MFNemies

Beijing's atrocities put free-traders on the defensive

Rick Henderson from the July 1997 issue

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Conservative strategist Bell, a longtime opponent of protectionism, says he favors revoking MFN because current policies have not made the Beijing regime more democratic. "What has gone well in China since Bill Clinton delinked trade and human rights in '94?" he asks. "As their markets appear to open up, human rights abuses continue to grow." Bell contrasts Clinton's silence about Beijing's policies with the tough talk Ronald Reagan used in the waning years of the Soviet Empire. "The biggest lie," he says, "is that nothing we do could have any effect [on China]. What we say has enormous power."

"What we think about China vs. what we should do about it are two separate issues," counters Joe Cobb, president of the Trade Policy Institute, a Washington think tank that advocates trade liberalization. "Removing MFN from China would be about as effective as Jimmy Carter's pulling out of the 1980 Olympics was in getting the Russians out of Afghanistan."

China in 1997, says Cobb, is not comparable to the Soviet empire 10 years ago. For one thing, the NATO alliance spent hundreds of billions of dollars a year trying to "contain" the Soviet Union. The United States also armed anti-communist insurgencies in Central America, Africa, and Asia, and continues to maintain military forces in South Korea. No such military buildup against China exists now or is intended.

Interestingly, critics of MFN fall back quite readily on anti-capitalist rhetoric. James Dorn, director of academic programs at the Cato Institute and an economics professor at Towson State University, bristles at the suggestion that maintaining trade is just about "sell[ing] a few more Big Macs," as Gary Bauer wrote in The Weekly Standard. "Trade itself is a human right," says Dorn, author of a forthcoming book on China and MFN. "By denying trade, you're contracting human rights rather than expanding them."

MFN opponents also tend to assume that the Beijing regime is a completely monolithic economic juggernaut with no organized internal opposition. Yet, notes Dorn, it is widely agreed that perhaps half of China's state-owned enterprises are bankrupt, and many of those in operation lose money. Dorn also cites a growing Chinese civil society, including such informal business and community organizations as the Association of Private Entrepreneurs, which claims some 22 million members.

The southern regions of the nation have a growing entrepreneurial sector, much of it fueled by investment and expertise from business owners who live in Hong Kong. Revoking MFN would crush this economic activity, the most likely source for an independent middle class on the mainland. An April report by the Hong Kong government estimates that denying MFN would reduce Hong Kong's trade by as much as 8 percent, reduce its growth in GDP (currently 5 percent a year) by as much as 60 percent, and cost the island 86,000 jobs.

Since more than one-third of China's trade is with the United States, says Elliott, revoking MFN, which would raise U.S. tariffs on Chinese goods by as much as tenfold, "would be disastrous. It would have no positive effect on China. If we withdraw MFN, we lose whatever leverage we still have with them." Dorn fears that isolating Beijing could "create a type of radical nationalism that decreases the costs to the Chinese leaders of becoming ideological," as in Cuba.

Last year, the House extended China's MFN status by a 2-to-1 margin, so any vote against MFN extension this summer, says Jeff Bell, "would be a major event." That could happen: Among House Republican leaders, Conference Vice Chairman Susan Molinari (N.Y.), Policy Committee Chairman Chris Cox (Calif.), and Budget Committee Chairman John Kasich (Ohio) oppose MFN renewal. Majority Leader Dick Armey (Tex.) is reconsidering his support for MFN. At the end of April, Speaker Newt Gingrich said he supports extending MFN for no more than six months to see how Beijing behaves during the transfer of Hong Kong.

Clinton has vowed that, even if the House votes down his MFN request, he will veto that resolution. Overriding that veto isn't likely in the House, let alone in the Senate, where it may not be possible to get as much as a simple majority to oppose MFN extension.

But even a symbolic vote from the House wouldn't advance the cause of freedom in China. Harry Wu, who spent 19 years in the Laogai--China's labor camps
--is one of the most passionate opponents of MFN extension. He chronicled Beijing's persecution of religious practitioners in the April Crisis. And in an article for Insight this January, he talked about Wei Jingsheng, a dissident who has spent 14 years in the Laogai "because he spoke his mind and, most importantly, he spoke his mind to other people." Wei is famous. "But what happens to the nameless and the faceless?"

What indeed? Wu was fortunate, in a way. He came to this country in the mid-1980s after waiting more than five years to get a visa which let him work as a scholar at Stanford University. Tensions between the United States and China weren't as high back then, permitting the sort of scholarly and cultural exchanges that let Harry Wu come here. But if U.S. policy makers heed the advice Wu now offers, thousands of those "nameless and faceless" prisoners of conscience could languish in labor camps for decades to come.