Trade Pressure on China and Japan

January 21, 1994

President Clinton's special trade representative, Mickey Kantor, continues to be the most effective operator on the administration's foreign policy team. After muscling the North American Free Trade Agreement to passage in Congress and pushing through to a new 116-nation General Agreement on Tariffs and Trade, he has forced China to accept tighter textile quotas and Japan to open up its lucrative public works market.

The China accord, which penalizes Beijing for "massive fraud" in sending illegally mislabeled garments into the U.S. market, is a major plus for Sino-American relations. They remain strained, however, by China's human rights abuses and its sales of missiles to rogue regimes.

Mr. Clinton could make points with China-bashers on Capitol Hill if he were to use these transgressions to end normal trade relations with China next June. But he evidently sees a much greater national-interest payoff in pushing Beijing to change its ways. Treasury Secretary Lloyd Bentsen this week secured China's acceptance of U.S. inspections of suspected sites where prison-made goods are produced. More remains to be done.

China's influence will be crucial if North Korea is to be deflected from its dangerous drive to become a nuclear-weapons power. And if China can be brought into the international community as a team player to stop nuclear proliferation and as a rule-abiding member of GATT, the commercial synergy between the huge Chinese and U.S. economies can continue to produce big results.

Mr. Kantor caught Beijing's attention Jan. 6 by threatening a 35 percent cut in China's textile quotas, a step that would have cost that nation's exporters $2.1 billion a year. Under the new punitive accord, the U.S. restrained the growth of Chinese textile quotas over the next three years, limited silk imports for the first time and warned of 3-for-1 penalties if further mislabeling is detected.

While textile quotas are protectionist and costly to consumers, the emphasis in U.S. trade policy is on opening rather than closing markets.

In prodding Japan to open its construction market, which could mean billions for U.S. contractors, Mr. Kantor set a precedent for similar action in much-disputed semi-conductor and auto parts trade -- all key parts of a framework agreement due when President Clinton meets Japanese Prime Minister Morihiro Hosokawa next month. While Mr. Kantor called this "an historic step forward," past disappointments suggest this is no time to celebrate. Pressure must continue if huge U.S. deficits in its Asia trade are to be reduced.

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