Study: China Deal May Hurt Deficit
WASHINGTON (AP) _ Supporters of a landmark trade bill with China have a ticklish problem _ the government’s major study of the measure indicates it will make America’s already huge trade deficit with China worse rather than better.
U.S. Trade Representative Charlene Barshefsky, who requested the review, calls the finished product ``a very incomplete study, and to be frank, not much utilized.″
But opponents have gleefully seized on the report by the U.S. International Trade Commission to do their own analysis projecting the China deal will result in the loss of 872,000 American jobs over the next decade.
Preposterous, says the Clinton administration, which published its own state-by-state assessment that proclaimed the China deal would ``open new export and employment opportunities in all 50 states.″
Meanwhile, both sides mounted a frenzied last-minute lobbying blitz Monday in advance of this week’s House vote on the deal that would make normal trade relations with China permanent. ``We are getting close,″ President Clinton said in a Monday night NBC interview. ``I am optimistic, but boy, we have got a lot of work to do. It’s not done yet.″
A dwindling number of undecideds _ perhaps a dozen or slightly more _ continued to hold the fate of the bill in balance, with 218 the number needed for passage in the 435-member House.
Supporters hope for at least 150 Republican votes and about 70 Democratic votes. If such a margin materialized, and supporters say it remains in doubt _ the measure would win by just two votes.
Supporters did pick up at least two formerly undecided Republicans on Monday _ Tom Campbell of California and Jim DeMint of South Carolina. Campbell said he feared congressional rejection ``would compel the Chinese government to respond with extremely high tariffs on American goods exported to their markets.″
Opponents, meanwhile, picked up Rep. Steven C. LaTourette, R-Ohio. ``I decided to listen to my conscience and my district and vote ’no,‴ he said.
As in the huge debate over free trade with Mexico in 1993, supporters and opponents offer starkly different views of the future if Congress passes legislation that would end the annual congressional review of China’s trade privileges.
Clinton and his economic team contend the China agreement is a no-brainer. All the trade concessions are being made by China. In return for America’s support for its bid to join the World Trade Organization, China would dismantle barriers that U.S. corporations and farmers have long complained about.
The trade commission did predict that U.S. exports would rise by 10 percent with American farmers the biggest winners. But it also predicted imports from China to the United States would rise by 7 percent. Although U.S. trade barriers are not being changed, China’s products will become more competitive on world markets as the country’s efficiency improves by lowering its own barriers.
Since China already sells $6 in the U.S. market for every $1 American manages to sell in China, the trade commission’s projections would mean an increase in America’s trade deficit with China.
That deficit hit a record $68.7 billion last year, the largest for any country other than Japan. Chinese imports totaled $81.8 billion, reflecting that it is America’s No. 1 supplier of toys, apparel, shoes and consumer electronics. U.S. exports to China totaled just $13.1 billion.
Using the ITC’s findings on the trade deficit, a study by the Economic Policy Institute, a labor-supported think tank, projected that over the next decade, U.S. job losses would total 872,091, with every industry suffering. California led all states with 84,294 lost jobs.
``This is a very conservative estimate of job losses,″ said Robert Scott, author of the EPI study. ``It assumes that China will live up to the agreement and not devalue its currency to gain competitive advantage.″
The administration, however, contends the job-loss report wrongly assumes that the gains made when the agreement is fully phased in will continue multiplying at the same high rate over the next decade.
Barshefsky also attacked the ITC report’s methodology because it focused only on tariff cuts and not the benefits from the removal of non-tariff barriers.
``It is a terribly incomplete study because it only assumes tariff reductions,″ she told The Associated Press in an interview. ``It didn’t factor in things like trading rights and rights of distribution.″
New York investment firm Goldman Sachs has estimated that by 2005, U.S. exports to China could be $13.9 billion higher, double the current level, with 57 percent of the gain coming from the tariff cuts, 26 percent from the elimination of non-tariff barriers and the rest coming from higher U.S. investment in the country.
But organized labor says rising U.S. investment in China will simply mean more U.S. companies building factories in China to take advantage of cheap wages.
``We’ve seen a lot of good jobs become bad jobs _ 13-cent-an-hour jobs, child labor jobs, forced labor jobs,″ says AFL-CIO President John Sweeney. ``That is the pattern that corporations take when they invest in other countries.″
Meanwhile, the General Accounting Office, the investigative arm of Congress, suggested that a group formed by the Clinton administration to help lobby for the bill may have violated a federal anti-lobbying law.
In a letter to Rep. Frank Wolf, R-Va., GAO General Counsel Robert P. Murphy cited a single e-mail message from a unit of the administration’s China Trade Relations Group to two farmers’ organizations urging their members to contact lawmakers in support of the legislation.
That appeared to violate a federal law prohibiting federal funds from being used ``directly or indirectly″ to lobby for legislation before Congress.
However, Murphy said a ``negligible″ amount of federal funds were involved and that the violation ``was minimal and does not warrant further action on our part or a referral to the Justice Department.″
White House spokesman Jim Kennedy noted that the GAO itself had cited only a single e-mail. ``After reviewing over 2,000 pages of documents, the GAO found no violations of the anti-lobbying act,″ he said.
The bills are H.R. 4444 and S. 2277
On the Net: White House site: http://www.chinapntr.gov
AFL-CIO site: http://www.aflcio.org/publ/press2000/pr0222.htm