A Tale Of Two Cities: Washington

It was a decidedly odd way for Bill Clinton to hear the news. At about 8 a.m. on Nov. 15, the president was stepping into the shower in his hotel bathroom in Ankara, Turkey, where he was preparing for a summit of European leaders. A whole continent away, in Beijing, his China negotiators, Charlene Barshefsky and Gene Sperling, were huddling in another bathroom--the women's room on the first floor of the Chinese Trade Ministry. It was the only private place they could find to make a cellular-phone call. Just hours before, they had told Clinton that the news looked grim; there was little chance of a deal on China's entry into the World Trade Organization. The president had gone to bed somewhat downcast; a defeat would have been a personal slap in the face. He had recently pleaded with Chinese President Jiang Zemin to restart WTO talks after allowing a deal to slip away during Prime Minister Zhu Rongji's visit in April. But now, through the hiss of water in his shower, Clinton heard the voice of his personal aide, Kris Engskov, urgently calling him out.

So it was that Bill Clinton, dripping wet, learned of what may be one of his greatest foreign-policy triumphs. Clinton picked up the phone and heard Sperling, his National Economic Council chief, make the bathroom-to-bathroom connection. "Mr. President, the world's best trade negotiator has some good news for you," Sperling said. Then he handed the phone to Barshefsky. Following a dramatic last-minute intervention by Zhu, she said, the Chinese had abruptly turned around, granting numerous key concessions. Barshefsky, the unrelenting U.S. trade representative, had finally brought home a China trade deal--after 13 years of intense U.S. pressure. By the time the two negotiators made their call to Clinton, Jiang was so eager to sign that they were rushing to beat CNN with the news. Clinton, who had likened himself to an "expectant mother" during the talks, blurted out to Barshefsky, "I am so elated."

Well, he should be. In an administration that thrives on regular swings from disaster to triumph, the months of tense talks over the WTO were another "ER"-like drama (though Barshefsky at times compared Chinese tactics more to "Seinfeld"--"contentless, though not as funny"). The end result, everyone agreed, was truly historic. China must now come to a separate accord on WTO entry with the Europeans and Japanese, and Congress next year has to grant Beijing permanent "normalized" trade relations as its part of the deal. But if it all unfolds as the administration expects, China's relationship with the United States--and the rest of the globe--will be altered for good.

No one is more intent on making this deal a reality than U.S. executives. Under the terms of the trade deal, American companies in every sector will have a better chance of achieving breakthroughs in the China market than ever before. From Midwestern agribusiness to Detroit's Big Three automakers to Silicon Valley high-tech firms, American corporations in a few years will be able to sell goods to 1.2 billion people throughout China at relatively low tariffs. And they'll no longer be forced to transfer their prized technology under Beijing's harsh rules, or limit their sales to certain Chinese cities under bizarre distribution limits. Second, if Beijing adheres to the rules, WTO accession could come to be seen as the decisive moment when China finally joined the world community to stay, kowtowing to the rule of international law. And Clinton hopes the accord will quell the sniping on Capitol Hill about his ever-lurching China policy, which in seven years has gone from transparent bluffing on human rights to what critics call outright appeasement.

But this is Washington, after all. And the lines of battle are already being drawn in the capital over the China deal. Organized labor, which fears a loss of U.S. jobs to low-paid Chinese workers, plans to mount a vigorous campaign against normalized trade relations. This week major manufacturing unions will meet in the capital to map out a coordinated strategy. They'll be joined by elements of the coalition of liberal Democrats and hard-right Conservatives that defeated fast-track, the broad trade negotiating authority, in 1997. And late last week 113 Democrats sent a letter to Clinton decrying the loss of America's sovereign ability to impose rules on workplace rights (an authority that would fall under the WTO). "The deal is a great leap backward," Democratic Whip David Bonior told NEWSWEEK. "We're going to be abandoning any leverage we have on human rights and democratization in China." Meanwhile, Bonior's conservative GOP counterpart, Tom DeLay, may try to inflict Clinton with another humiliating defeat. "He's really, really upset about Chinese human-rights abuses," says DeLay's spokeswoman, Emily Miller. "This president has shown such weakness in foreign policy, and China only understands negotiating from a position of strength."

Indeed, the legions of Sinophobes in Washington could write a book with separate chapters on all the "ifs" in the China deal. (Some no doubt will.) In the 2000 election year, the debate over permanently granting to China what used to be called "most-favored-nation status"--actually, just the ordinarily low U.S. tariffs granted to most countries--will be intense. The U.S. still suffers mounting deficits with China (September's, at $6.9 billion, was the largest ever for any country). And next year's Taiwan election could elicit more anti-China rhetoric on Capitol Hill, as could stonewalling by Beijing on its promised market openings. Finally, some critics will argue that if the deal works, China, a putative 21st-century superpower, will ultimately come out a stronger nation.

Yet in the end, most Hill observers expect normalized trade relations to pass Congress's muster. Unless Democratic liberals abandon Clinton en masse, the tally should reflect the annual favored-nation vote that now takes place (China usually wins handily). Much of the toxic anti-China atmosphere has dissipated since Zhu's springtime visit, when charges of Chinese nuclear espionage were grabbing headlines. More important, big business, farmers and Silicon Valley are uniformly ecstatic about the trade goodies packed into the deal. (The pro-agriculture coalition is especially powerful in the House, where the real test will come.) Ann Craib of the Semiconductor Industry Association says lobbyists will focus on newly elected members who don't have an entrenched China position. Barney Frank, a Democratic liberal who opposes the deal, concedes: "I think they probably have the votes for it, given the agricultural bloc."

Clinton is leaving little to chance. The administration will argue that by opening up telecom and the Internet, the deal will do more to liberalize China politically than governmental pressure from outside. And Sperling and Barshefsky threw tantrums in Beijing last week to get the Chinese to grant concessions to labor and right-wingers. A key one is an "anti-dumping" rule that allows Washington to impose, for another 15 years, unilateral penalties for illegally low-priced exports. "The level of specificity is like no other deal we have," says Barshefsky.

Even so, many in Congress will demand a way of rapping China on the knuckles every year. NEWSWEEK has learned that some on both sides are beginning to hint at a compromise: a provision attached to the bill on trade normalization that would call for an annual human-rights debate on China, but without a threat to withdraw Beijing's most-favored-nation status. But no one in the administration even wants to crack that door open now. "We're going to push for an all-out effort to show on a state-by-state, district-by-district level why this [deal] is beneficial," says Sperling. Former U.S. trade rep Carla Hills says Clinton's own lobbying role is crucial. "It's important that the president be out in front early, often and in a constant way" pushing the deal, she says. If he really wants to secure a place in the history books, if for no other reason, Clinton will do just that.

Investment: U.S. companies can own up to 50 percent of Chinese firms

Lower tariffs: Taxes drop from 25 to 9.4 percent on industrial items, 31.5 to 14.5 percent on farm goods, 13.3 percent to zero on technology

Exports: U.S. firms can distribute imported, not just Chinese-made, goods

Labor: Manufacturing jobs could shift to lower-wage China

Human rights: U.S. activists lose leverage

Bilateral relations: Reinvigorated China could end up at odds with U.S. on geopolitics