China Trade

It's a No-Brainer

There are tough calls in American political life. There are tough votes on Capitol Hill. Permanent Normal Trade Relations (PNTR) for China is not one of them. As U.S. Trade Representative Charlene Barshefsky tells us in this week's Big Shot Interview, all the concessions are on the Chinese side.

This deal gives our companies greater access to the Chinese market and allows us to market directly to Chinese consumers. It reduces tariffs on U.S. exports to China. It gives U.S. companies greater ownership rights in Chinese ventures. It includes stronger protections for U.S. intellectual property, so our software, movies, music, medicines and chip designs can't be easily pirated. Meanwhile, we make no changes in our rules on imports into the U.S. We give up nothing in return for the opportunity to compete for business in China. In Barshefsky's words, "It's a no-brainer."

Okay, what about the issue of human rights? There's no doubt that China's government mistreats its own people. The persecution of Falun Gong members and other people of faith is despicable. Recent attempts to censor the Internet show that for all the movement toward free markets, the regime still doesn't get the idea of individual liberty. The question is, will PNTR help or hurt the prospects for reform in China? To put it another way, do you think freer markets in China will help or hurt the average Chinese citizen?

History says that expanded trade and more American companies in China will be good for China's dissidents, and that's one reason why Chinese democracy activist Martin Lee wants PNTR. Says Barshefsky, "Trade agreements are not an aggressive substitute for human rights policy. But we know, we know, that increased trade raises living standards. We know that as a country has become wealthier, people demand more of their governments. This has been the pattern most profoundly felt in Asia."

You want examples? Notes Barshefsky, "If you look at Thailand, at the Philippines, at South Korea—perhaps the most pointed example—as incomes rose, as the economy opened more, as information flowed between that economy and the outside world over time, people demanded more. And in the case of the Philippines, and in the case of South Korea, they demanded democracy." Adds Barshefsky, "As Ben Franklin said, 'We know of no nation ever ruined by trade.' That is certainly going to be the case with China."

For the first time, the Chinese government is letting all of our computer and software firms set up shop and sell directly to Chinese consumers without government interference. Our companies can give average citizens the tools of the information age. And more communications technology in the hands of the people is always bad news for dictators. Think of the 1980s, when the Reagan Administration smuggled fax machines and radios to the Solidarity movement in Poland. Now imagine how a 21st century dictatorship could possibly control a population with widespread access to the Internet.

Says Barshefsky, "Last year there were one million Net users in China. This year, the estimate is between 9 and 12. Next year the estimate is 30, and it is predicted at about 120 million three years after that. The government is not going to be able to control content. It is not going to be able to control access, keeping in mind as well, access can be provided cross-border. One does not have to locate in China to provide access. And I think that the Net and the availability of information flow on the Net is going to have perhaps the single most profound change on China, engendering tremendous pressure on the Chinese leadership… that we have ever seen."

If you're somebody who cares deeply about human rights, don't allow yourself to be used by opponents of free trade. In fact, what protectionist politicians fear most is a reformed China, because it might actually attract new U.S. investment.

Says Barshefsky, "It is a curious argument coming from Americans. The argument would have to go something like this: As China opens and liberalizes, as new rules are introduced, as new enforcement mechanisms are introduced, as China becomes a more reliable partner, as rule of law is more firmly rooted in China, it will become an ever-more attractive place in which to invest. And our companies may therefore invest in China at a more rapid rate than currently, and export products back to the U.S. Now the logical extension of the argument would be to say, we should insure that all countries with which we trade should remain lawless, so that investors won't locate there. That is to say I can't attribute any legitimacy to arguments that suggest it is not in our interest to promote the rule of law worldwide."

The United States prospers when we have reliable trading partners committed to free markets and the rule of law. Let's help China become that kind of partner, and you'll be amazed at the benefits for Chinese citizens.