Clinton's sensible move

President Bill Clinton's decision last week to renew China's Most Favored Nation (MFN) trade status automatically ended the policy of linking human rights with trade which the U.S. government had drummed up in bilateral and multilateral negotiations over the past year.

Actually, the decision had been widely expected over the past few months as more American officials came out in support of the enormous business lobbying pressures against the withdrawal of China's MFN status. And as it became increasingly clear that Clinton seemed to have not anticipated the willingness of most of the United State's important allies in the developed world to side with China on the MFN issue.

However bitter might have been the lessons Clinton gained from his outright capitulation in withdrawing the threat he made against China last year, the decision he made last week is indeed the most sensible one in view of the economic and social damage that would have been done by stopping China's MFN status.

In fact, when President Clinton in May last year gave China one year in which to make overall significant progress on human rights or risk losing its MFN status he antagonized his own Post Cold War foreign policy. He has often stated that trade is the leading edge of his foreign policy.

Withdrawing China's MFN would have seriously damaged the economic and strategic interests of the United States in Asia because such a move would have denied the American business sector a great opportunity in one of the world's most promising economies. Stopping the two-way trade with China, which amounts to around US$40 billion a year, would certainly affect hundreds of thousands of jobs in America. That would be especially damaging at a time when the U.S. is still embroiled in trade friction with another Asian economic power, Japan.

Moreover, as most analysts argue, withdrawing China's MFN status would not in anyway contribute to improving human rights protection in that country. Instead, the negative economic impact on China of such a measure might worsen the environment for human rights protection.

After all, the leverage of Clinton's warning was somewhat insignificant as the MFN actually is not a trade privilege as is the case with the U.S. Generalized System of Preferences that removes duties on imports. The MFN status provides China with the same tariff treatment that all other U.S. trading partners have enjoyed. But such a unilateral economic measure on the part of the U.S. might have handicapped the ability of American businessmen to compete in one of the world's single largest markets.

Another case in point is Indonesia, which has been given by the American government until August to improve its workers rights protection or else lose its GSP trade privilege. So naturally this country has welcomed President Clinton's decision to uncouple human rights from trade. We think the futility of his tough talking and bullying of China will bear down hard on Clinton, leading him to another sensible decision to sever the matter of labor rights from trade issues. Such a move would mean not only the virtual maintenance of Indonesia's access to duty-free exports for a broad range of light industrial products to the United States, but also would remove a "thorn in the flesh" within the bilateral economic relationships.

Having said all of that, we want to clarify that there is no intention here to imply that either China or Indonesia should be commended for human rights protection. Nor do we take Clinton's move on China's MFN as an end to the U.S. campaign for human rights. Rather, we think, the campaign should be treated as an ongoing process that should be pursued bilaterally, but separately from economic and trade issues, through quiet, yet vigorous diplomacy.