Source: Carnegie
Reprinted from the Weekly Standard, April 3, 2000
On March 16, as the people of Taiwan were preparing to make history by turning out the ruling Nationalist party in the most momentous election in the 5,000-year history of the Chinese people, and as the Chinese rulers in Beijing were thundering ever more ominous threats of war should the Taiwanese electorate vote for opposition candidate Chen Shui-bian, Republican senator Chuck Grassley sent a letter appealing to the Beijing government to address "a very important matter." To underscore the importance of this very important matter, Grassley let the Chinese know that it was very important "to me personally." It was a matter which, the senator demanded "in the strongest possible terms," the Chinese must urgently resolve.
And what very important matter was on Senator Grassley's mind the day after China's "moderate" premier, Zhu Rongji, threatened war with Taiwan? What was on the senator's mind was fertilizer. The Chinese, it seems, have been restricting access to American fertilizer producers -- some of them no doubt based in Senator Grassley's own state of Iowa -- in a manner which the good senator finds "completely contrary to the free trade principles at the heart" of the World Trade Organization. This is, of course, shocking news. And it is a real detriment to America's vital national interests, given the fact that, as Grassley pointed out in his letter, "Fertilizer is the fourth largest United States export to China." Indeed, the United States exported a little over $ 900 million worth of fertilizer to Chinese farmers last year. That's about one-seventieth of the U.S. trade deficit with China.
Welcome to American politics at the dawn of the 21st century. When it comes to selling fertilizer, or textiles, or CDs, our politicians are prepared to play hardball with Beijing, or at least to talk a tough game. When it comes to defending the vibrant democracy of Taiwan from Chinese military intimidation and attack, or preparing the American people for a possible conflict with China sometime in the future, well, that is another story.
As the Republican-led Congress rushes to pass permanent most-favored-nation trade status for China, there is little indication that the Senate will take any action on the Taiwan Security Enhancement Act. That legislation, already passed overwhelmingly by the House, would strengthen military ties between the United States and Taiwan, increase Taiwan's ability to defend itself, and send a clear message to Beijing that its bellicose threats against Taiwan can only strengthen American resolve to come to Taiwan's aid.
Leading senators, however, together with the Clinton administration, seem determined to send a very different message to Beijing. Their message is: Threaten Taiwan, and get a new trade deal. For these senators, it seems, trade trumps everything. The day after Taiwanese voters defied Beijing and elected Chen president, the only thing that worried most Republican congressional leaders, as well as Clinton administration officials, was that Beijing might "overreact," hurting chances for permanent MFN for China. Grassley was on hands and knees, literally begging the Chinese to play it cool long enough to get past the vote. "I beg them," he said, "as a friend, just don't overreact." A Chinese military attack on Taiwan, Grassley said, would kill China's chances for getting into the WTO this year -- and what would happen to the fertilizer producers then?
There are many sound, economic reasons to oppose granting permanent MFN status to China this year. Some of them were outlined by former Reagan Pentagon official Richard Perle at a Senate Finance Committee hearing last week. Perle, as a loyal adviser to George W. Bush, officially declares his support for permanent MFN for China. But when asked if the Chinese could be trusted to live up to any agreement and provide a "level playing field" for foreign businesses, Perle candidly admitted that such goals were illusory. "It would be hard to imagine more outrageously predatory behavior than that practiced by Chinese industry," Perle warned. "They'll lie, cheat, and steal on a breathtaking scale." It would be a "great mistake," he argued, "to expect a level playing field, because in China there is no level playing field, not even for private Chinese enterprises, much less foreign ones." Perle poured cold water on administration assurances, eagerly parroted by Republican congressional leaders, that China's entry into the WTO would necessarily open that economy up to American business. Americans should be "skeptical about the benefits to be found in Chinese membership in the WTO," he argued. "It is not self-enforcing, and unless we enter this with a plan for a vigorous defense of our rights under the WTO, when those rights are violated, as they surely will be, we will be bitterly disappointed."
And there are strategic arguments against granting permanent trade status to China. Already, American corporations have provided the Chinese military with advanced technologies that can someday be used against American forces. Already, the Chinese are using their enormous trade surplus with the United States to purchase advanced Russian weaponry that can be used in an attack on Taiwan. It would be one thing if Congress, while passing permanent trade status for China, were simultaneously instituting measures to prevent American trade with China from aiding its military buildup. But, of course, that is not happening. The same powerful corporate lobbyists who are ramming permanent MFN through Congress have also eviscerated every attempt to limit American technological and other assistance to the Chinese military. And they will be in an even stronger position to do so after permanent MFN is passed. The same lust for Chinese markets that has Senator Grassley talking about fertilizer when Taiwanese democracy is under threat of attack will continue to dominate U.S. policy toward an increasingly dangerous and belligerent Chinese government.
Lenin once quipped that the capitalists would sell the rope to hang themselves. During the long Cold War competition with the Soviet Union, this thankfully proved not to be an accurate judgment. For most of the Cold War, American strategic interests and moral principles trumped trade. That was crucial to the West's eventual triumph. Unfortunately, as the potential for conflict between the United States and China grows with each passing year, Lenin, who was wrong in the twentieth century, is looking more and more prophetic about the twenty-first.