March, 2001: Players - Who's Up To What

By Greg Rushford
Published in the Rushford Report

Hong Kong's Tung Chee-hwa vs. Taiwan

Hong Kong’s chief executive, Tung Chee-hwa, keeps tripping over Taiwan — for no good reason.

Last May, I reported that when Tung came to Washington to lobby for China’s accession to the WTO (which is also very much in Hong Kong’s interests), he waded into foreign policy issues that were none of his concern (Hong Kong’s Basic Law expressly reserves foreign affairs for Beijing). First, Tung basically said that he hoped that Taiwan would be reunited with the motherland — on Beijing’s terms. Then he said that Hong Kong was just as democratic as Taiwan, while refusing to say whether he would endorse universal suffrage. Ouch. Hong Kong’s Basic Law specifies that universal suffrage is the “ultimate aim” after 2007. People in Taiwan and other democracies have shed blood for democracy. Lucky Hong Kong has the prospect of universal suffrage handed to it on a platter. Yet its chief executive — who has never stood for election — signaled that that prospect frightens him.

Recently, there have been more embarrassments.

When USTR Robert Zoellick testified before the Senate Finance Committee at his January 30 confirmation hearing, Sens. Frank Murkowski (R-Alaska) and Jon Kyl (R-Az.) aired some concerns about Hong Kong. It seems that Chief Executive Tung is doing Beijing’s bidding to make things as unpleasant as possible concerning Taiwan’s prospective accession to the World Trade Organization. Since 1992, the understanding has been that Taiwan would be admitted to the GATT (now WTO) as a separate customs territory known as Chinese Taipei. But until now, Hong Kong has refused to sign off on its own bilateral accord with Taiwan, thus blocking the WTO’s necessary consensus.

Zoellick first assured the senators that the George W. Bush administration “will have no weakness” on the issue that Taiwan join the WTO at the same time as does China.

“Second, about a year and a half ago, after a visit to Taiwan, I learned that Hong Kong was the one working party that had not signed off on Taiwan’s report,” Zoellick testified. “And so I actually had a meeting with C.H. Tung where I stressed to him that if Hong Kong wanted to get the support of the United States and be seen as a unique economic entity, it better be very careful about holding up any of these things with Taiwan.” Zoellick added that “not long ago” but before he was nominated as USTR, he had again talked about this to some mainland Chinese officials: “I stressed that any effort to mess this up would be an explosive issue here.”

Hong Kong officials say that Hong Kong wants Taiwan in the WTO, and that there is no intention to block Taiwan’s WTO accession. Yet the point is clear: There are no outstanding economic issues between Hong Kong and Taiwan over the latter’s WTO accession. Hong Kong is perfectly free to sign off on this without asking permission from anyone in Beijing. Yet Chief Executive Tung hasn’t done it.

"This is purely a political sense on the Hong Kong side,"explains a Taiwanese official. "We know who the real boss is."

Last month, the Beijing-appointed Tung signaled still again that he also knows who his boss is.

When Chinese Nobel laureate Gao Xingjian — whose writings are banned on the mainland — visited Hong Kong, Tung snubbed him. Gao told inquiring reporters that he hadn’t felt free to speak his mind in Hong Kong, which has long enjoyed a reputation for honoring free speech. Gao went on to Taiwan, where he was treated with the utmost courtesy by President Chen Shui-bian. Reminding the world’s press that Taiwan was a democracy, Chen said on February 7, “Politics shouldn’t interfere with literature.” That used to be the sort of statement that Hong Kong’s leaders made.

On February 12, Tung found time to honor the visiting mayor of Taipei, Ma Ying-jeou, an opposition leader. Reuters didn’t miss the point that Ma‘s visit to Hong Kong was intended to isolate pro-independence politicians like President Chen: “In a clear sign that Ma’s visit was approved by Beijing, a string of senior Hong Kong officials and pro-Beijing figures attended a gala dinner in his honour on Sunday.”

Hong Kong is a wonderful city that in so many ways is a shining beacon for a mainland China that is trying — however awkwardly at times — to modernize. Kowtowing to Beijing’s baser instincts when it isn’t necessary does not help the mainland, and certainly harms Hong Kong.

Tung even asked the popular Mayor Ma how he, too could go about becoming more popular.Give me a break.

President Bush re-nominates Thelma Askey to the ITC, steel lobbyists launch a behind-the-scenes effort to kill the nomination

The U.S. steel lobby’s campaign against Thelma Askey continues. As I reported in December, the first round began in the White House, where domestic steel lobbyists asked President Bill Clinton not to re-nominate Askey to another term on the International Trade Commission. Askey, a well-regarded former aide to the House Ways and Means Committee, was too much a free trader to suit the steel guys (even though she had voted with the majority of her colleagues three-fourths of the time).

In January, Clinton moved to throw Askey into the ranks of the unemployed, using his recess-appointment powers to put Dennis Devaney, a Michigan labor lawyer who is liked by the United Steelworkers of America, in her place. Askey moved out, and Devaney moved in.

Last month, President George W. Bush (commendably) showed his displeasure with Clinton’s sneak attack by re-nominating Askey to the commission.

Late last month domestic steel lobbyists circulated an intemperate memorandum on Capitol Hill that indicates there will be an all-out effort to derail Askey’s nomination in the Senate Finance Committee. While the copy of the memo that found its way to me doesn’t have a letterhead, its tone and content clearly suggest that it was written by a law firm.

My sources say that Robert Lighthizer, a partner in Skadden, Arps, Slate, Meager & Flom, has been circulating the memo on the Hill. Lighthizer — who is sort of the Lori Wallach of Washington’s international trade bar — is known for his sharp tongue. Last month, I reported how Lighthizer was going around town attacking jurists on WTO dispute-resolution panels who voted against his U.S. steel clients. Lighthizer declined to comment.

The memo doesn’t pull punches in attacking Askey. “Askey’s reappointment to the ITC would be a disaster for domestic manufacturing,” the memo declares.

“Askey’s record has been particularly troubling in steel cases," the document claims. "In May 2000, Askey voted with the ITC to find that the U.S. steel industry was not being injured or even threatened with injury from imports of cold-rolled steel. Since that time, U.S. cold-rolled sheet prices have dropped by 23 percent and both LTV Steel Company and Wheeling-Pittsburgh Steel have been driven into bankruptcy."

"At a time when we are laboring under record trade deficits and when our manufacturing sector is in recession, we need stronger, not weaker, enforcement of our basic fair trade laws,"the memo concluded. "Thelma Askey’s reappointment to the ITC would only accelerate the deteriorating condition of our manufacturing base and allow foreign producers to continue trading unfairly in our market."

There isn’t space here to defend Askey’s actual record, except to say that there is nothing wrong with it. The personal attack on her is without foundation.

Corporate America on labor and the environment: "We’re flexible"

Although Spring is still around the corner, you can smell fresh international trade winds coming. While it will be a fight that could take most of this year, I think that it is likely that President George W. Bush will get from Congress the fast-track negotiating authority that he needs. One of the chief obstacles, of course, will involve the question of linking environmental and labor issues to trade negotiations. Here’s what’s going on the business community in this regard.

When the international policy committee of the Chamber of Commerce of the United States met on January 23, the question came up: Should the Chamber modify its longstanding position that linking labor and the environment to trade shouldn’t even be talked about? John Howard, the chamber’s international-policy honcho, reports that "there was a resounding ‘No’ by all but one or two of 40-some company representatives present."

"Our position has not modified because we believe the record amply demonstrates that these issues should be worked out in a manner separate from trade agreements,” Howard explains."The virtue of the Chamber’s position is that it has intellectual coherence. There are many things that business can do for the environment that have nothing to do with trade. And it doesn’t take a lot of heavy mental lifting to see through the AFL-CIO’s oh-so-sincere concern for improving labor standards overseas as thin cover for a protectionist stance regarding American jobs at home. These guys want less jobs overseas, period.

The trouble with the Chamber’s position is politics. If business wants fast track, some cover has to be given to the swing New Democrats whose votes are crucial. Some farsighted business lobbyists (yes, there are some) point out that the importance of wooing Democrats may well become even more important should they regain control of the Senate or House in the 2002 elections.

Hence, many business lobbyists are now quick to signal their "flexibility" on labor and the environment. The bottom line remains: no punitive sanctions, which couldn’t be negotiated with developing countries in a new WTO round anyway. But short of that, business lobbyists are willing to talk.

"We need to address these issues," said Boeing’s chairman and CEO, Phil Condit, on behalf of the Business Roundtable last month. "The BRT recognizes that labor and environmental issues are important factors in forming such consensus [on fast track]," adds Condit, who chairs the Roundtable’s international trade task force.

"NAM is looking for a constructive approach to the concerns that have been voiced on labor and the environment," declares Frank Vargo of the National Association of Manufacturers. "We believe that there are lots of alternatives and we are willing to sit down and explore them."

“There has to be recognition that there is a need to address these issues in a cooperative manner,“ says Calman Cohen, president of the Emergency Committee for American Trade. "One could argue that by lowering tariffs on technology that could clean up the environment, there is a relationship between trade and the environment; and also that eliminating subsidies that keep non-productive land in farming could be handled in trade negotiations," the ECAT president adds.

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