‘Where Have All The Sanctions Gone?’: Additional Arguments For Blocking MFN To China

Introduction

On 24 May 1990, President Bush called a press conference to announce his decision to renew China’s most-favored nation (MFN) status. In announcing this controversial decision and in an effort to allay concerns that he was rewarding the Beijing regime for its oppression of the Chinese people following the Tiananmen Square massacre, President Bush went to some lengths to emphasize that his Administration was continuing to penalize the PRC in other ways.

Specifically, he asserted that "sanctions" he had placed on China in the immediate aftermath of the crackdown remained in effect. He said, "To express America’s outrage at the tragedy of Tiananmen, the Congress and my administration promptly enacted sanctions against China. These sanctions remain basically unchanged today." (Emphasis added.)

Unfortunately, the Center’s analysis suggests otherwise. The truth is that the sanctions adopted by the Bush Administration did not amount to much when they were announced, starting on 5 June 1989. Today, they are virtually meaningless.

The Administration’s Ersatz Sanctions

At that time, President Bush adopted four measures, two of which could not be called sanctions insofar as they involved humanitarian assistance through the extension of visas for Chinese students in the United States and support for Red Cross initiatives. The other two were described as sanctions. These involved (1) suspending — as opposed to canceling outright — U.S. government and commercial sales of weapons; and (2) suspending visits between U.S. and PRC military officials.

Weapon Sales

As the Center pointed out last year,(1) most of the government munitions sales are not scheduled for delivery in any event until at least 1991. Until recently, work on all of them had gone forward apace.

Last month, the largest sale — a $502 million Chinese procurement from Grumman Corporation for 55 avionics kits to modernize the PRC’s obsolescent F-8 fighter — was canceled by the Chinese. One Bush Administration official, however, went to great lengths to emphasize that the cancellation of the deal was "not a direct result of any strategic reexamination of the relationship." Indeed, this acquisition had apparently simply become too rich for Beijing’s taste, reportedly generating cost overruns in excess of $200 million.

Three other military programs, totaling over $100 million are still in place, however, including artillery modernization programs (Mason & Hanger-Silas Mason Company and Hamilton Technology), four Mk-46 torpedoes (Honeywell) and two AN/TPQ 37 counter-artillery radars (Hughes Aircraft). None of these has been appreciably affected by the Bush sanctions policy.

What is more, in order to ensure that those U.S. military export items that could have been affected by the President’s sanctions were not impinged upon, the Bush Administration has made special exceptions in order to permit them to be transferred. For example, export licenses for three U.S. communications satellites made by Hughes Aircraft planned for launch by the Chinese were simply redefined to be "normal commercial exports," rather than belonging on the munitions list, despite the fact that extensive security safeguards were required for their transfer. On that grounds, these satellites were approved for shipment to China.

White House spokesman Marlin Fitzwater tried to explain away this feat of semantic legerdemain by saying, "We recognize that some items captured in the suspension here have civilian applications and fall under the category of normal commercial exports." Yet another exception was made on 7 July 1989 when the Administration decided to grant a waiver allowing the transfer of four new 757-200 jets, equipped with sophisticated Honeywell navigation systems which are controlled on the munitions list.

Suspension of Contacts

On 20 June 1989, in the face of congressional criticism that the Bush Administration’s initial sanctions policy was a woefully inadequate response to Chinese brutality, the White House expanded the ban on U.S.-Chinese meetings to include all "high-level contacts."

Just two weeks after Secretary of State James Baker cited this toughening of the Administration’s position on China as part of a campaign to head off a sanctions bill in the Senate, the Administration sent National Security Advisor Brent Scowcroft and Deputy Secretary of State Lawrence Eagleburger on a secret mission to Beijing. There, they engaged in a form of ingratiation to their Chinese interlocutors widely seen as "kow-towing." Subsequently, Baker himself met with Chinese officials in Paris at a July meeting on Cambodia and Scowcroft and Eagleburger took a second secret trip to Beijing in December.

Deferring World Bank Loans to China

Also on 20 June 1989, the Bush Administration announced that it would seek to postpone consideration of Chinese applications for World Bank loans. Here too, there was a great deal less to this sanction than appeared at first blush.

Barber Conable, president of the World Bank, had already decided to suspend consideration of loans to China worth $780 million when the Bush Administration announced this new "sanction." Moreover, as soon as the World Bank decided to resume lending to the PRC, it received U.S. consent to do so. As a result, the Bank has approved four loans to the PRC government worth $440 million, including a $300 million tree-planting project announced just last week, a $30 million loan for earthquake relief, and a $60 million loan for agricultural development. In the case of the forest project, China can take up to 40 years to repay the loan, at less than one percent interest per year.

The Administration has not only approved multilateral loans to China, U.S. government bilateral loans have been issued subsequent to the announcement of this "sanction." Indeed, the U.S. Export-Import Bank’s "lending window" for China remains open. This spring, Eximbank extended two loans to China totaling $33 million. The Chinese government was also the beneficiary last month of substantial price subsidies provided by the U.S. Agriculture Department’s Export Enhancement Program. Under the arrangement, China bought 399,350 metric tons of U.S. wheat at subsidized prices, with deliveries scheduled for July and August.

The Bottom Line

In short, it is seriously misleading for the President to suggest that his sanctions "remain basically unchanged today," except in the sense that they were not effective when announced and they continue to be ineffectual. This fact has not gone unnoticed by the repressive rulers of contemporary China. The hard-line president, Li Peng, personally thanked President Bush for extending MFN.

Neither has the Bush Administration’s apparent unwillingness to impose serious penalties for repression been lost on Mr. Gorbachev. To make certain that he felt entitled to at least equal treatment to that granted Beijing, he put the issue rather bluntly to congressional leaders during his visit to Washington last week. He asked pointedly, "What should we do for you to give us MFN status? Maybe we should introduce martial rule in the Baltics and at least fire some rounds." The best that the members of Congress present could muster by way of response was an embarrassed giggle.

Conclusion and Recommendation

On 28 June 1989, President Bush said that [the lesson of China is to] "hold high the banner of values that we believe in the United States. We have a special responsibility around the world in terms of human rights, democracy, and freedom."

Regrettably, the evidence suggests that the Bush Administration is not unduly concerned with either holding high that banner or exercising its "special responsibility." Unless corrected, the President’s decisions not to impose meaningful sanctions last year, to breach or circumvent those that might have been meaningful and then, just last month, to renew most-favored nation status for Beijing, stand to make an utter mockery of U.S. policy in East Asia and around the world.

The Center for Security Policy believes that the Congress should carefully examine the true track record of the Bush Administration with respect to its China sanctions policy. If such a review confirms the aforementioned conclusion, it strongly urges that — in the face of continuing and brutal Chinese oppression — Congress enact its own package of effective sanctions. The place to start would be with legislation that would block the granting to Beijing of MFN under present circumstances.

This approach is not only consistent with traditional American values and strategic interests. It also offers the only real hope of facilitating an early and — it is to be hoped permanent — end to the present regime in Beijing. Furthermore, such an approach would send a very positive signal to Gorbachev at the very moment when he is, by his own admission, considering a prolonged period of heavy-handed and repressive tactics to bring the insurrectionist republics and reform movements in the USSR to heel. To do otherwise emboldens those thwarting the freedom movements in both China and the USSR.

1. See the Center’s paper Building Democracy in China: The U.S. Role, No. 89-30, 8 June 1989.