By the time you read this column, both House and Senate committees will likely have had an opportunity to vote on recommending the granting of permanent normal trade relations (PNTR) with China. Granting of PNTR will slash tariffs for high-technology goods and services and increase opportunities for foreign investment in China. Speaking recently in San Jose, CA, President Clinton claimed that giving China PNTR status would enhance the record growth of the US economy while he reiterated that it would cost America "zip, zilch, nada, zero" in return.
With PNTR in place, industrial tariffs on American products will fall from an average of 24.6% in 1997 to an average of 9.4% by 2005, according to the US Department of Commerce. There's a good chance that tariffs on high-tech equipment will be eliminated entirely by 2005, according to some China trade experts. Considering that manufactured goods comprise a large proportion of American exports, the drop in Chinese tariffs is good news for high-tech manufacturers.
US high-technology industry exports to China have increased more than 500% between 1990 and 1998. US exports of communications equipment grew more than 900% in that same time period. China's information technology equipment market is estimated to be growing at 20%-40% annually. Clearly, PNTR with China will be advantageous to optoelectronics manufacturers and equipment suppliers.
Support is growing
The establishment of PNTR is supported strongly by American business executives. The US High-Tech Industry Coalition, a group of the leading high-technology associations including the American Electronics Association and the Semiconductor Industry Association, has been actively lobbying members of Congress to support PNTR.
"We have strong, bipartisan support in Congress for China PNTR," said Jim Whittaker, chairman of the Coalition and Director of International Public Policy with Hewlett-Packard, speaking recently in Washington. "We are urging those still undecided members of Congress to examine the incredible opportunities that American companies will have in Chinanot only for sales and exports of US products, but also for bringing positive changes to the people of China by way of China's integration into the world community and its increasing access to the Internet and democratic values and ideals."
"The stakes are high," said Whittaker. "We can choose economic engagement with China, or we can allow our foreign competitors to get the access we have negotiated. For us to benefit, Congress must establish PNTR with China."
Prominent China-watchers see rapidly increasing investment opportunities in China. "A forthcoming study by the American Enterprise Institute (AEI; Washington, DC) demonstrates that foreign investment will continue to constitute an important factor in China's economic growthboth from the production of goods and services for home consumption and for the production of goods and services for export," said Claude Barfield, an AEI economist. "China is too large and too diverse an economy to depend on export-led growth entirely. Like the USA in the 19th century, China will be dependent on foreign capital and technological know-how to grow and move up the technology ladder. The synergies involved will be beneficial for both China and foreign investors, particularly US companies who are counted as the technological leaders in many high-tech sectors."
Secretary of State Madeleine Albright is also an ardent supporter of increasing trade with China. Speaking recently in Washington, Secretary Albright said, "Our Congress will not vote on whether China enters the World Trade Organization (WTO). Sooner rather than later, China will. And the issue before Congress is whether America will share in the economic benefits or leave those benefits entirely to our competitors in Europe, Asia, and elsewhere. Now, for America to benefit, under WTO rules, we must give China the same permanent normal trading status that we grant to the more than 130 other countries who belong to that organization."
Time to speak out
Assuming that the issue meets with the approval of both congressional committees, the full House and Senate will still have to vote on this issue. Let your elected representatives know that you support PNTR with China. Most members of Congress have their own Web sites so they can be reached directly by e-mail. If you need more information on the issues surrounding PNTR, a good source is a White House Web site, www.chinapntr.gov. Let's open the door to free trade with China.