Henceforth, Let ‘Normal’ Be Our Byword

On Monday, the president announced his intention to continue China’s current trade status. Congress will now review and perhaps reverse the president’s decision. Because of the reversion of Hong Kong to Chinese sovereignty, alleged campaign financing improprieties and a host of other issues, this year’s debate promises to be the most heated in many years.

Congress’ decision on this matter will have significant consequences for our relations with one of the world’s fastest-growing economies and the world’s most populous nation.

While we do not agree on all aspects of American policy toward China, we do believe it is imperative that the American public and members of Congress fully understand what the debate is about. As Congress considers the merits of renewing so-called most favored nation (MFN) treatment for China, let us be clear that MFN refers only to the same treatment accorded virtually all other trading partners.

The term “most favored nation” is, regrettably, a misnomer, a relic of the 17th century; it gives the false impression that we are granting some sort of special privilege or reward.

In fact, MFN is neither. It designates the most ordinary, most normal trading relationship among countries. Since the founding of our republic, the principle of nondiscrimination embodied in MFN has served as the cornerstone of U.S. international trade policy. In its most basic application, this principle requires a country to apply the same tariff rate to a particular product from one country that it applies to imports of the same product from all other countries.

For example, because we give Singapore MFN status, the clock radios we import from Singapore are subject to the same tariff rates as clock radios from Thailand, Spain or any other country to which we extend MFN treatment. Imports from countries that do not have MFN status - and there are only six that fall into this category - are subject to far higher tariff rates.

It is also important to note that MFN is not a one-way street. In practice, we grant MFN treatment only to countries that have agreed to provide the same treatment to U.S. goods. Thus, in return for our granting MFN treatment to clock radios from Singapore, Singapore grants MFN treatment to U.S. imports, applying, for example, the same tariff to imports of U.S. computer chips that it imposes on chips imported from Japan, Korea, Great Britain or any other country to which it extends MFN treatment.

What is the benefit for the United States? American companies can compete on fair and equal terms with their foreign rivals.

To further illustrate the inadequacies of the term, “most favored nation” tariff rates are not, in fact, the lowest tariff rates the United States applies. We have free trade arrangements with Canada, Israel and Mexico. We grant additional tariff preferences to developing countries under the Generalized System of Preferences, to Caribbean nations under the Caribbean Basic Initiative, and to Andean countries under the Andean Trade Preferences Act. In all, we grant tariffs lower than MFN rates to certain products from more than 130 nations.

MFN status simply does not confer special treatment. So, in an effort to bring a modicum of clarity to our trade laws and to make our trade policy more comprehensible, we and 17 of our colleagues on the Senate Finance Committee have introduced legislation to replace MFN in U.S. trade law with a more suitable term: “normal trade relations.” We believe that term is far more accurate and will better inform our debate on China’s trade status.

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The following fields overflowed: BYLINE = William V. Roth Jr. and Daniel P. Moynihan Special to The Washington Post