U.S. companies have played an important role in improving wages and working conditions by providing private sector alternatives to jobs in state-owned Chinese factories. U.S. companies pay higher wages, implement world-class standards, and support American values--merit-based hiring, respect for employees, individual responsibility, high ethical standards, environmental stewardship, and free enterprise.

• Between 1987 and 1997, average Chinese wages grew by 343%. In certain sectors the growth was even more pronounced -- real estate (593%), banking and insurance (568%), and energy (475%). In short, the market-oriented reforms and historic opening to foreign trade and investment, which were launched by Deng Xiaoping in 1978, have contributed to unprecedented increases in wages and living standards. A recent survey by the American Chamber of Commerce shows U.S. companies operating in China pay four times as much as state-owned companies for comparable work.

• A World Bank report notes that "[t]wenty years ago, China was among the world's poorest countries, with 80 percent of the population living on incomes of less than US$1 a day and only a third of all adults able to read or write. Between the launching of China's economic reform program in 1978 and 1995, its transition from a command to a market-based economy helped fuel a remarkable average growth in Gross Domestic Product of 8.0 percent a year."

• According to the World Bank, accession to the WTO could increase China's GDP growth by 2-3% annually, "translating into 5 million [Chinese] jobs for each additional percentage point of growth. Increased foreign investment should also create additional employment."

• Open trade advances worker rights. Independent studies show that trade liberalization improves working conditions in developing countries by leading to across-the-board wage increases and greater rights to organize and engage in collective bargaining. In a 1996 study of 44 countries, the Organisation for Economic Cooperation and Development (OECD) found a strong correlation between trade liberalization and workers' rights.

• The OECD study concluded that "the clearest and most reliable finding is in favour of a mutually supportive relationship between successfully sustained trade reforms and improvements in association and bargaining rights. . . . [F]ears that freer trade could lead to an erosion of these standards . . . are unfounded."

• The actions of Chinese workers support the OECD's findings. They are abandoning jobs in state-owned enterprises, applying for jobs with foreign companies and the private sector, and flocking to the dynamic free enterprise zones of Southern China.

Isolating China from the global trading system would worsen human rights and working conditions. Rejecting PNTR for China would shut down the lines of communication with China and undermine the important role played by U.S. businesses, religious organizations, and NGOs in promoting the rule of law and democratic principles. It would damage prospects for legal reform, freedom, and political change.

• While the AFL-CIO cloaks its protectionist opposition to China's WTO Membership in human rights concerns, cutting off U.S.-China trade would be disastrous for ordinary Chinese. Some of the worst human rights abuses in history took place when China was isolated and markets were closed. Today, few Chinese want to go back to the abuses of the Cultural Revolution or mass famine of the Great Leap Forward.

• In its 1999 Human Rights Report, the State Department found that economic reform has been accompanied by an opening of Chinese society. "Most average citizens went about their daily lives without significant interference from the Government, enjoying looser economic controls, increased access to outside sources of information, greater room for individual choice, and more diversity in cultural life."

Contrary to the AFL-CIO's bleak claims, the situation with respect to China's labor practices is complex. Despite gaps between law and practice, China:

• Recognizes the right to collective bargaining in all enterprises, including those that are foreign-owned.

• Does not prohibit strikes, even though the law does not explicitly include the right to strike. In fact, the State Department's 1999 Human Rights Report found a marked increase in strikes, work stoppages, and demonstrations.

• Prohibits child labor. According to the State Department: "Neither the ILO nor UNICEF believe there is a significant child labor problem in the formal sector. Good public awareness, a cheap abundant supply of legal young adult workers, nearly universal primary schooling, and labor law enforcement all reduce opportunities and incentives for employers to hire child workers."

• Gives workers more extensive legal rights than most developing countries, including mandatory and legally enforceable written employment contracts, a 40-hour work week, protections for working women, and maximum overtime of 36 hours per month. Most employers are required to provide housing and medical care.

• U.S. trade law, which we support, prohibits prison labor imports and would not be changed by PNTR. In fact, the WTO explicitly authorizes restrictions on trade in prison labor products in GATT Article XX(e).

• While more work needs to be done to improve working conditions in China, shutting the doors to U.S.-China trade by denying PNTR will only block progress on worker rights, collective bargaining, and health and safety standards.

Despite the AFL-CIO's claims that the U.S. will be flooded by low-wage imports, the WTO Agreement contains strong safeguards against market disruption and fully preserves U.S. antidumping remedies for a 15-year transition.

• The U.S.-China WTO Agreement provides a 10-year transition for U.S. remedies against market disruption and protects U.S. non-market economy antidumping methodologies for 15 years. Accordingly, U.S. law will continue to provide effective relief against import surges and unfair trade practices.

• Most of China's exports consist of low-cost consumer goods, e.g. apparel, footwear, toys, and consumer electronics - which are no longer produced in substantial quantities in the U.S. Thus, Chinese exports tend to displace other Asian suppliers, not U.S. production. While the AFL-CIO focuses on the U.S. trade deficit, it neglects to point out that the U.S. unemployment rate is also at an historic low - 4.1% -- because of America's global leadership and dynamism.

• A China WTO Agreement would open markets for America's most competitive, high-wage, high-skill products--capital equipment, agriculture, high technology, financial services, telecommunications, and Internet services. A Brookings Institution study found that most U.S. exports to China are high value-added goods, produced by industries that pay American workers above-average wages. In contrast, prospects remain poor for increasing low-wage U.S. assembly of inexpensive consumer goods, e.g. apparel, footwear, and televisions, absent a sharp deterioration in U.S. living standards or a major downward shift in the current aspirations of the U.S. work force.

• Opening Chinese markets will increase future export opportunities for America's most competitive industries - ones that can support future U.S. living standards and good wages. The Institute for International Economics found that trade expansion has raised overall U.S. wages. "Increased efficiency through international trade and specialization has created a larger pie to share, largely compensating any downward pressure on unskilled wages."

• By prohibiting China from imposing technology transfer, export performance, and import substitution requirements on investors, the WTO would allow U.S. firms to supply Chinese markets from U.S. factories, instead of manufacturing in China.

Protectionism, not trade, threatens U.S. wages, incomes, and retirement security. According to Federal Reserve Board Chairman Alan Greenspan: "The evidence is overwhelmingly persuasive that the massive increase in world competition--a consequence of broadening trade flows--has fostered markedly higher standards of living for almost all countries who have participated in cross-border trade. I include most especially the United States."

• According to the Federal Reserve Chairman, protectionism is a threat to U.S. prosperity and the retirement income security for U.S. workers: "It is well known that erecting barriers to the free flow of goods and services across national borders undermines the division of labor and standards of living . . . . Not so well understood, in my judgment, is the impact that fear of growing protectionism would have on profit expectations, and hence on the current values of capital assets."

• The prospects for the U.S. economy and U.S. stock market valuations will deteriorate significantly if Congress puts up protectionist walls that shut off American business and agriculture from 96% of the world's potential purchasers. Because assumptions regarding continued access to overseas markets are built into U.S. equity valuations and price-earnings ratios, there could be a sharp deterioration in U.S. equity markets if U.S. trade policy goes protectionist.

Bringing China into the WTO will help strengthen the rights of working Chinese by expanding the rule of law, boosting the entrepreneurial forces in Chinese society, and fostering more freedom and openness. As Wang Dan, a leading Tiananmen Square dissident, said: "Economic change does influence political change. China's economic development will be good for the West, as well as for the Chinese people. China needs Most-Favored Nation trade status with the United States and it should fully enter the world trading system."

PNTR benefits working Americans. Making China play by global trade rules guarantees access for U.S. products and services to the world's largest emerging market and ensures that U.S.-China trade will continue to support U.S. economic growth, increased productivity, higher wages and better retirement security for working Americans.

As Leonard Woodcock, former United Auto Workers (UAW) President and former U.S. Ambassador to China, said: " I have spent much of my life in the labor movement and remain loyal to its goals. But in this instance, I think our labor leaders have got it wrong. . . American labor has a tremendous interest in China trading on fair terms with the United States. The Agreement we signed with China this past November marks the largest single step ever taken toward achieving that goal."