Press Briefing by National Security Advisor Sandy Berger

Office of the Press Secretary

For Immediate Release May 19, 1997


The Briefing Room

3:52 P.M. EDT

MR. JOHNSON: Good afternoon, ladies and gentlemen. Sorry it has taken a little time in order to give you some more information on the President's announcement he made just a few minutes ago on the extension of MFN for China. First, we're going to have the President's National Security Advisor, Mr. Berger, talk about some of the political and economic issues, and then Ambassador Barshefsky talk about some of the trade issues associated with this decision.

Mr. Berger.

MR. BERGER: Thank you, David.

The President's decision, announced today, to renew normal trading relations with China, MFN status, is based upon his judgment about what is in the national interest of the United States. How China evolves over the next decade, over the next 20 years, will be of profound importance to the American people. It will either evolve in a way that integrates it more closely into the international community, or it will evolve in a way that creates more problems for the international community. That is why we have, over the past several years, pursued a policy with China of engagement. It is in the President's judgment that engagement with China, not isolation from China, is in the best interest of the American people.

Engagement is not an end into itself. Engagement is a vehicle by which we can expand the areas of cooperation with China and deal face to face with Chinese on areas of difference. And there are both. We have worked with China on issues ranging from nonproliferation where they have joined with us in the indefinite extension of the Nonproliferation Treaty, in signing the Comprehensive Test Ban Treaty, signing and ratifying the Chemical Weapons Convention; last year, agreeing to not provide nuclear equipment to unsafeguarded nuclear facilities; on security issues such as trying to achieve a more peaceful arrangement in the Korean Peninsula, and achieving the agreed framework with North Korea to freeze and ultimately dismantle their nuclear weapons program.

All of these are areas where our engagement with China have produced concrete results. There are also areas where we have basic disagreements with China -- on human rights, on issues of market access, on some of their weapons sales. But a policy of engagement is one which enables us to deal with those issues face to face directly, rather than in a way that isolates us from China.

So the first primary reason why the President made this decision is because he believes that engagement is a way to expand cooperation and to deal with areas where we differ.

Second, Hong Kong's transfer to Chinese rule this year creates another important reason for continuing normal trading relations with China. Hong Kong, of course, is the gateway of trade between the United States and China and handles over 50 percent of U.S.-Chinese trade.

Undercutting the island's economic footing at this moment would be a serious blow just at the time when Hong Kong needs to assert its strength and autonomy, and we must support the economic vitality of Hong Kong during this period of transition. That's why Hong Kong leaders from a broad range of views, including Democratic Party Hong Kong Leader Martin Lee, Governor Patton and others all strongly support renewal of MFN.

Third, over time, we believe that engagement with China will expose China to the rest of the world, will help to promote over the long term the kind of openness that we seek in Chinese society. Commercial activity is not a human rights policy in and of itself, and that's why we have also in Geneva and elsewhere stood up and made it very clear that we oppose Chinese abuses, and that we are not satisfied with Chinese human rights practices. But over the sweep of time, the openness of China does clearly have and will clearly have a liberalizing effect.

And finally, I would say this: Let's be clear what's at stake here. Ending MFN with China is essentially severing our economic relationship. And to sever our economic relationship is to break our political relationship with a nation that represents a quarter of the world's people, a nation whose importance to the stability and peace of Asia and the world is extremely important.

We cannot determine China's direction, but we can help to influence China's direction if we remain engaged with it. MFN is very much -- and maintaining a normal trading relationship is very much part of that process.

Let me ask Ambassador Barshefsky to say a few words, and then I'll take questions.

AMBASSADOR BARSHEFSKY: Thank you. As Sandy Berger has said, President Clinton's strategy is clear. U.S. interests are best served by a secure, stable, open and prosperous China. The manner in which we engage it will help determine whether it becomes integrated into international norms and institutions or whether it will be isolated and unpredictable.

The vote on MFN is a vote on how best to protect U.S. interests, not an endorsement of China's policies. Extending for China the same normal trade treatment we give to virtually every other nation on Earth will help further integrate China and promote the interests of the American people. This is as true for trade with respect to China as it is with respect to the broad range of our strategic interests.

And let me make five brief points with respect to trade issues. First, providing MFN treatment is the U.S. norm in trade. MFN means that China would receive the same trade treatment as virtually every other country. There are only six countries in the world -- six countries in the world with whom we do not have an MFN relationship -- Afghanistan, Cuba, Laos, North Korea, Syrbia- Montenegro and Vietnam. Every other country -- every other county -- has an MFN relationship with the United States. MFN confers no special benefit or special trade treatment to China.

Second, as Sandy Berger said, MFN revocation would harm Hong Kong's economy and stability. Hong Kong's economic strength is one of its chief assets in ensuring its autonomy and viability. It handles somewhere between 50 and 70 percent of U.S.-China trade, making it highly dependent on continued, normal trade status with the United States. Hong Kong authorities estimate that MFN revocation would slash its trade with the U.S. by between $20 and $30 billion, with a resulting loss of as much as 85,000 jobs. This is why Hong Kong's leaders, as Mr. Berger has indicated, strongly favor renewal of MFN -- as does every major political party in Hong Kong.

Third, MFN revocation would increase the prices U.S. consumers pay for basic goods and cost U.S. jobs. This could, in turn, provoke retaliation against U.S. exports and open the door to the China market for our foreign competitors. MFN revocation, it is estimated, would cost U.S. consumers almost $600 million annually for goods such as shoes, clothing and small appliances. U.S. exports to China have more than tripled over the past decade. Those exports support more than 170,000 U.S. jobs.

Fourth, MFN revocation could derail the multilateral and bilateral trade negotiations to increase our access to China's market, and could also derail China's observance of international trade rules. You know that China's accession to the WTO -- those talks have been continuing for some time. That accession would have to be based on commercially meaningful terms. It would also have to be based on China's adherence to international trade norms -- norms to which China is not now bound.

We're making progress in those negotiations, and insisting that China comply with basic international requirements, as well as to further open its market. Revoking MFN would likely stop the progress in WTO negotiations. A second MFN revocation would jeopardize access that we've achieved in bilateral talks, including on textiles, recently in agriculture, and of course, with respect to intellectual property protection where we've made significant progress.

Last, opening China's market is the best response to the U.S. deficit with China, not severing our economic relationship with China. Market opening would lead to greater prosperity in the United States and in China. MFN revocation would derail that progress. Whenever necessary, of course, we must use targeted trade tools, including our trade laws and possible threats of trade sanctions to the extent we have specific market access concerns. We have used targeted trade sanctions effectively in the textile and intellectual property rights sectors, and that tool remains available to us.

With that, let me turn this back to Sandy Berger.

Q What tools do you have left to really force them to make progress on the human rights issue, and have you made it since we've had MFN?

MR. BERGER: Over a large sweep of time, are conditions in China better today than they were 20 years ago or 40 years ago? The answer is probably yes.

Q I'm not talking about 20 years ago, I'm talking about just recently.

MR. BERGER: But I think in terms of influencing China's behavior, there really are two basic instruments. One is engagement with China itself, and the commerce -- and I don't mean that only in commercial terms, but the commerce in ideas, the opening of China to ideas, to information, to people, to exposure to the outside world is over time I think in our judgment one that has a liberalizing influence.

But in the short term, what we can and must do is simply express our views candidly and forthrightly about human rights conditions in China. That's why in Geneva, notwithstanding the fact that a number of our allies that have supported a resolution of the past dealing with China's human rights behavior decided not to, we nonetheless cosponsored that resolution, because in our view we cannot say that human rights practices are better in China than they were a year ago.

And I think, simply, the position of the United States takes, expressed -- keeping faith with those who are fighting for a more pluralistic society is extraordinarily important over the long term.

Q In addition to listing the positive reasons for extending MFN being engagement, you also, Ambassador Barshefsky, made the point that not to do it would be expensive for us, which leaves the impression that you're really only willing to use this tool when it's easy; and when it's difficult, we don't want to know about it.

MR. BERGER: I don't know that that's the conclusion. Basically, Charlene read you the list of countries that don't have MFN, don't have normal trading status with the United States; it's pretty small and fairly tight list of countries.

Q But it's a list of countries -- with the exception of Vietnam, these are not economic powerhouses, and our trade with them I'm sure -- the lack of trade with them would not touch us at all.

MR. BERGER: Each of these situations have a different historical derivation and a different rationale. The fact of the matter is that with respect to China, it is our judgment and it's the President's judgment that ending MFN -- and let's be clear what that does -- what that does is essentially raises tariff levels to prohibitive levels, effectively ending the trading relationship which in turn would have a dramatic effect on the political relationship, is not the best way to serve America's interests. That calculation may be different with different countries.

Q America's interests clearly go beyond human rights interests then?

MR. BERGER: Absolutely. America's interests with China involve security interests and stability in Asia. They involve what we can do together in Korea. They involve our continuing effort to get China more integrated into the international nonproliferation regimes, as they have with the Chemical Weapons Convention; ending nuclear testing nonproliferation treaty, still areas where we're concerned. So there's a very broad range of issues that we have with a country that is the largest country in the world.

Q Sandy, what's the process now? Is there a 30-day, 90-day, what's the process in Congress and what's the outlook in Congress? This has come up every year since 1980 and it's, with varying degrees of difficulty, gone through. What's your expectation this year?

MR. BERGER: Well, the process is the President officially notifies the Congress by June 3rd that he has renewed MFN. There is then a motion of disapproval, essentially; a process whereby both Houses can vote on a motion of disapproval. There are 90 calendar days that are allowed for that and we would hope that we would be able to sustain the President's decision in that process.

Q So what's it look like?

MR. BERGER: Well, I think this is always -- China MFN, at least since the late 1980s, since Tiananmen, has been a controversial issue. Each year it has been ultimately upheld. Each year Presidents of both parties have renewed MFN status and in one form or another, that position has been upheld by the Congress, but I would anticipate a very lively and vigorous debate in the Congress on this.

Q This year there's a new factor in the debate, and that's the Christian right, large portions of which oppose renewal of MFN. How much of a factor is that? I mean, they have very strong grass-roots movement. How much of a factor is that and in what way are you adapting your strategy to deal with that?

MR. BERGER: Well, first of all, I don't think there is uniformity in any community. There are other groups that are involved in the Christian community, a group of 100 organizations that have actually churches and missionaries and other kinds of facilities in China that are very strongly for renewal of MFN. So I can't calculate how that --

Q -- political apparatus that the --

MR. BERGER: I think there are obviously people on both sides of this, Bob, but I think in the last analysis the members will decide whether or not in fact they want to take the step of isolating us from a quarter of the world's population. We're not going to isolate China; we're going to isolate ourselves from China; this is what this is about.

Q Sandy, getting back to the six countries that Ambassador Barshefsky said, the United States does not have most favored nation trade status, you didn't include in the list Iraq, Iran, Libya, Sudan. Does the United States grant MFN to those countries?

AMBASSADOR BARSHEFSKY: We have embargoes in place with many of those countries, but those countries in ordinary times would receive MFN treatment from the United States.

Q So right now they don't have MFN?

AMBASSADOR BARSHEFSKY: No, because of embargo situations --

Q -- list, how long is it really?


MR. KYLE: I think it's only a few more countries.

Q How about Libya?

MR. KYLE: There are a couple of embargoes, but it's only a few more countries.

MR. BERGER: Rather than do -- why don't we get an accurate answer to you. The trade embargoes on those countries obviously --

Q Well, we want to write this, we want to make your point -- it's a lot of stories, but we're going to look like fools --

MR. BERGER: I understand. It's a fair question and we're giving you a mushy answer here. So I would like to give you an accurate answer rather than pretend that we know.

Q Can I just, on a totally unrelated matter, did the allegations of Chinese fundraising activities that the FBI is investigating, did that play any role at all in the President's decision?


Q And, finally, some of the Republican members of the House and Senate are suggesting that unless the administration cooperates in finding Charlie Trie in China, that they're going to vote MFN.

MR. BERGER: I don't see the connection.

Q Sandy, you mentioned before that some of America's allies had voted with China and against the U.S. on the human rights resolution last month in Geneva. One of those countries, France, got richly rewarded for that last week. President Chirac was in China, got I think a billion and a half dollar contract. The Chinese very explicitly made a connection between their vote and the expanding business relationship. How do you answer those who would say, why should we disconnect trade and human rights when the Chinese clearly are still connecting it themselves?

MR. BERGER: Well, I would turn it around. We're not prepared to trim our sails with respect to being very public and very clear about our views of China's human rights behavior, notwithstanding what its commercial implications may be. And that's why I said earlier, with respect on human rights, while we believe over time engagement with China will help to open China, expose it to ideas, put a computer on people's desk, the Internet, television antennas -- as you go down the Li River, the most ancient river, the subject of wall hangings around the world, you now see television antennas. All of those things tend over time to be corrosive of centralized, authoritarian regimes.

But in our view, that's not sufficient in terms of our posture vis-a-vis human rights in China, which is why we took the position we did in Geneva. We are not going to submerge our view on human rights with respect to China because it might mean a few contracts.

Q Have you made a formal decision on whether or not you're going to recognize Zaire as the Democratic Republic of Congo and when or why, or why not?

MR. BERGER: First of all, we recognize countries, we don't recognize governments. The fact is we continue to recognize what now is being called by its government, Congo, and I suspect that if that's what they're going to call it, that's what we're going to call it.

Q Sandy, just another China question. If the Chinese behave badly with Hong Kong after the handover, how much harder is it going to be for you to do this, and would you continue pushing just as hard if there is some Tiananmen-like incidents?

MR. BERGER: Number one, we obviously are watching very carefully how this transition takes place. We are making our views known to the Chinese and we are very supportive of their living up to their obligations under the 1984 Declaration.

Number two, as I said in the opening, my opening comments, ending MFN would be the worst possible thing we could do for Hong Kong and I'm not going to speculate on what will happen if; we will continue to watch this very carefully and believe that it ultimately is in China's interest to live up to its obligations.

I'm going to have to leave, but we will get you the answer to --

A A follow-up on Hong Kong. Sandy, is it a given that the vote won't take place until well after the transition on the Hill? You don't expect them to do this until they've watched the Hong Kong transition --

MR. BERGER: The normal situation would be that we would submit the notification, we would submit on June 3rd and then it's up to the leadership to determine what the pacing is. But they've often done it before the August recess; I don't honestly know -- you would have to --

Q Does it matter to the administration whether -- would you also prefer to wait and see what happens with Hong Kong, or no?

MR. BERGER: I think our view is that we ought to continue a normal trading relationship with China and we ought to get on with it. This annual exercise, this annual debate is not one that necessarily serves, I think, anybody's interest.

Q Ambassador, is there any evidence that engagement has done any good whatsoever on human rights, not in the long-term --you're talking about, but right now. Human rights organizations definitely --

MR. BERGER: I think it depends again on what time frame one looks at. Over the longer sweep of time, is China more open today than it was a number of years ago? Yes. Has China's human rights situation in the last few years improved? I would say no. But I think that you have to look at this in long-term framework, and what you think will be the best way to influence the situation. Thank you.

Q Aren't resolutions of disapproval subject to a presidential veto?


Q And then there would be a two-thirds override that would be required?

MR. BERGER: Right.

Q Why didn't you go for permanent status if you don't think this annual debate is such a great thing?

THE PRESS: Thank you.

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