Boeing among those applauding upgrade of China’s trade status

Associated Press

WASHINGTON — The ailing U.S. business sector hailed President Bush’s decision to grant normal trade status to China, saying it will take the gamble out of dealing with the communist nation and emerging economic powerhouse.

Boeing Co., which ventured into China on the heels of President Nixon’s historic 1972 visit, took the news as a bright spot in an otherwise dreary time.

"It means that everyone can have confidence that tomorrow, next week or five years from now, we can all do fair business with China," said Fred Kelley, a spokesman for the Chicago-based aircraft maker.

The new trade status takes effect Jan. 1, Bush said Thursday in the announcement released in Crawford, Texas, where he is vacationing at his ranch.

The United States has struggled over China’s trade status for almost a quarter-century, with factions of both political parties arguing that Beijing needed to improve its human rights record before normal trade was considered. But supporters argued that China would be better influenced by an influx of American business brought on by normal trade relations.

That, and the acknowledgment that China could soon have a production ability that rivals the United States, brought the issue to the fore.

Congress last year granted the permanent status to China contingent upon its entry into the World Trade Organization. China’s application was accepted formally at the WTO’s annual meeting last month in the United Arab Emirates.

"We desperately need to bring China into the fold and stop having silly spats that keep our relationship off track," said Richard Daisly, a professor of foreign trade and economics at Vanderbilt University and an adviser for AOL Time Warner.

"Every step China has ever made toward opening up its society has come because it has sought economic benefits for its people. We must continue to show them that opening up to the world has benefit," Daisly said.

Bush called the trade proclamation the "final step in normalizing U.S.-China trade relations" and said it would open up the vast Chinese markets to billions of dollars in American goods.

Kelley said China’s status was a thorn in Boeing’s side for years.

"Stability is key in our business," he said. "We must look 18 to 24 months ahead in terms of building parts, planes and servicing them. It has been difficult for China to make such agreements when they don’t know if they would have an export license the following year or whether the United States would allow the planes to be delivered."

Some economists said the decision reflects a need to repair the country’s relationship with China, after the incident earlier this year when the crew of a crashed U.S. spy plane was held for a short time in China.

"We may not like China, and Bush may like communism even less, but the day is coming when any product will be manufactured in China more cheaply than anywhere else," said Chalmers Johnson, a former professor of economics at the University of California, Berkley. "We are merely reacting in a way that will hopefully benefit us. … You can’t fight the tide."

Bush’s proclamation formally lifts restrictions on China imposed by the Jackson-Vanik Amendment to the Trade Act of 1974. The amendment, initially aimed at the former Soviet Union’s restrictions against Jewish emigration, withholds normal trade relations with communist states that restrict emigration.

Since 1980, China has enjoyed temporary normal trade relations with the United States under annual presidential waivers of the law. But each waiver has triggered debates in Congress over China’s record on human rights and weapons proliferation abuses.

The last one occurred in July, when the House voted 259-169 to approve Bush’s waiver this year, the last that will be necessary.

Former President Clinton, at odds with many in his own party, started the process of moving China toward permanent trade status, which provides the same low tariffs that many other countries pay.

China and the United States reached an agreement, as part of China’s WTO entry, that will lower China’s tariffs on U.S. goods and open up its service sector to American companies.

China’s tariffs on U.S.-made goods are to fall from an overall average of 25 percent to 9 percent by 2005. Duties on America’s primary farm products are to drop from 31 percent to 14 percent.