MAY 2000 VOLUME 21 NUMBER 5


SEWING UP THE CHINESE MARKET

 
The Corporate PNTR Lobby
How Big Business is Paying Millions to Gain Billions in China
 

Ian Urbina is a Washington, D.C.-based freelance writer.

By Ian Urbina

In late May, the U.S. Congress will vote on whether to grant permanent normal trade relations (PNTR, formerly known as most favored nation (MFN) status) to China, and the U.S. business community is sparing no expense to push  the case for approval. The impending vote -- and China's parallel entrance into the World Trade Organization -- represents the final obstacle for U.S. corporations in their long pursuit of China's fabled "one billion new consumers."

Spearheading the PNTR push is a coalition of four main trade associations -- the U.S.-China Business Council, the Business Roundtable, the Business Coalition for U.S.-China Trade and the Emergency Committee for American Trade -- representing hundreds of the nation's largest companies. Each of these outfits wields million dollar budgets and vast political clout.

The U.S-China Business Council runs on a $4 million annual budget and maintains offices in Beijing, Shanghai, Washington, New York and Hong Kong. Headed by Robert A. Kapp, the Business Council is a 30-year-old organization representing over 250 major corporations with investments in China.

The Business Roundtable is an organization consisting of the CEOs of leading U.S. corporations. It is currently led by  Philip Condit, chair of Boeing -- whose airplane sales to China now total $18.5 billion.

The Business Coalition for U.S.-China Trade and the Emergency Committee for American Trade are more ad hoc organizations, focused on pushing the corporate agenda on China trade and trade policy generally. Calman Cohen, a longtime Washington lobbyist, chairs both organizations, which draw support from over a thousand CEOs from a range of industries.

Other trade associations and companies with high profiles in the lobbying blitz include the National Association of Manufacturers, General Electric, ExxonMobil, Ford, Aetna  and New York Life Insurance Co., all of which are calling in their own legions of hired guns. A fairly new arrival among the ranks is America Online, which has hired veteran international lobbyist Lisa Barry, who formerly worked the issue for Boeing, to make the PNTR case.

"Silicon Valley is a gold mine for campaign contributions," says a spokesperson for Rep. Nancy Pelosi, D-California, one of the leading Congressional opponents of permanent MFN status for China. "Now that they're in on it, a lot of politicians are really hustling."

The China lobby is certainly not new on the scene. What has changed is the scope and intensity of its efforts. "The business community has been ratcheting up the level of money behind this for the last 10 years," says the Pelosi spokesperson. "It's hard to guess at a single number since so many of these China shops overlap but have different names, but it's a huge sum of money."

Some figures are clear, however. Last September, business leaders announced they were ready to put up $10 million to fund a massive advertising and lobbying campaign. More recently, the Business Roundtable (BRT) promised to spend over $6 million on its "GoTrade" campaign, in addition to the half million dollars it recently paid to run 13 different ads in Congress Daily, Roll Call, The Hill, Congressional Quarterly, National Journal and CQ Monitor. The U.S. Chamber of Commerce, which has 3,000 state and local affiliates, so far has thrown $1 million in the pot.

Because virtually all of the big business community is united behind the PNTR push, the campaign contributions of proponents are on an even vaster scale. The U.S.-China Business Council reports that its top 20 campaign contributors distributed $26.1 million to federal candidates and parties in the 1996 elections.

Despite renewed funds, business leaders continue to recycle old arguments, best summed up in the Business Roundtable's panglossy booklet on "Corporate Responsibility in China." The booklet explains that while seeking the rich rewards to be had in China, U.S. companies would also serve the higher purpose of "bringing with them U.S. ethical and managerial practices," which set "a positive example of corporate citizenship." Big business is also running TV ads in 22 states and nationally on CNN which state that the new agreement would force China "to play by the rules" and "opens China's market to our goods and services." Nonetheless, most people in the United States remain unconvinced, as only 18 percent support PNTR status for China, according to Peter D. Hart Associates.

With the vote fast approaching, business leaders have begun tailoring their ads toward specific districts and regions. Television ads convey tales of the vast Chinese wheat market to Northwest farmers, while others brief Floridians on the yet untapped Eastern demand for citrus. Robert A. Kapp recently lectured local businesspeople in Maine on the ways trade with China will benefit their state's blueberry industry. The Business Roundtable is circulating detailed studies on the benefits of China trade in 62 congressional districts and the Chamber of Commerce is hosting a number of "education" drives to get local business leaders to write their representatives.

But by far the greatest activity is occurring on Capitol Hill, where an impressive team of heavy hitters is going to bat for big business. Jeffrey Bergner, former staff director for then Senate Foreign Relations Committee Chair Richard Lugar, R-Indiana, and David Castagnetti, former administrative assistant to Senator Max Baucus, D-Montana, are on the job, working for the Business Roundtable. So too are Nicholas Calio and Kirsten Chadwick of Obrien Calio, who have been hired to persuade Republicans. Steven Champlin of the Duberstein Group is lobbying key Democrats. Sandy Kristoff, former top Asian staffer at the National Security Council, is canvassing the issue for New York Life International, a subsidiary of the New York Life Insurance Co. Scott Shearer, chief lobbyist for the large farming cooperative Farmland Industries, and Nick Giordano, international trade counsel for the National Pork Producers Council, are working the issue for a coalition of several dozen large corporate farming interests.

Practically every former secretary of state of the past 25 years has been hustling to help get the word out. Heading the pack is Henry Kissinger, who was largely responsible for the Nixon-era thaw in U.S.-China relations. Since then Kissinger has been one of China's most tireless advocates, while opening or working for a range of multi-million dollar joint ventures in China, including China Ventures, which has paid Kissinger $375,000 for serving as chairman, in addition to nearly $1 million in management fees.

After the 1989 Tiananmen Square massacre, Kissinger, as a paid consultant for ABC news, advised against imposing economic sanctions, arguing that no government in the world should be expected to tolerate protesters' occupation of a public square. As chair of the America-China Society, Kissinger along with President Carter's Secretary of State Cyrus Vance, his co-chair, has opposed linking China's trade status to the government's human rights record. Members of the America-China Society include Chase Manhattan Bank, Coca-Cola and American Express -- all already heavily invested in China.

Kissinger's consulting firm, Kissinger Associates, describes itself as representing numerous companies doing business in China, while Kissinger himself has also become the central adviser for the Business Coalition for U.S.-China Trade, which includes over 1,000 members. 

Also involved is Alexander Haig, secretary of state under Ronald Reagan. For years, Haig has been hard at work paving the way to China's booming military market, working for such clients as United Technologies, which builds jet engines, helicopters and aerospace systems, and International  Signal & Control Group, which sold weapons fuses to China. More recently, Haig served as editorial advisor to China's "Official Guide" for U.S. businesses wishing to invest in China.

Haig "doesn't register as a foreign lobbyist, but he's effectively a voice for a foreign government," says Mark Lagon, a former foreign-affairs adviser to the Republican House leadership.

A current Hill staffer who tracks China adds, "He's a guy we worry about because every time we try to put together a piece of legislation [critical of China] Haig gets on the phone to Republican members and we suddenly find that we've got less votes than we thought we did."

George Shultz, secretary of state under Ronald Reagan and a board member of Bechtel Corp., a construction company with interests in over 60 projects in China, including two nuclear power plants, is lending a hand as well. Lawrence Eagleburger, secretary of state under Bush, has done consulting work for Kissinger Associates on Chinese trade issues.

President Clinton and his administration are not relying only on outside assistance. They have made approval of PNTR their top priority. In 1992, Clinton campaigned for the presidency criticizing George Bush for 'coddling dictators' and extending MFN treatment to China. Upon taking office, he promptly flip-flopped. These days the White House is in a virtual frenzy pushing PNTR. "It's the president's absolute top priority right now. Everyone is moving on this. Albright was just sent to Boston, Barshefsky was in Philly, Summers in New York, all at different speaking engagements on China trade," Daniel Cruz, a spokesperson for the White House China trade working Group, remarked recently. "Daley runs the Commerce Department, but as of late he spends 90 percent of his time promoting this deal." In April, Clinton brought batches of House members to the White House on an almost daily basis for a discussion about why he wants Congress to pass PNTR.

Meanwhile, Big Business continues to spin the deal as good for average people in the United States. In April, business leaders staged a "workers rally" on the Hill which featured employees from a range of industries who visited offices of at least 100 different House members. Meant to cast permanent MFN as publicly popular and not just CEO backed, the rally fizzled, turning out only 400 or so employees.

"The corporate rally was pure astroturf," remarks Patrick Woodall of Public Citizen's Global Trade Watch. "These were a few pilots and such, not American factory workers that they turned out."