HTML _ RL30225 - Most-Favored-Nation Status of the People's Republic of China
13-Oct-2000; Vladimir Pregelj; 11 p.

Abstract: The Tiananmen Square incident of June 4, 1989, and the repressive policies and violations of human rights by the Chinese government that followed it, led to the imposition by the United States of some economic and other sanctions against China and to consideration of additional sanctions, among them the withdrawal of China's nondiscriminatory, or most-favored-nation (MFN; normal-trade-relations) tariff status in trade with the United States. After having been suspended in 1951, MFN tariff status was restored to China in 1980 conditionally under Title IV of the Trade Act of 1974, including compliance with the Jackson-Vanik freedom-of-emigration amendment, which must be renewed annually. The lapse or withdrawal of the MFN tariff status would result principally in the imposition of substantially higher U.S. customs duties on, and in higher, often prohibitive, costs of, over 95% of U.S. imports from China ($81,522 million total in 1999) and a likely cutback in such imports as well as possible retaliatory reduction by China of its imports from the United States. A significant economic disadvantage might result for Hong Kong (U.S. imports in 1999 were $10,360 million) and (somewhat less) Macau (U.S. imports in 1999 were $1,123 million), which, despite their political reunification with China, remain separate economic entities with permanent U.S. MFN status. Sundry legislation introduced in earlier Congresses to withdraw altogether or severely restrict China's MFN status failed to be enacted, in two instances for failure to override the President's veto. In mid-1993, the President set additional human rights conditions for the renewal of China's MFN status in mid-1994, but this policy was reversed in 1994, by delinking the MFN status renewal from human rights and other conditions except the statutory freedom-of-emigration requirement, triggering new legislative measures to restrict China's MFN tariff status, none of which was enacted. In the 105th Congress, legislation was introduced, but not passed, to grant permanent MFN status to China outright, or upon its accession to the World Trade Organization. Some of the latter-type bills would have placed additional conditions on the grant of the MFN status; denied MFN treatment to products or exports of the Chinese Army or a Chinese military enterprise; or raised the amount of U.S. tariffs on imports from China to the level of China's tariffs on U.S. exports to China. On January 30, 1998, the President extended the trade agreement with China for 3 years, and on June 3, 1999, renewed China's Jackson-Vanik waiver and MFN status; legislation to disapprove that waiver renewal was defeated in the House on July 27, 1999. In the 106th Congress, legislation has also been introduced to grant outright permanent nondiscriminatory status to China or link its retention or permanent restoration to China's membership in the World Trade Organization. [read report]

Topics: International, Economics & Trade, International Finance

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