China Trade Relations
with Sen. Larry E. Craig (R-Idaho)
Friday, May 19, 2000, 11:30 a.m. EDT
During the week of May 22, the United States Senate will decide whether to grant permanent normal trade relations (PNTR) to China. While this measure is not necessary for China to enter the World Trade Organization, it is an important vote that has implications for U.S.-China bilateral trade and Chinese participation in the international free trade system. Many different constituencies—from organized labor, human rights and environmental activists to agriculture and corporations—have lobbied congress and the administration on PNTR.
Sen. Larry E. Craig (R-Idaho) was online Friday, May 19to discuss extending permanent normal trade relations to China. Sen. Craig, chairman of the Senate's Republican Policy Committee, is an advocate for granting PNTR to China and a supporter of free trade. Last year, Senator Craig led a trade mission to Asia to open the market to more exports.
Sen. Craig was first elected to the U.S. Senate in 1990 after serving five terms in the U.S. House of Representatives. He serves on the Agriculture committee as well as the Appropriations, Energy and Natural Resources, and the Veterans' Affairs committees. Sen. Craig is the chairman of the Republican Policy Committee. A rancher from Payette, Idaho, Sen. Craig served for six years in the Idaho Senate.
Visit Sen. Craig's homepage.
Read the transcript below.
Last I heard, some 70 senators supported PNTR. Is this accurate? About how many senators oppose the measure and how many are undecided? Are opponents mostly liberal Democrats?
Sen. Larry E. Craig: The answer is there has been no official count as to how many Senators support and or oppose PNTR. It will break out ultimately with those Senators that are tightly aligned with organized labor having a difficult time voting for it and they would probably be Democrats. Some Republicans and Democrates have expressed their concern about general humanitarian issues and civil rights issues in China. Those two concerns break in a bipartisan way.
Will this trade bill make it easier to purchase goods from China that are also made by American companies and if so, why is it in our economic interest to pass this bill?
Sen. Larry E. Craig: First of all, American companies that are doing business in China are largely producing products for the Chinese and greater Asian markets. And most of those products would not be marketed in this country. The agreeement that was struck between our government and China that we will soon be voting on is overwhelmingly one sided. That side is very pro-U.S. in that it is our economy that is gaining access to the Chinese markets. We have over the last good many years provided China with MFN which translates into Chinese manufactures having nearly unlimited access to our consumer market. The restricion of trade has been one sided with limitations on access to their markets. This agreement begins to break those restrictions down. We have not lowered nor will we be required to lower any of the tariffs that are currently up for our markets in any significant way. Our last consideration, for the first time the Chinese will be required to play by a set of rules that are international in scope and these are rules that they heretofore, not being a member of the WTO, have not been subject to. Those rules will be enforced not just by this country but all other trading nations that are members of the WTO.
I think it's great that we're making economic overtures to China, Vietnam, et. al. Now what about Cuba? Obviously the embargo isn't working.
Sen. Larry E. Craig: In today's modern world, embargoes generally don't work. We are not the sole producer of but a very few products. Unless we can get all other trading nations of the world to agree with us on embargoes, they generally become one sided and hurt the producers and workers of the nation that is doing the embargoing.
What would you expect the impacts on the cross-strait relations of PNTR to China to be, if there is such an effect? How about the US foreign policies on issues related to the cross-strait relations after PNTR to China (and even after both China and Taiwan enter the WTO)? What would your expectation or comments on the human right and environmental problems in China? Is it possible that those issues in China after PNTR could be under control? Would you believe that by granting China PNTR could help China open their economy/market or make it a more responsible member of the international society by its accession to/participation in a rule-based organization?
Sen. Larry E. Craig: Just this week, I had Taiwanese students in my office for a visit. To a person they support the mainland's entry into the WTO. One of the obvious reasons is that they recognize the opportunity for Taiwan to follow and also become a member. I think the young generation of Taiwan also understands that the growing economic relationship between Taiwan and the mainland is making the distance across the straits less and less with every coming year.
How will PNTR affect agriculture prices in the United States? As you know, we are facing an agriculture crisis and I'm concerned this could have bad effects. Am I wrong, or will this be positive for our farmers?
Sen. Larry E. Craig: In all due courtesy, I think you are wrong. 45-50% of everything that a U.S. farmer produces today must be sold in foreign markets for that farmer to maintain a level of profitability with his or her operations. China is without question potentially the largest agricultural market in the world. While they will strive to provide their citizens with basic food stuffs, as their economy grows, they will increasingly want value added agricultural products of the kind that our nation produces.
Also, again the rule of law begins to play. My example is this: ten years ago China was tenth or eleventh in the world in the production of apples and apple products. Today they are number one. In fact, their production is greater than all of the other nine top producing nations in the world combined. If they were in the WTO, we would have much greater control over the amount of concentrated apple juice that they are now selling in this market. Those sales have caused our apple producers across the country to register three of the worst years they've had in decades. Many in my state are pulling their trees and going to other crops. That would not happen under WTO.
(1) Do you think more U.S. trade with China would reward human rights violations or help spread human rights principles?
(2) Do the Chinese, who are big agricultural producers, really WANT to buy ag products from the U.S.? What is the potential impact for American farmers?
Sen. Larry E. Craig: I believe any effort to improve the standard of living of the average Chinese worker improves their overall situation in China. Let me give you an example: I recently visited a Kodak film plant in Xiamen, China. This was a state of the art facility that Kodak would have built in Virginia or Idaho. No construction rules, no environmental rules were violated. The employees of that plant not only have a first class facility to work in that protects them physically and environmentally but their salaries are substantially greater than when they worked for the old state owned film company that Kodak consumed. Also, the dormitories or living facilities that these workers once lived in--again, state owned facilities--were acquired by Kodak, remodeled, condoed and sold to the employees. Now you have an employee who has more purchasing power, better working conditions and for the first time in generations, is a property owner.
Is Sen. Daschle’s continued quorum call expected to prevent the Senate from voting on China trade? In your opinion, do the Democrats’ complaints about Lott’s leadership have any credibility?
Sen. Larry E. Craig: There has been a thunderstorm raging in the Senate for the last 48 hours but I think you appreciate as much as I do that thunderstorms pass. Usually followed by some fairly calm weather and bright sunshine. Now I don't mean to make light of your question or the situation that exists here in the Senate between the Democrat and Republican leadership. But as a member of the Republican leadership I am charged with the responsibility of making the Senate run. Therefore, getting its work done. That means moving appropriations bills in a timely fashion and bringing issues like PNTR to the floor for thorough consideration and a vote. Senator Daschle understands what I've just said as well as anyone who serves in the U.S. Senate and I am convinced he will work with us to resolve these differences.
If PNTR is so good for this country (i.e. increased trade = more jobs), why are the labor unions in the U.S. so concerned about giving PNTR to China?
Sen. Larry E. Craig: I have always been frustrated by what appears to be organized labor's purpose of guarding the status quo in America's labor force. The status quo has never existed in our economy and therefore our labor force has always been an example of constant change. In today's world that has accelerated more than ever before. We are at near full employment today not in spite of trade but because of trade. And I see an opportunity to access the China market as a job creator not a job destroyer. I have as basis for that thought all of the history behind me that shows that every time we access a world market we increase economic growth in this country and therefore create more jobs. The problem organized labor faces today is not trade, the problem they face is the growing empowerment of the individual worker through the new technologies of our economy.
What do you think of the split down the ranks of Chinese dissidents, where some such as Harry Wu (and other extremists) are opposed to PNTR, and others such as the (outlawed) China Democracy Party are in favor?
Sen. Larry E. Craig: I don't clearly understand the politics of the different dissident groups that operate in and outside of China all in opposition to the current Chinese government's policies. But I am not surprised there are splits because I believe some think that if you try to isolate China, you will create the kind of internal turmoil that may someday bring the current government down while other groups I think believe that the changes that are going on in China today, while not quick enough for many of us as it relates to human rights, are in fact changes that are taking place. Many of these changes are simply those of a government, slowly but surely, releasing its hold on its citizens by releasing its hold on its economy. I believe based on my experience that the Chinese government recognizes that a freer more market driven economy in China is clearly going to change the character of that country from top to bottom.
Have proponents of this bill been effectively making the argument that integrating China into the world economy will help lessen the chance that they will be less likely to do something radical like attack Taiwan?
Sen. Larry E. Craig: Many of us believe and some of us are willing to say that a China fully engaged in the world economy is a China less likely and less willing to flex its military muscle on relatively simple premise: that they have a lot more to lose. Also I think some of us recognize that China wishes to play a greater role in world affairs and Asian affairs. I hope we have made it very clear to them that the only way we can accept this new desire on their part is an economic role and not a military role.
What about the concerns over human and animal abuse in China? Isn't keeping China's trade status the way it currently is a way to have more leverage on those issues?
Sen. Larry E. Craig: In all due respect, I think it is relatively naive to assume we can have impact on domestic policy within another country through any legislative effort we might undertake. We would only want to deny access to our markets those products that might address an inhumane treatment of animal issue or a humanitarian issue. keeping China's trade status the way it is is really a one way street. They have significant trade barriers and major limitations on our producers and workers access to their markets and we have very little restriction in access to ours. That's the current state of play and has been that way for some time. This agreement really is China opening its doors and our remaining about where they are.
If PNTR passes with the amendments that have been proposed in the House, do you feel the accomodations made for protecting human rights will be sufficient? Will they have any impact on the current human rights situation?
Sen. Larry E. Craig: The house is now crafting a legislative package that is obviously aimed at building a majority vote for final passage. I think any amendment that doesn't significatly change the agreement itself or is in any way viewed as penalizing or restricting China's status in this agreement is something that we would be able to accept in the final product. Right now, what is key, is building a majority vote in the House.
Why the American people cannot smoke a good Cuban cigar, but can easily drink Chinese apple juice? Does it seem fair to you? PS I know smoking it's bad for us....
Sen. Larry E. Craig: In response to the several questions on Cuba... I am not about to say that politics is a perfect art or that everything we do here would meet the hypocrisy test. But I do know this: The Cuban community in this country has become a substantial political force in helping determine our policy toward Castro and not the people of Cuba. Until Mr. Castro goes, I don't believe we will ever have normal relations with Cuba. Last year, I helped push an agricultural product and medical supplies anti-sanction bill through the Senate that included Cuba. If you've been following these issues, you will remember it got blocked in conference committee between the house and senate because we had included Cuba. That will be tried again this year. I know of no other way to explain to you what is obvious in your question but the policies and the politics between the Cuban and Chinese issues are different for all of those and other reasons combined.
What would happen to our relationship with China if we do not grant them PNTR?
Sen. Larry E. Craig: I am not sure any of us can crystal ball the impact of a failure to support China's entry into the WTO. For this country and our producers it could lead to being frozen out of the Chinese market. While other countries would go on to support China's entry into the WTO and therefore gain or retain access to the China market. But I think the whole issues is a lot bigger than just markets and product sales. I believe there are factions within the internal politics of the current chinese government that would love to see China revert back to a more militarized police state of a few years ago. They would gain stature inside China if we were to deny their entry. At the same time, it is my belief, having recently been in China, having visited with the president of China and others who are rapidly becoming more progressive in their relationships between government and the people that they could experience a substantial setback in their effort to modernize/liberalize China.
Our time's up. Many thanks to Senator Larry Craig and to everyone who participated in the discussion.
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