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Evans, Novak, Hunt & Shields

U.S. Trade Rep. Charlene Barshefsky Discusses PNTR With China

Aired May 20, 2000 - 5:30 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ROWLAND EVANS, C0-HOST: I'm Rowland Evans. Robert Novak and I will question the Clinton administration's top trade negotiator.

ROBERT NOVAK, CO-HOST: She is U.S. Trade Representative Charlene Barshefsky.

(BEGIN VIDEOTAPE)

(voice-over): President Clinton called in a prestigious figure in his effort to win approval next week by the House of Representatives of permanent normal trading relations with China.

WILLIAM J. CLINTON, PRESIDENT OF THE UNITED STATES: We all know that when Chairman Greenspan talks, the world listens. I just hope that Congress is listening today.

ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE BOARD: The outcome of the debate on permanent normal trade relations with China will have profound implications for the free world's trading system and the long-term growth potential of the American economy.

NOVAK: But a majority of the president's party in Congress is opposing him on this issue and the House Democratic leader spoke out against the agreement on the same day that the Federal Reserve chairman was supporting it.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: We should not take all of the pressure and leverage off of China, that we make a mistake if we bring China into the WTO at the cost of losing any and all pressure or leverage on the Chinese government.

NOVAK: Charlene Barshefsky was the lead negotiator in the lengthy talks with China last year that led to the agreement bringing China into the WTO, the World Trade Organization. A Washington lawyer for 18 years specializing in international trade, Ambassador Barshefsky was named deputy U.S. trade representative by President Clinton in 1993 and has held the top trade post since 1996.

(END VIDEOTAPE)

NOVAK: Ambassador Barshefsky, I have recently talked to two leading Democratic congressmen supporting the agreement, Congressman Robert Matsui of California and Congressman Sander Levin of Michigan, and they told me that they still do not have enough votes to pass it. Is it possible you could lose this vote?

CHARLENE BARSHEFSKY, U.S. TRADE REPRESENTATIVE: I don't think we'll lose the vote at the end of the day, but we're not there yet. The situation is quite fluid, this is a very difficult vote for a number of members of Congress, but we do feel at the end of the day we will be successful.

EVANS: But you have had this on the boards for a very long time. What do you have to do in these last few days before Wednesday's vote to get a sufficient number?

BARSHEFSKY: Well, I think, first of all, working with members, responding to their concerns, their questions.

But second, as you know, Congressman Sandy Levin and Congressman Doug Bereuter have put together an interesting series of proposals, including the creation of a human rights commission to monitor human rights-related activities in China.

Once that bill comes to the floor of the House along with PNTR, I think we will have resolved a number of remaining concerns that fence- sitters have.

EVANS: For those people who came in late, PNTR is permanent normal trading relations...

(CROSSTALK)

BARSHEFSKY: I'm sorry.

EVANS: That's OK.

And we are talking now about a very modest goal of trying to get over 70 Democratic votes in the House out of 211. That's what we're talking about, isn't that? You think you'll make over 70?

BARSHEFSKY: I think we'll have to see. The only number that counts is 218, not 70, not any other number in between. It's 218; that's what we have our eye on.

EVANS: Madam Ambassador, we just heard Dick Gephardt. The House Democratic whip tuned in this week, with an even sharper comment.

Let's take a look at what he said.

(BEGIN VIDEO CLIP)

REP. DAVID BONIOR (D-MI), MINORITY WHIP: It is a China that would do Joseph Stalin proud. A police-state where injustice is law and brutality is order. And this is the China we're being told to extend permanent, most favored trade status to.

(END VIDEO CLIP)

EVANS: Now what does it say about the president -- Clinton's leadership abilities when the two top Democrats in the House of Representatives speak this way about what he is -- himself has said, and you agree, is probably the most important issue before the American people today?

BARSHEFSKY: It demonstrates the leadership of the president.

It's not easy for a president to go against leaders in his own party. But in this case, we are persuaded that for our economic benefit, for our strategic benefit, permanent normal trade relations status should be granted China.

EVANS: Now, that I understand, but why is it that the president, who has these marvelous powers of persuasion, cannot get the top people in his own party in the House to follow him?

BARSHEFSKY: I think you ask a good question. Certainly China is an issue on which people differ, including those who are leaders in the Democratic caucus. We don't agree with their view, but we take seriously the concerns that they have raised. But at the end of the day the way in which to move China toward Western norms and Western values is not to repudiate China, it is to bring it into a rules-based system. EVANS: Just one more on that. This is sundering, cutting in half the Democratic Party. Are there going to be repercussions in your party, and for the president, after this vote, whichever way it goes?

BARSHEFSKY: I don't believe so. I believe that the Democratic Party will emerge from this, will reconsolidate, if you will. I think that the party will get over this split. Although this split in international trade matters is obviously a troubling phenomenon, one that has dogged us since passage of the Uruguay round agreement, but one that we have begun to cure through overwhelming bipartisan passage of the Africa Trade Act and the Caribbean Trade Act just this week.

NOVAK: Ambassador Barshefsky, I don't know how much you have been criticized in your seven and a half years in Washington, but in Thursday's New York Times their eminent columnist, William Safire, called you "shrill, shrill." And why he called you shrill was that you, in an interview to the columnist Lally Weymouth, of The Washington Post, you said this, quote, "Organized labor, human rights advocates and some environmentalists have aligned themselves with the Chinese army and hardliners in Beijing who do not want accession" -- that is accession to the WTO -- "for China," end quote. Do you think that's shrill?

BARSHEFSKY: This is not only a misquote, but it was also taken out of context. The point is simply this: That those in China that oppose China's entry in the WTO -- and not all Chinese in the leadership want China to be in the WTO -- tend to be the most conservative elements of the army, the hardline portion of the leadership, and some of the heads of the largest state-owned enterprises.

EVANS: Now we...

BARSHEFSKY: Now we must be very careful when we look at this issue not to reinforce their position in China. And we believe that denial of PNTR would reinforce their power and their position. This is clearly what I indicated to Ms. Weymouth and clearly the purport of my comments that I made to her.

NOVAK: And just to make sure I understand -- I have a little trouble when you use the word conservative -- you mean the most orthodox communist...

BARSHEFSKY: Hardline.

NOVAK: Hardline communist.

BARSHEFSKY: Yes, yes, indeed. Hardline.

NOVAK: Anybody bad is called a conservative, OK, all right. Now, another question, we had -- Mister -- the gravamen of Mr. Safire's column was that if we pass this we will take a weapon out of the hands of the U.S. government in dealing with the Chinese regime. That's something that in our introduction we had Mr. Gephardt saying.

And also, in the Wall Street Journal on Thursday, Wei Jingsheng, who is a Chinese dissident, said the same thing. He said, quote, "If PNTR is granted, U.S. businesses may suddenly find it quite troubling that the American government has become a toothless animal, unable to sink its teeth into a hard piece of bread," end quote.

They're all saying the same thing, that if we give this agreement, we don't have a stick to beat China with. What do you think of that?

BARSHEFSKY: Annual NTR -- normal trade relations -- has been granted to China, year-in year-out, by every Congress, by every president since we have established diplomatic relations with China in 1979, over 20 years. And its been granted even in moments of greatest tension with China. It is not leveraged, it is a foregone conclusion. And indeed, the opponents of permanent NTR have made clear they would continue to grant annual NTR.

The key to reform in China is to create a critical mass of reform within China, including economic reform. The key is to support economic reformers in China, coupled with international pressure and international encouragement. And we believe that is what PNTR will do.

EVANS: Ambassador Barshefsky, I'm confused about some of the reactions among dissidents, the people who hate the regime in China most. They have different opinions on what effect bringing -- giving permanent trade relations to China will have on the government and on the country.

Those who have escaped China and are in this country, are saying, they need it. We should do this, for just the reason you stated. But those who are in China, are saying, hold back, hold back.

Now why do you -- why this difference of opinion among those dissidents. BARSHEFSKY: Actually, the lines are not so clearly drawn. If you look at Martin Lee, one of the world's leading democracy advocates in Hong Kong; if you look at Bao Tong (ph), Ren Wanding, who are in China; if you look at Dai Ching (ph), one of the leading Chinese environmentalists, who is in China, they all say that this agreement and PNTR would be the most important step in Chinese reform in 20 years.

Certainly, there's a difference in opinion among the dissident communities...

EVANS: I made a mistake. I had it exactly reversed...

(CROSSTALK)

EVANS: But you're explaining it now.

Now, what about the dissidents here...

NOVAK: Why don't you -- why don't you explain what you meant?

What you were saying was the dissidents in China want the deal...

EVANS: And those here don't want the deal.

BARSHEFSKY: I can't explain fully the difference in view. I can only say that we are persuaded by those who are in the ground, in China, living there, we are persuaded that the way to support them and their efforts is to bring China within the rules.

EVANS: Is it possible that those who are in this country feel a greater sense of responsibility in telling the truth, because they cannot be hurt by the Chinese government, whereas the dissidents in China are going along publicly with the government?

BARSHEFSKY: Dissidents are dissidents because they speak their mind, regardless of the whim of any particular regime.

And I find it very interesting that those who have remained in China, but who have endured great hardship and punishment in prison, are those who are saying, as Martin Lee did, I hate this regime, but I believe PNTR is in the interest of the world and of China.

EVANS: We have to take a break, Madam Ambassador, and when we come back with Mrs. Barshefsky, we will talk to her about, Is there a European-U.S. trade war about to start?

In a moment.

(COMMERCIAL BREAK)

NOVAK: Ambassador Barshefsky, according to the U.S. Commerce Department figures, in 1992, the year before President Clinton took office, the U.S. trade deficit was $37 billion. In 1999, the last year for which figures were available, it was $268 billion -- a huge increase. Does that bother you? BARSHEFSKY: I think the trade deficit, as is pretty well acknowledged, is more a sign of the strength of the U.S. economy than any weakness in our economy or in our competitiveness.

We have the lowest unemployment rate in 30 years, the lowest rate of inflation, highest rate of home ownership, all despite the fact that we have a large trade deficit.

The deficit itself tends to be more a sign of the strength of U.S. economic activity relative to the activity of our trading partners. We've grown at twice the rate of Europe, we've grown at considerably faster that rate as against Japan, our two major trading partners. I think, as Alan Greenspan has said, global imbalances with respect to the trade deficit -- that is, we're in deficit, Japan and Europe tend to be in surplus -- are not sustainable in the longer term. But right now, the economy is very, very strong and we see no immediate threat.

NOVAK: But, Madam Ambassador, I traveled on the campaign trail way back in 1992 listening to Bill Clinton, and he was saying that these terrible deficit numbers under George Bush will just ruin us.

So there was really just politics, because you're -- with all due respect, you're giving the same argument the Republicans gave eight years ago, that these deficit numbers which were much smaller then, are a sign of strength, not weakness.

BARSHEFSKY: Well, I think first of all at the time those arguments were made while the president ran, there was great question about our competitiveness. Japan was still viewed as Japan, Inc., a very powerful competitor.

The world has changed quite a bit since then. We've been rated for the last five years and each year the world's most competitive economy. And so I think the perception of the affect of the trade deficit on our economy has in fact changed.

EVANS: Madam Barshefsky, a lot of people think a serious trade war looms between the United States and Europe. We've had trouble with bananas as you know; we've had trouble with certain kinds of beef; there've been disputes about butter, wine, good heavens; but the big one coming up is a new airliner that we say -- the European governments are going to finance with taxes -- they're going to subsidize it partly, to compete with the 747, which is the biggest passenger airline in the world. They want to beat it. Is there something to that?

BARSHEFSKY: We're looking at the issue very, very, very...

EVANS: There is then some truth to it?

BARSHEFSKY: There is some truth to the notion that Airbus, which would be making this new jumbo liner, is not an instant company. This is not a new industry in Europe. Airbus has gone with about 50 percent of the new orders last year. They're shooting for 60 percent this year. And they ought to be able to do all of that without government involvement, without preferential financing from the member state governments who form part of the airline consortium.

EVANS: Would you bring a case -- will the United States bring a case against them...

BARSHEFSKY: We'll look at all of our options, and we'll work carefully with out industry.

EVANS: We only have another minute. Last question, obviously, Madam Ambassador. Do you really think that what is happening today in Cuba is worse than China virtually blowing up Tibet, torturing, putting clerics in jails, taking the bishop of China and putting him in jail because he didn't attack the pope, human rights, all these things in China?

Do you really think that what Cuba is doing is worse than that?

BARSHEFSKY: I can only tell you what the law is. Congress has looked at this issue. There is and remains a trade embargo with Cuba, which Congress has not lifted.

And in addition, of course, we're in a very different situation with Cuba. Relations were stronger earlier on in this decade, and then, of course, you had the very unfortunate downing of the Friends to the Rescue aircraft, which changed the equation.

EVANS: Should the embargo -- would you like to see the embargo lifted with Cuba?

BARSHEFSKY: You ought to ask the president of the United States.

EVANS: How about you?

(LAUGHTER)

EVANS: No. How about you, seriously. You're the trade representative.

BARSHEFSKY: I am comfortable with the way things are.

EVANS: OK. We've got to take another break. And when we come back, we'll have "The Big Question" for Charlene Barshefsky.

(COMMERCIAL BREAK)

EVANS: "The Big Question" for Charlene Barshefsky.

Madam Ambassador, George W. Bush, the putative candidate for president of the Republican Party, had a great event this week supporting President Clinton on this issue.

Isn't it about time that your own vice president, Albert Gore, had a similar -- made a similar effort to bring his Democrats behind the president?

BARSHEFSKY: The vice president has been actively engaged in this issue; appearing, as you know, and introducing the president at a very major event, including a short speech by the vice president on China...

(CROSSTALK)

EVANS: You think he's done everything he should?

BARSHEFSKY: I believe he has, absolutely.

EVANS: No complaints?

BARSHEFSKY: No complaints. He's worked with members...

(CROSSTALK)

EVANS: And you don't think that he's beholden to the labor unions?

BARSHEFSKY: I think the vice president is his own man.

NOVAK: As we showed in the introduction to this program, when the president brought out Chairman Greenspan, shortly thereafter, House Minority Leader Gephardt, perhaps the next speaker, assailed, denounced the trade agreement. Were you disappointed in that?

BARSHEFSKY: Of course I'm disappointed that the Democratic leadership doesn't support the initiative. But I'm also respectful of their views. They make important arguments and arguments that need to be responded to. We believe we have the better of the arguments, however.

EVANS: Thank you very much, Ambassador Barshefsky.

BARSHEFSKY: Thank you.

EVANS: My partner and I will be back with a comment, after these messages.

(COMMERCIAL BREAK)

EVANS: Charlene Barshefsky is one smooth operator, Bob, a lawyer for 18 years. That's why the president put her in this job. She didn't make a single mistake, even though she knows that the leaders of her party in the House are trying to cut the ground out from under her.

NOVAK: For Democrats who are for this bill, Rowlie, along with Ambassador Barshefsky, the line is, We don't have the votes yet but we hope to get them. Believe me, if they don't have the votes next Wednesday they'll be very disappointed. They think they're going to win.

EVANS: And, you know, she says this is not going to have an impact on the future of the Democratic Party, this split over trade, but believe me, Bob, if Vice President Gore loses the election, the new leaders of the Democratic Party are going to shift the direction of that party on trade. NOVAK: Charlene Barshefsky is pretty good in an interview, but what she's really tough at is negotiating. If you were the poor Chinese and you gave her everything you could, they gave away everything, imagine negotiating with her for all those weeks.

I'm Robert Novak.

EVANS: I'm Rowland Evans.

NOVAK: Today, in one half-hour on CNN, "RELIABLE SOURCES" looks at just how far a journalist will go to protect a source.

Then, at 7:00 p.m. Eastern, "CAPITAL GANG" talks about Rudy Giuliani's dropout and the Bush-Gore battle on Social Security.

EVANS: And that's all for now. Thanks for watching.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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