Most-favored-nations (MFN) Issue

The issue of the most-favored-nations (MFN) trade status for China has been argued heatedly at least since the Tiananmen Square incident in 1989, with a conflict between those who believe that the only way to change China is to continue trading with her against those who feel that such egregious conduct should not be “rewarded” by favorable treatment. This year, in spite of opposition to the continuation of MFN status for China, President Clinton again renewed it, and again this renewal was subject to certain changes within China as well as certain proofs that China is not breaking international agreements on the use of prison labor and other matters. Those who support extending MFN to China believe that maintaining an economic relationship with China will help bring democracy to China in the long run, while opponents believe that rescinding MFN status is necessary to make a statement of disapproval and to bring China more into line with the rest of the world.

MFN status entitles a country to economic preferences granted by the U.S. only to its best trading partners. Goods from countries on the MFN list are allowed into the United States at the lowest possible import tax, for instance, making the goods more attractive to U.S. consumers. The Chinese view winning MFN status as very important. China is one of the United States’ major trading partners, selling the U.S. some $19 billion worth of goods each year, and the U.S. in turn sells China more than $6 billion worth of products each year. It is the President who decides which nations will receive MFN status. President Bush granted the status to China for three years, and President Clinton has now continued it. Critics of the policy state that giving MFN status to China overlooks the continuing, widespread violations of human rights in that country while also sending the wrong message to the leadership. Human rights experts point out that China continues to arrest and try…

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