)\nN\nPackard\nN\nThomas (CA)\nN Petri\nN\nThomas (WY)\nN\nPursell\nN\nUpton\nN\nRamstad\nN\nVander Jagt\nN\nRegula\nN Vucanovich\nN\nRhodes\nN Walsh\nN Rinaldo\nN Weber\nN\nRoberts\nN\nYoung (AK)\nN\nRoth\nN\nYoung (FL)\nN\nRoukema\nN Zeliff\nN\nSantorum\nN Zimmer\nN\nSaxton\nN\nSchaefer\nN\nSchiff\nROLL NO. 203\nREPUBLICAN -\nNAYS\n- CONTINUED\n-\nDeLay\n- Hopkins\n- Inhofe\nROLL NO. 203\nREPUBLICAN -NOT VOTING -\n34-W)LOTT\n1-3-41\n3 - Cohen, Jeft, Brown\n6-\n1\nCchen\nSENATOR CHRISTOPHER BOND\nSENATOR HANK BROWN\n24 /3\nJettords\nSENATOR CONRAD BURNS\n1\nBrown\nSENATOR JOHN CHAFEE\n1\nSENATOR DAN COATS\n2\nSENATOR THAD COCHRAN\n1\nSENATOR WILLIAM COHEN\n3\nSENATOR LARRY CRAIG\n1\nSENATOR ALFONSE D'AMATO\n4\nSENATOR JOHN DANFORTH\n1\nSENATOR ROBERT DOLE\n1\n1\n6\nSENATOR PETE DOMENICI\n1\nSENATOR DAVE DURENBERGER\n1.\nwill\nSENATOR JAKE GARN\n1>\nsmith\nSENATOR SLADE GORTON\n3\nsoft\nSENATOR PHIL GRAMM\n1\nMIC\nSENATOR CHARLES GRASSLEY\n1.\nDA\nSENATOR ORRIN HATCH\n1.\nSENATOR MARK HATFIELD\n1.\nHelas\nSENATOR JESSE HELMS\n5\nGart\nSENATOR JAMES JEFFORDS\n3\nSENATOR NANCY KASSEBAUM\n1\nSENATOR ROBERT KASTEN\n$1.\n*\nSENATOR TRENT LOTT\n2\nSENATOR RICHARD LUGAR\n1.\nSENATOR CONNIE MACK\n5\nSENATOR JOHN MCCAIN\n1\nSENATOR MITCH MCCONNELL\n1.\nSENATOR FRANK MURKOWSKI\n1.\nSENATOR DON NICKLES\n1.\nSENATOR BOB PACKWOOD\n1.\nSENATOR LARRY PRESSLER\n1.\nSENATOR WILLIAM ROTH\n1.\nSENATOR WARREN RUDMAN\n1.\nSENATOR JOHN SEYMOUR\n11\nSENATOR ALAN SIMPSON\n1.\nSENATOR ROBERT SMITH\n5\nSENATOR ARLEN SPECTER\n&\nSENATOR TED STEVENS\n1.\nSENATOR STEVEN SYMMS\n1-\nSENATOR STROM THURMOND\n1.\nSENATOR MALCOLM WALLOP\n#3\nSENATOR JOHN WARNER\n1.\nTOTALS\n1.\nNo Conditions\nAM 31\n31\n33( Corth, Kisten)\n2.\nUndecided on Conditions\nW 4 3\n3\n3.\nMild Condition\nb 4\n4\n4.\nSupports Mitchell\n2\n2\n5.\nOpposes MFN\n3\n3\n51\nLOTT 2. (34)\nWzllop\nTHE WHITE HOUSE\nWASHINGTON\nRECOMMENDED TELEPHONE CALL BY THE PRESIDENT\nTO:\nSenator James Jeffords (R-VT)\nDATE:\nJuly 22, 1991\nRECOMMENDED BY:\nFrederick D. McClure\nPURPOSE:\nTo urge Senator Jeffords to support Most\nFavored Nation trade status for China.\nBACKGROUND:\nToday the Senate begins work on the Mitchell\nbill providing conditional Most Favored\nNation trade status for China. Senator\nJeffords is the lone remaining undecided vote\non this matter. He has told us he is most\nconcerned about China's human rights policy\nand, while he wants to be helpful, he has not\nyet agreed to oppose the Mitchell bill and\nsupport our position. A phone call from you,\nassuring him that human rights policy is the\ncorrect one, will help us secure his vote.\nKEY POINTS:\n:\nJim, I hope you had a chance to read my\nletter to Max Baucus and Bob Dole\noutlining my China policy. I understand\nyou have strong concerns about China's\nhuman rights violations.\n:\nBelieve me, I share those concerns, and\nwe are making every possible effort to\nimprove China's human rights policy, but\nI cannot make real progress on human\nrights by denying MFN to China -- or\nworse, putting conditions on it.\n-- Jim, you have my strong commitment on\nthis area, but I need your vote against\nthe Mitchell bill.\n--\nCan I count on you to help me with this\ndifficult problem?\nDATE OF\nSUBMISSION:\nJuly 22, 1991\n-2-\nACTION:\nREPUBLICANS\nDEMOCRATS\n+ L+ U L -\n+LUE- -\n-\nBond\nAdams\nM\nBrown\nAkaka\nof\nBurns\nBaucus\nChafee\nBentsen\n-\nBiden\nM\nCoats\nCochran\nBingaman\n? Cohen\n? Boren\nCraig\n1\n? Bradley\nD'Amato\nM\nBreaux\n-\nDanforth\nBryan\n3\nDole\nd\nBumpers\nDomenici\nBurdick\nDurenberger\n?Byrd\nConrad\nas\n? Garn\n? Gorton\n-\nCranston\nGramm\n? Daschle\nDeConcini\nGrassley\nHatch\nDixon\n? Hatfield\n*\nDodd\nHelms\n-\nExon\n-\n:\n? Jeffords\nFord\nKassebaum\nal\n? Fowler\nKasten\n-\nGlenn\nM M M M M M M M M M M M M M M M - M M M M M M M M M\nLott\n-\n? Gore\nLugar\n&\nGraham\nMack\n-\n? Harkin\nMcCain\nHeflin\nMcConnell\nHollings\nMurkowski\nB\nInouye\nNickles\nJohnston\nB\nPackwood *\n-\nKennedy\nPressler\nKerrey\nRoth\nd\nKerry\nRudman\n-\n?Kohl\n-\nSeymour\n#\n-\nLautenberg\nSimpson\nal\nLeahy\nSmith\n-\nLevin\n? Specter\n-\nLieberman\n-\nStevens\nMetzenbaum\n*\nSymms\n-\nMikulski\nThurmond\nMitchell\nWallop\nM\nMoynihan\nWarner\n? Nunn\nPell\n? Pryor\n43\n? Reid\nRiegle\n? Robb\nRockefeller\nM-MITCHELL COSPONSORY\nSanford\n- BAUCUS LETTER SIGNATORY\nSarbanes\nSasser\n? - POSITION UNKNOWN\nShelby\nat\nSimon\nUNDERLINED- HASBEEN TO W.H\nWellstone\n- KIMMITT MTG SUGGESTED\nWirth\nWofford\n2/18\nSENATOR CHRISTOPHER BOND\nSENATOR HANK BROWN\nSENATOR CONRAD BURNS\nSENATOR JOHN CHAFEE\nSENATOR DAN COATS\nSENATOR THAD COCHRAN\nSENATOR WILLIAM COHEN\nSENATOR LARRY CRAIG\nSENATOR ALFONSE D'AMATO\nSENATOR JOHN DANFORTH\nSENATOR ROBERT DOLE\nSENATOR PETE DOMENICI\nSENATOR DAVE DURENBERGER\nSENATOR JAKE GARN\nSENATOR SLADE GORTON\nSENATOR PHIL GRAMM\nSENATOR CHARLES GRASSLEY\nSENATOR ORRIN HATCH\nSENATOR MARK HATFIELD\nSENATOR JESSE HELMS\nSENATOR JAMES JEFFORDS\nSENATOR NANCY KASSEBAUM\nSENATOR ROBERT KASTEN\nSENATOR TRENT LOTT\nSENATOR RICHARD LUGAR\nSENATOR CONNIE MACK\nSENATOR JOHN MCCAIN\nSENATOR MITCH MCCONNELL\nSENATOR FRANK MURKOWSKI\nSENATOR DON NICKLES\nSENATOR BOB PACKWOOD\nSENATOR LARRY PRESSLER\nSENATOR WILLIAM ROTH\nSENATOR WARREN RUDMAN\nSENATOR JOHN SEYMOUR\nSENATOR ALAN SIMPSON\nSENATOR ROBERT SMITH\nSENATOR ARLEN SPECTER\nSENATOR TED STEVENS\nSENATOR STEVEN SYMMS\nSENATOR STROM THURMOND\nSENATOR MALCOLM WALLOP\nSENATOR JOHN WARNER\nTOTALS\n1.\nNo Conditions\n2.\nUndecided on Conditions\n3.\nMild Condition\n4.\nSupports Mitchell\n5.\nOpposes MFN\nCRA91.332\nS.L.C.\nAMENDMENT NO.\nCalendar No.\nPurpose: To express Congress' findings with respect to the\ntrade practices of the People's Republic of China, to\nspecify additional areas of trade in which the People's\nRepublic of China needs to make significant progress, to\nrequire the President to take action with respect to cer-\ntain trade practices and human rights violations, and for\nother purposes.\nIN THE SENATE OF THE UNITED STATES-102d Cong-, 1st Sess.\nS. 1367\nTo extend to the People's Republic of China renewal of\nnondiscriminatory (most-favored-nation) treatment until\n1992 provided certain conditions are met.\nReferred to the Committee on\nand ordered to be printed\nOrdered to lie oh the table and to be printed\nAMENDMENTS intended to be proposed by Mr. BINGAMAN\nViz:\n1\nOn page 4, between lines 23 and 24, insert the follow-\n2 ing:\n3\n(10) The United States has failed to use existing laws\n4 and other means to respond to, prevent, or discourage the\n5 People's Republic of China from-\nAMENDMENT No.\n802\nBy\nBingaman\nBill/Res. No.\n5.1367\n4pqs\nCRA91332\nS.L.C.\n2\n1\n(A) committing violations of internationally rec-\n2\nognized human rights, including the rights of the\n3\npeople of Tibet;\n4\n(B) taking action that results in the proliferation\n5\nof dangerous military technology and weapons; and\n6\n(C) engaging in unfair trade practices against\n7\nthe United States.\n8\n(11) The Government of the People's Republic of\n9 China is engaging in unfair trade practices against the\n10 United States which are unreasonable and discriminatory\n11 and burden and restrict United States commerce by failing\n12 to protect intellectual property rights, raising tariffs, em-\n13 ploying regulatory taxes as a surcharge to tariffs, using dis-\n14 criminatory customs rates, imposing import quotas and\n15 other quantitative restrictions, barring the importation of\n16 some items, using licensing and testing requirements to\n17 limit imports, and falsifying country of origin documenta-\n18 tion to transship textiles to the United States through third\n19 countries.\n20\nOn page 5, between lines 11 and 12, insert the follow-\n21 ing new section:\n22 SEC. 3. PRESIDENTIAL ACTION.\n23\n1\nThe President is directed to take the following actions\n24 with respect to the People's Republic of China's human\nCRA91.332\nS.L.C.\n3\n1 rights violations, weapons proliferation, and unfair trade\n2 practices:\n3\nSubstantially lighten restrictions\n4\n0gy annefers China\n5\n(2) Interact more forcefully with our allies, es-\n6\npecially Japan and European countries, and with the\n7\nWorld Bank and other multilateral lending institu-\n8\naccomplish the restriction\ntions, to oncourage them to restrict transfers of\n9\ntechnology to China.\n10\n(2)\nEncourage members of the Missile Technol-\n11\nogy Control Regime to set up a working group to\n12\ndevelop a common policy concerning the People's\n13\nRepublic of China's missile transfers to other coun-\n14\ntries.\n15\n3\nDirect the United States Trade\n16\nRepresentative to take appropriate action pursuant to sec-\n17\ntion 301 of the Trade Act of 1974 with respect to the trade\n18\npractices of the People's Republic of China which are un-\n19\nreasonable, unjustifiable, or discriminatory and which\n20\nburden or restrict United States Commerce.\n21\n(4)\nEncourage the Human Rights Commission\n22\nof the United Nations to issue a report on human\n23\nrights conditions in the People's Republic of China,\n24\nand to work with our allies and the Union of Soviet\n25\nSocialist Republics to encourage the Human Rights\n26\nCommission to issue such a report.\nCRA91.332\nS.L.C.\n4\n1\nTake any other action the President deems\n2\nadvisable to achieve the purposes of this Act.\n3\nRedesignate sections 3 through 5 as sections 4\n4 through 6, respectively.\n5\nOn page 7, line 5, strike \"and\".\n6\nOn page 7, between lines 5 and 6, insert the follow-\n7 ing:\n8\n(G) ceasing unfair trade practices against\n9\nthe United States which are unreasonable and\n10\ndiscriminatory and burdensome and restrict\n11\nUnited States commerce by failing to protect in-\n12\ntellectual property rights, employing regulatory\n13\ntaxes as a surcharge to tariffs, using discrimina-\n14\ntory customs rates, imposing import quotas and\n15\nother quantitative restrictions, barring the im-\n16\nportation of some items, using licensing and\n17\ntesting requirements to limit imports, and falsi-\n18\nfying country of origin documentation to trans-\n19\nship textiles to the United States through third\n20\ncountries, and\n21\nOn page 7, line 6, strike \"(G)\" and insert \"(H)\".\nUnited States Department of State\nWashington, D.C. 20520\nJune 5, 1991\nEnclosed you will find the China package that is being sent to\nevery Member. I hope you find it useful.\nJanet Janet G. Mullins"
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