China Trade: Will Clinton Pull It Off?

How an unlikely alliance of political enemies and Big Business brought victory within reach

On May 2, Representative Ken Bentsen, a second-term Democrat from Houston, found himself sitting in the living room of the White House family residence getting the Full Clinton Treatment. As Bentsen and two dozen other members of Congress munched peanuts and washed them down with Cokes, Martin Lee, chairman of the Hong Kong Democratic Party and a strong critic of China's repressive human-rights record, made an impassioned plea. "I have never been to China, and I probably never will in my lifetime," lamented Lee. Nevertheless, he said, it was critically important for the U.S. Congress to grant China permanent normal trade relations (PNTR). Then, with considerable emotion, President Clinton pressed the case for dismantling the barriers to trade with China. "How can we address your concerns?" Clinton beseeched the group.

Bentsen, a 41-year-old former investment banker and nephew of ex-Treasury Secretary Lloyd M. Bentsen, was already under strong pressure to vote yes. Compaq Computer, Enron, and Coastal--all located in his district--operate subsidiaries in China. The Port of Houston handles many of China's exports to the U.S. And Texas farmers and the oil-services industry have been clamoring for access to the Chinese market. But like other Democrats, Bentsen had also been pressed by the AFL-CIO to vote against normalizing relations with China in order to preserve U.S. jobs.

A week after the White House schmoozathon, Bentsen announced his support--though not before Clinton agreed to establish a commission to review unemployment programs for those who lose their jobs to increased imports. "It's not enough to say there are more winners than losers and move on," explained Bentsen. "We must strengthen the safety net for American workers in less competitive industries who lose their jobs due to trade."

CLIFFHANGER. Bentsen's support of PNTR and recent decisions by others in the room that day, such as Representative Thomas H. Allen (D-Maine), are behind the growing confidence within the Clinton Administration that it will win a cliffhanger vote in the House during the week of May 22 and follow with a larger margin of victory in the Senate in June. To win, Clinton needs a total of 218 votes. If House Republicans, as expected, come up with 150 affirmative votes, only 68 out of 211 House Democrats must vote yes. A week before the official tally, the White House had nearly 60 of those Democratic votes in hand and still needed just under half of some 22 undecideds.

Whatever the outcome, the colossal lobbying battle over China's trade status will be studied by political science classes for years to come. Usually, Congress would sooner cut its own pay than pass controversial legislation during an election year. As recently as last January, it looked as though Republicans would merely exploit the issue to highlight rifts over trade policy among Democrats and then drop the matter after the conventions. Instead, an unwieldy alliance of business, the Administration, and House Republicans managed to move the bill to the brink of passage.

Opposition to PNTR for China has been vigorous, with labor, environmental, human-rights, family farm, and consumer groups lining up with conservative Republicans angry over Beijing's repression of religious freedoms. But business groups have spent as much as $10 million on advertisements alone and, for the first time, harnessed the power of the Internet for a trade battle. In past trade debates, critics of globalization ruled the Internet. This time, business groups have been creating Web sites and e-mail distribution lists to coordinate their daily message. So when exiled Chinese dissidents Hongda Harry Wu and Wei Jingsheng criticize PNTR, the Business Coalition for U.S.-China Trade is able to counter by posting endorsements from its own Chinese rights advocates, such as Dai Qing, a China-based journalist and environmentalist.

Another first: High-tech groups, such as the Information Technology Industry Council and the Electronic Industries Alliance, have joined forces with traditional associations such as the Business Roundtable in pushing a pro-trade agenda. In the 1994 legislative fight over NAFTA, tech companies were largely absent. But their presence has helped the China PNTR campaign get through its darkest hour.

That came on Feb. 15, when the entire House Republican leadership assembled before TV cameras on a frozen Capitol Hill lawn. One by one, House Speaker J. Dennis Hastert of Illinois, Majority Leader Richard K. Armey, and House Whip Tom DeLay, both of Texas, promised to support the White House effort. Off-camera, the GOPers revealed their true strategy--the slow walk. They planned to draw out the process as long as possible and hold the House vote in August, just before the Democratic Convention. The timing was calculated to provide maximum damage to relations between the AFL-CIO, which opposes PNTR for China, and Vice-President Al Gore, whom the labor federation endorsed last October despite his support for normalizing trade relations.

THE RIOT ACT. Two months later, Hastert announced that the House would vote during the week of May 22. What happened? The business lobby read the riot act to DeLay. Boeing CEO Phil M. Condit and FMC Chairman Robert Burt led a delegation to DeLay's office on Apr. 5 and insisted that the GOP leadership set a date for the vote. Partisanship, they insisted, would kill PNTR just as it had killed major trade legislation in 1998 when the GOP scheduled a controversial vote too close to Election Day. "The Republicans had to stop playing games," says Lisa Berry, formerly with Boeing and now a lobbyist for America Online Inc. "We just told DeLay, `You can't do this."'

Business has also stolen a page from Big Labor's playbook by mounting a powerful grassroots campaign. The U.S. Chamber of Commerce, for example, says local business execs have logged over 200 visits to congressional offices in 31 states. On the Hill, the arm-twisters have included Cargill Chairman Ernest Micek, TRW Chairman Joseph Gorman, Sun Microsystems CEO Scott McNealy, Motorola CEO Christopher Galvin, and AIG Chairman Maurice Greenberg.

Small manufacturers have also been turning up the heat. Kyle Burns, an executive of San Antonio bowling-ball manufacturer Columbia 300 Inc., told lawmakers that PNTR will allow the company to bypass Chinese middlemen and sell directly to millions of potential bowlers. Dale Grogan, president of Leapfrog Smart Products Inc., an Orlando manufacturer of computer chips for credit cards, explained he'll be able to sell the technology to Chinese banks eager to keep track of hundreds of millions of consumers who now have no credit records.

MR. LUCKY. Pro-China forces have been keeping their message simple: China will enter the WTO regardless of whether Congress votes for PNTR. But turning down PNTR would mean that "Europe and Japan will get all of the benefits of China's concessions to the WTO, and we will get none," Clinton said on May 9. The Administration has been sticking to this line despite the opinion of legal experts that a 1979 agreement with China would guarantee the U.S. the same tariff reductions offered by Beijing to all other members of the WTO. A General Accounting Office report last March concurred with that opinion.

Not surprisingly, luck has been with Clinton. Although the President was roundly criticized in April, 1999, when he rejected a deal from Premier Zhu Rongji that would have let China into the WTO in return for an extensive list of market-opening measures, that decision has proved serendipitous. In a final meeting between the two leaders, Clinton had asked Zhu: "Do you really need this?" Zhu, apparently confused by Clinton's question and anxious not to seem weak, answered through an interpreter, "No." Later, the President announced that because several issues remained unresolved, the final agreement would be delayed.

Since then, the U.S. has negotiated a 15-year deal under which the U.S. can hit China with temporary tariffs if it floods the U.S. with goods. And the delay has allowed the U.S. to win a provision that strengthens its hand in determining when Chinese goods are being dumped on the U.S. market. Without such safeguards, "we never would have gotten enough votes for this," a top Administration official emphatically states. On Mar. 8, Clinton weighed in with a major speech in which he made PNTR a national security issue, a clarion call for many conservative Republicans.

Beijing, for its part, has behaved as badly as supporters feared, but not badly enough to raise any new hackles among its critics. Although the mainland government rattled sabers before the Mar. 18 presidential vote in Taiwan, Beijing and Taipei have been conciliatory ever since. Taiwan's new President, Chen Shui-bian, supports PNTR and China's entry into the WTO, especially since it opens the gates for Taiwan's much-delayed accession to the WTO. Beijing has continued its crackdown on the Falun Gong sect and on independent Catholic clergy in China, infuriating GOP hard-liners. But China also has curried favor with U.S. agricultural groups by purchasing U.S. beef, pork, wheat, and citrus.

Oddly, some of the same factors that ordinarily help to kill controversial legislation in election years have been working in the President's favor this time. Case in point: China's strongest critic in the House, Minority Leader Richard A. Gephardt, held his fire for months in order to raise money from high-tech business groups that strongly supported the legislation.

MINEFIELD. As the vote approaches, Administration and business lobbyists have been fighting against overconfidence. After all, China could still produce a public-relations disaster. A bipartisan attempt by Representatives Sander M. Levin (D-Mich.) and Doug Bereuter (R-Neb.) to fashion an amendment creating a human- and labor-rights commission on China could backfire by alienating some members. And partisan bickering, now holding up votes on gun control and health-care reform, could stall the trade legislation.

But if the Administration can get a few more holdouts to sign on to this high-wire act, it just might defy conventional wisdom, pass the first major trade bill in six years, and help secure Clinton's place in the history books. And if it fails, the battle for the China trade will be remembered as an extraordinary campaign that came from far behind and had victory almost in its grasp.

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