Investigative Economics  ·  theaxes.fyi ↗
Volume XII · The annual renewal, 1990–2000

Published in
Advance.

From 1990 to 2000, China’s access to the American market was renewed by presidential waiver every twelve months, and the House of Representatives voted each year on whether to withdraw it. The condition attached to that renewal in 1993 names the Tiananmen Square movements in its text. Neither chamber ever withdrew or conditioned the treatment. In 2000 the annual vote was abolished by statute.

Subject10 July 1986 – 11 Dec 2001
MechanismMarket access renewed by annual waiver, with a recorded vote
DocumentExecutive Order 12850, 28 May 1993
Read time9 minutes
Volume XII A dated record of China’s most-favoured-nation treatment in the United States, 1986 to 2001, and of the annual vote it ran on, with one instrument. Related: Volume I, on the arrangement China’s integration served.

On the night of 3 June 1989 the Chinese army entered Beijing and fired on crowds in the streets. At least a thousand civilians were killed. China had applied to rejoin the world trading system three years earlier, on 10 July 1986, and was admitted on 11 December 2001 on terms set out in a protocol with expiry dates written into it.

Between those dates ran an annual American vote. Under the Trade Act of 1974, China’s most-favoured-nation treatment in the United States ran on a twelve-month presidential waiver that Congress could disapprove. From 1990 the House of Representatives voted on that disapproval every year. In 1993 the renewal was made conditional by executive order, and the order names the Tiananmen Square movements in its text. In 2000 the annual vote was abolished by statute.

i. The week

Beijing,
3–4 June 1989.

On the night of 3 June 1989 the Chinese army moved into Beijing from the west and fired on the crowds that had built barricades to stop it. The worst of it was at Muxidi, about four kilometres west of Tiananmen Square. Amnesty International, which investigated for a year and published in 1990, records hundreds killed or wounded in that area alone and people shot inside the apartment blocks that line the road; its finding on the total is at least a thousand civilians, against an official Chinese figure of about two hundred.

The rounds

The ammunition is in the record three times, written down by three kinds of witness.

4 June 1989, one in the morning. The United Press International correspondent David R. Schweisberg files from the Monument to the People’s Heroes. His dispatch carries a young Chinese photographer with a two-inch gash in his abdomen, holding up a camera lens shattered by a bullet: “The lens was on his belt in a bag and took most of the force of the steel-jacketed round.”

5 June 1989. Sir Alan Donald, Britain’s ambassador in Beijing, files a telegram to London about twenty-four hours after the shooting. Four words of it read: “27 Army were using dum-dum bullets.” They sit beside “27 Army ordered to spare no-one and shot wounded SMR soldiers” and four wounded girl students who “begged for their lives but were bayoneted.”

3 June 2014. Group Captain Peter Everett, Australia’s military attaché in Beijing in 1989, holds one up to a television camera for the ABC’s Foreign Correspondent. He collected seventy-two of them out of the flats of embassy staff near Chang’an Avenue, the avenue the troops came down. He calls them dumdum bullets: “That’s the core — solid steel. The core is surrounded by lead and then surrounded again by a thin copper sheath which peels apart like a banana when it hits something.”

Twenty-five years separate the first account from the last. The detail was carried the whole way.

What follows is the American trade record attached to that week, and the dates on it.

An armoured column stretched across the far end of a wide avenue, seen from a height.
Armour drawn up across the far end of Chang’an Avenue, at the edge of the square.
Crowds filling a wide avenue, bicycles and barricades, seen from a height.
The same avenue, earlier.
An emptied avenue with abandoned bicycles, a handcart and a figure lying in the road.
Abandoned bicycles, a handcart, and a figure in the road.
ii. The sanctions

The sanctions,
June to December 1989.

The American measures taken after 3 June 1989, and what became of each.

  • 5 June 1989. President Bush suspends all government-to-government and commercial arms sales to China and all military exchanges. Roughly $600m of government contracts and perhaps $100m of commercial sales are affected.
  • 20 June 1989. All high-level government exchanges suspended. The United States says it will seek postponement of new loans to China from the multilateral development banks.
  • 1–2 July 1989. Brent Scowcroft and Lawrence Eagleburger fly to Beijing in secret to see Deng Xiaoping. The aircraft’s air force markings are removed and it refuels in the air so that it need not land; the American embassy in Beijing is not told.
  • 7 July 1989. Thirty-two days after the embargo, the State Department waives it — to authorise the sale of four Boeing 757-200s whose navigation systems are convertible to military use.
  • October 1989. Chinese military officers return to work at two American facilities, where they are upgrading China’s F-8 fighter with American avionics.
  • 2–3 December 1989. Scowcroft and Eagleburger return to Beijing, this time announced, to brief the Chinese leadership on the Malta summit and to discuss a route back to normal relations.
  • 19 December 1989. On the day he signs the act containing it, the President waives the prohibition on Export-Import Bank financing for China. The same day he waives the export-licence ban so that three American-built satellites can be launched on Chinese rockets — about $300m of business for American firms.

Six and a half months separate the embargo of 5 June 1989 from the waivers of 19 December. Within that period the same administration waived it for aircraft navigation systems, fighter avionics, Export-Import Bank financing and satellite launches, and sent two missions to Beijing. The trade relationship itself was not suspended at any point.

iii. The instrument

The annual
renewal, 1990–2000.

Under the Trade Act of 1974, a non-market economy could only hold most-favoured-nation treatment in the American market through a presidential waiver that had to be renewed every twelve months, and Congress could vote the renewal down. For China, from 1990, that is exactly what happened: once a year, in public, the House of Representatives debated whether to take away the country’s access to the largest consumer market on earth, and recorded every member’s name on the result.

Each year’s vote is set out below against that year’s goods imports from China. Move the year to read both.

The annual renewal · 1990–2000
House roll calls (CRS 98-603) · US Census Bureau

Pick a year

1990
Members voting to withhold 247 of 435
0218 = majority435
Imports from China, that year $15.2bn goods, customs value
0$110bn

The highest count is 1992, at 258 to 135. That year the House also passed conditions twice; both bills were vetoed, the House overrode both vetoes, and the Senate sustained both. The count falls to 105 in 1993 and 75 in 1994, and does not return above 173 in any later year. Across the same eleven years, goods imports from China rose from $15.2bn to $100.0bn.

In no year did both chambers withdraw or condition the treatment. On 24 May 2000 the House voted 237 to 197 to make it permanent; the Senate agreed 83 to 15 on 19 September; it was signed on 10 October 2000. The 197 votes against are more than were cast for withdrawal in any year after 1992.

iv. The order

Executive Order 12850,
and what followed it.

The renewal of 1994 was made conditional by executive order the year before. The order names the event in the text of the condition.

Executive Order 1285028 May 1993

§1(a) In making this recommendation the Secretary shall not recommend extension unless he determines that: extension will substantially promote the freedom of emigration objectives of section 402 of the Act; and China is complying with the 1992 bilateral agreement between the United States and China concerning prison labor.

§1(b) In making this recommendation the Secretary shall also determine whether China has made overall, significant progress with respect to the following: taking steps to begin adhering to the Universal Declaration of Human Rights; releasing and providing an acceptable accounting for Chinese citizens imprisoned or detained for the non-violent expression of their political and religious beliefs, including such expression of beliefs in connection with the Democracy Wall and Tiananmen Square movements; ensuring humane treatment of prisoners…; protecting Tibet’s distinctive religious and cultural heritage; and permitting international radio and television broadcasts into China.

The order required the Secretary of State to report before 3 June 1994, and the President to decide on the twelve months beginning 3 July 1994. The report was delivered and the decision announced on 26 May 1994, three hundred and sixty-three days after the order was signed.

The President’s news conference26 May 1994

“He has reached a conclusion with which I agree, that the Chinese did not achieve overall significant progress in all the areas outlined in the Executive order relating to human rights…”

“I have decided that the United States should renew most-favored-nation trading status toward China… I am moving, therefore, to delink human rights from the annual extension of most-favored-nation trading status for China. That linkage has been constructive during the past year. But I believe… that we have reached the end of the usefulness of that policy.”

The conditions were found unmet, the renewal was granted, and the linkage was ended the same afternoon. In the same statement the President extended the Tiananmen sanctions and added a ban on importing Chinese guns and ammunition. Six years later the annual vote itself was abolished.

v. The price

The terms of
accession, 1986–2016.

China applied to resume its place in the trading system on 10 July 1986, three years before Tiananmen, and was admitted on 11 December 2001. The terms are a published protocol, and two of its clauses carry expiry dates.

The application
10 Jul 1986
China applies to resume its status as a contracting party to the GATT.
Trade
4 Mar 1987
A working party is established to examine the request. It will sit for fourteen years.
Trade
The crackdown, and the response
3–4 Jun 1989
The army enters Beijing from the west and fires on crowds on the approach avenues. At least a thousand civilians are killed.
Violence
5 Jun 1989
The man and the tank column, on Chang’an Avenue, as the column leaves the square. Arms sales and military exchanges suspended the same day.
Record
5 Jun 1989
The British ambassador cables London with a second-hand figure of at least ten thousand dead. It stays classified for twenty-eight years.
Record
2 Jul 1989
Scowcroft and Eagleburger meet Deng Xiaoping in Beijing. The trip is secret; the American embassy is not told.
Diplomacy
7 Jul 1989
The arms embargo is waived for four Boeing 757-200s with convertible navigation systems.
Money
12 Jul 1989
Cable 89BEIJING18828: a diplomat who stayed at the monument reports no mass shootings in the square, and hundreds killed in the city.
Record
19 Dec 1989
Export-Import Bank financing and satellite export licences waived on the day the act containing them is signed.
Money
The annual vote
18 Oct 1990
The House votes 247–174 to disapprove renewal. The Senate does not act.
Lever
2 Mar 1992
Bush vetoes conditions on renewal. The House overrides 357–61; the Senate falls five votes short.
Lever
28 May 1993
Executive Order 12850 makes the next renewal conditional, naming the Tiananmen Square movements.
Lever
26 May 1994
The conditions are found unmet. Renewal granted anyway; human rights delinked from the annual extension.
Lever
The lever goes
27 Jul 1999
The last annual disapproval vote fails, 170–260.
Lever
15 Nov 1999
The United States and China sign the bilateral market-access agreement in Beijing after fifty-four hours of talks.
Trade
10 Oct 2000
Permanent normal trade relations signed into law. The annual vote ceases to exist.
Lever
What was signed
11 Dec 2001
Accession takes effect. Some nine hundred pages of commitments: tariff cuts, trading rights, services opening, an end to dual pricing.
Trade
11 Dec 2013
The product-specific safeguard in §16 of the accession protocol expires, twelve years in.
Trade
11 Dec 2016
§15(a)(ii) expires: fifteen years during which other members could treat China as a non-market economy in dumping cases and price its goods off a third country’s costs.
Trade

Those two clauses are the measurable price of admission: twelve years during which other members could apply a safeguard against Chinese goods alone, and fifteen during which they could price those goods off a third country’s costs in dumping cases. In 2001, the year of accession, China sold the United States $102bn of goods.

The lever on China’s terms of entry was annual, numbered and recorded. It carried a condition naming the Tiananmen Square movements from 28 May 1993 to 26 May 1994. It was put to the House of Representatives in each of eleven years and was never carried into law, and on 10 October 2000 it was abolished.

Volume I sets out the monetary arrangement that China’s integration served. The votes above are how that integration was carried.

vi. Sources

Where to check
every line above.

Grouped by the section each one supports.

i. The week

What happened in Beijing on 3–4 June 1989

  1. The casualty finding, the Muxidi killings, the medical team in the square and the figure of at least one thousand civilians: Amnesty International, China: The massacre of June 1989 and its aftermath, ASA 17/09/90, 1990.
  2. The Chilean diplomat’s account, the summary line on mass shootings, and the mis-sequenced Spanish tape at paragraph 11: US embassy Beijing cable 89BEIJING18828, 12 July 1989, released in the 2011 cable archive. Also at WikiLeaks PlusD.
  3. The night dispatch from the monument, the “killing field” opening and the steel-jacketed round: David R. Schweisberg, UPI, “Student protest ends in gunfire, flames”, 4 June 1989.
  4. Peter Everett on the recovered rounds and on the bullet marks along Fuxingmen: ABC Foreign Correspondent, “Tiananmen: Australia’s witnesses”, 3 June 2014, with the companion article.
  5. The declassified American record of the crackdown week, including the embassy’s own reconstruction “What Happened on the Night of June 3/4?” of 22 June 1989: National Security Archive, Tiananmen Square, 1989: The Declassified History.

ii. The sanctions

The American measures of June to December 1989

  1. Every sanction, waiver and date in section iv, including “killing and wounding upwards of a thousand,” the 7 July 1989 Boeing waiver, the October 1989 F-8 avionics return and the 19 December 1989 waivers: Congressional Research Service, China: U.S. Economic Sanctions, 96-272.
  2. The secret mission of 1–2 July 1989 and the announced one of 2–3 December: Office of the Historian, Department of State; contemporary account in the Washington Post, 22 December 1989.

iii. The instrument

Every roll call in the rail, and the trade it was attached to

  1. Every roll call in the instrument, the two 1992 vetoes and both override attempts: Congressional Research Service, China’s Most-Favored-Nation (MFN) Status: Congressional Consideration, 1989-1998, 98-603, 1 August 1998, table at CRS-3.
  2. The 1999 vote: H.J.Res. 57, rejected 170–260 on 27 July 1999.
  3. Permanent normal trade relations: H.R. 4444 actions (House 237–197, 24 May 2000) and the Senate roll call (83–15, 19 September 2000). Public Law 106-286, 10 October 2000.
  4. Imports from China for every year in the instrument: US Census Bureau, Trade in Goods with China, annual totals, customs value.

iv. The order

Executive Order 12850 and the decision of 26 May 1994

  1. The conditions, in full: Executive Order 12850, 28 May 1993, printed at 58 FR 31327, 1 June 1993.
  2. The delinking, verbatim: The President’s News Conference of May 26, 1994, Public Papers of the Presidents, 1994, book 1, p. 991.

v. The price

China’s application, the bilateral agreement and the accession terms

  1. The bilateral agreement of 15 November 1999: White House fact sheet.
  2. The accession terms and the nine hundred pages: World Trade Organization, Press/243, 17 September 2001. Accession took effect 11 December 2001.
  3. The two expiring clauses — the non-market-economy methodology under §15 and the product-specific safeguard under §16: Congressional Research Service, China’s Status as a Nonmarket Economy, IF10385.
  4. China’s application of 10 July 1986 and the working party of 4 March 1987: World Trade Organization, accession record for China.
vii. Spread the inquiry

Six lines
that carry the file.

Each one posts with a link back to the section it came from.

Visual direction after the oceanographic films of Jacques-Yves Cousteau and the crew of the R.V. Calypso, 1943–1996. The saucer is the SP-350 “Denise”. No affiliation; the debt is the point.