MARCH 24, 2000

An All-Out Push from Clinton's Point Man on China

Deputy Commerce Secretary Robert Mallett says: "We just got to give it the big heave-ho"

If there ever was a man on a mission, it's Deputy Commerce Secretary Robert L. Mallett. He's one of the Clinton Administration's leaders for making an all-out effort to convince Congress to vote "Yes" on granting China permanent normal trade relations (PNTR) status when the issue comes to a vote -- probably by late spring or early summer. Mallett argues that normalizing trade relations with China would grant enormous economic benefits to U.S. companies, while helping to open up China and end some of the human-rights abuses and anti-democratic practices that have disturbed critics and members of Congress.

Addressing business leaders at the Asia-Pacific Business Outlook Conference at the University of Southern California in Los Angeles on Mar. 23, Mallett said lawmakers should take their cue from the newly elected leader of Taiwan by toning down their anti-China rhetoric. Many want to register protest votes against China by voting against PNTR status, which used to be called most favored nation (MFN) trade status.

But the Administration contends that Congress must grant that status in order for the U.S. to enjoy the benefits of lowered Chinese trade barriers when that country joins the World Trade Organization. After his speech, Mallett spoke with Business Week's Sheri Prasso. Here are edited excerpts from their conversation:

Q: How critical is this last push by the Clinton Administration to get Congress to grant permanent normal trade relations status to China?
[We've reached] about as good an agreement [with China] as we can get. It essentially opens up China's markets for the first time to U.S. products and services on a wholesale basis. We get priority treatment, we get antidumping rules to remain in effect for 15 years. And to reject it is to give far too much encouragement to the undemocratic forces in China.

If we don't go there, the Europeans are going to go there [to do business], other people are going to go there. And as the President has said, we're going to spend the next 20 years wondering why we handed over this opportunity to somebody else.

If you open up that market, you'll see more American cell phones being bought, more cars, auto parts, more of our manufacturing products, computers, all of that going into China in a way that it's not happening now. More financial services will be offered, insurance companies will be able to sell life insurance, property insurance. That's what this means. It's a bottom-line issue for American business. It means more markets, and more jobs in the U.S.

Right now, we have to do technology transfers in China, or we have to go through their state-owned companies, or we have to go through a state-certified distributor. All of those things disappear with this deal. If we pass PNTR status with China, China can accede to the WTO. It stabilizes the region, which is very important. It sends the right message to markets. So we just got to give it the big heave-ho so that it will pass.

Q: Do you think those members of Congress who oppose granting PNTR to China will listen?
I can't believe -- well, I don't want to be patronizing. These are American representatives. They have their point of view for reasons. But the impact on American business is so positive, that I can't believe looking at all the facts and circumstances that you would still come out against PNTR. Even if viewed in the most conservative light, with all of the benefits of PNTR, I don't think you could still stay in the "No" column.

None of the objections are based on the quality of the deal. What the objections seem to be based on are that, first, China has human-rights violations. China has political repression, religious oppression. Second, the labor and environmental conditions that exist in China now are so unfavorable that they would put the U.S. at a global disadvantage.

It seems to me one of the ways to bring China into the new age, in terms of environmental technologies and cleaning up their environment, is to allow us to sell them the technologies to be able to improve their environment. They need this. And I think the President cited former Supreme Court Chief Justice Earl Warren, who said "There's nothing more contagious than liberty."

So with China opening up to the world, the Chinese people get to see how aggressively the rest of the world has embraced technology. Then they've got to change. Internally, when they start having to respond to WTO disciplines, their whole economy will change.

Voting "No" won't free one dissident from jail, it won't stop one crackdown, it won't improve relations between China and Taiwan. It has none of the upsides that voting "Yes" has.

Q: So then what can members of Congress do to register some measure of discontent with China, if not by voting no on PNTR?
We go to the U.N. Commission on Human Rights and register our discontent there. We continue to lodge diplomatic complaints and send notes through acceptable channels. But the answer isn't in cutting off your nose to spite your face.

Q: What impact does the Clinton Administration see in the recent election in Taiwan?
If you mean China's sabre-rattling prior to the election, it would have helped had they not issued some of the things they said. I think the approach that the new Taiwanese leadership has taken is positive, and that it ought to inform some of the people in Washington.

The Taiwanese want to see this deal happen. They want to see China's accession to the WTO. Chinese dissidents want to see China's accession to the WTO, believing it's one of the ways they're going to finally open up China and finally allow a way for China to relax some of its undemocratic tendencies.

Sheri Prasso