 During the week of
May 22, the United States Senate will decide whether to
grant permanent normal trade relations (PNTR) to China.
Public Citizen's Global Trade Watch has been one of the
most outspoken groups against this measure and a vocal
participant in the debate on globalization. Lori
Wallach, Director of Global Trade Watch, will be
online Thursday, May 18 at 1 p.m. EDT to discuss
why she thinks PNTR for China is "neither
merited nor necessary."For nine years,
Wallach has represented Global Trade Watch on issues of
globalization and international commercial agreements before Congress, the courts, government agencies, and in
the media. Wallach is author of Whose
Trade Organization?: Corporate Globalization and the
Erosion of Democracy and has published numerous
trade analyses, editorials and chapters in several
anthologies. She has served as a trade commentator on
CNN, ABC, CNBC, CSPAN, and appears on such programs as
All Things Considered and The NewsHour with Jim Lehrer.
Wallach founded the Citizens Trade Campaign in 1993 and
is a founding board member of the International Forum on
Globalization.
Global
Trade Watch was created in 1993 to promote government
and corporate accountability in the area of international
commercial agreements shaping the current version of
globalization. Global Trade Watch is a division of Public Citizen,
founded by Ralph Nader in 1972, as a nonprofit citizen
research, lobbying and litigation group based in
Washington D.C.
Below is today's transcript.
New York, NY: Why is PNTC more nor less
"merited or necessary" that permanent trade
with any other country? Please correct me if I'm wrong,
but isn't the yearly renewal of trade with China
something of a Cold War anachronism? If so, what is the
objection to permanent trade relations with China in
particular?
Lori Wallach: This big national debate about
giving China Permanent Normal Trade Relations - that is
what "PNTR" stands for by the way -- has
everything to do with the FUTURE direction we take on
what may be the most important issue of our time:
globalization.
The debate about China trade status is only the most
recent in a series of domestic and international fights
about globalization. Remember NAFTA, WTO, the Multilateral
Agreement on Investment (oh yah, you don't know about
that one because the US press did not cover it despite it
being on the front pages of press around the world - just
think NAFTA on steroids) and of course the protests in
Seattle and Washington, D.C.
Currently globalization is occurring under one version of
rules put forth by a global commerce agency called the
World Trade Organization (WTO). This version of the rules
is not "free trade." In fact the famous
philosophers of free trade -- like Adam Smith and David
Ricard -- must be spinning in their graves to see to what
global commerce terms their term "free trade"
has been applied. For instance, the WTO has many
restrictions on trade - such as providing a monopoly
TRADE RESTRICTION on production and sale of medicine for
30 YEARS!!! to the pharmaceutical corporation that has a
patent on a drug. And, some of what is called a
"trade restriction" by WTO and is targeted for elimination is actually our domestic food
safety and
environmental laws.
The China debate is the latest installment in a long
fight about getting these global commerce rules into balance. The goals is to eliminate the considerable
downsides of the current rules while trying to distribute
benefits broadly.
The overarching question at stake in this debate is: will
the U.S. allow commerce to dominate all of our other
values and goals.
Because China is such a HUGE player in the world trade
scene - the U.S. has a $60 BILLION trade deficit with
China - the China debate has becomes more high profile
than other similar debates that did not become national
news.
Arlington, VA: If congress passes this bill
granting PNTR with China, how will this affect China's
quest to join the WTO?
Lori Wallach: Glad you brought up the WTO
I just noted what that institution is in my previous answer.
So... now let me explain how WTO is linked to this China
trade fight.
New countries get into the WTO whenever 2/3 of the
current 137 WTO countries vote "yes" on the new
nation's entry.
In the U.S., Congress has no role in this decision - only
the White House. The Clinton Administration had told
China it will support its entry into WTO (Actually, the
Administration said yes before even negotiating on the
terms of China's entry!)
BUT... under the US constitution, Congress has exclusive
authority to decide about regulation of international
commerce. That means, for instance, setting tariff rates
and also setting bilateral trade terms between the US and
other nations.
So... Congress must decide what trade terms the US gives
China REGARDLESS OF WHETHER CHINA IS IN THE WTO OR NOT.
The difference is, if the US gives China Permanent Normal
Trade Relations, the US gives up its bilateral
relationship with China and turns it all over to the WTO.
And WTO rules FORBID countries to link trade with human
rights, child labor bans, environmental conditions. Which
means the US would lose its current authority to link
trade with China to China improving its terrible human
rights record. China sends 42% of it total exports to
one country - the United States. This gives us enormous
leverage to say: hey, we will give you the same access to
our market as any other country - BUT you need to allow
people to practice their religions freely, meet with
others, set up unions and associations, have free
speech... etc.
Fleetwood, PA: I am concerned about the future
of the United States because Georges Bush's rationale for
supporting trade with Communist China manifests an
undeveloped notion of history with no consideration for US workers and big labor leadership which represents the
rank and file continues to support Al Gore who supports
George Bush's position on trade with China. Since labor
union leadership continues to support Al Gore, despite Al
Gore's sellout to China, how serious of a problem is this
China deal to the average US non-executive worker. I am
further concerned that the media is playing a shill to
what amounts to a class warfare argument between the
U.S. non-executive worker and the U.S. Wall Street
Executive. Certainly, I would like cheaper goods, but not
at the expense of U.S. workers walking the unemployment
line because a US worker cannot work for $1.25 or less
per hour as the Chinese worker does. When the U.S.
consumer pays for unemployment, what has the US consumer
gained.
Lori Wallach: This question is more a comment
and it makes clear why 79% of Americans oppose PNTR for
China - according to a recent Harris poll.
Annapolis, Md.: thanks for taking my question.
Your book's title implies that global trade could
erode democracy. Democracy where? . . .and also, could
you explain how it will erode democracy.
thanks.
Lori Wallach: My book reviews the actual five
year performance of the WTO. We all get to hear many
grandiose promises about how globalization or proposals
like giving China PNTR will be great for us. So, I
decided to get done with the hypotheticals and actually
track what happened under WTO. What I found was...
well, why give away the scariest thing since the latest
Stephen King novel - please buy my book! (www.tradewatch.org)
But seriously, what I found is that the WTO - which
combines 900 pages of rules on everything from food
safety to whether we can ban asbestos anymore - has been
strongly enforced by a built in tribunal system in
Geneva. We found that every single time one WTO country
complained that another WTO country's food safety, health
or environmental law violated trade rules, the WTO
tribunal agreed and ordered the countries to get rid of
those laws. In the US, we weakened our Clean Air Act
regulations having to do with gasoline clenthiness (sic) after
WTO ruled against them and demanded we do so.
But who elected these guys? Who said they could double
guess our government scientists who spent years coming
up with our Clean Air Act regs? Who said they can second
guess our Congress, which said that clean air in our most
polluted cities was a priority.
That is why we say it erodes democracy - these decisions
are being shifted away from those who must live with the
results. Meaning, when something does not work - we have
no way to change it. You think it is a pain to call city
hall when you street lights are burned out. Well, imagine
trying to track down and make accountable someone in some
international bureaucracy to get what you want.
Washington, D.C.: We give China MFN tariff
treatment every year so our market is open to Chinese
goods. PNTR is about opening the Chinese market to U.S.
goods (trade law experts uniformly dismiss the notion
that we don't have to pass PNTR to get the benefits of
the WTO agreement). What possible benefit will accrue to
American workers by voting down PNTR? Our market will
remain open to their goods, why shouldn't we open their
market to our goods? Since China will join the WTO
regardless of PNTR, if we don't pass PNTR, American
companies could easily relocate to foreign countries to
get access to China's market.
Lori Wallach: First, let's dispense with the
myth that China will be a huge new market for U.S. goods:
the Chinese dictatorship jails or shoots workers who try
to organize for a living wage. Average wages are 25 cents
an hour and some US shoe makers pay as little as 13 cents
an hour. What exactly do you think people in China making
the annual income (per World Bank) of less than $850 per
year can buy of U.S. goods? The fact is that even in
areas in which the U.S. has
been a leader in design or development of a good, the
actual goods are being made in China at these slave
wages.
Perhaps you have seen one of those Motorola
pro-China-PNTR ads? About selling cell phones to 1.3
million Chinese. Well first, Motorola leaves out one
vital detail: they just announced a $2 BILLION
inve3stment to build a plant in China to make Motorola
cell phones. Obviously, those phones will be much cheaper
made than paying even minimum wager to someone in the US -
or for that matter to someone in Mexico. And, given the
limited capacity of China's population to afford such
phones, they will be shipped back into the US for sale.
That is what PNTR is really all about: guaranteeing
unlimited, unconditional access INTO the US for goods
made in China under horrific condition (often by US
companies.)
As for your other item: I am not sure where you have
gotten your information, but in fact many trade experts
have written about how the US DOES NOT have to pass PNTR
to obtain the trade benefits China must make if it enters
the WTO. For instance, I suggest you read the excellent -
though very long and scholarly - memorandum to Congress by Columbia University Law School Professor Barenberg.
The US and China now must give each other the best
treatment they give any other nation in trade terms under
a 1979 Trade Treaty. The US gives China its best deal -
which is the tariff rates and other terms required by the
WTO (of which the US is a member.) China gives the US its best deal - but China's current best deal has higher
tariffs and other restriction. When China enters WTO -
which is unrelated in timing to the PNTR vote in Congress- its new "best treatment" also becomes
the WTO terms. The US gets these new, better terms under
the 1979 agreement.
The only question remaining is how the US can enforce
these trade terms. China has a VERY consistent record of
violating its past trade and other international
agreements. In fact, many Members of Congress from
districts who grow crops or manufacture goods here and
seek to export to China oppose PNTR because they worry
about losing powerful US trade law enforcement tools that
would be banned if the US passed PNTR. In the past, it
has been the threat of sanctions under these US laws that
has pressured China to follow it trade rules (and also to
free political prisoners, by the way)
The basic deal here is this: The US is China's number one
export market. The US takes 42% of all of China's exports
explaining why we have such a big trade deficit with
China.) We have enormous leverage because of our role as
China's major export market.
Costa Mesa, CA: I admire your tenacity and find
your analyses of trade issues rather refreshing. How
would you respond that the consequences of not passing
PNTR are worse (for both the US and China) than the
consequences of passing it? Even if we receive full
bilateral benefits of China in the WTO under the 1979
Agreement , not passing PNTR destabilizes the Chinese
govt., and more importantly, puts the Chinese people in a
far more precarious position.
Lori Wallach: Over a year ago, when the China
PNTR debate was just starting, I was honored to be
invited to a meeting with Wei Jinsheng. Like most people,
I only knew Wei as the famous Chinese dissident who had
finally been sprung after 18 years in Chinese prisons and
work camps where he had been sent for writing an essay
about the need for democracy, free speech and a free
market. I knew that Wei was working with the thousands of
other Chinese dissidents in exile in the US and Europe.
(The US State Dept reports that after 6 years of
engagement policy with China - meaning not linking trade
and human rights like we sued to before the Clinton Admin
ended this practice in 1994) human rights conditions in
China had gotten much worse and EVERY human rights, free
speech, religious freedom and labor advocate was in jail
or in exile)
Wei made a compelling case about why not passing PNTR
would help those fighting for human rights in China: most
simply, the current regime relies on one thing for its
legitimacy: continuing economic growth and providing
jobs. This growth and these jobs are based on exports. The
US takes 42% of China's total exports. As much as the
current regime may hate being pressured to improve human
rights conditions, its own survival is based on ensuring
continued access to the US market. Wei argued that only
the US making as a condition of that access allowing free
labor unions, allowing the free speech and information exchange that is necessary
for a free market to work, etc
would get this regime to move - because its own self
interest in remaining in power would be at risk much more
immediately from losing access to the US market than from
allowing reforms...
As for China's people: what worries many is the
combination of China entering the WTO - whereby 15
million peasant farmers will be forced off their land in
the short term per Chinese govt data - and the
repressiveness of the government. Desperate, hungry WTO
unemployed will find their protests and demands met with
"a gun or the gulag" as Wei says.
Dallas,Tx: What happens if a country refuses to
abide by WTO rulings?
Lori Wallach: This is a really important
question and it goes to why so many Representatives from
district that grow or make things they want to ship to
China oppose PNTR (as compared to Representatives who
support companies who want to send investment and production to China and need a guaranteed, unlimited
right to ship the goods back here for sale)
Under WTO rules, a country is told by a WTO dispute
enforcement tribunal that it must change a law that
tribunal has ruled breaks WTO rules.
Countries that refuse to do so face trade sanction from
the winning country.
But here is the catch: unlike the US trade law which
allow motivationally large sanctions, at WTO the level of
pressure that can be applied against the country breaking
the rules is et at the WTO and is limited to the actual
damages suffered by the winning country as calculated by the WTO.
So... right now, in several cases the US won over Europe
at the WTO, Europe said: those WTO rulings are just bad
policy, we won't change the laws. So, the US was
permitted to put up sanctions - but only after two years
and only as much as the WTO said was allowed. And now
several years later, Europe just "pays" those
sanctions and keeps the laws the WTO ruled against.
Now, if Europe does that (although Europe has implemented
other WTO ruling) imagine how well the WTO will work in
China, where there is no notion of the rule of law...
Washington, DC: Ms. Wallach,
I'm very concerned about human rights in China,
including religious freedoms, child labor and worker
rights. Will the Levin proposal adequately address these
kinds of human rights issues?
Lori Wallach: Great question! There are 100
Chinese dissident from as far away as Europe up at
Congress right now dropping hundreds of little Trojan horses on the desks of the Members of Congress who are
considering this useless fig leaf.
So here is the situation: human rights, religious,
Chinese dissident, pro-democracy groups all oppose PNTR
because it would require the US to:
1. End the practice of annually reviewing China's human
rights record before determining if the US wanted to
give China another year of favored trade status.
2. Take away the right to link access to the lucrative US
market to China making improvements on human rights - or
nuclear proliferation, or religious freedom.
And, 79% of the American public opposes PNTR until China
improves in these areas.
So... many Members of Congress were lining up to say
"no": to PNTR. Right now there are equal
numbers for and against, even though there is a HUGE
corporate coalition (Caterpillar, Motorola, Cargill,
Boeing -- all the big companies who have major operation
IN China...)is pouring millions and millions into TV ads,
and "Astroturf" fake grassroots efforts and
plane loads of lobbyists.
So, the PNTR supporters decided they had to try to
provide some "cover" for Members of Congress so
that when the corporations piled on them and DEMANDED
that they support PNTR, the Members of Congress would not
have to go home -- with 79% oft he public opposed to the deal - and be labeled as a human rights sell out.
To say that the proposal they came up with is toothless
is a complement to the relevance of the proposal -
gumless even would be generous. The ineffectiveness of
the Levin proposal has been highlighted in widely
distributed letters to Levin about his
"useless" proposals by leading Chinese
dissidents, including Wei Jingsheng.
At the same time that Levin's proposal is being derided
as weaker than NAFTA's feeble side agreements, the human
rights and religious freedom issues are rising. Last week
a presidentially-appointed religious freedom commission
called on Congress to oppose PNTR given China's growing
repression. The U.S. Catholic Conference, Methodists and
other religious and human rights groups also oppose PNTR
as do the exiled Chinese dissidents representing China's
human rights and labor movements.
The most basic problem with Levin's proposal is that it
fails to provide a replacement for the trade- related
enforcement capacity and leverage Congress would lose if
it ends its annual vote on China's trade terms. A 1994
Administration decision to delink human rights and trade
shelved the trade leverage tool, but it worked in the
past (ask the Chinese dissidents now exiled in the U.S.
about how trade pressure improved conditions for them)
and has enormous potential given China now sends 42% of
its exports to the U.S.
In contrast, Levin's plan would duplicate existing
measures which have failed to improve China's trade or
human rights conduct. Representatives who were seeking
meaningful "parallel" measures to cover these
issues and Taiwan saber rattling ended their efforts
after determining that GOP leaders and the Administration
opposed any proposals with teeth. Democratic Leader
Richard Gephardt announced PNTR opposition after months
of negotiations convinced him that no effective parallel
bill was possible.
The Clinton Administration and GOP leaders oppose
measures that use trade leverage on China, such as by
linking human rights or national security with trade
benefits. On March 30, 2000, Pres. Clinton's economic
advisor Gene Sperling announced that the Administration
would oppose any parallel China legislation connecting
human rights or national security to trade. This position
reverses the President's promise that future trade pacts
would have enforceable human rights, environmental and
labor terms.
Given these Administration and GOP constraints, the only
enforcement schemes Levin considers are a
"shoot-ourselves-in-the-foot" proposal to cut
off Export-Import Bank funding from U.S. companies
seeking to export to China and the addition of
China-specific language to existing, ineffective terms in
U.S. law which call on U.S. World Bank and IMF reps to
oppose certain proposals. Some PNTR supporters also argue
that U.N. sanctions could be used. Yet again this year
and for the seventh year in a row, China has blocked U.S.
efforts to get a UN resolution on China's human rights
violations out of committee.
THE LEVIN PROPOSAL:
1) Executive and Legislative Branch Commission on China's
Human Rights
This new Commission would prepare a report on China's
human rights conduct. Yet, the U.S. State Department
already brings considerable resources to bear to conduct
an extensive, well-respected annual human rights review
of China which it publishes. More importantly, the newly
proposed Commission would have no ability to take action
when China's human rights conduct continues to
deteriorate. This represents a major step backward from
Congress' current authority.
Currently under the annual Jackson-Vanik review and NTR
vote process, Congress determines the terms of China's
access to the U.S. market each year. This role means
Congress has the capacity to threaten, and if necessary
enact, trade pressure, such as an increase in tariff
levels. Proponents of PNTR say the annual review policy
has not improved China's human rights conduct. Yet, they
fail to mention that they broke the tool that they now
declare does not work. Under pressure from business
interests, the Clinton Administration gutted the
effectiveness of the trade tool by delinking human rights
considerations from China's right to favorable terms of
U.S. market access. Every year since
"delinkage," trade has expanded and China's
human rights conduct has worsened, a fact which debunks
the myth that more free trade promotes more freedom.
In the past, threats of trade sanctions have been the
only effective means to obtain changes in China's
conduct. For instance, in 1996 China finally implemented
intellectual property terms it had agreed with the US in
1995 after the U.S. began implementing millions in
tariffs sanctions against Chinese goods.
However, if the U.S. has a full WTO relationship with
China, the U.S. may only use WTO dispute resolution to
enforce China's commitments. And, the U.S. would be
forbidden from using trade pressure to enforce human
rights or environmental treaties. Unlike the speedy U.S.
trade enforcement mechanisms, such as Section 301 of the
trade law, WTO dispute resolution takes two year
minimally and can be only initiated by the
Administration, not Congress. While U.S. enforcement
mechanisms permit motivationally large sanctions, WTO
sanctions are based on actual damages with the amount
determined by the WTO. Enforcement of such WTO rulings
relies on respect for the rule of law, a notion that is
missing in China.
As a result of these WTO constraints on enforcement, Rep.
Levin is left with no effective enforcement tools. Thus,
his proposal is to "punish" China by cutting
off Export-Import Bank funding from U.S. companies
seeking to export to China. The other proposal is to
create pressure by having U.S. World Bank and IMF
representatives vote against China's interests. Yet,
similar provisions on IMF and World Bank voice and vote
already in existence have proved totally useless. (E.g.
these institutions do not make decisions by voting.)
2) Amendments to US trade law to reiterate Chinese
commitments on surge protection and dumping that will be
part of China's binding WTO accession terms.
First, these Chinese commitments will apply whether or
not they were memorialized in U.S. law, as they will be
part of China's legally binding WTO accession terms.
Second, these provisions only cover instances of Chinese
products flooding the U.S. market, but they do nothing to
ensure access of U.S. goods into the Chinese market - the
more troubling problem with past U.S.-China trade.
3) WTO Review of China's Compliance and a U.S. WTO
Compliance Review
These elements of the Levin proposal are already covered
by existing WTO rules and U.S. laws and policy, making
their inclusion in the China package more meaningless
feel-good filler. The WTO already would be required to
review China's compliance under the WTO's Trade Policy
Review Mechanism (TPRM). Indeed WTO countries are
required to provide regular data to the WTO's TPRM so
that continual monitoring of compliance is possible, as
well as regular TPRM reports on each WTO Member's conduct
under the WTO rules. The U.S. annual review of China's
conduct Levin calls for is already done and would
continue to be required as part of the National Trade
Estimates Report published annually by USTR.
Boston, MA: Hi Lori,
Haven't read your book, but am reading some
prerevolution history & it occurs to me that concern
over the WTO is pretty similar to things we've seen
before.
But if we're China's biggest market, shouldn't we be
their 800-pound gorilla? Why are we so gutless with them?
They threaten Taiwan (Intel suggests they're always empty
threats), we do nothing; they threaten to nuke Los
Angeles & we do nothing; we're too gutless to even
comment on Tibet or Tiananmen Square -- after 10 years of
this I have to wonder what's going on. Is it that we're
supporting a communist government there in hopes of
avoiding total anarchy, civil war, etc?
Any ideas?
Lori Wallach: Any ideas you ask? How about you
run for Congress or recruit someone else to do so with
your logical thinking on this matter. Seems sort of
obvious to me too, but I'm only a trade lawyer!
And, given your election campaign will come after the
vote on China PNTR: PLEASE DO THIS NOW: CALL CONGRESS
(NUMBER FOR CAPITOL SWITCHBOARD IS 202-225-3121) AND TELL
YOUR REPRESENTATIVE TO VOTE NO NEXT WEEK ON PNTR FOR
CHINA. TO FIND OUT THE POSITION OF YOUR MEMBER OF
CONGRESS, PLEASE EMAIL OUR ORGANIZING TEAM HERE: [EMAIL PROTECTED]
OR [EMAIL PROTECTED]
www.washingtonpost.com
: Thanks again to Lori Wallach for joining us and
answering all of these questions.
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