{"id":1024,"date":"2020-12-01T17:01:14","date_gmt":"2020-12-02T01:01:14","guid":{"rendered":"http:\/\/savingusmanufacturing.com\/blog\/?p=1024"},"modified":"2020-12-01T17:01:14","modified_gmt":"2020-12-02T01:01:14","slug":"its-time-to-end-chinas-most-favored-nation-status","status":"publish","type":"post","link":"https:\/\/savingusmanufacturing.com\/blog\/general\/its-time-to-end-chinas-most-favored-nation-status\/","title":{"rendered":"It\u2019s Time to End China\u2019s Most Favored Nation Status"},"content":{"rendered":"\n

China\nwas granted Most Favored Nation status through presidential proclamation on an\nannual basis from 1980 – 1998. This was because the Trade Act of 1974 stated\nthat \u201cMFN status may not be conferred on a country with a nonmarket economy if\nthat country maintains restrictive emigration policies\u201d China was, and still\nis, a nonmarket economy and restricted emigration, but the Act allowed the\npresident to \u201cwaive this prohibition on an annual basis if he certifies that\ngranting MFN status would promote freedom of emigration in that country.\u201d<\/p>\n\n\n\n

According\nto CRS Report 98-603<\/a> for Congress, \u201cChina\u2019s Most-Favored-Nation\n(MFN) Status:  Congressional\nConsideration, 1989-1998:\u201d After the Tiananmen\nSquare protests in 1989, there was enough opposition to granting MFN status to\nChina that the \u201cHouse passed joint resolutions disapproving MFN for China in\nboth 1991 and 1992,\u201d but the Senate didn\u2019t pass the joint resolution. However,\nthe real focus of the debate was not whether to deny MFN status for China\naltogether, but whether or not to \u201cplace new human rights conditions on China\u2019s\nMFN eligibility.\u201d Congress passed legislation in 1991 and 1992 that would have\nplaced further conditions on China\u2019s MFN status, but President Bush vetoed the\nlegislation. <\/p>\n\n\n\n

In\n1993, President Clinton announced he would link China\u2019s MFN status to human\nrights progress beginning in 1994. However, President Clinton reneged on his\ncampaign promise and reversed himself:  \u201cOn June 2, 1995<\/a>, President\nClinton transmitted to Congress his intention to waive the emigration\nprohibition and extend MFN status to the People’s Republic of China for an\nadditional year, beginning July 3, 1995.\u201d <\/p>\n\n\n\n

An\nL.A. Times article<\/a> of May 27,\n1994, reported: \u201cPresident Clinton, abandoning a central foreign policy principle\nof his Administration, announced Thursday that he has decided to \u201cde-link\u201d\nChina\u2019s privileged trading status from its human rights record. While\nacknowledging that China \u201ccontinues to commit very serious human rights\nabuses,\u201d Clinton said that he has come to believe that broader American\nstrategic interests justify the policy reversal.\u201d  <\/p>\n\n\n\n

The\nannual granting of MFN status to China by a presidential waiver continued\nthrough 1998. Note<\/a> that \u201cOn\nJuly 22, 1998, legislation was enacted which replaced the term\n“most-favored-nation” in certain U.S. statutes with the term\n“normal trade relations.”  This\nmade it easier for Congress to make the fateful decision to extend \u201cpermanent\nnormal trade relations,\u201d or PNTR, to China when the Senate voted to give China\npermanent most-favored-nation status on September 19, 2000. This vote paved the\nway for China\u2019s accession to the World Trade Organization.<\/p>\n\n\n\n

As\nReihan Salam, President of the Manhattan Institute wrote in an article<\/a> titled \u201cNormalizing\nTrade Relations With China Was a Mistake,\u201d in the June 8, 2018 issue of The\nAtlantic, \u201cPNTR was a euphemism designed to get around the fact that the\ntraditional term for \u201cnormal trade relations\u201d was \u201cmost-favored-nation\u201d (MFN)\ntariff status\u2026MFN status meant imports would be treated as favorably as those\narriving from \u201cthe most favored nation.\u201d Absurd as it might sound, this\nlinguistic convention had meaningful political consequences. To argue that we\nought to have normal trade relations with China was one thing. Sure, why not?\nTo make the case that China ought to be treated as our most favored nation<\/em>\nwas a more vexing PR challenge, not least in the wake of the brutal crackdown\nthat followed the Tiananmen Square protests in 1989.\u201d<\/p>\n\n\n\n

An article<\/a> in the American Economic Review, \u201cThe Surprisingly Swift Decline of US Manufacturing Employment,\u201d byJustin R. Pierce and Peter K. Schott, July 7, 2016, states: \u201cThe permanence of PNTR status made an enormous difference: Without PNTR, there was always a danger that China\u2019s favorable access to the U.S. market would be revoked, which in turn deterred U.S. firms from increasing their reliance on Chinese suppliers. With PNTR in hand, the floodgates of investment were opened, and U.S. multinationals worked hand-in-glove with Beijing to create new China-centric supply chains.\u201d\u00a0 <\/p>\n\n\n\n

This\nchange in U.S. trade policy that eliminated potential tariff increases on\nChinese imports resulted in industries that were more vulnerable to the change\nexperiencing greater employment loss, increased imports from China, and higher\nentry into the U.S. market by U.S. importers and foreign-owned Chinese\nexporters. My three books and the hundreds of articles I\u2019ve written since 2009\nhave described what has happened to U.S. manufacturing since 2001. Besides the\nloss of 5.8 million manufacturing jobs and the closure of an estimated 67,000\nAmerican manufacturers, American manufacturing shifted toward more high-tech, less\nlabor-intensive production. However, as China upgraded their technology in the\npast few years, we started losing our high-tech manufacturing also. <\/p>\n\n\n\n

In\naddition to the annual reports to Congress by the U.S.-China Economic and\nSecurity Review Commission documenting China\u2019s violation of World Trade\nOrganization rules along with human rights violations, the U.S. Department of\nState submits an annual\nreport<\/a> on International Religious\nFreedom in accordance with the International Religious Freedom Act of 1998.\nAccording to the 2018 International Religious Freedom Report : \u201cMultiple media\nand NGOs estimated the government detained at least 800,000 and up to possibly\nmore than 2 million Uighurs, ethnic Kazakhs, and members of other Muslim\ngroups, mostly Chinese citizens, in specially built or converted detention\nfacilities in Xinjiang and subjected them to forced disappearance, torture,\nphysical abuse, and prolonged detention without trial because of their religion\nand ethnicity since April 2017.  There were reports of deaths among\ndetainees.  Authorities maintained extensive and invasive security and\nsurveillance, in part to gain information regarding individuals\u2019 religious\nadherence and practices.\u201d <\/p>\n\n\n\n

Therefore,\nit gave me great pleasure when I read that on September 17, 2020, Senator Tom\nCotton (R-Arkansas) introduced a bill (S.4609<\/a>) that \u201cwould\nstrip China of its permanent most-favored-nation status\u2014also known as Permanent\nNormal Trade Relations\u2014a designation it has held for the last twenty years. If\npassed, the legislation would make extending most-favored-nation status to\nChina an annual decision for Congress and the president.\u201d<\/p>\n\n\n\n

Cotton\nsaid, \u201cTwenty years ago this week, the Senate gave a gift to the Chinese\nCommunist Party by granting it permanent most-favored-nation status. That\ndisastrous decision made the Party richer, but cost millions of American jobs.\nIt\u2019s time to protect American workers and take back our leverage over Beijing\nby withdrawing China\u2019s permanent trade status.\u201d <\/p>\n\n\n\n

Senator\nCotton\u2019s press release<\/a> states: \u201cThe\nChina Trade Relations Act<\/a> would revoke\nChina\u2019s permanent most-favored-nation status and return to the pre-2001 status\nquo, whereby China\u2019s MFN status must be renewed each year by presidential\ndecision. Congress could override the president\u2019s extension of MFN by passing a\njoint resolution of disapproval.<\/p>\n\n\n\n

The\nbill also would expand the list of human-rights and trade abuses under the\nJackson-Vanik Amendment that would disqualify China for MFN status, absent a\npresidential waiver. The abuses that would make China ineligible for MFN\nstatus, absent a presidential waiver, are as follows:<\/p>\n\n\n\n