Commentary

Trade with China: Business Profits or Human Rights?

Reprinted with permission from Copley News Service.
Business profits vs. human rights. So do critics of trade with China frame the debate. But freer trade is likely to advance human rights, as well as boost business profits.

For years, Congress has voted annually on permitting ”normal trading relations” with China. Now the Clinton administration is advocating permanent status (PNTR) for Beijing, which would allow China to enter the World Trade Organization.

Lobbying furiously for a yes vote is American business. Without doubt, trade with China, now about $95 billion both ways, is economically beneficial: Some 200,000 Americans are directly employed providing exports to China.

Much more would be possible with a more open economy. Western firms, investors and exporters alike, have found China to be a tough market. Companies cite rising labor costs, market access restrictions, high taxes and customs duties and corruption.

But PNTR critics don’t care about increased profits. Columnist Abe Rosenthal cites ”Beijing’s human rights crimes.” The AFL-CIO denounces Chinese labor practices (while actually worrying most about increased imports).

The Weekly Standard complains about China’s ”threats to attack Taiwan.”

Frank Gaffney of the Center for Security Policy worries about Chinese nuclear developments posing ”a new threat to this country.”

Obviously, it would be easier to grant PNTR if China was capitalist and democratic. It is neither. But the most important question is: What policy, economic integration or isolation, is most likely to move China toward capitalism and democracy?

To ask the question is to answer it. Membership in the WTO might not sweep away all of Beijing’s economic restrictions, but despite determined internal opposition, the regime has made significant market-opening concessions.

As my Cato Institute colleague Mark Groombridge puts it, ”A vote in favor of extending PNTR to China is a vote for reform of the Chinese economy.” Indeed, the United States has received more than just promises.

Beijing has begun revamping the banking sector. Government officials are planning to relax investment and trade controls, and Chinese companies are maneuvering to better meet anticipated international competition.

Although market reforms do not guarantee greater respect for human rights, economic prosperity brought increased pressure for democracy in such countries as South Korea and Taiwan. In China itself, political decentralization and personal autonomy have been expanding. Particularly dramatic has been the growth of private associations and companies.

The communist leadership will undoubtedly resist future democratization; in fact, military and security agencies resolutely opposed the WTO accord. However, the greater people’s access to the tools of freedom, such as computers, the larger the number of private power centers, such as businesses, and the increased autonomy of subordinate governments, such as the coastal trading provinces, the greater the pressure for change.

Isolation would merely give the central authorities a pretext to crack down. Notably, religious groups like Ned Graham’s East Gates Ministries support continued trade with China.

Finally, while Beijing could end up as an enemy of the United States, such a result is not preordained. China threatens not America, but America’s domination of East Asia. The best response would be to step back and encourage U.S. allies to defend their own interests.

Anyway, since Beijing’s future is not predetermined, Washington should adopt policies, such as freer trade, more likely to encourage friendship than hostility. It is for this reason that Taiwan, despite China’s persistent threats, supports Beijing’s entry in the WTO.

The silliest argument against PNTR is that Chinese imports would overwhelm U.S. industry. In fact, American workers are far more productive than their Chinese counterparts.

Moreover, Beijing’s manufacturing exports to the United States remain small about half the level of those from Mexico. PNTR would create far more export opportunities for American than Chinese concerns. Estimates of the likely increase in U.S. exports range up to $13 billion annually.

There is another issue: The right to trade is a basic human right.

Fundamental to one’s humanity is the freedom to peacefully exchange the product of one’s labor with others. If Americans want to buy, say, toys, clothes or Christmas ornaments from Chinese rather than U.S. firms, they have a moral right to do so.

That trade should be free does not mean anything goes. Congress can rightly restrict trade with security implications: Americans need not improve the accuracy of Chinese ICBMs, for instance. And goods produced by forced labor in prison camps do not represent free trade.

Moreover, American officials should challenge Beijing to respect the rights of its citizens. U.S. taxpayers should not be forced to subsidize the Chinese government through the Export-Import Bank, Overseas Private Investment Corp. and foreign aid agencies.

Everyone wants a freer, more democratic China. Granting PNTR to Beijing would make that more likely.

Doug Bandow is a senior fellow at the Cato Institute.