Senator Lock Smith

Smith Office

Capital Hill

No. 134, Washington Boulevard

Washington D. C. 903567

Tel: 345-468-5959

Date: July 19,1999

Mr. Richard Williams

Abacus Group of America, Inc.

350 Fifth Avenue

New York 10118

Re: MFN for P. R. of China

Dear Mr. Williams:

Thank you for contacting me regarding the extension of Most Fvored Nation (MFN) status for the People’s Republic of China (PRC). MFN is the commitment by one country to exrend to another country the lowest available tariff rates.

On Thursday, May 24, President Clinton announced that he planned to continue to grant MFN to China ofr another year. Under current law, the House of Representative or the Senate must pass a resolution to disapprove the President’s extension within 60 days after the expiration of the previous authority. However, “legislative vetoes” of this nature have been found unconstitutional by the Supreme Court, and subsequently there is some question as to whether the President must respect a congressional mandate. Legislation designed to bring this law into compliance with the constitution will be considered by both chambers in the very near future. The new language will require both Houses of Congress to pass a joint resolution disapproving the President’s decision. In the event that President Clinton vetoes the resolution, one House must override the veto by a 2/3 majority or else the one year extension will go into effect.

There is no doubt that the imposition of sanctions against China will send an unmistakable message of condemnation to Beijing. However, if we choose to follow this avenue, the United States will relinquish every available means with which to leverage the Chinese to improve their rights record. It is primarily for this reason that I do not favor total revocation of MFN status. However, that is not to say that I stand 100% behind the President’s decision; rather, it can be said that I stand 50% behind it. While I certainly appreciate the economic and political benefits of maintaining the status-quo, I do not believe the US can allow these factors to overshadow the more important issue which is our commitment to those who suffer oppression at the hands of their government. Fortunately, Congress has it within its power to extablish a middle ground. I intend to give my full support to any scheme which is carefully crafted to provide incentive for the Chinese to improve its people rights record but at the same time does not severely restrict our trading relationship. It is imperative that we remember the correlation between the free flow of trade and the free flow of ideas.

Thank you again for sharing your views with me.

Yours sincerely,

Lock SmithUnited States Senator