DATE: Saturday, June 21, 1997               TAG: 9706210004

SECTION: LOCAL                   PAGE: B6   EDITION: FINAL 

TYPE: Opinion 

SOURCE: BY J. R. BULLINGTON 

                                            LENGTH:   95 lines

DENYING CHINA EQUAL TRADE STATUS WILL HURT U.S.

President Clinton has announced his intent to renew China's Most Favored Nation trade status when it expires July 3. However, congressional opponents have until Sept. 1 to pass a joint resolution overturning this decision, and many have said they plan to do so.

Last year, a resolution to deny MFN status to China was handily defeated. But this year, the dynamics of the debate have changed, as conservative Christian groups have joined labor unions and liberal human rights organizations in a vigorous anti-MFN lobbying campaign. This has caused some congressional Republicans to reconsider their traditional support for MFN renewal.

While demagogues and deluded divines may find considerable self-satisfaction in mounting this moralistic crusade, its success would be a major foreign policy disaster. Why? Because denial of MFN status to China would have grave consequences for American economic and political interests as well as for the very values the crusaders profess to support.

First, we need to understand that Most Favored Nation trade status is no favor. It is simply 19th-century diplomatic jargon for equal treatment. In fact, the United States maintains the same MFN trade terms with every nation in the world save six (Afghanistan, Cuba, Laos, North Korea, Serbia and Vietnam).

What would denial of China's MFN status mean? Specifically, it would mean that U.S. taxes on goods imported from China would rise from the current average of 5 percent to an average of 50 percent, the level of the Depression-era Smoot-Hawley Tariff. This would cause prices on these products to soar, forcing American importers to find new and more costly suppliers (most likely in Southeast Asia and Latin America). The end result would be higher prices for American consumers.

Moreover, since MFN is extended on a reciprocal basis, China would immediately withdraw MFN treatment for the United States. This would mean the loss of about $18 billion in U.S. exports to China, which support some 200,000 high-paying American jobs. European and Japanese suppliers would quickly fill the gap, and American companies, workers and farmers would be frozen out of the world's largest emerging market for decades to come.

But the political consequences of revoking MFN for China would be even more serious than the economic losses.

China is clearly becoming a great world power - perhaps a superpower - of the 21st century. Its 1.3 billion people are a fifth of humanity; it is the center of an undeniably great world culture and civilization; and by about 2020, its economy is likely to surpass ours as the world's largest.

Historically, the emergence of a new world power has often led to regional or global conflict; and it may turn out that the China of 2020 or 2030 is indeed hostile, aggressive and an enemy we must confront. The best way to assure such an outcome is to isolate and punish today's China and treat it as an adversary rather than a partner in the new world order.

Denial of MFN status would be a giant step along this path of confrontation. At a minimum, it would surely increase tensions across the Taiwan strait, complicate the already dangerous situation on the Korean peninsula and undercut efforts to control Chinese arms exports to rogue regimes. It could well mark the beginning of a decades-long Sino-American Cold War, with unpredictable consequences for world peace.

And finally, the most ironic consequence of MFN denial would be a grave setback to human rights and religious freedom in China, the very causes which the political demagogues and misguided Christian conservatives claim to champion.

No one who cherishes American values would argue that China today is democratic or sufficiently respectful of human rights or adequately tolerant of religion. However, since Deng Xiaoping in 1979 began to lead China away from Maoism to a market-based economy and more openness to the West, there has been dramatic change: Not only are the Chinese people vastly better off materially, they also enjoy much greater personal freedom, improved access to information, and a substantial degree of religious toleration.

Given everything we know of the Chinese government, it is fatuous to suppose that its reaction to denial of MFN would be more democracy, greater respect for human rights and increased tolerance of religion. It would certainly be just the opposite. This is the view not only of the vast majority of China experts but also of human rights activists and religious leaders with actual experience in China.

Consider: Would we Americans move more quickly to solve, say, our narcotics-consumption problem, or growing income disparities, or lingering racism if one of our major trading partners ordered us to do so on threat of economic war? Can we expect China, which has much stronger historical reasons than America to be fearful and resentful of foreign pressure, to react differently?

Trade with China, and the policy of constructive engagement of which it is an indispensable element, are economically beneficial and politically vital, and represent the best hope for promoting American values in this rising global power. Congress should ratify MFN approval this year and then move to give China the same permanent MFN status that is enjoyed by all our other trading partners. MEMO: J. R. Bullington is director of the Center for Global Business and

Executive Education at Old Dominion University and a former U.S.

ambassador and career diplomat with extensive service in Asia and

Africa. KEYWORDS: ANOTHER VIEW

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