WASHINGTON-With the Clinton administration’s failure to close a deal on Chinese World Trade Organization membership, U.S. firms and congressional moderates have become angry and concerned about China backing off commitments to open wireless equipment and services markets.
In coming months, business executives plan to lobby the White House and Congress to ensure that a ground-breaking opportunity in an emerging market-one with 1.2 billion people and serious telecom infrastructure needs-does not slip away.
President Clinton overrode urgings from top trade, national security, diplomatic and business officials to sign off on Chinese WTO entry during Premier Zhu Rongji’s recent visit.
Instead, the president reportedly sided with close political advisers (Chief of Staff John Podesta and National Economic Council head Gene Sperling) who warned that going forward now-amid nuclear spying, technology transfer and campaign finance allegations against China-amounted to an invitation to the GOP-led Congress to kill the trade initiative.
Adding to the combustible political climate surrounding U.S.-Sino relations are stark differences between the two countries on the Balkan War and the United States’ $57 billion trade deficit with China.
“Had there not been political, national security and campaign contribution issues, I think it would have been much more of a slam dunk,” said Arnold Brenner, executive vice president of global government relations at Motorola Inc. “It’s as good or better than anything [the United States Trade Representative] has ever come back with. It seems the Chinese made an incredible effort to be as compliant as possible with U.S. demands.”
Brenner added: “Motorola and a lot of others were disappointed we sent Zhu Rongji home without a deal. We’re concerned, too. We don’t want to see China backslide.”
But that is precisely the direction China seemed to be heading after the April 8 joint news conference when Clinton, standing next to Zhu, announced “we are not quite there yet” on China WTO membership.
Zhu, outwardly disappointed about coming up short on WTO entry, lashed out at the administration. “We have not agreed to all these things,” Zhu said. “If you want too much too soon … you may up end up with nothing.”
“We hope an opportunity was not missed,” said Matthew Flanigan, president of the Telecommunications Industry Association. “The deal was excellent for telecommunications issues.”
“We hope they [China] don’t have any backsliding,” added Flanigan. “To now have this happen has all of us concerned.”
TIA members recently accompanied Commerce Secretary William Daley on a trade mission in China that resulted in a slew of telecom contracts for U.S. telecom firms. Flanigan said he is advising members to write to the White House and Congress in support of Chinese WTO entry. “It’s critical to get a deal with China,” he said.
In the hours and days immediately after the April 8 news briefing, the administration went into a mad scramble to cajole and assuage Zhu, reassuring him that Clinton remains committed to getting an agreement on Chinese WTO membership later this year, or before the 2000 elections.
The political stroking appeared to have paid off. By the middle of last week, a second joint communique was issued following a phone chat between Clinton and Zhu, who was in New York.
“During the conversation, they agreed that both sides should move intensively on negotiations toward the resolution of the remaining issues in their talks on China’s accession to the WTO,” the communique stated. Those talks are set to resume in Beijing by the end of this month.
The White House apparently wants a deal in advance of a WTO meeting this November in Seattle.
“We’re encouraged by the progress to date,” said Scott Horne of Lucent Technologies Inc.
On Capitol Hill, USTR Charlene Barshefsky assured Senate Finance Committee members last week that Chinese commitments on telecom and other industrial sectors are locked in. But she added, “there are some critical differences that exist with respect to these rules.”
One of those is China’s insistence that the United States drop its anti-dumping regulations. Daley said those rules represent a check against exploitive imports that could hurt U.S. businesses.
“The window of opportunity for China’s accession to the WTO is closing rapidly,” said Sen. Max Baucus (D-Mont.).
Sen. Frank Murkowski (R-Alaska), another Senate Finance Committee member, urged Barshefsky “to press the Chinese to wrap this up and not to lose momentum.”
Sen. Phil Gramm (R-Texas), without naming names or industries, lambasted certain lawmakers for forcing U.S. trade negotiators to make unfair demands of Chinese counterparts that amounted to protectionism.
Indeed, the United States wants to shield textile industries in the South from Chinese imports, apparently in order to appease concerns of powerful senators, like Ernest Hollings (D-S.C.), Jesse Helms (R-N.C.) and Majority Leader Trent Lott (R-Miss.).
Another factor in the equation, according to some observers, is Barshefsky’s standing in the Clinton administration and the apparent disconnect in trade strategy leading up to Zhu’s visit here that resulted in Clinton’s decision to put the brakes on a Chinese WTO endorsement.
While regarded as one of the toughest and most effective USTR negotiators, Barshefsky is not as close to Clinton and his political thinking as was former U.S. trade representative Mickey Kantor. Some suggest that relationship, combined with heavy China-bashing in Congress, contributed to the administration’s postponement of an agreement on China’s entry into the global trade forum.
