WASHINGTON-The chairman of the largest Internet service provider in the world last week called on Congress to give China permanent normal trade relations in an effort to reform China.
“Here in the United States, Congress is considering whether to extend permanent normal trade relations to China so United States firms and workers can benefit from China’s commitment to open up its markets to foreign participation. There is no doubt that the future competitiveness of our [information technology] sector will be effected by whether we have access to the Chinese market but the vote for the Chinese NTR involves more than economics. It’s a vote on whether the United States wants to engage with China and facilitate the type of reforms many in China are working to achieve,” said Steve Case, chairman of American Online, speaking to the Global Internet Summit in Fairfax, Va.
NTR will allow American companies to reap the benefits of the millions of Chinese who are already online not to mention the many more in the future, Case said.
“Today more than 9 million Chinese are online. During the next few years, China is expected to become one of the largest Internet markets in the world. China clearly understands and recognizes the importance of information technology and is striving to establish a foundation for the application of it and the development of e-commerce,” Case said.
As part of that foundation, China is striving to join the World Trade Organization, and commitments it made last year will enable American firms to help transform China.
“China’s commitment in the WTO to open its services marketplace including its telecommunications markets, as well as its commitment to reduce tariffs on IT products, will enable U.S. firms to contribute to the transformation that is under way in China … China’s participation in WTO will also lay the foundation for e-commerce by opening the telecommunications sector, and these commitments will help create an environment where the whole value chain of e-commerce will be realized,” Case said.
NTR status was not only a topic at the Global Internet Summit but also on the political front where the Clinton administration bowed to pressure from labor and environmental groups and released the full, 250-page text of the U.S.-China trade deal struck last November in Beijing.
China agreed to the trade concessions in exchange for U.S. backing of WTO membership.
“There is absolutely no reason for keeping a trade agreement secret,” said Sen. Max Baucus (R-Mont.), a big supporter of China trade.
Other Republicans have criticized President Clinton and Vice President Gore for promising to renegotiate the China trade agreement to appease organized labor and others.
Senate Majority Leader Trent Lott (R-Miss.), for his part, warned the administration it will lose China trade if Clinton and Gore do not make stronger personal commitments to lobby the issue on Capitol Hill.
The ball in now in Congress’ court.
Congress is poised to vote this spring on whether to extend NTR status to China.
The White House and business lobbyists, pitted against organized labor, environmentalists and human rights activists, have mounted an aggressive lobbying campaign for China NTR.
Clinton sent China trade legislation to Congress on March 8.
While there are enough votes to pass China trade legislation (and kill a filibuster) in the Senate, passage of the bill in the House is much more circumspect.
Commerce Secretary William Daley conceded as much in a speech last Wednesday at the National Press Club. But Daley, saying China NTR was the administration’s top foreign policy priority, said he was confident Congress will pass the bill by Memorial Day.
“The economics of this deal are very good for America,” said Daley.
Rep. Tom Davis (R-Va.), speaking to reporters at the Global Internet Summit, said the China trade vote was “the most important issue we will address in this Congress.” He also said he thinks everyone in favor of China NTR needs to do more. “I don’t think any of us is doing enough,” he said.
House Minority Whip David Bonior (D-Mich.), who opposes the bill, is angered the text of the U.S.-China trade agreement is silent on worker rights, human rights and environmental protection. Bonior also said the trade pact lacks strong enforcement provisions.
On the other hand, House Minority Leader Richard Gephardt (D-Mo.), who in the past has sided with labor on trade issues, supports China NTR.
House Speaker Dennis Hastert (R-Ill.) is not expected to call a vote until he has 100 Democratic votes. Today, Hastert has just fewer than two-thirds of the Democratic votes he needs.
But there is a big risk associated with Hastert’s wait-and-see strategy. As more time passes and the 2000 election nears, lawmakers are expected to grow reluctant to vote on China NTR this year. Instead, Congress could choose to vote on a one-year China trade bill as it has done in previous years.
Further fueling election-year politics are allegations of technology transfers and nuclear spying against China and threats against Taiwan by Communist China.
As a separate matter, China itself is divided on global free trade.
For wireless players here and abroad, the stakes are enormous. China, a nation of 1.3 billion people, has a poor telecom infrastructure that is tailor-made for wireless technology.
While Motorola Inc., Lucent Technologies Inc., Qualcomm Inc. and other U.S. wireless equipment suppliers have gained access to China’s market in recent years, China has largely locked out foreign investment in wireless-telecom services.
Under last fall’s U.S.-China trade pact, China agreed to allow up to 25 percent foreign equity in mobile-phone services one year after China enters the WTO, 35 percent after three years and 49 percent after five years.
Under a phased-in approach, U.S. and other foreign service providers can provide mobile-phone services in Beijing, Shanghai and Guangzhow one year after China enters the WTO. After three years in the 135-member world trade body, mobile services can be offered by foreign investors in Chengdu, Chongqing, Dalian, Fuzhou, Hangzhou, Nanjing, Ningbo, Qingdao, Shenyang, Shenzen, Xiamen, Xian, Taiyuan and Wuhan.
Foreign carriers can offer nationwide mobile-phone service in China five years after China joins the WTO.
For paging, China agreed to allow up to 30 percent equity upon China’s accession to the WTO, 49 percent after one year and 50 percent after two years.
The U.S.-China trade accord states that Internet and satellite services are included, but does not lay out precise terms of foreign ownership as it does for other telecom services.
The dynamics of China trade extend beyond the U.S. shore. The European Union wants China to agree to allowing majority foreign ownership in telecom services before it will back its WTO membership bid. In addition, China reportedly is pushing China to embrace European-developed Global System for Mobile communications mobile phone technology over U.S.-made Code Division Multiple Access Technology.
