President Clinton's decision on Apr. 8 to send Chinese Premier Zhu Rongji packing without an agreement on China's entry into the World Trade Organization seemed to be a massive miscalculation. The President took a drubbing from much of the press, which had breathlessly reported that a deal was in the bag. The Cabinet and White House staff appeared divided, and business leaders were characterized as furious over the lost opportunity. Zhu charged that Clinton lacked "the courage" to reach an accord. And when Clinton later telephoned the angry Zhu to pledge a renewed effort at negotiations, the gesture was widely portrayed as a flip-flop.
In fact, Clinton made the right decision in holding out for a better WTO deal. A lot more horse-trading is needed before a final agreement can be reached. And without the Administration's goal of a "bullet-proof agreement" that business lobbyists can enthusiastically sell to a Republican Congress, the whole process will end up in partisan acrimony that could harm relations with China for years.
THE HARD PART. Many business lobbyists, while disappointed that the deal was not closed, agree that better terms can still be had. And Treasury Secretary Robert E. Rubin, National Economic Council Director Gene B. Sperling, Commerce Secretary William M. Daley, and top trade negotiator Charlene Barshefsky all advised Clinton that while the Chinese had made a remarkable number of concessions, "we're not there yet," according to senior officials.
Negotiating with Zhu over the remaining issues may be the easy part. Although Clinton can signal U.S. approval for China's entry into the WTO himself, he needs Congress to grant Beijing permanent most-favored-nation status as part of a broad trade accord. And the temptation for meddling on Capitol Hill may prove overwhelming. Zhu had barely landed before Senate Majority Leader Trent Lott (R-Miss.) declared himself skeptical that China deserved entry into the WTO. And Senators Jesse A. Helms (R-N.C.) and Ernest F. Hollings (D-S.C.) promised to introduce a bill requiring congressional approval of any deal.
The hidden message from these three textile-state Southerners: Get more protection for the U.S. clothing industry. Hoping to smooth the way, the Administration tried, but failed, to budge Zhu on textiles. Also left in the lurch: Wall Street, Hollywood, and Detroit. Zhu refused to open up much of the lucrative Chinese securities market and insisted on "cultural" restrictions on American movies and music. He also blocked efforts to allow U.S. auto makers to provide fleet financing.
BIG JOB. Already, business lobbyists are blanketing Capitol Hill to pre-sell any eventual agreement, but what they've heard so far isn't encouraging. Republicans, including Lott, say that "the time just isn't right" for the deal. Translation: We're determined to make it look as if Clinton has capitulated to the Chinese and is ignoring human, religious, and labor rights violations; the theft of nuclear-weapons technology; and the sale of missile parts to America's enemies. Beijing's fierce critics within the Democratic Party, such as Senator Paul D. Wellstone of Minnesota and House Minority Leader Richard A. Gephardt of Missouri, won't help, either.
Just how tough the lobbying job on Capitol Hill will be became clear on Apr. 20, when Rubin lectured 19 chief executives on the need to discipline their Republican allies. With business and the White House still trading charges over who is responsible for the defeat of fast-track trade negotiating legislation in 1997, working together won't be easy. And Republicans--with a wink--say that they'll eventually embrace China's entry into the WTO as a favor to Corporate America. Though not before they torture Clinton. But Zhu is out on a limb, and if Congress overdoes the criticism, he may be forced by domestic critics to reneg. Business must make this much clear to both its GOP allies and the White House: This historic deal is too important to risk losing to any more partisan squabbling.