WASHINGTON-With China potentially becoming the biggest wireless export market in the world, the Clinton administration is challenged with keeping disputes over human rights, arms sales and Taiwan separate from its economic interests in the booming Asian nation of 1.5 billion people.
Clinton was expected to meet yesterday and today with Chinese President Jiang Zemin in Subic Bay (outside Manila in the Philippines) to discuss regional trade liberalization and other issues to wind up the Asia Pacific Economic Cooperation forum. The United States is pushing for a free trade accord among APEC’s 18 member nations.
U.S. officials reportedly failed during preliminary talks late last week to win support for APEC to phase out tariffs on telecommunications and computer products, a big blow that could undercut the World Trade Organization meeting next month in Singapore.
At that meeting, the United States will lobby for more countries to open telecom markets in order to reach a free trade agreement by Feb. 15 among WTO’s 125 members.
Erin Pham, head of Asia Pacific affairs at the Telecommunications Industry Association, said wireless technology could account for 40 percent to 50 percent of the $50 billion to $60 billion in telecommunications business in China during the next five years.
Today, the equipment market is relatively open, with L.M. Ericsson, Hughes Electronics Corp., Lucent Technologies Inc., Motorola Inc. and Northern Telecom Ltd. among the suppliers in China. The telecom service market, though, is closed.
President Clinton has carried on the Bush administration’s policy of de-linking trade and human rights. But keeping the trade and other contentious issues separate is a delicate balancing act that requires Clinton to walk a fine line. Congress makes noise every year about revoking most favored nation status for China. But China retains MFN status year after year.
“Given the business interests and the larger picture, the administration will never take a hard stance on trade [with China],” Pham predicted.
But even as lucrative as China’s telecom market promises to be, it may be difficult for Clinton and Congress to keep trade separate from other highly sensitive issues.
In late October, Wang Dan, a leading figure in the 1989 Tianaman Square uprising, was sentenced by the Chinese government to 11 years in jail for his pro-democracy activities.
Just last week, The Washington Times said China sold missile technology and advanced radar system components to Iran. This follows U.S. intelligence reports of Chinese missile and nuclear technology sales to Pakistan, Iran and Syria, a development the paper said was at odds with Clinton administration claims that China had curbed arm sales.
For sure, the United States has taken note of last week’s Commerce Department figures showing an alarming $11.3 billion trade deficit for September-the second worst deficit in history. China accounted for $4.7 billion of that number, the second time in as many months and the third time in 1996 that the U.S. trade imbalance with China was greater than with Japan.
“We have made some progress in opening markets in China, but we have a long way to go,” said Mickey Kantor, secretary of commerce. “We want a level playing field. As they have access to our market, we want access to theirs.”
In the post-Cold War era, the United States appears willing to leverage its economic might rather than its military muscle to win concessions on human rights in China and elsewhere. China, for example, wants into the WTO. But its acceptance into the global trade group could depend on how it relates to the world community on human rights and arms sales.
But that is counterbalanced by the immense trade opportunity China offers in telecommunications. How big?
“Huge, huge, huge,” says Eric Nelson, head of international affairs for TIA.
