Baucus Predicts Passage of PNTR Status for China

(May 6, 2000) Sen. Baucus predicted on Friday, May 5 that the House will approve PNTR status for China later this month, and that the Senate will then overwhelmingly approve it in June.

Sen. Max Baucus (D-MT) spoke on permanent normal trade relations (PNTR) status for China at a luncheon hosted by the American Enterprise Institute on Friday, May 5. "PNTR will pass," said Sen. Baucus.

"There will be a majority in the House in three weeks," he added. "The Senate will then pass it overwhelmingly."

He also stated that the agreement signed with China last September allows American companies to sell a lot of computers and Internet services in China. If the Congress does not approve PNTR status for China, the consequences for American companies "would be severe."

"Failure to pass PNTR would be a very serious blow to the American high tech industry," said Sen. Baucus. It would be "to their disadvantage, and to the advantage of Japanese and European companies."

	Sen. Max Baucus (D-MT)

He also said that "failure to pass PNTR would poison our relationship with China."

Sen. Baucus was asked, "Is there a fall back position?" He responded: "There is not much thought about fall back."

Sen. Baucus began his address with a series of "assessments." First, "the bilateral WTO agreement signed last September provided tremendous economic benefits to the United States." Second, "China will join the WTO whether or not the United States grants PNTR status to China."

Third, the argument that extending PNTR status to China is not necessary is false. Fourth, "the United States does not loose leverage over China by passing PNTR."

Fifth, "passing PNTR will lead to Taiwan's early entry into the WTO." This will have beneficial consequences. There will be countless opportunities for interaction in WTO processes. "They will have to grant the same benefits to each other that they grant to others." Moreover, they "will be able to use the WTO dispute resolution system."

He concluded that this "is going to deepen significantly the ties between China and Taiwan."

Sen. Baucus also addressed some problems associated with PNTR status for China. "We must address the concerns of many American workers," he said. Also, "China may soon become the number one polluter of the environment."

He also addressed the problem of compliance by China with its trade agreements. He argued that "China is not alone." "Lack of compliance is pervasive among our trading partners."

He also argued that trade would lead to liberalization. "Economic growth leads to the development of a large middle class in any country," which then puts demands on the government for democratization. He cited Korea, Taiwan, the Philippines and Indonesia as recent examples.

Sen. Baucus was long the leader in the Senate of the efforts to pass annual extensions of Most Favored Nation status for China. Permanent Normal Trade Relations (PNTR) is the new name for Most Favored Nation (MFN).

Sen. Baucus gave an address and answered questions at an AEI luncheon attended by about 100 people. The luncheon program was part of a three part series on China and Taiwan.