Granting Permanent Normal Trade Relations To China Could Be The Trojan Horse That Ultimately Undermines America and Canadian Workers' Livelihoods

Granting Permanent Normal Trade Relations To China Could Be The Trojan Horse That Ultimately Undermines America and Canadian Workers' Livelihoods

by Kevin Phillips

WASHINGTON - The real issues in this week's congressional vote on U.S. trade relations with China have as much--maybe more--to do with human rights in New York, North Carolina and California as in Beijing, Tibet or Mongolia. Global wage pressures already figure in the increasing economic inequality and poverty rates in U.S. cities.The real long-term threat to U.S. national security may well come if legislation granting permanent normal trade relations to China passes, despite the Washington bluster about the dangers if it fails. China, unlikely to seriously democratize, is emerging as the chief U.S. foreign rival of the 21st century. Beijing's plans for restoring China's greatness rest, in part, on securing U.S. technology and conducting the trade equivalent of guerrilla warfare according to the writings of Sun Tzu: war without fighting. For all these reasons, outmaneuvering China should be a key goal in U.S. politics and foreign policy. If the Democratic White House and the GOP congressional leadership are captives of business and trade lobbies, then the independent parties should hammer the issue. The stakes are that important--and then some. Visions of dollar signs dancing along the Great Wall explain why U.S. business is so eager for Congress to approve permanent normal trade relations with China, eliminating such inconveniences as annual reviews of China's human-rights behavior. With 1.3 billion people, China is a large market for U.S. products, even if few corporations have made much money there yet. Greed has already produced a frantic corporate courtship of China, a juggernaut of business pressure on Congress and specious arguments that trade leads to democracy and peace. Don't quibble, the lobbies argue: Just say "yes." What proponents don't discuss is that China is the world's biggest pool of cheap labor. Worse, a large percentage of Chinese manufacturing is controlled by the army, the so-called People's Liberation Army. The army even has dozens of companies in the U.S. importing Chinese goods on a large scale to earn dollars for military weapons. Some manufacturing takes place in guarded camps. Obviously, these are not practices that could survive serious annual human-rights checkups. But such rights never seemed to matter in China, where 3,000 years of history show no concept of individual rights or freedom of expression, though the Chinese invented paper and printing. Pro-favored-nation talk from the White House about encouraging democracy is naive. Current protesters in China, such as the Falun Gong, have little to do with Western-style democracy but rather fit in the tradition of millenarian escapism, like the Taiping revolt, suppressed in the mid-19th century. What does recur in Chinese history is ambition for preeminence, ethnocentricity and hostility toward foreigners that turns into xenophobia. If the advent of radio in the 1920s and '30s did not bring stable democracy and human rights to an embattled, suspicious Germany, it is unwise to assume great things from the Internet in China. But even if U.S. politicians can shrug off the fate of workers and rights in China, they cannot shrug off the fate of U.S. workers. For the last quarter-century, rising trade and globalization have become principal factors in the stagnation of U.S. manufacturing wages since 1975. China's role in this cannot be isolated, but Chinese wages are one-tenth to one-twentieth of those paid in the United States, and Chinese products are flooding U.S. markets. In 1998, the last year for which figures are available, China imported $14 billion worth of U.S. goods but sent $71 billion into our markets, the largest trade deficit the U.S. had with any nation. These statstics hang like a guillotine over the U.S. work force. The ability of U.S. companies to dump American workers and move plants to Mexico, already a drain, is a drop in the bucket compared with the possibility of large-scale U.S. corporate outsourcing to China--and using that as a club over employees in U.S. wage negotiations. But wait a minute, the skeptic will say, unemployment is 3.9%. We're not losing jobs, at least not yet. No, but the job profile in the U.S. is stratifying. The jobs for the top 1%, 5% or 10% are terrific, but many who used to be in the middle are in trouble now that the once-reliable jobs of steelworker, junior supervisor and secretary are being replaced by positions in food service, temp agencies, security or retail, along with the explosion of openings for gardeners, drivers and nannies. The "upstairs-downstairs" pattern is writ largest in states like California and New York, with their increasingly Brazil-like income gaps. Sweatshops are booming in both Los Angeles and New York City; last December, a report by the U.S. Conference of Mayors detailed a rising tide of hunger and homelessness, with demands for emergency food up sharply. Los Angeles was at the top of the list. Only a few weeks ago, the New York Community Service Society released data showing sharply rising local poverty rates, capped by the finding that 23% of families below the poverty line had a head of household who had attended or graduated from college. This is frightening, and more Mexico- and China-type "globalization" could make it worse. China is estimated to have 300,000 software engineers and millions of English-speaking college graduates. White-collar, back-office and technology jobs now being outsourced in ever-greater numbers to Ireland and India could shift to China, and the Chinese are bound to push for them. Whenever possible, authorities in China tell businessmen hoping for access to their market or cheap labor that they have to include advanced technology in the deal. Even more, the foreign companies have to manufacture some of it in China and train local workers. As a result, while valued-added products (telecommunications, computers) were only 12% of U.S. imports from China in 1990, they were 29% by 1996 and are now close to 40%. China's transformation is starting to resemble that of Germany and Japan in earlier eras. It's an unnerving precedent. In the 1880s, 1890s and early 1900s, Britain, then the world's leading power, sold Germany the coal, machinery and technology it needed to overtake the British industrially. None of this trade "engaged" the kaiser in a "democratic dialogue" or prevented World War I. Despite current assurances, there is little historical evidence that trade ties prevent wars. In 1914, the British, French and Russians fought the Germans, Austrians and Turks despite numerous trade ties and open borders. In the War of 1812, the United States fought its leading trading partner. In the U.S. Civil War, the North fought the South, despite the anguished howls of Northern industries that sold to the South. Ironically, China provides another example. Growing investment and trade between Taiwan and mainland China didn't stop the Taiwanese from electing a advocate of independent-republic status as president in the island's recent elections. If trade doesn't ensure democracy and openness, the reasons to worry about Chinese ambitions balloon. In recent years, China has enlarged its nuclear missile force; rallied overseas Chinese, who dominate the economies of Indonesia, Malaysia and Singapore; seized a South China Sea island claimed by the Philippines; built a railroad to the Indian Ocean through Burma; set up a naval listening post on a Burmese island in the Indian Ocean; and transferred nuclear technology to potential Islamic allies in Pakistan, Iran, Algeria and Libya. In 1996, Gen. Mi Zhenyu, of the Beijing Academy of Military Sciences, said, with respect to the U.S., that for some years, China must "quietly nurse our sense of vengeance . . . We must conceal our abilities and bide our time." China's trade approach may employ this tactic. U.S. companies such as McDonnell Douglas, Boeing and Loral Space & Communications Ltd. have already been so collaborative with the Chinese they have been accused in Congress of sharing secret technology. Loral's behavior has even perturbed the U.S. Justice Department. The Chinese make trade promises to foreign governments, then break them or invent dodges in keeping with Sun Tzu's adage, "To fight and conquer is not supreme excellence; supreme excellence consists of breaking the enemy's resistance without fighting." Over the years, this is what the Chinese have done. Time after time, President Bill Clinton backed down on linking trade to human rights. Asia experts Richard Bernstein and Ross H. Munro, in their book, "The Coming Conflict With China," detail how the United States has been "pin-pricked into defeat" by China on trade issues when agreements made in 1992 were undermined by later tactics that "negated parts of the original understanding. So, too, did newly introduced nontariff barriers make a mockery of many tariff cuts enacted with such fanfare by the Chinese in early 1996." What this suggests is that the "great terms" the White House has just negotiated with China to promote the normal-trade proposal may not be worth the rice paper they're printed on. This is serious stuff. A fair share of the paperback war novels on today's bookracks present some kind of fight with China. The time frame is debatable, but if the Chinese economy maintains its current pace, it will be larger than that of the United States between 2020 and 2030. Better to shape a new policy and have rough words with China now than a major war say 15 or 20 years out. For the United States to do for China what Britain did for Germany circa 1900--and with the added problem of undercutting the domestic work force--would be inexcusable. Earlier this month, it was disclosed that a former Justice Department prosecutor had urged an independent investigation of the circumstances in which the 1996 Clinton campaign got $1.5 million from the CEO of Loral, which may have broken the law by providing technology for China's rocket program. Atty. Gen. Janet Reno rejected the request. That's too bad. If Clinton's 1996 Chinese campaign contributions and dealings had been fully probed, it is hard to imagine that his normal-trade request and unctuous rhetoric would now be taken seriously. Maybe he wouldn't have dared to make it. Such are the accidents by which even great nations lose their way. - - - Kevin Phillips Is the Author of "The Politics of Rich and Poor." His Most Recent Book Is "The Cousins' Wars: Religion, Politics and the Triumph of Anglo-america."