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Big Biz wins China vote
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May 24, 2000: 7:59 p.m. ET
U.S. firms have a lot at stake in granting China permanent normal trade relations
By Staff Writer Martha Slud
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NEW YORK (CNNfn) - Corporate America is celebrating the passage in the House of Representatives of legislation that expands U.S. trading ties with China, a landmark accord that would pry open Beijing's potentially enormous markets for computers, insurance, crops and a host of other products.
The House approved the hotly contested bill in a 237-197 vote Wednesday, ratifying the bilateral trade pact brokered by the Clinton administration and Chinese officials last fall. But the bill still has another step ahead. The Senate, which is expected to easily approve the measure, is due to vote on the legislation next month.
U.S. businesses have lobbied fiercely for the legislation, with heavy-hitting backers including Motorola Inc (MOT: Research, Estimates), Intel Corp. (INTC: Research, Estimates), Microsoft Corp (MSFT: Research, Estimates), Citigroup (C: Research, Estimates), Caterpillar (CAT: Research, Estimates), Whirlpool Corp. (WHR: Research, Estimates) and General Motors (GM: Research, Estimates). Big business has spent millions on an advertising blitz in the days leading up to the vote.
"It's really a momentous vote -- a case of the House putting the long-term economic interests of the country above short-term political calculations," said Marc Brailov, a spokesman for the Washington-based American Electronics Association, one of many trade groups that has pressed legislators to approve the measure.
The House approval gives "a potent charge to our high-tech industry," he said.
"We're very, very pleased with the outcome - it was a strong bipartisan showing," said Jim Whittaker, director of international government affairs at Hewlett-Packard (HWP: Research, Estimates) and chairman of the U.S. High-Tech Industry Coalition on China. "We are now going to be looking toward the Senate, where we are going to be working diligently to secure passage."
The outcome of the vote "exceeded expectations," said Christopher Padilla, director of international trade at Eastman Kodak (EK: Research, Estimates). Under the bill, tariffs on U.S. photographic products would be cut by about 50 percent.
Click here for CNNfn's full report on the U.S.-China trade pact
The legislation would award China permanent normal trade relations with the United States - granting the Communist country the same trade status as most other nations. Previously, Congress held an annual review of Chinese trading ties - an often-embarrassing event for Beijing that served as a forum for critics to attack its record on human rights, religious freedom, relations with Taiwan and the environment.
In exchange for the upgrade, Beijing agreed to reduce stiff tariffs on U.S. imports and abolish restrictions on overseas investments in the country. The deal was reached in advance of China's proposed accession to the World Trade Organization, the Geneva-based body that sets and enforces global trade rules.
The bill was bitterly opposed by organized labor, which argued that the bilateral pact will encourage U.S. companies to shift low-wage manufacturing jobs to factories in China. Human rights activists also criticized the legislation, saying it removes any incentive for China to work to improve individual rights.
Not all businesses support the measure, however. Textile manufacturers, for example, fear the legislation could lead to a flood of cheap Chinese exports on the U.S. market, chipping into their sales.
More exports to China
For years, U.S. corporations have been itching to delve into China, a country of nearly 1.3 billion people that has the potential to become the world's biggest consumer market. 
"Obviously, we see this as a major step to keep America competitive in an increasingly global economy," said Norm Sandler, director of global strategic issues for Motorola Inc. (MOT: Research, Estimates).
"It means more exports to China, which translates into more jobs for American workers," he said.
Among the biggest winners of the legislation would be car makers, financial services firms and telecommunications companies, said Bernard Yeung, an area research director at the University of Michigan's William Davidson Institute, which studies emerging economies.
For U.S. businesses, the trade pact is a necessity to stay competitive on the world stage, said Yeung. If the U.S. does not reach a market-opening trade deal with China, then China will open its markets to companies in Europe and elsewhere, he said. Last week, the 15-nation European Union reached a bilateral trade accord with China.
"In all of these industries, we have competitors and they are the Europeans," he said.
The U.S.-China bill calls for China to cut tariffs on an array of U.S. imports. It will cut duties on autos to 25 percent, from the current 80 to 100 percent, by 2006 and phase out quotas. Import duties on auto parts also will be reduced. China also agreed to end restrictions on the operations of car dealerships.
U.S. banks will be allowed to begin serving the country in two years. China also agreed to open up its telecom industry to U.S. investment, allowing American companies to own up to 50 percent of local telephone providers after two years.
Another big winner is the farming industry. China agreed to cut tariffs on corn, soybeans, cotton and other crops, as well as cut subsidies to its own farmers. Overall agriculture tariffs will be cut to about 18 percent, from 31 percent, by 2004.
U.S. soybean farmers strongly backed the legislation. Last year, China purchased nearly $900 million dollars of U.S. soybeans, soybean meal and soybean oil, making the country the largest overseas buyer of U.S. soybeans.
"This is really the first -- as far as I'm concerned -- the first true attempt on the part of the U.S. government to help farmers get into the world market," said Tony Anderson, a soybean farmer in Mount Sterling, Ohio
"We're just ecstatic about it," he said, after hearing about House passage of the bill. "It's the best news I've heard all day." 
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