The China Sellout

The good guys lost one in the recent congressional vote favoring "permanent normal trade relations" (or PNTR) with China. Nonetheless, there is a silver lining in the result that should dispel some of the gloom and doom in progressive circles. A battle was lost, but the war is far from over and may, oddly enough, be more winnable in the long run.

Politically, first of all, there is good news in the party breakdown of the House tally for those who still believe in the two-party system. Republicans favored PNTR by a three-to-one margin; Democrats opposed it by two-to-one. The GOP vote was expected and unremarkable; the Democratic vote, on the other hand, showed the enduring failure of Bill Clinton to transform his party and reconstruct it in his own centrist image. As with NAFTA, the president couldn't have won without Republican support. On the central issue of globalization, he is a man without a party.

Also losing while winning was the Democratic Leadership Council (DLC), ideological purveyor of the Clintonian "Third Way," whose conservative influence was shown to be marginal at best. On a core component of the DLC agenda, only a third of the House Democrats were in the New Democrat camp. And this was after an intense lobbying/vote-buying effort by the White House, combined with a lack of all-out counter-lobbying by portions of the labor movement reluctant to embarrass the official AFL-CIO presidential candidate, Al Gore, who backed the China bill. (So much for the efficacy of early labor endorsements.)

Market-oriented elements of the media, of course, have been trying to put a reverse spin on the Democratic vote in the lower house. The New Republic's neo-liberal columnist Matthew Miller, for instance, labeled the party "confused" and its congressional wing unrepresentative of American workers, who presumably deserve a China trade deal that will "lift living standards for nearly all Americans." Not all, however, since Miller did admit that some Americans would lose their jobs, adding, "That's capitalism." Easy for an elite journalist to say.

Miller's attitude is unfortunately typical of large segments of the establishment press and intelligentsia, whose livelihoods do not depend on trade legislation and whose careers are not threatened by globalization. The impact of their biased interpretations has been fortunately offset by another consequence of the China vote that should encourage progressives. PNTR was the clearest example yet of the power of big money in the political process, an unvarnished display of corporate governance at its worst. The money changers were in the temple doing their sordid business in full view of the public, which couldn't help but notice and, if rumblings are any indication, feels appalled and disenfranchised. Partly as a result, the conditions necessary for a counter-offensive in the form of campaign-finance reform seem to be reaching critical mass.

Some statistics from the battlefield, courtesy of the Washington Post's John Burgess: The U.S. Chamber of Commerce spent $4 million on lobbying and ads in its push for PNTR, targeting 66 swing votes in the House. The Business Roundtable, which spent $10 million in all, hired 60 special trade lobbyists to work full-time persuading 88 selected congressmen to vote "yes"; it also donated $46,000 each to the campaigns of legislators on record early in favor of unfettered China trade.

Individual multinationals, reeking of cash, were on the scene in force as well. The companies pushing for permanent China trade without an annual human-rights review comprised a veritable who's who of the Fortune 500. Among U.S. transnationals already established on the Chinese mainland, or shortly to be ensconced there pending confirmation of China's WTO membership, are General Motors, PPG Industries, Merrill Lynch, Coca-Cola, United Technologies, General Electric, Motorola, Qualcomm, and IBM.

The prospect of such blue-chip firms doing business in China is supposed to be unqualified good news for American workers; yet, the American public doesn't apparently share in the euphoria of the moment. According to a recent poll by the University of Maryland's Program on International Policy Attitudes, only 31 percent feel the U.S. should "actively promote" international trade as a goal, and fully 39 percent believe Washington should actually slow down or reverse its implementation. Negative attitudes harden and intensify toward the lower end of the income scale. Polling done by the Pew Research Center in 1999 indicated that two-thirds of Americans in families earning $75,000 or more a year -- the group most fully invested in the stock market -- saw globalization as a positive development, compared to barely over one-third of those in families earning less than $50,000.

Average Americans have concluded, in other words, that globalization and its accompanying trade agreements constitute a bad deal for them, and with good reason. Globalized free trade would be a positive thing if it followed standard textbook guidelines; theoretically, there's nothing wrong with nation A selling its homegrown manufactures to nation B, and vice versa. That's not what's happening, however.

Under today's global system, corporations based in advanced countries like the US move subsidiary industrial and manufacturing facilities into less advanced countries quaintly labeled "trading partners," where they take advantage of cheap labor and lax environmental standards. The goods produced in the host country, typically with raw materials imported by the corporation, are then shipped back to the firm's country of origin for sale. The corporation, in effect, trades with itself through its foreign-based subsidiaries. This intrafirm trade presently constitutes nearly half of all import/export commerce worldwide. The resultant "imports" may be cheaper in the home market -- they certainly cost a lot less to make -- but many of the potential home-country consumers have meanwhile lost their portable industrial jobs and are left with lower-paid service work and a reduced standard of living.

A far-reaching but little-noticed trade bill passed by Congress last month illustrates the system's dark underside and points up its tie-in to politics. In mid-May, while everyone was preoccupied with China, the African Growth and Opportunity Act quietly became law. Under it, a NAFTA-type relationship has been established with the emerging nations of sub-Saharan Africa, Central America, and the Caribbean, whereby member countries enjoy quota-free and duty-free trade status with the US when exporting manufactured apparel made with American fabrics. In essence, this is a blatant and intentional invitation for American textile firms to move jobs overseas.

Soon to be approved by the Senate, the China PNTR legislation and the November trade deal that preceded it figure to have a comparable impact on a much wider scale by, for example, abolishing US quotas on Chinese-made textile goods and removing barriers to American corporations wishing to establish chemical, steel, and auto plants in that country. In essence, the big China sellout amounts to an economic loss for many average Americans in the short run, but its potential fallout also sets the stage for meaningful political reform over the longer term. Neo-liberal free-traders might contemplate that old saying: "Be careful what you wish for; you may get it."

Wayne O'Leary is a writer in Orono, Maine.

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