5. Most Favored Nation (MFN) Status

In July 1979, the Chinese Government and the U.S. Government signed the Agreement on Trade Relations between China and the United States, which went into effect in February of the following year, enabling the two sides to give each other MFN status. MFN is a mutually beneficial trade arrangement between China and the U.S. on none-levy of discriminative custom duties on each other's exports on reciprocal basis, which has played a positive role in promoting the bilateral trade relations between the two countries. The political turmoil in the spring of 1989 made the MFN an outstanding issue in China-U.S. relations. Some members of the U.S. Congress submited various kinds of bills each year demanding the members of the removal of the MFN to China or conditioning its extension. In May 1994, the U.S. Government announced the delinking of the annual MFN review with the human rights issue. In July 1998, President Clinton signed the 1998 Reform Act of the U.S. Internal Revenue Agency . According to this act, the term of the "MFN" was changed to "Normal Trade Relations" (NTR). In June 3, 1999, President Clinton announced the extension of China's NTR for another year. On July 27, the U.S. House of Representatives voted down a bill removing China's NTR by 260 to 170. On July 28, Zhu Bangzao, spokesman of the Chinese Ministry of Foreign Affairs, said in his comment that it is wise for the U.S. House of Representatives to vote down the so-called bill of "cancelling China's NTR" and that the U.S. side should go along with the trend of the time and solve the issue of China's permanent NTR at an early date so as to create favorable conditions for the sustained development of China-U.S. economic and trade relations.

Chinese Minister of Finance Xiang Huaicheng and U.S. Secretary of Treasury Lawrence Summers co-chaired the 12th Session of the China-U.S. Joint Economic Committee (JEC) in Beijing on October 25,1999. The two sides discussed international and domestic financial issues and issued a joint statement.

Chinese animals and plants inspection and quarantine authorities sent a team to California, Florida and other U.S. states for preliminary inspection of citrus in January 2000. At the end of February, China National Cereal & Oil Import & Export Corporation sent a team to inspect the western region of the U.S and hold business talks with its U.S. partners. Consequently the team ordered 50,000 tons of U.S. wheat. Vice Minister of Foreign Trade and Economic Cooperation Sun Zhenyu led a mission to the U.S. for the China -U.S. Joint Committee on Commerce and Trade (JCCT) mid-term consultation in late February 2000. The two sides exchanged views on issues such as China's accession to the WTO and U.S. granting Permanent Normal Trade Relations (PNTR) status to China , etc.

Chinese Minister of Foreign Trade and Economic Cooperation Shi Guangsheng and U.S. Secretary of Commerce William Daley co-chaired the 13th Session of the China-U.S. JCCT in Beijing on April 7, 2000. The two sides exchanged views on the PNTR, the development of China's West and other issues, and issued a joint statement.

(China's Accession to the WTO)

From November 10 to 15, 1999, the Chinese Government Delegation headed by Shi Guangsheng, Minister of Foreign Trade and Economic Cooperation and the U.S. Government Delegation headed by Barshefsky, U.S. Trade Representative and Gene Sperling, Director of the U.S. National Economic Council, held negotiations in Beijing on China's accession to the WTO. The two sides singed on November 15 the Bilateral Agreement between the Government of the people's Republic of China and the Government of the United Stades of America on China's Accession to the WTO.

(Permanent Normal Trade Relations (PNTR))

China and the U.S. signed a bilateral agreement on China's accession to the WTO on November 15, 1999. The U.S. Government promised to make all efforts to press to solve the issue of China Permanent Normal Trade Status. On January 10, 2000, U.S. President Bill Clinton announced the establishment of a team consisting of his cabinet members and headed by Secretary of Commerce William Daley and White House Deputy Chief of Staff Steve Ricchetti to coordinate with the Congress and urge the Congress to support the U.S.-China WTO agreement. Thereafter in the State of the Union Address and on many other important occasions, President Clinton urged both Republicans and Democrats in the Congress to support the agreement and grant the China PNTR. On March 8, the Clinton Administration submitted a bill on granting China PNTR.

On May 24, the U.S. House of Representatives passed a bill granting China PNTR by a favorable majority of 237 votes against 197 votes. On September. 19, the U.S. Senate passed the same bill with 83 for, 15 against, and 2 abstentions. On October10, the bill was signed by President Clinton into law. That marked the death of the twenty?year- long practice of examination and debate on granting China the Most Favored Nation (MFN) status on the U.S. side, thus removing the long-existing obstacle to the development of China-U.S. trade relations, and was of major significance for the sustained, healthy and smooth development of the bilateral economic cooperation as well as the overall China-U.S. relationship. With regard to some contents of the act that interfere with China's internal affairs and are harmful to China's national interest, the Chinese side made serious representations to the U.S. side, and explicitly made clear its position of firm opposition.

On July 18, the U.S. House of Representatives voted down a bill put forward by the House Representative Dana Rohrabacher on the cancellation of Normal Trade Relations status to China with a majority votes of 218 against 147, which made that status extended for another year.

Editor:Li Yang