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CIAO DATE: 12/99
U.S.-China Relations in the 21st Century: Dawn of a New Era?
June 24, 1999, Washington D.C.
I. Introduction
Good morning. It’s great to see everyone so early on this beautiful June morning. And, just like clockwork, as spring turns to summer and the throngs of tourists begin their annual descent on our nation’s capital, so does our attention in Congress turn towards our annual debate over China policy.
It seems I have been doing this for so long, that if we ever do get permanent normal trading relations for China, I won’t know what to do when June rolls around and we no longer have to dissect and reevaluate every aspect of our foreign policy toward China. But, that is a price I am willing to pay.
II. Importance of China
Although I make light of this annual debate, that certainly does not mean that we should make light of our relations with China. Our relationship with China is complex and increasingly important. Today, China is our sixth largest export market for American agriculture. U.S.-China trade supports over 200,000 export related jobs in the United States, as well as tens of thousands of jobs in U.S. retail, transportation, marketing and financial industries.
And, as we have seen throughout the years, there are a myriad of issues that are intertwined in this relationship—nuclear proliferation, regional security, the bilateral trade balance, intellectual property protection, religious freedom, the future of Taiwan, Tibet and Hong Kong, and political and economic freedom for the Chinese people.
It is these issues which tend to form the background of the debate over our relations with China.
III. Fundamental Question—Linkage
Most of you know that the annual debate over China is driven by a decades old statute called Jackson-Vanik. But, what is Jackson-Vanik? It is a statute that was narrowly designed to sanction a specific country on a very specific issue—the problem of Jewish emigration from the former Soviet Union. But given Congress’s loathing to repeal such carefully thought out legislation, two decades later, the statute is still on the books.
And what has happened during those two decades? Well, the Berlin Wall fell. The Soviet Union collapsed. Communism in Eastern Europe has a stake driven through its heart and freedom of Jewish immigration is really no longer an issue. The whole rationale behind the Jackson-Vanik statute is gone. Yet its impact remains and it still drives our foreign policy —not towards the former Soviet Union, but towards China!
Because of Jackson-Vanik, the U.S. Congress is forced to look at the tea leaves and reanalyze our relations with China every year. Every year we find ourselves questioning whether we should cut off our economic and political ties. This is patently absurd. Our foreign policy towards the most populous country in the world is being dictated by a decades old statute which was crafted to address a very different problem than the multiplicity of issues we have with China today.
When we tear away the rhetoric from both sides of the debate, we are really left with just one fundamental question—what should the linkage be between extension of normal trade relations (formerly Most Favored Nation status), and our foreign policy toward China? On one side of the debate you have those who believe that our trading relationship with China should be closely linked to virtually every aspect of our relations, from Taiwan, to promotion of human rights and religious freedom, to weapons proliferation. They see NTR as a club, something we should use to punish China for not acting in accordance with international norms or our wishes. On the other side are those we see the trade relationship as a tool, a tool which can be used to promote freedom and bring the rule of law to China, thereby advancing our interests in a myriad of ways.
Obviously, I fall into the latter category. Throughout these many years, I have consistently argued that the best foreign policy tools available to us that promote reform abroad are policies that promote capitalism, market reform, and free trade. All three are powerful levers for political and social change, precisely because they are powerful mechanisms for economic change. I still believe that.
Although every aspect of our relationship with China comes under the microscope in June, there always seems to be one theme “de jour” which dominates the debate for that particular year. Several years ago following the massacre on Tiannanmen square, the question was— how should our trade policies be linked towards human rights and democracy in general? Two years ago, the theme was religious freedom—how can our trade policies best promote religious freedom in China? This year, in the wake of the Cox report, the question becomes, how can our trade policies best be used to promote our national security?
Let’s look at each of these questions more closely.
IV. Human Rights
When looking at human rights in China it is important that we view our relations in an historical perspective. Before Deng Xiaoping China was a rigid, totalitarian state. There was strict control over individual thought, information, speech, even travel. Moaist doctrine strictly regulated almost every aspect of the daily lives of individual citizens— where they worked, lived, and even the clothing they could wear. Government control extended into every single aspect of an individuals life. We watched in amazement the robotic-like response of Chinese during the upheavals of the Cultural Revolution.
But Deng Xiaoping began to change that when he instituted market based economic reforms in China. For the first time in decades there was official recognition of the right of Chinese farmers to lease private plots of land. Private sector decision making was allowed, price controls were removed, and ownership of small and medium sized factories were authorized. Agricultural communes were abolished.
The results of economic reform were clear. Greater economic freedom equaled greater personal space for the Chinese people.
The trend over time is equally clear. Today, over half of China’s output is generated by private enterprise —85 percent of China’s workers are employed in the private sector. Today, there is greater freedom of thought, employment choice and the ability of the individual citizen to seek redress against the government. The development of a strong, vibrant, private sector —particularly in Southern China —continues to drain power away from Beijing.
The basic premise still holds true—state control will continue to erode if private enterprise is allowed to continue to expand. There is a fundamental contradiction between the individual autonomy required by a successful market economy and rigid government restrictions on individual freedom and ideas. Philosophers from John Locke to Max Weber agree that market capitalism is generally accompanied by an expansion of economic liberties.
So, when looking at whether maintaining our trading relationship with China has helped or hurt the cause of human rights in China over time, the recent history of China has shown a gradual increase in personal freedom and loosening of government control precisely because of our trading relationship. Over time, we also have seen greater adherence to the rule of law rather than the rule of man in China. You simply cannot have a vibrant, market based economy which is linked to the rest of the world unless you have the rule of law at home. Clearly, China is on the right track.
But you don’t just have to look at China to know that this fundamental principle holds true. History has shown throughout the globe that greater economic freedom leads to greater individual rights. From South Korea, to Taiwan, to Chile and Argentina, the adoption of free market reforms and participation in the global economy helped promote the human rights of the individual and democracy. I am confident that the same will hold true for China over time.
V. NTR and Religious Freedom
Several years ago the debate switched away from human rights and became centered around the promotion of religious freedom in China. Again, the fundamental question—should renewal of normal trade relations be used as a lever to promote religious freedom in China. Again, the answer was no. The definitive response to that question came not from Congress; it came from those in the religious community who work every day to promote religious freedom within China. Evangelical groups from across the country began to contact their members of Congress, concerned that the work they were doing on the ground would be jeopardized were Congress to deny normal trading relations with China.
The Reverend Pat Robertson summed up the position well in an op-ed published last year, where he argued, that (quote):
“...a truly moral position [toward China] would do two things. First, it would honor those who have fallen by pursuing their lost dreams and helping China reform from within. Second, it would open, not shut, the door to the message of freedom and God’s love. Leaving a billion people in spiritual darkness punishes not the Chinese government but the Chinese people. The only way to pursue morality is to engage China fully and openly as a friend.”
Congress heard that message. We heard it not just from faith based organizations, but from any number of civil service organizations working in China. Groups such as the International Republican Institute, which works to develop the rule of law in China and strengthen the nascent village democracy movement, feared that their work would be discredited. In the end, the majority of the House of Representatives concluded that by revoking normal trade relations with the People’s Republic of China, we would be extinguishing some of the brightest rays of hope to the Chinese people, ultimately hurting the very people we are trying to help.
VI. National Security
This year, we have a new theme, a new drumbeat. It follows from the release of the Cox report. And its name is “national security.” I certainly will not make light of this issue. The allegations in the Cox report are very disturbing, outlining a pattern of Chinese espionage dating back decades. But there are several aspects of the report that disturb me more than others. Am I surprised that China has been spying on our nuclear weapons labs? No. Nations have gathered intelligence about friends and foes for centuries. We cannot expect nations today to act differently.
What really bothers me is that we let it happen. The least we can expect from our government is to remain constantly vigilant against attempts to pilfer our most sensitive secrets. Our national security is too important for slip-shod security. I am also very disturbed that, when these allegations were first brought to light, the Clinton administration did not take swift, definitive action to tighten security at our national weapons labs.
But again, in the context of NTR, the question is—how should our national security be linked to renewal of normal trade relations with China? The answer to many in Congress is to paint China as the new Soviet Union, a nation with whom we were locked in an decades long struggle for world influence. I do not want to repeat those decades. I think we can do better.
In analyzing our national security policy toward China certain factors have to be remembered. First, China is a permanent member of the United Nations Security Council. Second, China is home to one-fifth of the world’s population. Third, China is strategically located, sharing a common border with India, Pakistan, North Korea, and Russia. Fourth, China is a nuclear power. Fifth, China has a reasonably sophisticated military industrial complex. In sum, China is in a position to influence events in the world, for good or bad. It cannot be ignored.
But, let’s be clear. China is not our enemy. But neither are they our “strategic partner.” We do share some common security interests with China, such as continued stability on the Korean peninsula. It would be short-sighted for us to ignore these common security interests by cutting off our economic and political relationships with the People’s Republic of China. But we also cannot be naïve. China and the United States are not allies. In many ways we are competitors. In our policy toward China, we need to stand firmly on our ground, pragmatically recognizing the common interests we share, but also fully cognizant of our many differences. I think the best term I have heard to describe this relationship is that of a “strategic competitor.” As strategic competitors we must work together when it meets our common interests, but, just as we would not allow a business competitor into our boardroom, we must never let our guard down as we pursue our own national security interests.
But once again, I think we will find that linking extension of normal trade relations to external issues, such as national security concerns, will be rejected this year.
So, putting aside our annual debate over renewal of NTR, a debate which is becoming more and more stale and less and less helpful over time, what should our policy be toward China? Our immediate political and economic goal must be to get China into the World Trade Organization on commercially viable terms. This would have both immense tangible and intangible benefits for the United States.
VII. World Trade Organization
As we look toward China joining the WTO, it is useful to look at the history of the organization itself to understand a fundamental benefit of China’s accession.
The GATT, the precursor to the WTO, was founded at the onset of the Great Depression. At that time many of the world’s trading nations adopted high tariffs and quota restrictions that succeeded in choking off international trade and increasing tensions among nations. The United States was the worst among the offending countries. As the nation slipped into the grip of the Great Depression, Congress adopted a virulently protectionist trade law. Its name —the 1930 Smooth-Hawley Tariff Act —will live forever in the annals of infamous legislation, alongside the Anti-Sedition Act and the post-Civil War Reconstruction Act. Smoot-Hawley raised average tariffs on U.S. imports to over 50 percent. We should never forget how swiftly the wave of retaliatory tariff legislation swept around the globe, or how deep the ramifications of these trade barriers were; they shut off trade in a world reeling from economic recession.
Ironically, in that era over a half a century ago, it was Republicans who fought for higher tariffs and Democrats who stood for free trade. When Franklin Roosevelt became president, he sought to reverse our protectionist trends through implementation of the 1934 Reciprocal Trade Agreements Act. This act delegated to the President the power to enter into reciprocal trade agreements to lower tariffs. By the onset of World War II, the United States had signed twenty bilateral agreements reducing tariffs on dutiable products by 35 percent. By the end of World War II both political parties had recognized that the economic crisis of the 1930’s had formed the crucible for the political and military disaster that engulfed the world in global conflict in the 1940’s. We vowed never to let it happen again.
During the Bretton Woods conference in 1948 —in which the charters for the International Monetary Fund and the World Bank were written —the United States helped establish the framework for the creation of GATT. The objectives of the GATT system were simple: to promote trade liberalization and to guarantee stable conditions for market access on a nondiscriminatory basis by creating a set of transparent rules and dispute-settlement procedures. World leaders believed then —as I do today —that increased economic integration through trade would strengthen world stability and provide a bulwark of democracy in the emerging Cold War.
The result? For the past fifty years the world has experienced a degree of economic growth and stability which was unimaginable to our forefathers. This stability and prosperity are in no small part due to the growth of international commerce among nations. More than sixty years ago, shortly before the outbreak of World War II, Secretary of State Cordell Hull talked about the importance of having a global environment fostering free trade:
A thriving international commerce, well adjusted to the resources and talents of each country, brings benefit to all. It keeps men employed, active, and usefully supplying the wants of others. It leads each country to look upon others as helpful counterparts to itself rather than as antagonists.
Thus, the architects of the GATT correctly believed that an institution fostering multilateral economic growth would help to pave the way for recovery, peace, prosperity, and democracy. To a large degree this vision holds true a half century later. And, the fundamental premise that Cordell Hull articulated over a half century ago is just as true today—nations linked together through trade share common interests in maintaining world peace and stability.
And the past fifty years since the birth of the GATT have show this premise to be true. Over time, we watched as two of our most bitter enemies of the day, Germany and Japan, turned into flourishing democracies. Today, that are among two of our strongest allies. Who is to say in fifty years from now, China cannot be a flourishing democracy? Who is to say in fifty years that China will not be one of our strongest trading partners?
But to get there from here requires vision and courage, something in short supply inside the beltway. It was not easy for Arthur Vandenberg or George Marshal to articulate a policy of rebuilding Germany and Japan at the end of World War II after 250,000 American men had perished in a war against their governments. Certainly, not the most popular position of the day. But there were those with vision, we saw it as an opportunity we had to seize upon to help guide the world toward continued peace. And they were right.
VIII. International Rule of Law
In my view one of the most important things we can do today is help bring a rules based trading system to China. And the only certain way we can do this is to get China into the World Trade Organization. Within China today an internal political struggle is taking place between reformers who seek domestic economic and political change and hard-liners who advocate return to the Maoist policies of the past. Who wins that struggle will have profound implications for the future stability of Asia and for the world which our children and grandchildren will inherit.
China’s admission in the WTO will help reformers within China move toward greater internal economic liberalization. This process is what Thomas Friedman has called “revolution from beyond” or “globalution.” Globalution—sounds like some amorphous blob— simply means using international rules based organizations to help promote a rules based system at home. It is in a sense, importing the rule of law. It gives political cover and external support for those within China who seek to liberalize the Chinese economy at home.
And, interestingly enough, this process is a two-way street. Last week, Anson Chan, the Chief Secretary of Hong Kong, was in Washington. While meeting with me and some other Representatives she made an interesting point—once China is in the WTO and begins to implement its market liberalizing commitments, it will be very difficult for other countries in the region to remain idle. In other words, it will be extremely difficult for other Asian economies to remain closed while the Chinese economy opens.
Now, what about the tangible economic benefits for the United States? Here the benefits are so lopsided in our favor that opposition seems almost ludicrous. If our trade negotiators are able to bring home a deal that is as good or better than the one outlined during Zhu Rongji’s visit, the benefits to the U.S. economy will be profound. For the first time our manufacturers and service providers will have real access to the Chinese market. For the first time, we will have clear and transparent rules governing our trading relationship. And for the first time, we will have a multilateral dispute settlement mechanism to bring China into compliance with its international obligations. And I cannot emphasize a final point enough—for the first time pressure for continued market liberalization will come not on a bilateral basis from the United States, but from international commitments which China agreed to on its own initiative. The United States will have a tool to further advance reform in China, a tool that does not depend on U.S. pressure or the expenditure of American good will to enforce changes in China, changes that serve our national interests. The resulting change in our relationship will be profound.
IX. Conclusion
China’s accession to the WTO will not solve all or our problems. But it will be a huge step forward. And there are other things we can do to advance our interests in Asia. In concluding, let me just outline a few other steps we can take.
First, we cannot be myopic in our view. Just as we cannot view our relations with China through the narrow prism of Jackson-Vanik, we cannot view our relations with Asia through the narrow prism of China. For too long now we have been negligent in our support for those Asian countries so vitally important to our national and economic security. Japan is the first that comes to mind. A solid regional ally such as Japan must never be given second-tier status. We also need to pay more attention and strengthen our relations with other key nations in the region— Indonesia, the fourth most populated nation in the world, South Korea, India, and Russia. In my view, U.S. foreign policy makers spend much too much energy on China and not enough on these other important nations.
Second we must continue to support institutions such as the National Democratic Institute, the International Republican Institute, the Asia Foundation, and the Asia Society. These organizations are a vital tool of foreign policy, working on a day to day basis to help bring democracy and the rule of law to Asia. Congress cannot expect these institutions to promote better understanding in the region if we are unwilling to provide them with the resources to do it.
Finally, just as we cannot overlook the importance of China, we cannot overestimate its threat to the United States. We need to continue to work with China as a “strategic competitor” but we cannot be blind to other destabilizing influences in the region. From Kashmir to the Korean Peninsula, we must remain constantly vigilant.
Thank you.
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