WASHINGTON — Plastics industry officials are pushing Congress to renew most-favored-nation trading status with China, but critics say denying MFN will force open China's markets and ease growing trade deficits, including those in plastics.
Christopher Hall, director of international business for Cincinnati Milacron Inc.'s Plastics Technology Group in Batavia, Ohio, told the House Ways and Means Trade Subcommittee June 17 that the United States must renew MFN to reduce trade barriers with China, such as high value-added taxes, bureaucratic red tape and intellectual property concerns.
``I firmly believe that if the United States cracks the MFN whip, we will pay through a loss of sales and jobs and our competitors from Europe and other Asian countries will benefit as a result,'' said Hall, who testified for the Society of the Plastics Industry Inc. of Washington.
But critics of renewing MFN for China said withholding it will give the United States leverage to open up the Chinese market even more. The U.S. trade deficit with China was $50 billion in 1997 —25 times what it was a decade ago — because of prohibitive tariffs, according to Rep. Nancy Pelosi, D-Calif., an opponent of MFN.
SPI said the U.S. plastics industry exported $432 million worth of raw materials and products to China in 1997, a 94 percent increase in five years.
But U.S. government trade figures indicate that the plastics trade deficit with China also is increasing, from $1.35 billion in 1996 to $1.55 billion in 1997. A labor union chart distributed at the hearing said plastics had the eighth-largest deficit among U.S. products.
Some of that increasing trade deficit is from U.S. companies manufacturing plastic components in China and shipping them to the United States for final assembly in other goods, said Robert Branand, Washington counsel for Cincinnati Milacron. That trend makes U.S. products more competitive, he said.
In an interview before his testimony, Hall said he could not provide specifics about Milacron's business in China but said the Chinese government could easily retaliate against U.S. firms. Milacron has been in China for 25 years, with sales there accounting for about 100 jobs companywide, he said.
Congressional renewal of China's MFN status, an annual ritual examining human rights and trade records, is complicated this year by questions of the Chinese role in nuclear proliferation and U.S. campaign finance.
But in spite of the high-profile fighting, industry observers expect MFN to be renewed.
Besides hurting the U.S. economy, Pelosi and other critics said MFN should be turned down because U.S. security policy suffers from China assisting Pakistan's nuclear weapons development. Other congressional critics said China's forced abortions, sterilizations and human rights abuses warrant suspending MFN.
