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July 19, 1999
Trade Briefing Paper no. 5

Trade and the Transformation of China: The Case for Normal Trade Relations

by Daniel Griswold, Ned Graham, Robert Kapp and Nicholas Lardy

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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. In 1998 Americans imported $71 billion worth of goods from China and exported $14 billion, making China the 13th largest market abroad for U.S. goods. 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.

Trade encourages human rights and facilitates the work of Western religious ministries active in China. East Gates International, headed by Ned Graham, son of evangelist Billy Graham, has been able to distribute 2.5 million Bibles legally in China since 1992. According to Graham, the organization can communicate freely with its contacts in China because of the proliferation of information-exchange technology such as e-mail, faxes, and cellular telephones -- a development made possible by trade and economic reform.

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.

Full text of Trade Briefing Paper no. 5

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