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April 24, 2000
Granting PNTR is a win-win proposition, and biggest winners are Chinese
citizens
Cato study shows PNTR benefits U.S. national interests, most notably
Chinese reformers
A congressional vote in favor of extending permanent normal trade relations (PNTR) to China is a vote for reform of the
Chinese economy, according to an analysis released today by the Cato Institute.
In "China's Long March to a Market Economy: The Case for Permanent Normal Trade Relations with the People's Republic of China," author Mark Groombridge examines the impact of granting PNTR to China and its subsequent accession to the World Trade Organization and finds that it will "benefit, not only the United States and the world trading system, but most directly the citizens of China, millions of whom are still mired in abject poverty."
Groombridge, a research fellow with Cato's Center for Trade Policy Studies, analyzes historical and economic data and concludes that China's accession to the WTO will dramatically strengthen the hand of elements in the pro-reform leadership. In the study, Groombridge confronts arguments against extending PNTR, most notably that it removes the United States' only leverage against China's economic and political behavior and that U.S. jobs will be lost because of a flood of Chinese imports.
He finds that those arguments ring hollow. First, the annual debate on whether to extend normal trade relations has proven to be neither an effective nor an appropriate tool for influencing China's long-term behavior. "As a WTO member, China will be subject to a multilateral dispute settlement process that is likely to be much more effective than unilateral sanctions imposed by the United States," Groombridge says.
Groombridge also finds that the protectionist, "job-loss," argument against PNTR boils down to the assertion that the commercial interests of textile producers and a few other import-competing industries are more important than the interests of import-using businesses, consumers and U.S. exporters with a huge stake in improved access to the Chinese market.
The correct resolution of the PNTR issue, Groombridge believes, ultimately turns on a straightforward question: "Is it in the U.S. national interest to encourage China to liberalize its economy in a more market-oriented direction?" His answer is yes, and he predicts that the agreement will extend unprecedented opportunities to U.S. industries and consumers, and the greatest rewards will be reaped by "average Chinese citizens struggling to free themselves from the shackles that chain them to China's disastrous socialist legacy—one responsible for the impoverishment and starvation of millions of people."
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