China, EU get trade pact

Last major hurdle to Beijing joining WTO is cleared

Vast markets opening

Accord could affect close House vote on normal trade status

May 20, 2000|By Jonathan Weisman and Jay Hancock | Jonathan Weisman and Jay Hancock,SUN NATIONAL STAFF

WASHINGTON - The European Union reached a market-opening trade accord with China yesterday, clearing the last major hurdle impeding China's accession to the World Trade Organization and adding a powerful argument to President Clinton's efforts to normalize trade with the Communist giant.

The European deal came at a critical time for the administration: A vote in the House to permanently normalize trade relations with China is scheduled for Wednesday.

With Senate passage virtually assured, the real battle is in the House.

Opponents of the China trade legislation - and even some proponents - had been arguing that a vote now was foolishly hasty because the Europeans had not yet agreed to terms for China's accession to the WTO, an international body that sets rules for world trade.

Under the rules of the body, the United States would be denied some of the market benefits of China's accession if Congress rejects the bill.

Now, the president can more persuasively argue that a rejection of permanent normal trade relations - PNTR - will leave the nation's European competitors free to pursue economic opportunities in China that would not be available to U.S. firms.

"It is now clearer than ever that China will join the World Trade Organization," Clinton said in a statement.

"For America to reap the broad benefits of China's historic decision to open its markets and to strengthen the forces of positive change in China, Congress must act on PNTR.

"A vote against PNTR will cost America exports and jobs, cede this massive new market to our competitors in Europe and Japan, and embolden those resisting reform in China."

Opponents scoffed at the notion that the Europeans had changed the political equation on Capitol Hill.

Labor, human rights and environmental organizations are lobbying strenuously against the measure, insisting it would deprive the United States of leverage to improve China's behavior while costing some U.S. workers their jobs.

China must still reach agreements with a half-dozen countries, including Mexico, said Thea Lee, assistant director for public policy at the AFL-CIO.

And, she said, formal protocols must be drafted before China enters the WTO, making next week's vote premature.

"Members of Congress are still being asked to vote on a deal that doesn't exist yet," she said.

But, Lee conceded, the European Union was China's most significant remaining hurdle, and China could be in the WTO before the end of the year

"The timing of this couldn't have been better," said Rep. Robert T. Matsui, a California Democrat leading the drive for permanent trade relations. "It really does indicate the value of this [vote] now. The European companies are going to be all over this."

Under the terms of the WTO, any tariff-lowering accord reached between two of the organization's members applies to every other member.

So the few concessions the Europeans squeezed out of China that U.S. negotiators failed to obtain would apply to U.S. companies if Congress approves the trade bill. European negotiators focused on access to China's potentially massive market for wireless phones to help their firms that manufacture the devices.

"That helps [San Diego-based] Qualcomm as much as [Finnish] Nokia and [Swedish] Ericsson," said White House spokesman Jake Siewert.

The trade vote might be the most important of the year for Clinton, who would like his legacy to include broad successes in bringing free trade from Mexico City to Beijing. An intensive White House lobbying drive was to take on its most public face tomorrow night in an Oval Office address to the nation.

But House Democratic leader Richard A. Gephardt, who opposes the measure, made it clear to Clinton that he didn't want such an open showdown, even threatening to request time for an on-air rebuttal of his own party's president.

Democratic supporters of the bill told the White House that an Oval Office address could only stiffen the spines of opponents in the labor movement, raise the public awareness of the issue, and make it that much harder for undecided Democrats from heavily unionized districts to vote yes.

Supporters are also wary that a scattering of wavering Republicans might decide they cannot vote for anything so heavily identified with a president who remains wildly unpopular in their districts.

Republican leaders, who overwhelmingly support the trade deal, are increasingly optimistic about its passage. Yesterday, Republicans and Democrats completed legislation that would create a congressional commission to monitor China's compliance with human rights, labor rights and environmental protection.

Supporters say the new body would adequately replace Congress's annual vote on China's trade status, a vote that lawmakers would give up by making China's trade status permanent.

Democrats who back the bill say the votes will not be assured until the balloting begins. Yesterday, three undecided Democrats and two fence-sitting Republicans announced they would support the deal, but three undecided Democrats said they would oppose it.

Rep. Benjamin L. Cardin, a supporter, said the EU-China deal was significant and would work to the president's advantage.

"It's an argument for a `yes' vote," the Baltimore Democrat said. "It doesn't affect too many votes on its own.

"However, momentum is important. Clearly the momentum is toward approval of PNTR, and this is part of the momentum."

Legal analysts and administration officials described the European deal as only modestly better than the one the United States made with China last fall.

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