July 1999

Congress will soon consider whether to revoke normal trade relations (NTR) with China and then, possibly in the fall, whether to make NTR permanent as part of China’s anticipated entry into the World Trade Organization. The consequences of congressional action are huge. China today is America’s no. 4 trading partner. Trade and economic reform have helped to lift 200 million Chinese out of poverty since 1978. Revoking China’s NTR status would raise average tariff rates on Chinese goods entering the United States from 4 percent to more than 40 percent, putting a chill on U.S.-Chinese commercial relations. Making China’s NTR status permanent before its entry into the WTO would allow American companies to reap the benefits of the “breathtaking” offer made by Chinese premier Zhu Rongji in April to open up China’s economy to international competition. Finally, China’s entry into the WTO would encourage further economic reform in China and restore its faltering economic growth. To facilitate that entry, the United States should drop its unreasonable demands that China agree to an extension of U.S. quotas on textile imports and stricter antidumping and “safeguard” rules that discriminate against Chinese exports.