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THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release May 31, 1996

STATEMENT BY THE PRESS SECRETARY

The President Renews MFN Status for China

The President announced today that he has renewed Most-Favored-Nation (MFN) trade status for China this year. The President has taken this step because he believes that continued engagement with China is the best way to help it become a constructive force for stability and prosperity in Asia and to advance important American interests.

Under the criteria set forth in the Trade Act of 1974, as amended, and in particular, the Jackson-Vanik amendment concerning freedom of emigration, the sole statutory requirement for MFN renewal is a Presidential determination that renewal will substantially promote freedom of emigration in China. The President will today transmit to Congress a determination to this effect.

Far from giving China a special deal, renewal of MFN confers on it a trading status equal to that enjoyed by most other nations. Simply put, it gives China normal trade status. It is not being granted as a favor to China.

The President is renewing MFN for China because he believes it advances critical U.S. interests at a time when China is at a critical turning point. Maintaining our overall relationship with China enables the U.S. to engage China in the months and years ahead, to enhance areas of cooperation and to pursue American interests in areas where we differ. That engagement can help determine whether China becomes a destabilizing threat or a constructive force in Asia and in the world.

Substantial U.S. interests are at stake and renewal of MFN best advances those interests. Revoking MFN would raise average tariffs on Chinese imports from 5% to 45%. It would effectively sever our economic relationship with China, undermining our capacity to influence China in a broad range of areas, including human rights, nonproliferation, trade, Taiwan relations and others. It is a clumsy and counterproductive instrument that would set us down the wrong path. It would reverse three decades of bipartisan China policy and would seriously weaken our influence not only in China, but throughout Asia.

Revoking MFN would also undermine America's economic interests. U.S. exports to China support 170,000 American jobs and have been growing at a rate of 20% a year. Chinese retaliation would imperil or eliminate these jobs, exclude American companies and workers from future business in one of the world's most dynamic markets and give an open field to our competitors.

Furthermore, revoking MFN would only set back efforts to promote human rights and democracy in China. Whether by telephone, fax, e-mail or daily contact, Chinese citizens are receiving a greater understanding of American ideals of personal, political and economic freedom. This influx of new ideas and information has helped fuel China's transformation over the last 20 years. Revoking MFN would cut those links and set back a dialogue that is feeding China's development for the next century.

At the same time, the U.S. will continue to stand with those who are fighting for freedom and human rights in China, as we did last month in cosponsoring a resolution in the U.N. Human Rights Commission condemning China's human rights record. We continue to have serious concerns about China's human rights practices and we will continue to press China on these matters. But revoking MFN is not the right way to make fundamental human rights progress.

Revocation of MFN status would not advance the interests of Taiwan or Hong Kong. The economies of both of these countries are enormously dependent on continued trade between the U.S. and China. That trade has contributed to the prosperity - and in turn - the establishment of a strong democracy on Taiwan. For Hong Kong, a strong and vibrant economy is an important way of supporting its autonomy as it moves toward the transition to Chinese sovereignty. That is why even those in Hong Kong who are most critical of China support renewal of MFN.

Engagement with China does not mean acquiescence in Chinese policies or practices we oppose. The President has demonstrated that he is prepared to use sanctions and other means at his disposal to promote America's goals regarding China, whether it is protecting U.S. intellectual property, deterring dangerous proliferation or promoting human rights. These are the right tools to use in advancing U.S. interests. Revocation of MFN is not.