Case #1771.3

The Eagle and the Dragon: The November 1999 US-China Bilateral Agreement and the Battle over PNTR (Abridged)

Publication Date: March 07, 2008
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This is an abridged version of note NR14-04-1771.0. On December 11, 2001, China became a member of the World Trade Organization. Many say the 1999 US-China bilateral trade agreement and the vote in Congress to permanently establish normal trade relations with China paved the way for China's WTO accession. Even though China was not a WTO member, the United States had granted China Most Favored Nation trading status (MFN) since 1979. However, under US law, China's trade status required an annual renewal that often became a focal point in Congress for protests over human rights issues, security concerns, and the growing US trade deficit with China. In order to support China's WTO accession, the United States had to commit to non-discriminatory treatment by agreeing to make China's MFN status permanently--known as PNTR or Permanent Normal Trade Status--thereby giving up the right to annual reviews.

Learning Objective:
The vote in Congress generated a lobbying battle on Capitol Hill of historical proportions. Why did PNTR pass? What role should trade agreements play in promoting human rights, enhancing domestic reform, encouraging the rule of law, and promoting national security? How were the US-China bilateral agreement and the PNTR vote linked to other key negotiations? What is the role of trade in advancing America's economic interests?

Other Details

Case Author:
Charan Devereaux
Faculty Lead:
Robert Lawrence
Pages (incl. exhibits):
United States, China