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President Clinton’s decision on Apr.8 to send Chinese Premier Zhu Rongji packing without anagreement on China’s entry into the World Trade Organization seemed to be a massivemiscalculation. The President took a drubbing from much of the press, which had breathlesslyreported that a deal was in the bag. The Cabinet and Whit House still appeared divided, andbusiness leaders were characterized as furious over the lost opportunity. Zhu charged thatClinton lacked “the courage” to reach an accord. And when Clinton later telephoned the angryZhu to pledge a renewed effort at negotiations, the gesture was widely portrayed as a flip-flop.
In fact, Clinton made the right decision in holding out for a better WTO deal. A lot more horsetrading is needed before a final agreement can be reached. And without the Administration’sgoal of a “bullet-proof agreement” that business lobbyists can enthusiastically sell to aRepublican Congress, the whole process will end up in partisan acrimony that could harmrelations with China for years.
THE HARD PART. Many business lobbyists, while disappointed that the deal was not closed, agree that better terms can still be had. And Treasury Secretary Robert E. Rubin, NationalEconomic Council Director Gene B. Sperling, Commerce Secretary William M. Daley, and toptrade negotiator Charlene Barshefsky all advised Clinton that while the Chinese had made aremarkable number of concessions, “we’re not there yet,” according to senior officials.
Negotiating with Zhu over the remaining issues may be the easy part. Although Clinton cansignal U.S. approval for China’s entry into the WTO himself, he needs Congress to grantBeijing permanent most-favored-nation status as part of a broad trade accord. And thetemptation for meddling on Capital Hill may prove over-whelming. Zhu had barely landedbefore Senate Majority Leader Trent Lott (R-Miss) declared himself skeptical that Chinadeserved entry into the WTO. And Senators Jesse A. Helms (R-N.C.) and Emest F. Hollings(D-S. C.) promised to introduce a bill requiring congressional approval of any deal.
The hidden message from these three textile-state Southerners: Get more protection for theU. S. clothing industry. Hoping to smooth the way, the Administration tried, but failed, tobudge Zhu on textiles. Also left in the lurch: Wall Street, Hollywood, and Detroit. Zhu refusedto open up much of the lucrative Chinese securities market and insisted on “cultural” restrictions on American movies and music. He also blocked efforts to allow U. S. auto makersto provide fleet financing.
BIG JOB. Already, business lobbyists are blanketing Capitol Hill to presale any eventualagreement, but what they’ve heard so far isn’t encouraging. Republicans, including Lott, saythat “the time just isn’t right” for the deal. Translation: We’re determined to make it look as ifClinton has capitulated to the Chinese and is ignoring human, religious, and labor rightsviolations; the theft of nuclear-weapons technology; and the sale of missile parts to America’senemies. Beijing’s fierce critics within the Democratic Party, such as Senator Paul D. Wellstoneof Minnesota and House Minority leader Richard A. Gephardt of Missouri, won’t help, either.
Just how tough the lobbying job on Capitol Hill will be become clear on Apr. 20, when Rubinlectured 19chief executives on the need to discipline their Republican allies. With business andthe White House still trading charges over who is responsible for the defeat of fast-track tradenegotiating legislation in 1997, working together won’t be easy.
And Republicans—with a wink—say that they’ll eventually embrace China’s entry into theWTO as a favor to Corporate America. Though not long before they torture Clinton. But Zhu isout on a limb, and if Congress overdoes the criticism, he may be forced by domestic critics torenege. Business must make this much dear to both its GOP allies and the Whit House: Thishistoric deal is too important to risk losing to any more partisan squabbling
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