Editorial

The Case Against China PNTR

Should China be fully immersed into the corporatized global economy?

The debate over whether the U.S. Congress should grant Permanent Normal Trade Relations (PNTR, formerly known as permanent most favored nation) status is about many things, but none more important than this basic question. A grant of PNTR will pave the way for implementation of a U.S.-China bilateral trade deal that contains tariff concessions and deregulatory measures designed to aid U.S. business, and for China to join the World Trade Organization (WTO). It will also mark the end of the annual Congressional review of China's human rights practices in connection with each year's vote to provide China with NTR.

This should not be a hard question to answer. Further opening the economy to U.S. and other multinational corporations and further deregulating the economy will exacerbate the worst social and economic tendencies in China, while undermining many of the country's important achievements of the past 50 years.

As NAFTA proponents argued about Mexico, PNTR proponents can fairly say that China is already open to foreign business. But as with NAFTA, PNTR is about corporate investment as much as the trade in goods. As we highlight in "The Joys of PNTR, According to the Fortune 500," U.S. business wants the certainty that comes from the China trade deal and Chinese membership in the WTO, and the progressive elimination of the many barriers to foreign investment in China.

Most of the hardships that large numbers of Chinese people will experience if PNTR is granted and China joins the WTO are not seriously disputed:

• Ten million or more peasants will be thrown off the land, as agricultural supports are withdrawn.
• Millions of workers will lose their jobs as state enterprises wither in the face of foreign competition, or downsize and speed up operations in an effort stay competitive.
• Social service provision will be decimated. Healthcare, education, pensions and other such services have long been provided by employers -- duties that state employers no longer want or can afford in the face of foreign competition. Foreign private corporations are generally not interested in taking on social service provision responsibility
• As a result of these and other factors, there will be a surge in income and wealth inequality, exacerbating dangerous trends already underway.
• Foreign tobacco companies will gain greater access to the Chinese market, which almost certainly means there will be a rise in smoking rates among women (traditionally non-smoking in China) and children. Because of the vastness of China's population, even small increases in smoking rates may result in millions of excess tobacco-related deaths.
• China will progressively lose the ability to employ the protectionist tools that have enabled it to grow at such rapid rates in recent decades, and to weather the Asian financial crisis with minimal hardship.

Corporate proponents of PNTR counter that the economic boom that will follow from PNTR will balance out the harms to workers and farmers -- that these transition costs are an unavoidable price of modernization. But there is little evidence to support these claims, and even if PNTR hypothetically did spur economic expansion, it would still occur amidst worsening economic inequality, a worsening of poverty and a shredding of the social safety net.

Strangely, despite the cheerleading from Big Business for PNTR and the acknowledged harms (no small thing to shunt aside), some progressives have offered support for PNTR. They contend that it is inappropriate for the United States to treat China differently than other nations, absent a call from Chinese workers and farmers for such differential treatment. But there are almost no independent mass organizations in China, nor even non-governmental organizations. Who exactly do these progressives expect to issue such calls?

Another strand of progressive criticism of PNTR opposition rejects "protectionism." But it is perfectly appropriate for U.S. unions and others to protect the interests of U.S. workers, especially against the ravages of corporate globalization. PNTR will cost U.S. manufacturing jobs and enhance the downward pressure on U.S. wages by making it easier for U.S. manufacturers to produce their goods in Chinese sweatshops. It promises few if any new jobs for workers in the United States. Big U.S. corporate winners from PNTR in the financial and service sectors will create virtually no jobs in the United States as they gain market share in China. And most of the manufacturers who hope to sell goods to the emerging middle class in China intend to make those products in China.

PNTR and China's accession to the WTO may be a winning deal for the Fortune 500, but it is a lose-lose proposition for people in both China and the United States. Opposing PNTR is an easy call.