TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 185

THE RESULTS.

MFN Brief 4/93

The Administration has so far maintained that withdrawal or revocation of MFN benefits would hurt the private-sector forces in China as well as U.S. consumers of Chinese products. This logic is questionable for a number of reasons.

1. The unconditional renewal of MFN for China actually harms U.S. citizens. MFN privileges allow Chinese goods to enter the U.S. market at low prices, but serve to increase the ever ballooning U.S. deficit. Since the 1989 Tianamen massacre, the U.S. has accumulated a $30 billion trade deficit with the PRC.and it is the American tax- payers who foot the bill.

2. The foreign exchange that China gains through MFN privileges is controlled primarily by the hard-liners who continue to erect trade barriers to U.S.goods.

3. The U.S. dollars received by China from its MFN status have not promoted a free market as was the intention. The Independent Federation of Chinese Students and Scholars has estimated that up to 80 percent of China's total exports are either "manufactured, marketed or exported" by state-controlled enterprises.

4. Providing economic privileges to recalcitrant governments carries a high risk and does not necessarily promote democratic principles, a fact illustrated by the Gulf War. Despite the unconditional renewal of MFN over the last three years repression and human rights violations in China and Tibet continue unabated.

5. The PRC government resorts to prison labour to produce goods. for exports. Sixteen to twenty million men and women are imprisoned in China's forced labour camps. Dissidents continue to be tortured. Free thought and association is curtailed. Religious worshippers are punished. And, Tibet remains under illegal military occupation.

THE CONGRESSIONAL REACTION.

These are the reasons why Congress believes that the Administration's policy of engagement has done little to improve China's conduct, either domestically or in the international arena. Members in both the House and the Senate are increasingly convinced that clearly-articulated economic sanctions will be more effective in bringing about positive developments in trade, weapons proliferation and human rights in China and Tibet.

Page 2/3