The United States must approve permanent normal trade relations (PNTR) status for China in order for the U.S. to receive the benefits of China’s accession to the World Trade Organization (WTO).

If China accedes to the WTO and the U.S. Congress does not pass legislation granting China PNTR, it is expected that the Administration would invoke its right of "non-application" under Article XIII of the WTO Agreement, as has been done with respect to other countries subject to the Jackson-Vanik Amendment. This would be done at the time China formally accedes to the WTO. Even though China would become a WTO member, the United States would not treat China as a WTO member. Moreover, China would not be required to treat the United States as a WTO member.

Without PNTR, an historic opportunity would be jeopardized for U.S. companies and their workers. The terms of the landmark U.S.-China bilateral agreement concluded in November and all other terms of China’s WTO accession package would not apply to U.S.-China trade and investment, except to the extent that existing bilateral agreements make the WTO agreement terms binding between the two countries.

While the U.S. would receive some modest benefits, such as tariff cuts, under the terms of the 1980 bilateral agreement between the United States and China, many of the hard-fought concessions by the Chinese are not covered by this agreement. For example, China’s agreement to eliminate forced technology transfer and investment requirements would not be extended to the United States. Nothing in the 1980 agreement requires the Chinese government to ensure that its state-owned and state-invested enterprises make their purchases solely on commercial terms, while China agreed to this commitment in the WTO accession agreement. Without PNTR, U.S. companies would not benefit from China’s agreements to allow distribution rights for foreign companies and to allow investment in telecom and Internet services. Additionally, the U.S. would not have access to WTO dispute settlement for China.

Article I of the GATT requires that WTO members provide "unconditional" MFN treatment to other WTO members. This principle is a cornerstone of the WTO and an open global trading system.

Some argue that the U.S. can meet this unconditional MFN obligation, and thus be entitled to China’s WTO concessions, as long as Congress renews NTR on a continual basis. Under the Jackson-Vanik Amendment to the Trade Act of 1974, China’s MFN status is tied to annual Presidential findings or waivers regarding freedom of emigration, which can be overridden by Congress through a joint resolution of disapproval. Continued annual renewal of China’s NTR status would violate WTO rules because it would be conditional (on freedom of emigration per the Jackson Vanik Amendment) and discriminatory (requiring procedures for China that are not applied to other WTO members). Approval for permanent NTR is necessary to meet the WTO’s unconditional MFN obligation.