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American Business Leader in China Differs With US Senators on Solving American Trade Deficit

The head of the American Chamber of Commerce in Beijing says the attempt by three U.S. senators to rescind China's permanent trade status is a "simplistic" response to America's massive trade deficit with China, and inconsistent with World Trade Organization rules. Daniel Schearf reports for VOA from Beijing.

A bill introduced in the U.S. Senate this week would rescind China's status as a normal trading partner of the U.S. The proposed legislation would once again subject China to an annual review process, to decide whether or not it deserves "most favored nation" status, and the reduced tariffs and trade barriers that status gives under WTO rules.

Senators Byron Dorgan of North Dakota, Lindsey Graham of South Carolina and Sherrod Brown of Ohio say China has engaged in systematic labor abuses, intellectual property theft and piracy, currency manipulation and unfair barriers against U.S. exports.

What really has them and a lot of other members of Congress upset, however, is the massive U.S. trade deficit with China. Washington this week revealed that the deficit reached $232 billion, the largest in U.S. history.

The senators say China is guilty of unfair trading practices. They say an annual review would give the U.S. the kind of leverage that would convince Beijing to trade fairly.

James Zimmerman, the chairman of the American Chamber of Commerce in China, says the bill is a simplistic response to the deficit, and a bad idea. He says it would conflict with WTO rules granting most favored nation status to member countries.

"All countries that are members are entitled to MFN status. So, for the U.S. to pull that back into their own unilateral forum seems to be taking a step back in time, and it will create more tension with China," he said.

China says the deficit is partly due to U.S. restrictions on certain high-technology exports, which Washington bans because of security concerns. China also uses a different method of calculating the deficit, and says it was actually only $144 billion in 2006.

Whatever the real figure, Zimmerman says, allowing the kind of high-tech exports that China wants would make only a small difference in the total.

He says the key to reducing the deficit is for the U.S. to push for greater access to the Chinese market. He says emphasis should be put on the service sectors, such as banking, accounting and legal services, areas in which U.S. businesses are strong.