U.S. NEEDS BROADER APPROACH TO CHINA
As U.S. officials approached their decision on China's trade status last week, Chinese officials were demonstrating that the problem is something more than a clash between commerce and human rights. By taking a broader view of the issue, the U.S. might vet rescue itself from the self-defeating notion that it must sacrifice economic interests to show its commitment to human values.
Last year, President Clinton signed an executive order linking China's most favored nation (MFN) trade status with his demand that the country show "overall significant progress" in human rights. He said he would make a decision by June 3. Last week, he seemed likely to renew MFN status and perhaps impose minor trade penalties. China had made progress in human rights but not as much as the White House wanted.
Revoking China's MFN status would be a mistake. It would hurt U.S. interests along with China's. As illustrated in a recent Oil & Gas journal special report, China's economic potential is enormous (OGJ, May 9, p. 33). Jeopardizing access by U.S. companies to opportunities in China and by U.S. consumers to resulting trade would be foolish. Yet failure to take action now will amount to retreat from a U.S. moral purpose that is serious and proper. Having linked moral specifics with trade, the U.S. finds itself threatening to hurt itself in response to another country's misbehavior.
QUESTION OF SOVEREIGNTY
It would be better for the U.S. to view matters such as human rights as the Chinese government does: as, above all, a question of sovereignty. This view enlarges and complicates the problem. But it shows why trade threats are doomed to come to grief.
The oil industry recently has witnessed how far Beijing will go to protect state interests. Chinese officialdom has tightened oil and gas regulation to the point of suspending oil imports until at least July. It also has imposed price controls on some products.
This is just what China does not need. The country's emergence as an economic powerhouse resulted from moves toward freedom of markets and individuals. The process has its dark sides. There have been reports galore of craft, reed, and exploitation of laborers. But China and the Chinese people have hope where none existed before. They can envision a future better than the present. On balance, the freeing of markets has been good for China and its people.
With its oil market intervention, the government has suspended the very forces that have been lifting its nation out of economic stagnation. Why? To give state-owned oil bureaucracies a breather from competition. Sovereignty, after all.
POLITICAL RISKS RISE
To non-Chinese oil and gas companies, the relative attractiveness of ventures elsewhere in the world has suddenly improved. China's clampdown may be temporary. And companies with large investments in China probably will ride out the upset rather than take their losses and leave. But Chinese political risks have risen by a notch or two. The Government has claimed approval rights over economic law. The amount can never be known, but China will lose foreign capital and business to this demonstration of state caprice.
The problem, then, the source of human rights abuses and commercial mischief alike, is a Government dedicated to preserving its interests above all else. To a government like that, loss of MFN status in the U.S. and diminution of foreign investment cannot mean as much as outsiders think they should. With a government like that, state and commercial relations must begin with an appreciation for the distinction between national well-being and official prerogative.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.