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News > Economy
Greenspan backs China bill
May 18, 2000: 11:37 a.m. ET

Fed chief says open trade is best way to promote human rights, economies
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NEW YORK (CNNfn) - Federal Reserve Chairman Alan Greenspan urged a divided U.S. Congress Thursday to approve a bill expanding trade relations with China, saying the measure would benefit both countries' economies.

Greenspan, in a rare endorsement of a pending bill before Congress, appeared at a White House event with President Clinton to press lawmakers to grant China permanent normal trade relations status. In exchange for the upgrade in trade relations, China would cut tariffs on U.S. imports and open a wide range of markets to American businesses.

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graphic CNNfn's Bob Beard reports on the battle to get permanent trade relations with China.
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Greenspan, a long-time supporter of easing trade barriers, said the measure would raise standards of living in China, promoting internal economic development and encouraging the communist country to foster greater individual rights.

The measure also is vital to U.S. interests, he said. (WAV378K) (AIF378K)

graphic"As China's citizens experience economic gains, so will the American firms that trade in their expanding markets," he said, reading from a letter that he had previously sent to the House Banking Committee supporting the trade accord.

Approval of the bill is a key step for China in its quest to join the World Trade Organization, the 135-nation body that sets world trade rules.

"China's progress towards prosperity and accession into the WTO will create new opportunities for American businesses and farmers," Greenspan said.

Greenspan said China currently accounts for 3 percent of world trade, a figure that is expected to jump if the country of 1.2 billion people becomes part of the WTO.

"Our markets are already generally open to China, and that will not be altered by PNTR [permanent normal trade relations]," the Fed chief said. "Passage of PNTR, however, will facilitate a further opening of China's markets to U.S. producers."

Critics of the legislation include human rights advocates and organized labor, which contends that U.S. companies will be tempted to shift work to low-wage plants in China, endangering U.S. jobs.

Supporters confident of passage


The House of Representatives is expected to vote on the PNTR legislation next week, with the vote considered too close to call.

The bill, however, got a boost Thursday as Republican congressional leaders announced a bipartisan agreement on companion legislation that would set up a watchdog commission to monitor human rights in China, a breakthrough that could sway some undecided lawmakers to vote for the measure.

"We're going to win this vote next week," California Rep. David Dreier, chief vote counter for the Republicans, told Reuters.

However, opponents of the bill condemned the monitoring plan and said they believed they had enough votes to defeat the bill.

"We don't need another commission. What we need is action. What we need is pressure. What we need is enforcement and action," said David Bonior, D-Mich., a leading opponent of the measure and the No. 2 House Democrat.

The Senate, which will take up the matter next month, is expected to approve the measure easily.

graphicU.S. Treasury Secretary Lawrence Summers also stands firmly behind the trade deal with China. He told CNNfn that China's accession into the WTO would grant U.S. exporters an open market in the communist nation. (229KB AIF)(229KB WAV)

Meanwhile, President Clinton plans to address the nation Sunday evening from the Oval Office in an effort to build support for the bill, White House Press Secretary Joe Lockhart said. The address will start at 7 p.m. ET, last about five minutes and focus on the "importance" of the issue for U.S. national security, Lockhart said.

In addition to passage of the trade bill in Congress, China faces another hurdle - hammering out a bilateral trade pact with the European Union. Talks between the two sides in Beijing came up short again Thursday, but negotiators agreed to resume discussions Friday.

The EU is the last major trade partner with China yet to reach a bilateral accord on WTO membership. Back to top

--from staff and wire reports

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