". . . [The trade agreement with China] is a win-win for both countries. It is, when it comes to the process of tariff reduction and market opening, a one-way process. . . . This is simply about China opening its market to us. It does not change our laws or our tariffs by one bit."

—Gene Sperling, director of the National Economic Council

"If you take a blank piece of paper and draw a line and write on one side the things that the U.S. had to do for China, it would be empty, but if you write on the other side everything China had to do to remove barriers to American goods and services, you'd cover the paper top to bottom."

—Bruce Josten, U.S. Chamber of Commerce

Remember NAFTA? Proponents of the North American Free Trade Agreement (NAFTA) also claimed that it was a one-way deal where the United States would gain much more than Mexico, since our tariffs on Mexican goods were two and a half times as high as Mexico's tariffs on our goods. Taking both tariffs to zero, it was argued, would clearly benefit the United States disproportionately, and NAFTA proponents confidently predicted growth in the U.S. trade surplus with Mexico and a consequent increase in American jobs related to exports to Mexico.

Instead, U.S. companies turned out to be much more interested in moving production to Mexico and selling their products back in the United States. As a consequence, our small trade surplus with Mexico ballooned into a $23 billion deficit, as U.S. companies shut down their American factories at an alarming rate and relocated them to Mexico—where they have earned huge profits by taking advantage of a workforce that is often denied the right to organize independent trade unions. The purchasing power of Mexican wages has fallen by almost 20 percent since NAFTA passed.

The China deal, like NAFTA, is being sold to the American public as a market-opening agreement, when it is actually designed to encourage and reward the shift of investment and jobs overseas. Let's not be fooled a second time by the same old arguments.

Not a One-Way Deal

Despite the overblown claims of permanent NTR supporters, the Chinese government did not spend more than 13 years negotiating an agreement that gave the United States everything, yielding no concrete benefit to themselves. In fact, the United States will make significant and irreversible concessions if it grants permanent NTR, severely limiting our ability to use our own trade laws effectively and giving the Chinese government a blank check to continue its egregious violations of human and workers' rights. We will give up crucial economic leverage on issues of great concern to the American people, in areas where the Chinese record is tremendously problematic.

By granting permanent NTR, the United States gives up:

• Annual review. Currently, Congress must decide each year whether or not to renew China's trade status. Since 1989, the debate has been heated and vigorous, with hearings and press coverage on national security issues, human rights, religious freedom, the environment and trade issues. While Congress has not yet voted to deny China annual normal trade relations, the prospect of losing NTR has spurred public debate on these important issues and put pressure on the Chinese government. Before President Clinton "delinked" human rights from the trade debate in 1994, most releases of prominent political dissidents occurred in the second quarter of each year, leading up to the congressional vote on China's trade status. The Wall Street Journal wrote that the release of 211 political prisoners in May 1990 was "aimed at improving China's image abroad and derailing U.S. lawmakers' efforts to take away China's most-favored-nation trade status" (5/11/90). The Chinese government has made no secret of its desire to end this annual review and the threat of losing trade privileges to the U.S. market. The business community has also argued for an end to this annual scrutiny of its workers' rights and environmental practices in China.
• Economic leverage to improve workers' rights and human rights. Since the WTO has no minimum standards for compliance with internationally recognized workers' rights or human rights, the United States will lose its ability to bring trade action against the Chinese government for violations of these rights, no matter how severe. If, for example, the Chinese government continues to jail and torture workers who try to organize independent trade unions, the United States will not be able to use our trade laws in protest of these practices, without facing WTO-mandated sanctions.
• Effective use of Section 301. One of the most effective market-opening policy tools the United States has is Section 301, the trade law we use to retaliate against unfair trade practices, including violations of workers' rights. The United States has come close to using Section 301 against China several times, and the credible threat of trade sanctions has been effective in achieving progress in negotiations and improving the Chinese government's enforcement of agreements. Once Congress grants permanent NTR, effectively agreeing to enter into a full WTO relationship with China, our ability to use Section 301 is severely limited. If the U.S. government finds that China is engaging in unfair trade practices, we can bring Section 301 sanctions only in non-WTO-covered sectors, such as a few marginal service areas, where the United States and China engage in little trade. Sacrificing our ability to use Section 301 effectively is akin to unilateral disarmament—we would be giving up the one policy tool that has the potential to be effective against precisely the kinds of unfair trade practices and workers' rights violations the Chinese government has engaged in.
• Leverage in the ongoing negotiations with other WTO members. Critical aspects of the accession deal—including subsidies, non-tariff barriers and verification mechanisms—still have not been fully negotiated. Once permanent NTR is granted, the Chinese government will have little incentive to make meaningful commitments in these areas.

Permanent NTR is like an insurance policy for the Chinese government and for the multinational corporations now benefiting from the status quo—it provides protection against any economic response to workers' rights or human rights violations; it ends the inconvenient and unflattering annual review; and it defangs American trade laws.

Benefits Oversold

The benefits of the China deal have also been oversold by its proponents. According to U.S. Trade Representative, the tariff reduction on goods the United States sells to China amounts to less than 7 percentage points (a cut from 17 percent to 10 percent)—which will be swamped by any sizable devaluation of the Chinese currency (much as the NAFTA tariff cuts were swamped by the peso crisis). Furthermore, key parts of the deal—regarding subsidies, internal regulation and monitoring—remain incomplete, raising important questions about why it is so important to hold the vote in the next month.

It is crucially important to remember that the grant of permanent NTR is irrevocable: Once the United States enters into a full WTO relationship with China, we cannot reverse course, no matter how unfavorable the circumstances, without subjecting ourselves to WTO sanctions. By granting permanent NTR, Congress agrees that our bilateral relationship with China will be governed by WTO rules and dispute settlement procedures, and we give up our right to use bilateral or unilateral measures effectively. If we attempted to enforce Section 301 or to bring trade action for violation of workers' rights, China would have the right to counter with WTO-approved sanctions.

On the other hand, denying permanent NTR can easily be reversed if circumstances warrant. Congress can vote down permanent NTR now, or delay a vote until the agreement is actually finished, and then reconsider that decision in a year or two, taking into account the Chinese government's record of compliance with WTO rules and international human rights and workers' rights norms. This is clearly the prudent course of action.