June 3, 1999
Web posted at: 2:33 p.m. EDT (1833 GMT)

WASHINGTON (AllPolitics, June 3) -- In what's expected to trigger a heated debate this summer with Congress, especially amid allegations of Chinese espionage, President Bill Clinton sent Congress Thursday his decision to renew normal trade relations with China for another year.

Clinton justified the renewal saying it "will promote America's economic and security interests" despite recent tensions between the two nations.

"We pursue engagement with our eyes wide open, without illusions," Clinton said. "A policy of disengagement and confrontation would only strengthen those in China who oppose greater openness and freedom."

The battle over China's trade status has become an annual Washington event, but Clinton has so far had his way. This year, that fight will be tougher, particularly in light of allegations that China stole U.S. nuclear secrets. There is also congressional anger over the violent Chinese protest outside the U.S. Embassy in Beijing following the mistaken bombing of the Chinese Embassy in Belgrade.

Clinton's move would maintain China's status as a normal trading partner. Last year, at the request of Clinton, Congress passed a law formally changing the name from Most Favored Nation (MFN) status to Normal Trade Relations (NTR). However, it is still widely referred to as MFN.

Rep. Nancy Pelosi

The renewal of MFN/NTR status will go into effect unless both chambers of Congress pass resolutions of disapproval within 90 days. If that happened, Clinton could veto the resolution, meaning a two-thirds majority would then be necessary to block renewal.

A coalition of liberal Democrats and conservative Republicans is likely to lead the opposition. Though it would be possible in the current political environment for them to succeed, it more likely that Congress will go along with a one-year extension.

Still, angry rhetoric is expected.

Rep. Nancy Pelosi (D-California) criticized the president's timing, that came on the eve of the 10th anniversary of the Tiananmen Square massacre: "This administration's China policy, like that of the administration before it, has not succeeded in making trade fairer, people freer, or the world safer."

And some conservatives point to the growing trade deficit with China as a sign that the policy is not working. The United States exported $14.3 billion in goods to China last year and imported $71.2 billion.

Clinton hopes that this annual debate could soon be a thing of the past, saying he wanted to work with Congress to secure permanent trade status for China as part of negotiations aimed at winning US support for China's entry into the World Trade Organization (WTO).

"NTR with China is good for Americans," Clinton said in a statement released by the White House Thursday. "Our exports to China have quadrupled in the past decade. Exports to China and Hong Kong support some 400,000 American jobs. Revoking NTR would derail ongoing negotiations to increase our access to China's market and to promote economic reforms there."

Robert Rubin

"Whether that is a practical possibility, given the current circumstances, I don't know, but I think it's something we should try to accomplish," said outgoing Treasury Secretary Robert Rubin.

Tensions between the United States and China forced administration negotiators to abandon hopes of negotiating China's entry to the World Trade Organization in time for Congress to vote on renewed trade ties and a WTO deal at the same time.

The U.S. granted MFN/NTR status to all its trading partners in 1934. But in 1951, during the early days of the Cold War, the policy was modified to require the president to suspend the MFN/NTR status of all Sino-Soviet bloc countries.

The Trade Act of 1974 allowed "nonmarket economy" countries to be granted a waiver and have their MFN status restored. Under the conditions of that act, the waiver must be renewed every year. President Jimmy Carter sent Congress in 1979 a trade agreement with China that included a MFN waiver. Normal trade status was formally restored to China on February 1, 1980.

Despite a strained relationship after China's 1989 crackdown of protestors in Tiananmen Square, China has been granted a MFN waiver every year since 1980.

CNN's Wolf Blitzer and John King contributed to this report.

Thursday, June 3, 1999

• Clinton notifies Congress of decision to extend China's trading status
• Ickes: First lady will form exploratory committee in July
• Financially strapped Alexander to cut campaign staff, travel budget
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• Transcript: Clinton speaks on Kosovo, budget and global warming
• Court to decide on motion to dismiss War Powers lawsuit
• Capital planners approve World War II monument on Mall
• House members to boost office funds as other programs face knife
• Gore pledges improved coverage of prescription drugs, help for family caregivers
• Pataki: Hillary run would be mistake
• Peace seeker Talbott: a Daytonian looking for a new Dayton deal
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• Smith considers abandoning GOP for presidential run
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• Dole goes home to raise money

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