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China PNTR: A Lose-Lose Deal—Viewpoints | EPI

Opinion pieces and speeches by EPI staff and associates.


China PNTR: a lose-lose deal

by Robert E. Scott

Question: if two thirds of the American public believes that the U.S. should “insist on better human rights and religious freedom from China before that country” is admitted into the WTO, why is the Clinton administration promoting a deal that does not include such protections? The answer: big business wants the deal, and it is planning to spend at least $14 million lobbying Congress to implement the agreement to bring China into the WTO.

The President has asked Congress to give China Permanent Normal Trade Relations (PNTR) this year, and to end current requirements for an annual review before renewing trade concessions. Clinton needs PNTR in order to implement the U.S. agreement on China’s entry into the WTO that was completed last year. Congress should reject this request, because the accession agreement is a bad deal for workers in the U.S. and in China.

The U.S. has a massive trade deficit of nearly $70 billion with China. This deficit has mushroomed in recent years, and reflects a six-to-one ratio of imports to exports – the most unbalanced relationship in the history of U.S. trade.

Our trade deficit with China has eliminated nearly 900,000 jobs in the U.S., most of them high skilled, high-wage manufacturing jobs that were lost in the 1990s and will never be replaced. If the WTO deal is implemented, the Administration’s own analysis suggests that the trade deficit with China will grow rapidly. The growth of this deficit is likely to eliminate over 800,000 additional jobs in the next 10 years, alone, further eroding U.S. manufacturing industries.

Workers in China will confront an even more difficult time than their compatriots in the U.S. A recent study by Chinese economist Hai Wen, of Peking University, forecast that 10.7 million jobs will be eliminated in China’s agriculture, motor vehicles and industrial machinery industries. The same study also predicts that even more jobs will be gained, but at what cost?

For a preview of what can happen, we can look at Mexico’s experience under NAFTA. There, millions of workers have been pushed off of farms and into the cities. Some have found new jobs in export industries, but most have taken low-paying, odd jobs, selling chewing gum on street corners, and the like. Average real wages for all Mexican workers have fallen by nearly 25% since NAFTA was implemented.

Conditions are even worse in China, where free and independent unions are simply not permitted. Workers attempting to organize independent unions are frequently fired and imprisoned for their efforts. For example, China sentenced two railroad workers to a labor camp last year for protesting against unpaid salaries.

The annual vote on China’s trading privileges, which PNTR would eliminate, is the U.S.’ only source of leverage that can be used to encourage China to improve its worker and human rights performance. By doing away with the annual vote, the U.S. will be reduced to the role of spectator, an outcome that may please corporate interests but will result in widespread suffering for workers in both China and the U.S.


Robert Scott is an economist at the Economic Policy Institute. He specializes in globalization and international trade issues.

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