Statement of Administration Policy: S.J. Res. 153 - Resolution of Disapproval of the President's Decision to Extend MFN to China & S. 1367 - United States-China Act of 1991

(SENT 7/15/91)
(Senate)

S.J. Res. 153: (Cranston (D) California)
S. 1367: (Mitchell (D) Maine and 24 others)

The Administration strongly opposes S.J. Res. 153, which would deny China most-favored-nation (MFN) trade status, and S. 1367, which would place additional conditions on MFN renewal. If either of these bills is presented to the President, his senior advisors will recommend a veto.

The President extended China's MFN waiver because he determined that China met the legal requirements under the Jackson-Vanik amendment and that continuing MFN would serve broad U.S. economic and foreign policy interests and promote reform in China. Over the past year, China has continued its relatively open emigration policy. Extension of MFN substantially promotes U.S. freedom of emigration and travel objectives, and its withdrawal would place at risk the substantial gains already achieved in these areas.

Extension of MFN is also important for promoting reform in China. Foreign trade keeps China open to the outside world and supports the economic forces that are driving domestic political and social change and encouraging a loosening of state control and more personal freedom. Millions of Chinese depend on a healthy commercial relationship to justify business and social contacts with the United States. MFN withdrawal would hurt all Chinese, but would hurt most those Chinese, particularly in the market-oriented coastal provinces, who have the greatest stake in economic reform.

A fundamental pillar of our relationship with the Chinese people, MFN is essential if we are to stay engaged with China on a broad range of issues, including human rights, nonproliferation, prison labor exports, and trade. Eliminating MFN would seriously erode our ability to influence Chinese behavior on these issues. It would also hurt U.S. exporters and consumers, and undermine confidence in Hong Kong where the United States has substantial economic interests.

Conditional renewal is not acceptable because it would make China less likely to respond to U.S. concerns. Hardline Chinese leaders would claim that national honor and sovereignty preclude any concessions to the United States. Imposing new conditions for renewal would, in effect, hold our single most powerful instrument for influencing China — trade and the openness which it brings — hostage to the reactions of the Chinese Government.

Where particular issues are unresolved and the Chinese are not forthcoming, the President has the tools necessary to pursue U.S. interests ln a targeted fashion. MFN's withdrawal is the wrong tool because of its indiscriminate impact and adverse effect on all Chinese, particularly those who continue to seek reform. The Administration believes that MFN should be renewed unconditionally now on its own merits, as the most effective means for influencing China's behavior on a range of U.S. interests.