Golden opportunity to open trade with China
By Roger C. Beach, Unocal Chairman and Chief Executive Officer
Few votes hold the economic potential of the one now facing the U.S. House of Representatives on trade relations with China. We have a tremendous opportunity to exert visionary economic leadership, accelerate regional and global stability, improve U.S. trade imbalances, and expand American -- and Texas -- exports to China.
Why is it important now to provide China with Permanent Normal Trading Relations, or "PNTR" in the Washington shorthand? For one thing, it could lead to a doubling of U.S. exports to this huge and growing market over the next decade, a good portion of which could come from Houston and Texas. In 1998, according to the Business Coalition for U.S.-China Trade, Texas exports to China and Hong Kong totaled $1.2 billion, making China one of the top 15 export markets for Texas. Last year, the Port of Houston traded $444 million of cargo with China and Hong Kong.
PNTR status for China also would promote peace and stability in the Asia-Pacific region and beyond. Most importantly, it would improve U.S. relations with a nation that is a potential global superpower.
China has already agreed to reduce tariffs, expand markets for U.S. agricultural products, improve business transparency, eliminate discriminatory taxes and regulations and phase out protectionist quotas. The Chinese have taken a courageous step toward open markets, recognizing that no nation can isolate itself in today's global marketplace if its economy is to grow and its people are to prosper. The country now is actively gathering the final, nation-by-nation votes it requires to formally join the World Trade Organization and expects to complete the process by the end of the year.
The ball is in our court. If Congress fails to approve PNTR status for China, the United States would isolate itself from other nations that have reached bilateral agreements with China. WTO countries must grant trade concessions unconditionally to other WTO members without further negotiations. That means China would have a right to withhold its WTO commitments from American goods, services and farm products while bestowing them on other WTO members, If Congress withholds PNTR, it would only be hurting American farmers, small businessmen, workers and companies.
The potential environmental benefits are great. China has major environmental concerns because of its reliance on coal and equally great concerns about the cost of oil imports. The Chinese are committed to re-evaluate their energy supply mix, placing greater emphasis on environmentally friendly natural gas. Beijing's recent decision to invest in a 2,800-mile natural gas pipeline system from China's west to its energy-hungry east will provide unprecedented market opportunities for American gas developers, equipment and technology providers and energy-service companies -- but only if trade is open.
Opponents of trade with China mistakenly believe that by approving PNTR we would be surrendering on issues such as China's human rights record. They argue that by withholding PNTR we can make China change. In fact, the opposite is true. Engagement and the WTO give the United States a stronger voice and a forum to make our voice heard loud and clear.
The record of U.S. business involvement in China over the last two decades shows how economic freedoms have increased in part by our presence. WTO membership will be a watershed in China's economic and political development. It will be a win for China's current economic reformers, who well understand that China's extraordinary growth rates cannot be sustained without completing the transition to a market economy. Congress has an opportunity to get it right this time. It can put the U.S.-China relationship on a path toward increased cooperation, mutual benefit and mutual respect.
Updated: May 2000