Playing With Fire

This June, President Clinton and Congress must decide whether to renew China's Most Favored Nation (MFN) trading status. While the Clinton administration and members of Congress are rightly concerned about China's poor human rights record, they would be making a grave and counterproductive mistake if they linked renewal of China's MFN to China's human rights performance.

For several reasons, revoking China's MFN would probably fail to improve human rights in China. China is a proud country that has evolved from a remarkable civilization over ten times as old as the United States? With a population of about 1.2 billion, and a geographic area of 3.7 million square miles, China is the most populous and third largest country in the world. Throughout much of their history, the Chinese have proven that they can survive just fine without contact with the rest of the world, including the United States.

While this kind of isolationism will become increasingly difficult in today's global economy, it will still be many years before a Chinese government will, out of economic fear, accept international humiliation and bow to American demands which it has explicitly opposed.

As an instructive political analogy that might cast doubt on the efficacy of trying, through economic coercion, to influence the internal affairs of a Communist regime, consider the case of Cuba. The united States has maintained a tight embargo on Cuba for over 30 years. The effects of this embargo on the Cuban economy are arguably much worse than the effects that the annulment of MFN would have on the Chinese economy. Yet Castro has maintained a firm clutch on the reigns of his Communist regime, while the citizens of his dictatorship have suffered the combined economic consequences of both his economic policies and the U.S. embargo.

The moral of the Cuban example is a simple one: dictators can long endure hardships imposed from the outside by leeching off resources that should have been destined for their citizens. In the case of China, whose size, population, and regional influence, make it abundantly more independent than the comparatively tiny island of Cuba, there is all the more reason to believe that Deng Xiaoping's government will find ways to adapt to the loss of its MFN status without changing its policy on human rights.

A revocation of china's MFN status would not only fail to produce the policy's desired effect (i.e. better human rights for the Chinese), but could actually lead Deng's government to grow more intransigent on human rights, and, in general, more recalcitrant in its dealings with the United States. Failure to renew MFN would rightly be perceived by China as a kind of economic ultimatum; this perception could start a vicious circle of political retaliation. China could decide not only to treat its pro-democracy dissidents more severely, but it could choose not to cooperate on other issues important to U.s. interests, like pressuring the North Koreans to allow the United Nations' nuclear inspections.

Economically, the policy of revoking China's MFN would be deleterious both to the U.S. and to China. This policy would involve raising the average tariffs on Chinese goods by 5 to 10 times, which, according to a study by the World Bank, would reduce Chinese exports to the US between 42% and 96%. Some estimate that such a reduction could cost China up to $10 billion in annual exports to the U.S., and millions of jobs in export industries. China would surely retaliate, and this would hurt the U.S.

Failure to renew China's MFN status could provoke an all-out trade war between China and the U.S. The Chinese government could impose high tariffs on American products and effectively threaten many of the 200,000 U.S. jobs that depend on the $9 billion in goods and services that the U.S. exports to China. Giant companies like Boeing and AT&T would quickly be overtaken by their Japanese and European competitors.

One of the worst consequences of revoking China's MFN status would be the erosion of the U.S.'s moral credibility when it comes to its foreign policy. Blaming China's human rights record for its loss of MFN would have the appearance and reality of being both hypocritical and inconsistent. It would be hypocritical of the U.S. to jeopardize its economic position for the sake of Chinese human rights while turning away, one economic grounds, Haitian refugees fleeing an oppressive regime.

The humanitarian motivation for revoking China's MFN is also totally inconsistent with the warm economic relationship that the U.S. continues to enjoy with countries like Saudi Arabia, where human rights and certain freedoms are barely discussed, much less enforced.

The simple, perhaps Machiavellian fact is that if the U.S. were consistently to apply its policy of economically penalizing any country with human rights violations, it would have no trading partners left. No state is morally blameless, because every state, by definition, is a political entity before it is an agent of morality.

That is not to say that there are no moral differences in the behaviors of different states, or that improvements cannot be brought about in the policies of cruel states. What it does imply, however, is that these moral improvements must be pursued politically before they are sought out economically. Pursuing human rights goals economically will inevitably lead to one of two undesirable scenarios: an inconsistency in the application of economic penalties, or the death of free trade.

There are many political means by which the U.S. can express its disapproval of China's human rights abuses. It could officially recognize Taiwan, and it could finance dissident prodemocracy groups inside and outside of China. It could also seek a multi-lateral reproach of China by raising the issue of human rights before the U.N With the creation of Radio Free Asia and its removal of a cap on arms sales to Taiwan, the U.S. has already taken measures to rebuff China for its recent human rights abuses. Denying China its MFN status in addition to these politically punitive actions would be an excessive measure that would probably worsen Sino-American relations, and threaten free trade.

With the recent passage of GATT, a hard-fought victory for free trade, it would be a serious error to start encouraging trade wars and undo the great progress that has been made towards a more cooperative world. There are also many humanitarian reasons to renew China's MFN status and preserve free trade, since the free movement of goods and services almost always leads to freer societies.

As China participates in greater economic exchange with the U.S., its increasingly enterprising citizens will have a greater need for uncensored, reliable information, and an increased tolerance for and understanding of democratic attitudes and practices. The more China trades freely with U.S. (and the rest of the world), the more its economy will grow, and the greater will be its need for policy-making that serves the interests of its businesses and citizens.

China has come a long way since Mao Zedong tried to rekindle its revolutionary fervor with his proclaimed Cultural Revolution of 1966. The subsequent and more moderate leadership of Deng Xiaoping has made a cautious and gradual attempt at economic liberalization. As China undertakes this difficult transition from Communism to capitalism, the U.S. must take care not disrupt China's progress while trying to hasten it.