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President Clinton’s decision on Apr.8 to send Chinese Premier Zhu Rongji
packing without an agreement on China’s entry into the World Trade Organization
seemed to be a massive miscalculation. The President took a drubbing from much
of the press, which had breathlessly reported that a deal was in the bag. The
Cabinet and Whit House still appeared divided, and business leaders were
characterized as furious over the lost opportunity. Zhu charged that Clinton
lacked “the courage” to reach an accord. And when Clinton later telephoned the
angry Zhu to pledge a renewed effort at negotiations, the gesture was widely
portrayed as a flip-flop.
In fact, Clinton made the right decision in holding out for a better WTO
deal. A lot more horse trading is needed before a final agreement can be
reached. And without the Administration’s goal of a “bullet-proof agreement”
that business lobbyists can enthusiastically sell to a Republican Congress, the
whole process will end up in partisan acrimony that could harm relations with
China for years.
THE HARD PART. Many business lobbyists, while disappointed that the deal
was not closed, agree that better terms can still be had. And Treasury Secretary
Robert E. Rubin, National Economic Council Director Gene B. Sperling, Commerce
Secretary William M. Daley, and top trade negotiator Charlene Barshefsky all
advised Clinton that while the Chinese had made a remarkable number of
concessions, “we’re not there yet,” according to senior officials.
Negotiating with Zhu over the remaining issues may be the easy part.
Although Clinton can signal U.S. approval for China’s entry into the WTO
himself, he needs Congress to grant Beijing permanent most-favored-nation status
as part of a broad trade accord. And the temptation for meddling on Capital Hill
may prove over-whelming. Zhu had barely landed before Senate Majority Leader
Trent Lott (R-Miss) declared himself skeptical that China deserved entry into
the WTO. And Senators Jesse A. Helms (R-N.C.) and Emest F. Hollings (D-S. C.)
promised to introduce a bill requiring congressional approval of any deal.
The hidden message from these three textile-state Southerners: Get more
protection for the U. S. clothing industry. Hoping to smooth the way, the
Administration tried, but failed, to budge Zhu on textiles. Also left in the
lurch: Wall Street, Hollywood, and Detroit. Zhu refused to open up much of the
lucrative Chinese securities market and insisted on “cultural” restrictions on
American movies and music. He also blocked efforts to allow U. S. auto makers to
provide fleet financing.
BIG JOB. Already, business lobbyists are blanketing Capitol Hill to presale
any eventual agreement, but what they’ve heard so far isn’t encouraging.
Republicans, including Lott, say that “the time just isn’t right” for the deal.
Translation: We’re determined to make it look as if Clinton has capitulated to
the Chinese and is ignoring human, religious, and labor rights violations; the
theft of nuclear-weapons technology; and the sale of missile parts to America’s
enemies. Beijing’s fierce critics within the Democratic Party, such as Senator
Paul D. Wellstone of Minnesota and House Minority leader Richard A. Gephardt of
Missouri, won’t help, either.
Just how tough the lobbying job on Capitol Hill will be become clear on
Apr. 20, when Rubin lectured 19chief executives on the need to discipline their
Republican allies. With business and the White House still trading charges over
who is responsible for the defeat of fast-track trade negotiating legislation in
1997, working together won’t be easy.
And Republicans—with a wink—say that they’ll eventually embrace China’s
entry into the WTO as a favor to Corporate America. Though not long before they
torture Clinton. But Zhu is out on a limb, and if Congress overdoes the
criticism, he may be forced by domestic critics to renege. Business must make
this much dear to both its GOP allies and the Whit House: This historic deal is
too important to risk losing to any more partisan squabbling.
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