US keen to end yearly MFN debate

AMERICAN Chamber of Commerce chiefs who returned from an exploratory trip to Washington at the weekend say there are clear indications that the US will go for a once-and-for-all resolution of the yearly question of China's Most Favoured Nation trade status.

But they warn that China could blast this goodwill by failing to demonstrate progress in the four key areas of concern: human rights, arms proliferation, market access and the ballooning bilateral trade deficit.

AmCham chairman Lyn Edinger said: ''Even the Congress leaders we met who are sympathetic to an extension of MFN continue to be worried and concerned that bad news in the area of human rights and arms proliferation could complicate moves to settle MFN foronce and for all.

''This spring should produce a resolution of the MFN issue if at all possible, but there are concerns that the Chinese response in some of these areas will not be enough to accomplish that.'' Of the four problem areas, Mr Edinger reckons arms proliferation is likely to prove the biggest sticking point.

''This is an issue that could prove to be the undoing of progress made in all other areas. I would strongly urge the China Government to hear us on this point,'' he said.

Mr Edinger and AmCham president Frank Martin said they felt a sense of exhaustion on Capitol Hill with the whole China issue, and a will to see the MFN question cleared up.

Several people told the AmCham chiefs that they found the debates exhausting, divisive and costly in time and money, and would like to see the argument resolved in such a way as to disengage Congress members from future debates.

This spring promises the usual China debate, revolving around the four thorny issues.

The US-China trade deficit, which last year soared to US$18.08 billion, is on track to hit a politically and economically unsustainable US$35 billion if it carries on growing at the present rate.

Mr Edinger said: ''A strong sense that we picked up last week was that the trade deficit is an increasingly important political problem that the Chinese are going to have to address.

''It has been discussed for quite some time. There has been a fair amount of quibbling and obfuscation on the matter of the deficit: China's method of calculation differs from that of the US Government. There is growing impatience in Washington on this issue.

''China is also in danger of being lumped together with Japan on this issue. The time has come for China to begin earnest dialogue on the trade deficit.'' A five-strong US delegation is in Beijing this week, monitoring the progress made in opening markets as agreed under the 301 market access talks.

Mr Edinger said China had undertaken to relax and, over time, to wipe out quotas on the 200 items identified under the 301 agreement.

He said he was hopeful that the US delegation would see progress and be able to carry that message back to Washington.

Congressional debates on China during the past three years have tended to exclude business chiefs and major corporations in the US, relying rather on trade and importers' associations for commercial representation.

But AmCham reckons this year will see business people joining in.

As the economic take-off in China gathers pace, Mr Edinger says there will be a role for those executives to hammer home their positions during the spring debate.

He said: ''When the China issues come up for debate this spring, there will be an opportunity for all voices to be heard.

''The partisan element has been reduced. The debate is likely to have a high level of objectivity and integrity, and there will certainly be an opportunity for us in Hongkong to have our position examined and evaluated.'' He reckons Bills against renewal are unlikely to be submitted until the administration has formulated its policy on China and MFN.

''Nancy Pelosi, who I think is the person on the whole most likely to enter legislation, has indicated she will give the administration time to develop its policy although she has in her pocket a Bill already written and which could be dropped into the process at any time,'' he said.