Max Baucus: “I rise to discuss the question of most- favored-nation tariff status for China. Our goals in China policy over the next…”

“I rise to discuss the question of most- favored-nation tariff status for China. Our goals in China policy over the next 10 years are more important than our goals for the next 2 months. But we must begin with the next 2 months and MFN status, because we can not do much at all unless we avoid disaster in the short term. We Americans should begin by understanding what MFN status is, and what it is not. MFN is not a special favor and it does not mean ``best country.'' It traditionally meant that we would give a country the same tariff rates everyone else got. But today, MFN is closer to ``Least'' than ``Most'' favored nation. Only seven countries--Afghanistan, Cuba, Cambodia, Laos, North Korea, Vietnam, and Yugoslavia lack MFN status. And the House, as well as the Senate Finance Committee, has already passed a bill to get Cambodia off that list. By contrast, 31 countries get tariffs below MFN through the Caribbean Basin Initiative, the Andean Trade Preference Act, the NAFTA, and the United States-Israel Free-Trade Agreement. And when we renew the Generalized System of Preferences, the total will rise to 151 countries and territories with tariffs below MFN. So giving China MFN status is nothing special. Now look at revoking MFN. It raises tariffs from Uruguay Round to Smoot-Hawley rates. That brings our average tariff on Chinese goods from 4.6 to 40 percent.…”