WASHINGTON-With last week’s House vote supporting presidential renewal of most-favored-nation trading status for China, the focus shifts to Hong Kong-and its huge wireless-driven telecom export market that falls under Beijing rule tomorrow-and to the World Trade Organization.
Both China and Hong Kong are strategic wireless export markets for the United States, but U.S.-Sino relations have become muddled by growing concern over China’s human rights record, arms sales to terrorist-sponsoring nations and alleged attempts to influence congressional and president elections and U.S. trade policy.
With $708 million in U.S. telecom exports (mostly wireless) shipped to Hong Kong in 1996, the market represents a strategic trading partner for the United States.
Hong Kong has four cellular operators-Hongkong Telecom, Hutchison, Pacific Link and Smart Phone (of which AT&T Corp. owns 30 percent)-that account for nearly 800,000 subscribers in a deregulated market. It is estimated that Hong Kong will have 2.5 million subscribers by 2000, or a 37 percent penetration rate.
To give some perspective, Hong Kong ranks fourth among all countries in U.S. telecom exports. Japan imports the most U.S. telecom products at $1.9 billion last year. Next is South Korea ($928 million), followed by China ($761 million) and Hong Kong.
Opinions differ whether Hong Kong’s thriving commerce will continue under Chinese rule.
“In telecom, it will be very much as it is today (in Hong Kong),” said Erin Pham, Asia specialist at the Telecommunications Industry Association.
Pham said Hong Kong and China will comprise a one-China, two-system arrangement, whereby China controls Hong Kong from Beijing but does not micromanage from afar.
Last Tuesday, the House voted 259-173 to defeat a move to overturn President Clinton’s renewal of MFN status for China. The margin was decisive, yet closer than any China MFN vote since 1990, a year after the 1989 Tiananmen Square massacre of democratic demonstrators by Chinese troops.
An unlikely alliance between Christian conservatives and liberal, labor-leaning Democrats fought to deny China MFN status, arguing that trade be used to leverage China for improved human rights and weapon export reforms.
The White House lobbied to continue the policy of “constructive engagement” with China.
House Minority Leader Richard Gephardt (D-Mo.) and Democratic Whip David Bonior (D-Mich.), meanwhile, broke with the administration and voted against MFN renewal.
“It’s a debate about principles and values and beliefs,” said Gephardt, a likely foe of Vice President Gore in 2000.
That policy, which Clinton adopted after criticizing former President Bush for the same stance during the presidential campaign of 1992, de-links trade from human rights. Yet Clinton himself acknowledges the policy has failed in terms of bettering human rights in China.
“The president is tough on human rights when it won’t cost us much money,” Amnesty International U.S. Director William Shultz told U.S. News & World Report. “Trade trumps torture every time.”
The United States currently has a $40 billion trade deficit with China, the largest ever with any country. Yet Motorola Inc. and Lucent Technologies Inc. are among U.S. companies that benefit from trading with China. Motorola announced just last week a $65 million contract to expand and upgrade a cellular system in the Guangdong province of China.
The fight over U.S.-China trade is not over, however.
Some lawmakers in Congress intend to curtail China trade if abuses are detected.
In addition, it is believed the decision about whether to extend WTO membership to China is even more crucial than the MFN vote. The thinking is that WTO would fully legitimize China in world commerce by effectively affirming China MFN for good, regardless of its activities in the world arena.
As such, that decision is viewed as more critical than the one Congress made last week.
