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• Federation of American Scientists

Summary

Particularly since--and to some extent despite--the Tiananmen Square incident of June 4, 1989, the U.S. Congress has considered two diametrically opposed types of action regarding China's nondiscriminatory, or most-favored-nation (MFN; normal-trade-relations) tariff status in trade with the United States. One has been its total withdrawal, the other--of more recent origin--its extension on a permanent basis. After having been suspended in 1951, China's MFN tariff status with the United States was restored in 1980 conditionally under Title IV of the Trade Act of 1974, including compliance with the Jackson-Vanik freedom-of-emigration amendment, which must be renewed annually, and the existence in force of a bilateral trade agreement between the two countries. This status would be either terminated or changed into a permanent one. China's loss of MFN tariff status would result principally in the imposition of substantially higher U.S. customs duties on--and in higher, often prohibitive, costs of--over 95% of U.S. imports from China ($99,580.5 million total in 2000) and a likely cutback in such imports as well as possible retaliatory reduction by China of its imports from the United States. A significant economic disadvantage might result for Hong Kong and Macau, which, despite their political reunification with China, remain separate economic entities with permanent U.S. MFN status. Sundry legislation introduced in earlier Congresses to withdraw or severely restrict China's MFN status failed to be enacted, in two instances for failure to override the President's veto. In the 105th Congress, legislation was introduced, but not passed, to grant permanent MFN status to China outright or upon its accession to the World Trade Organization. Some of the permanent-MFN bills would have placed additional conditions or restrictions on the grant of the MFN status. Legislation in the 106th Congress reflected China's prospective accession to the WTO. On one hand, it prohibited U.S. support of China's admission to the WTO without Congress's legislative approval and, moreover, in two instances required the United States to withdraw from the WTO if China was admitted to it without the U.S. support. On the other hand, like in prior years, Congress failed to pass legislation disapproving the President's mid-year renewals of China's Jackson-Vanik waiver and, moreover, enacted legislation (Title I, P.L. 106-286) approving permanent nondiscriminatory status for China upon its accession to the WTO. On January 30, 1998, the President extended the trade agreement with China for 3 years, and on June 1, 2001, renewed for one year China's Jackson-Vanik waiver and, thereby, its temporary nondiscriminatory status.

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