Industry Backs Clinton's Push for Permanent Trade Status with China

Industry Backs Clinton's Push for Permanent Trade Status with China

President Clinton with Sen. Strom Thurmond, R-S.C., right, following the president's final State of the Union address Jan. 27.

By Anne Gallagher, Contributing Writer

The high-technology industry is rallying behind President Clinton's recent vow to persuade Congress to grant extension of permanent normal trade relations status with China.

Congress should support the agreement the United States negotiated to bring China into the World Trade Organization by passing permanent normal trade relations as soon as possible this year, Clinton said in his final State of the Union speech Jan. 27.

"Our markets are already open to China. This agreement will open China's markets to us. And it will advance the cause of peace in Asia and promote the cause of change in China," Clinton said.

The entry of China into the World Trade Organization (WTO) would be a welcome move for the high-tech industry.

China's trade status topped the American Electronics Association's recently unveiled policy agenda for the latest session of Congress.

Without changing U.S. laws to grant the permanent status to China, U.S. industry will not be able to benefit from the concessions China has made to open its markets, AEA leaders said at a press conference in Washington Jan. 24.

"China would extend the other 135 WTO members the market-opening benefits the United States had fought so hard to secure," said William Archey, president and chief executive officer of AEA. "The rationale is crystal clear for Congress granting [permanent] status. This action will result in duty-free entry of U.S. products to China that should engender increased exports, sales and market share of U.S. products."

The push for approval in the Republican-led Congress could continue because many lawmakers are reluctant to support the move in light of China's human rights violations and the lawmakers' concerns about national security.

House Republicans who are opposed to granting permanent status to China include Reps. Dana Rohrabacher, Calif.; Duncan Hunter, Calif.; Joe Scarborough, Fla.; and Dan Burton, Ind.

Democratic opponents include Reps. Nancy Pelosi, Calif.; Cynthia McKinney, Ga.; and Pete Stark, Calif. All of these members voted last year to support Rohrabacher's bill that would have prevented China from being granted Most Favored Nation trade status.

Despite their resistance, several high-tech groups intend to apply pressure for change, including the U.S. High Tech Coalition on China formed by AEA in 1997 at the request of U.S. trade negotiators. The coalition comprises 10 America high-tech trade associations and their member companies.

In his lengthy address, Clinton also reported that he will invite high-tech leaders to join him this spring on another "New Market" tour, with the goal of closing the digital divide between rich and poor communities.

"I thank the high-tech companies that are already doing so much in this area, and I hope the new tax incentives I have proposed will encourage others to join us," Clinton said.

Specifically, Clinton is proposing a New Market tax credit and other incentives to spur $22 billion in private-sector capital to create new businesses and new investments in inner cities and rural areas.

"I ask Congress to give businesses the same incentives to invest in America's new markets that they now have to invest in foreign markets," Clinton said.

Clinton also touted the influence of the IT industry in propelling science and engineering innovations and bolstering the nation's prosperity.

"Information technology alone now accounts for a third of our economic growth, with jobs that pay almost 80 percent above the private-sector average," Clinton said. And he asked taxpayers to keep in mind that government-funded research "brought supercomputers, the Internet and communications satellites into being."

Other issues that AEA will focus on in the coming year are Internet taxation, e-commerce and privacy. AEA officials said the organization will continue to oppose any proposals to tax Internet transactions at the federal and state levels.

AEA has formed an e-commerce taxation task force to monitor closely the Internet tax proposals and work with the federally appointed Advisory Commission on E-Commerce. That commission is slated to present recommendations on Internet sales and taxes to Congress by April.

AEA also wants to raise the cap on businesses' use of foreign professionals to alleviate the high-tech worker shortage and to ensure the protection of stock options for hourly workers.

"The high-tech industry's legislative and policy agenda is a critical agenda because the high-tech industry is now so critical to our nation's continued prosperity," said Archey. The high-tech industry has accounted for a substantial part of the nation's economic growth, and through its productivity-enhancing innovations, "has helped keep that growth relatively free of inflation," he said.

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