The U.S. Senate on Tuesday overwhelmingly passed legislation allowing for permanent normal trade relations (PNTR) with China, a bill resoundingly backed by high-technology companies and one that supporters say will further open the communist country's market to U.S. computer, software, telecommunications and other technology manufacturers.
The 83-to-15 Senate vote sent the bill to U.S. President Bill Clinton, who has said he will sign it. The bill means China will no longer have to face an annual U.S. review of certain human rights conditions in order to achieve most favored nation (MFN) trade status with the U.S. It also is tied to China's entry into the World Trade Organization (WTO), which is expected later this year or early next year.
Officials who represent high-technology associations hailed the passage of the bill, which had been expected following the defeat of amendments last week that would have added weapons proliferation stipulations and other issues that proponents said were too distant from the intent of the bill.
Tim Bennett, senior vice president of the international sector of the American Electronics Association (AEA), said the vote was extremely gratifying, especially after the 13 years of work on bilateral negotiations between China and the U.S. that led to an agreement last November. [See "US, China Reach WTO Deal," Nov. 15.] One of the key provisions of China's entry into the WTO calls for the elimination by 2005 of tariffs on information technology products made in the U.S., including computers, semiconductors and telecommunications equipment, Bennett said. Other provisions eliminate complex trade-related foreign investment requirements.
The bill passed Tuesday gives Clinton authority to grant PNTR to China, which in turn enables the U.S. formally to recognize China's entry into the WTO. U.S. companies then will be able to take advantage immediately of the trade concessions China made in order to join the 138-member world trade body.
The Senate's overwhelming vote in favor of the measure after a relatively short period of time to consider it showed that the debate in the House of Representatives earlier this year sufficiently convinced a majority of the senators of the wisdom of PNTR, Bennett said. The fact that no amendments were added means that it will go directly to Clinton, sparing any further delay in a House-Senate conference committee.
Robert Holleyman, chief executive officer of antipiracy body the Business Software Alliance (BSA), said the Chinese m market represents an unprecedented opportunity for U.S. high-tech companies. All BSA member companies already are conducting business in China and so far have had "decent" returns on their investment, Holleyman said. But they all believe they have barely scratched the surface of what the true potential is in China.
"This is really the biggest boost that can happen at this point for American software and high-tech companies," Holleyman said. "We can't afford to write off a market as big as China."
China's entry into the WTO should enhance BSA's efforts to enforce and reduce software theft, the BSA's biggest concern. A recent BSA study on the impact of software piracy shows that last year 91 percent of the business software used in China was stolen, but Holleyman said that's a decrease from 97 percent in 1999.
As a WTO member, China will have to meet the stringent intellectual property obligations of the Agreement on Trade Related Aspects of Intellectual Property, Holleyman said. Much of the reduction in piracy that has taken place thus far has been a result of bilateral pressure from the U.S., Holleyman said. Once China is in the WTO, the pressure will come from many other countries.
Dave McCurdy, president of the Electronic Industries Alliance, said the vote was the most important trade vote of the decade for the electronics companies his organization represents. As China enters the information age, it will seek to buy high-tech goods -- everything from semiconductors to circuit boards, PCs to cell phones, and software to broadband systems and services -- from the U.S., McCurdy said in a news release. But he said it is too difficult to calculate exactly what PNTR will mean in terms of revenue and growth for the high-tech industry.
Passage of the bill also is good news for American workers, who will be able to take advantage of an increase in high-wage, high-tech jobs that PNTR with China will generate, McCurdy said.
Over the years, Congress never voted against MFN for China, which was a provision of the Trade Act of 1974. But PNTR opponents said maintaining the annual review was one of the best tools the U.S. had to help monitor human rights in China and other issues, including proliferation of weapons of mass destruction, China's occupation of Tibet and its relations with Taiwan. Opponents also warned that China will look out solely after its own interests and cannot be trusted.
"It is the economic and political reality of the Chinese situation and agenda that makes it all but certain that China will violate any trade agreement if it serves the national interest of China to do so," said Senator Robert Byrd, a Democrat from West Virginia, before the vote. Byrd called granting PNTR to China "clearly unwise" and a signal of weakness, greed and ambivalence on the issue of nonproliferation.
"It is a signal of total disregard of the overwhelming evidence that the Chinese government will not keep its word," he said.