Editorial: Sanctioning China

the Clinton administration has finally decided to play hardball with China. And this time it promises to back up its tough talk with actions.

Asked whether the administration was serious about imposing sanctions against China if Chinese officials did not undertake meaningful reforms, U.S. Trade Representative Mickey Kantor says, “Watch our actions.” He adds, “With this administration, it’s been quite clear that we’re willing to impose trade sanctions.”

“We want a detailed agreement that’s going to address the problem,” Kantor insists.

Unfortunately, the problem that has turned Kantor into such a tiger is China’s failure to crack down on factories illegally copying compact disks, movies, computer software and other copyrighted U.S. products, and infringing on U.S. companies’ trademarks. U.S. manufacturers allege that widespread and systematic Chinese copyright, trademark and patent infringements are costing them $1 billion annually in potential sales both in China and around the world.

Unless China moves rapidly to close down the outlaw factories and fully enforce intellectual property rights, Kantor threatens, the United States will impose $1 billion in countervailing trade sanctions on Chinese exports to the United States. Lurking in the background as an even more powerful sanction is the refusal to allow China to join the newly formed World Trade Organization until it reforms its treatment of intellectual property.

When it comes to China’s recent crack down on human rights and democracy advocates, however, Kantor and the Clinton administration remain docile.

In May 1994, the Clinton administration moved to “delink” human rights from trade concerns, severing human rights considerations from the annual review of China’s most favored nation trading status, which entitles China to low tariff rates.

“We have reached the end of the usefulness” of the threatened trade sanction policy,” President Clinton said, “and it is time to take a new path toward the achievement of our constant objectives. We need to place our relationship into a larger and more productive framework.”

Since the United States decided to pursue a “new path” and “put the relationship in a larger perspective,” human rights abuses in China have worsened. In the months since the U.S. change of course, Human Rights Watch and journalists have documented:

There is no great mystery as to why the Clinton administration is aggressively wielding trade tools against China on intellectual property, but avoids meaningfully confronting China on human rights issues. Threatening trade sanctions over copyright and related matters serves the interests of important U.S. business sectors, primarily entertainment and computer software companies, but also a range of other manufacturers whose brand names are being used without authorization. (As an example, the USTR points out that cornflakes are marketed in China as “Kongalu flakes” in a packaging and with a trademark “identical” to Kellogg’s Cornflakes.) Threatening or imposing trade sanctions over human rights abuses, in contrast, risked jeopardizing U.S. corporations’ desperate rush to get a foothold in the vast Chinese market.

This sorry state of affairs is aptly summarized by Kenneth Roth, executive director of Human Rights Watch. “The administration calls it commercial diplomacy. We see it more as resurgent mercantilism,” he says.

Ironically, the administration’s “resurgent mercantilism” may be on the verge of backfiring, at least in the case of China. With longtime government head Deng Xiaoping’s health fading, China’s leaders are jockeying for power by engaging in repressive and nationalist one-upsmanship. Even major U.S. corporations are finding themselves victimized by the Chinese government. The government broke a 20-year lease with McDonald’s and evicted the restaurant company from its site on Tiananmen Square to make way for a commercial development. And two state-owned trading companies allegedly cheated Lehman Brothers, the U.S. brokerage firm, out of $100 million.

In other words, the complete disrespect for the rule of law in human rights has carried over into other areas. As one business consultant told the New York Times’ Thomas Friedman: “The same arbitrary abuse of power that characterized China’s overall human rights behavior is now the principal obstacle to doing successful business in China.”

Friedman concludes, “That is why before this story is over American business, which was so insistent on getting human rights and democracy off the agenda of Sino-American relations, will have to be at the forefront of putting them back there.”

It is a sad day when human rights proponents have to rely on big business to prod a Democratic administration into promoting human rights in the world’s largest nation. n