Warm U.S.-China trade relations unlikely to last

By Adam Entous

WASHINGTON (Reuters): Sino-U.S. trade relations warmed on Tuesday with final passage of legislation granting China permanent low-tariff access to United States markets, but do not expect the honeymoon to last.

At the urging of U.S. lawmakers skeptical of communist China's commitment to economic reform, the U.S. administration has promised to launch its biggest trade enforcement drive in hope of ensuring Beijing lives up to its market-opening obligations.

The U.S. Congress will also increase its oversight of China through a proposed human rights commission that could recommend sanctions. Already Beijing has protested what it sees as U.S. interference in its internal affairs.

"When you consider that even with our long-standing relationship with Europe we still have trade disputes, it's quite obvious that we're going to have terrific disputes with China," said Iowa Republican Sen. Chuck Grassley, chairman of the Senate subcommittee on trade.

Citing Beijing's mixed record of compliance with previous trade agreements, U.S. lawmakers demanded stepped-up enforcement and oversight measures in exchange for approving legislation granting permanent normal trade relations (PNTR) to China.

In response the Clinton administration unveiled an initiative aimed at keeping tabs on Chinese market-opening and cracking down on trade abuses. U.S. Trade Representative Charlene Barshefsky called it the "largest monitoring and enforcement (effort) for any agreement ever."

The administration's plan calls for "accelerated investigations" of future trade complaints and for the creation of a "rapid response team" to monitor Chinese compliance.

U.S. trade experts will be based at the American embassy in China. In Washington, the Commerce Department will more than double the number of enforcement officers devoted to China. Analysts will keep an close eye on import surges.

Separately, Congress will set up a special commission to keep pressure on China to improve its human rights record, labor standards and religious freedom. The commission will monitor alleged abuses year-round, compile lists of victims and submit its findings to Congress and the president.

Should Beijing crack down on pro-democracy activists as they did in the 1989 Tiananmen Square massacre in which hundreds, and perhaps thousands, were killed, the commission could recommend sanctions, such as severing support to China from the U.S. Export-Import Bank and U.S. Overseas Private Investment Corp.

The commission could also direct the president to oppose loans to China from the World Bank and the International Monetary Fund.

But U.S. lawmakers concede they face an uphill fight in their efforts to influence Beijing, which continued its crackdown on religious groups even as the Senate began its final debate on the trade bill in early September, human rights activists said.

U.S. trade officials were also preparing for the worst. Already Beijing has sought to delay the phase-out of certain tariffs on information technology products, including computers, semiconductors and telecommunications equipment.

Lawmakers fear Beijing will throw up barriers to Taiwan's membership in the World Trade Organization (WTO).

China's admission to the world trade body could also make it more difficult to launch a new round of global trade liberalization talks because of Chinese opposition to U.S. and European initiatives on labor and environment protections. U.S. efforts to launch a new round failed last year in Seattle.

"There will be a lot of champagne toasts here and in Geneva when China joins the WTO," said Greg Mastel, a global economic analyst at the Washington-based New America Foundation. "But the reality is that tensions are sure to rise. It will be rare that a month goes by without some conflict."