Beginning in 1934, MFN status, which lowers tariffs on imported products significantly, was generally granted to all trade partners of the U.S. as part of statutory policy. In Sept, 1951, the Trade Agreements Extension Act made it obligatory for President Truman to suspend MFN status to the Soviet Union, and all other countries associated with the Sino-soviet bloc. In July, 1952, due to China's occupation of Tibet, its MFN status was suspended. At this time, the only way to have MFN status reinstated was by a specific law.

This all changed in 1974 when the Trade Act of 1974 was passed. In this Act, Title IV set procedures for attainment of MFN status. The procedure calls for a bilateral trade agreement between a

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The effects on the U.S. economy would also be great. Many products would suffer price increases but the distribution process would absorb most of the costs associated with the raise in tariff. The segment that would be most heavily affected would be the poor/ low-income economic group. This is because cost increases would be relatively high on low-margin retail goods such as clothing and household electronic products. If China were to retaliate against imports from the U.S., it could severely affect the grain, power generating machinery, aircraft, and fertilizer products export markets. Also, over-all business relations with U.S. companies in or looking to invest in China would all but deteriorate leaving a large hole for other countries multinationals to fill.

Neither are we able to grant China permanent approval or denial of MFN status though. Denying China MFN status would mean severe consequences for both Chinese and U.S. economies.

Giving up the yearly renewal of MFN status for China takes away all the economic leverage the U.S. previously had because the U.S. buys about 40% of China's exports. It doesn't seem that Clinton is going about this "in a way that advances the cause of freedom," and enables a "peaceful transition to freedom and democracy" (President Clinton in relation to the Cuban embargo, 1996). Judging from China's history of unfulfilled promises of reform, in fact, by continuing on the current political path, China might be allowed to amass a trade surplus with which it can restabilize and empower its communist regime by promising very low wages, unsafe workplace conditions, prison labor, and permanent access to the U.S. market. Even recently, Chinese officials have said things indicating no intention to stick to their end of the bargain. As reported in "Guangzhou Ribao" on January 6, 2000, Long Yongtu, China's trade negotiator, said,

Most recently, though, the debates in Congress went from taking away China's MFN status, to granting it to them permanently. The Clinton Administration, which has been supporting China's membership with the

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Approximate Word count = 1459
Approximate Pages = 6 (250 words per page double spaced)