by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, in Petaling Jaya on Friday, 27th May 1994:
President Clinton should not only renew MFN trading status to China, but should provide China with permanent MFN status
It has been reported from Washington yesterday that President Clinton is likely to announce the renewal of China’s Most-Favoured-Nation status with the approaching June 3 deadline when China’s current MFN status expires.
Clinton is reported to be considering four options, namely:
• renew China’s low-tariff benefits without condi¬tions;.
• renew MFN but sanction China’s exports of as¬sault weapons, which congressional aides value at about US$15 million;
• renew MFN but clamp down on all China’s guns and arms exports, worth some US$100 million a year;
• renew the trade benefits but restrict all exports made by China’s People Liberation Army, worth about US$900 million.
Clinton should not only renew China’s MFN status without conditions, but should provide China with permanent MFN status as well as support China’s re-entry into GATT before the end of this year, which would make China a founding member of the World Trade Organisation (WTO).
The MFN has been described as a ‘hopeless instrument of policy’ and ‘the trade equivalent of threatening nuclear war’.
The withdrawal of China’s MFN trading status would be a recipe for global disaster, as it would precipitate a trade war triggering tens of billions of dollars in losses and threatening hundreds of thousands of jobs not only in both China and the United States, but affecting other trading nations as well.
China has called on the United States to adapt a ‘practical and realistic’ approach to China’s eight-year application to rejoin GATT, which had been overshadowed by the MFN issue.
China had announced that it was prepared to negotiate a transitional period – to the end of the century – during which it would remove most non-tariff barriers, align its technical standards with international norms and make its currency, the renmimbi, fully convertible.
China’s attempt to rejoin Gatt should be seen “part and parcel” of its economic reforms and efforts to secure greater international confidence by making its economic system compatible with the world trade regime.