The Debate Over China S Mfn

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The Debate Over China S Mfn Status Essay, Research Paper In 1998, United States imported more than $70 billion worth of Chinese consumer and industrial goods, up from $38 billion in 1994. Topping the list: toys, footwear, electrical goods, and all forms of apparel, from woven to knits. But the days when American consumers could go shopping in 99cents Store, or buy a mid-sized Donald Duck stuffed toy for $20 at the Disney Store, would be numbered. Because as the debate over most-favored-nation (MFN) status for China heats up in Congress every year, consumers wonder whether 2000 could be the last year they could see cheap .Made in China x goods in the market. The math is simple: With MFN, imports from China have an average tariff of 6 percent. Without MFN, they could sharply

rise–to more than 40 percent on some items. Those costs are passed along to consumers. What is little understood is that the term MFN is really a misnomer. Despite its name, Most Favored Nation status is not a privileged status accorded only to close friends. It is normal trade relations — the ordinary tariff treatment United States accord to almost all countries in the world. The United States offers MFN, or ordinary tariff treatment, on a near-universal basis. .Over 160 countries have MFN trading status with the United States, and only six countries Afghanistan, Cambodia, Cuba, Laos, North Korea, and Serbia/Montenegro are denied MFN status x (Bloch 196). Cao 2 I believe that free and fair trade is the foundation for peace and prosperity — and frequently for democracy as

well. This belief has been proved by the decision of every U.S. president since normalization of diplomatic relations in 1979, Democrat and Republican alike, to extend MFN status to China. But there is still much debate over this simply normal tariff status in Congress every year, which found to American fundamental national interest. Why? Possible answers to this question surely would include the requirement of the Jackson-Vanik Amendment, a large and growing trade deficit with China, and using MFN as leverage to change objectionable Chinese policies, especially in human rights. A fundamental cause of the debate over China s MFN status in Congress is the requirement of the Jackson-Vanik Amendment. According to .the Jackson-Vanik Amendment to Trade Act of 1974, MFN status for

non-market economies became conditional on freedom of emigration, a move then aimed at restrictions on Jewish emigration by the Soviet Union x (Bloch 196). Obviously Chinese emigration to the United States is limited more by U.S. law than by Chinese government action. James Mann, the author of Beijing Jeep, tells us an early episode happened during Deng Xiaoping s trip to U.S. in 1979: At a White House meeting on January 30, 1979, when the president raised the subject of the Jackson-Vanik Amendment, Deng quipped, .If you want me to release to million Chinese to come to the United States, I d be glad to do so. x Carter and his aides laughed. (107) But China as a .non-market economy x is subject to an annual process of presidential certification in order to have its MFN status

extended; Congress can reject this presidential decision, if it chose to do so. Cao 3 The rapidly growing U.S. trade deficit with China causes the debate over China s MFN status drastic in Congress. For Americans, the trade surplus with Japan is an old story, one that was told and retold for three decades until the mid-1990s. In the case of China, by contrast, the United States seems to have been struck almost overnight. Since 1985, U.S. imports from China have grown 25% per year, while exports to China have grown at less half this rate. In 1998, China s trade surplus with the United States was roughly $56.9 billion. In the same period, China and Japan together were responsible for about half of the U.S. deficit in merchandise trade (Scott). Increasing trade with low-wage