Commentary: China Trade: Did Gephardt Shortchange Business?

Official Washington tuned in when House Minority Leader Richard A. Gephardt told a hometown St. Louis audience on Apr. 19 that he would oppose granting China permanent normal trade relations (PNTR) status. Although expected, the announcement was deemed a key setback for the Clinton Administration and its business allies. But unlike populist Pat Buchanan's thundering opposition, Gephardt's protest is more nuanced. The leader won't personally direct the fight against PNTR, leaving that to underlings. And his long silence on the issue has already provided the Administration months to lobby House Democrats, who usually look to Gephardt for strong leadership on matters affecting international trade.

What's Gep-hardt's game? It's a finely honed exercise in political dualism. By refusing to climb aboard the pro-China bandwagon, Gephardt--one of organized labor's key allies--is continuing his campaign against Beijing's human and labor rights abuses. In his 1999 book, An Even Better Place: America in the 21st Century, he dismissed as "ludicrous" the contention that expanded trade fosters democracy in China. "America has to stand for something more than money," he says.

GRAND AMBITION. Few doubt Gephardt's sincerity on the human-rights issue. But the minority leader has a keen sense that courting Big Business is essential for the realization of one of his grand ambitions--becoming Speaker in a House that's reclaimed by Democrats in the 2000 elections. To leaven his reputation as a pro-labor spear-carrier, he has been talking up a centrist, pro-business agenda that has attracted millions in campaign contributions from execs, especially in the tech sector.

It may seem inconsistent to dial for business dollars while opposing PNTR. But Gephardt has been pulling it off with aplomb. Both labor and business campaign contributions to House Democrats hit a high this year. Gephardt's balancing act "reflects the new reality of congressional politics," says Anthony J. Corrado, a government professor at Colby College in Waterville, Me. With just six GOP-held seats separating the Missourian from the speakership, execs are loath to turn down Mr. G's fund-raising appeals. At the same time, says Corrado, liberal Dems know they must make overtures to business to appear less scary in the event they take House control.

Still, Gephardt's playing of the China card has left some business groups queasy. "We're extremely disappointed.... Everyone thought that there was some hope" that Gephardt might relent, says Tim Hugo, executive vice-president of CapNet, a tech group that has contributed to the Democratic Party. Others are suspicious about the timing of Gephardt's speech. "There was a prodigious amount of fund-raising from business before Gephardt came out of the closet on China," says R. Bruce Josten, executive vice-president of the U.S. Chamber of Commerce.

Prodigious seems the right term. Gephardt's Democratic Congressional Campaign Committee raked in $45.4 million in the current election cycle. He is credited with personally bringing in more than $18 million of that. Just days after giving his support for most of the tech industry's Washington agenda, Gephardt netted $1.4 million in a Silicon Valley fund-raiser.

Gephardt sees no inconsistency in courting high tech while opposing one of its chief legislative goals. "Sometimes I agree with business, sometimes not," he says. "When there is a move I can make to support free trade, I am for it, but I worry about treaties which don't properly include human and workers' rights and the environment."

In one significant change, Gephardt says he now backs the current practice of granting China PNTR on a year-to-year basis, a departure from years past when he opposed the yearly executive order granting China the same status enjoyed by America's other trading partners. And part of his unwritten understanding with business and labor is that he won't try to strong-arm Dems to vote against the China trade measure, either. "There is merit on both sides. This is not a clear-cut issue," he says. It's a delicate business. But Gephardt's strategy for taking back the House depends on maintaining such subtle distinctions.

    Before it's here, it's on the Bloomberg Terminal.