On November 15, when President Clinton's weary negotiators agreed to back China's entry into the World Trade Organization (WTO), they set the stage for the last great struggle of this presidency. The battle lines are clear. Arrayed behind the administration is the entire political establishment: the four leading Democratic and Republican presidential candidates, every living former secretary of state and secretary of the treasury, and every major business lobby and farm lobby in Washington, D.C. Arrayed against it is a diverse, burgeoning counter-establishment—including the afl-cio, Ralph Nader's Public Citizen, the religious right, and Pat Buchanan. At stake is the future of U.S. business in Asia, the future of the WTO, and the future relationship between the world's most powerful nation and its most populous.
At first glance, it seems plausible that the Clintonites could lose. True, they have defeated their adversaries before—on nafta and in every one of the annual struggles over granting China "most favored nation" (MFN) trading status. But the opposition has clearly been gaining strength, and in the last big trade showdown—in 1997, over granting the administration "fast-track" authority to negotiate trade agreements without fear of congressional amendment—it handed the administration a stinging defeat. Many commentators saw that defeat as evidence that the old anti-nafta forces had gained enough recruits to block any major new trade initiative.
Will they bring down the administration's latest initiative? In a word, no. The circumstances today are entirely different from those in 1997. Unless China launches another Tiananmen Square-style massacre or an unprovoked attack on Taiwan, by this time next year it will be a member of the WTO—with Congress's blessing.
First of all, opponents of the Clinton-China deal will be operating on highly unfavorable legislative terrain. Congress cannot actually vote on whether to approve China's entry into the WTO. That is an executive-branch decision. All Congress can do is reject part of the deal the administration made with the Chinese—specifically its agreement to grant permanent "normal trading relations" (formerly known as MFN status) to China by ending its annual review of China's trading and human rights practices under the 1974 Jackson-Vanik Act. But, if Congress refuses to amend Jackson-Vanik, that won't prevent China from joining the WTO—the United States has already pledged not to block Chinese entry into the organization, regardless of how Congress votes.
Instead, Congress will be giving China an excuse to renege on concessions it made to the United States in exchange for permanent normal trading relations (NTR)—including lowering tariffs on U.S. farm and automobile imports; reducing barriers on foreign investment in banking, telecommunications, hotels, and tourism; and allowing the United States to impose temporary tariffs if surges in Chinese imports threaten U.S. domestic industries. Since all these measures would immediately benefit American companies and workers, opponents of China's membership in the WTO will be seen as cutting off their noses to spite their faces.
To make matters worse for China's critics, the Republican leadership has postponed the vote on NTR until at least the winter and perhaps the spring. By that time, China may already have been admitted to the WTO. Were the United States to deny China NTR at that point, that would actually violate the WTO's rules, which prohibit tariffs directed against only one country. In short, as one union economist who is organizing opposition to the agreement admits, "there is a lot of confusion, a lot of unclarity about what exactly a `no' vote on normal trade relations would mean."
Past trade battles have also rested on how united and how determined to press its case each side was at a given moment. That in turn depended on the particular agreement at hand. In the annual battles over China's NTR, Washington's foreign policy establishment and business lobbies enjoyed an advantage over human rights and evangelical organizations because they could point to dire results if normal trade relations were rejected. In the 1997 debate over fast-track trading authority, proponents could not point to any immediate benefits of adopting the procedure, while opponents, noting the growing American trade deficit with Mexico, could conjure up the specter of another nafta. But, with the coming battle over China and the WTO, the proponents once again have a clear advantage.
Business leaders and farmers can point to definite advantages from the November deal. Auto companies can look to bigger sales, movie companies to wider film distribution, telecommunications firms to participation in the Chinese market, and farmers to new customers who can relieve the growing glut at home. This potential windfall is sparking a concerted lobbying effort. The Business Roundtable, the National Association of Manufacturers, and the U.S. Chamber of Commerce have already formed a coalition and are dividing up which legislators to pressure. The Business Roundtable, which is composed of chief executives from Fortune 500 companies, has picked 71 congressional districts where its members have workers who can be organized to support the November agreement. The business lobbies did this kind of grassroots lobbying during the nafta vote but not during fast track, and they are already confident that they will carry the day. "If you set aside the 'stray asteroid' risk," says Chris Nelson, a trade analyst from Samuels International, a Washington lobbying firm, "nobody feels this will be defeated. The vote is a foregone conclusion."
On the agriculture side, citrus farmers in Texas, California, and Florida; beleaguered grain exporters in the Midwest, Great Plains, and Pacific Northwest; and meat exporters in the Midwest and Rocky Mountain states are also mobilizing to back the agreement. Democratic Representative Barney Frank, a critic of the deal, admits that pressure from agricultural interests may cancel labor's opposition to the treaty. Says Frank, "Labor has the votes, but not enough. The agricultural people are going to win."
The business and farm lobbies will carry the Senate without breaking a sweat. The test will come in the House. But there, too, opponents don't have the numbers. During the Clinton years, House Republicans have never contributed more than 79 votes against a major trade pact. That's how many GOP opponents NTR/MFN attracted in 1997, when Gary Bauer's Family Research Council and the Christian Coalition were at the height of their power, House members were determined to embarrass the Clinton administration, and the Chinese government had been implicated in the 1996 election scandal. But opponents of granting permanent NTR will be lucky to attract 50 Republicans next year.Business and farm organizations enjoy maximum leverage in an election year. Bauer has left the Family Research Council to run for president, and the Christian Coalition has fallen apart. And the Republican congressional leadership backs the agreement, as does George W. Bush.
If 50 or 60 Republicans vote against permanent NTR, Democrats would have to oppose the legislation by five or six to one. Labor pressure should sway some Democrats, but not that many. Democrats voted by a ratio of only three to two against nafta and five to four against NTR/MFN. In addition, admitting China to the WTO will bring out divisions among Democrats that transcend the old Labor Democrat/New Democrat divide. The Clinton deal should gain support from Democratic trade hawks who, unlike the protectionists and isolationists, back the WTO's multilateral approach to trade agreements. They don't want to disband the WTO but to strengthen its hand through new rules on labor rights and environmental protection.
The key person in this camp is House Minority Leader Richard Gephardt. Gephardt opposed nafta, fast track, and MFN, but he backed the legislation establishing the WTO and actively encouraged the administration's negotiations last spring with the Chinese. Last month, after the administration announced the WTO deal, labor leaders met with Gephardt to map out a response, but, to their disappointment, they discovered that he would not join them in denouncing the agreement. Instead, he told them he was looking for a way for Congress to accept China's entry without abandoning its pressure on human rights and labor rights. One labor participant declared afterwards in amazement, "He is looking for a way to support it."
There are other cracks in the old antiMFN coalition. One of the most prominent human rights organizations, Human Rights Watch, spoke positively of China's entry into the WTO. Even the afl-cio is probably not united in its opposition. Manufacturing unions, which feel directly threatened by cheap imports, have always taken a much more militant stand against trade agreements than public-sector and service-worker unions. And there is reason to believe that afl-cio President John Sweeney, who comes from the Service Employees International Union, does not really have the stomach for an anti-NTR crusade.
Earlier this year, the administration appointed Sweeney and Jay Mazur, the president of unite (the textile and apparel workers' union), to its Advisory Committee for Trade Policy and Negotiations, which was dominated by business leaders and lobbyists. In October, Sweeney and Mazur signed a committee letter backing Clinton's WTO agenda in exchange for the administration's commitment to promoting a WTO working group on workers' rights. When the letter was released, union leaders, including the heads of the Steelworkers and the Teamsters, accused Sweeney of conceding too much. "He was under serious attack for the first time since he took office," said one labor official.When the China agreement was announced, the usually pro-Clinton Sweeney, the labor official said, attempted to "mollify this growing rebellion internally" by stridently denouncing the White House, calling it "disgustingly hypocritical" for reaching the agreement while it "postures for workers' rights."
But there is another obstacle to an all-out union attack on the WTO deal: the unions' endorsement of Al Gore, an enthusiastic backer of the agreement. One labor official explained the dilemma: "It is definitely going to hurt [Gore], especially if there is a big labor campaign against it. How can unions seriously mobilize for the vice president of the administration who just did this? They are dodging this question." One answer, of course, is to let Gore's candidacy dangle in the wind. But the other is to downplay the unions' opposition to the agreement, thus moving the public debate back to health care and Social Security. That would help Gore and make passage of the WTO deal a foregone conclusion. And the unions might do just that. After all, they're probably going to lose on NTR anyway—why not curry favor with the leading Democratic candidate for president by delivering the votes they promised?