In Western tradition, the dragon is the embodiment of evil. (In myth, St. George slew one to win the hand of a princess.) But in the East, the dragon is a sign of good luck. And it's this image of the dragon, long the cultural and national symbol of China, the U.S. Congress will choose if it votes to give that nation permanent normal trade status.

The designation would eliminate the need for the annual review that has been required over the past two decades. To promote the deal, China pledged to lower tariffs on imports, agreed to allow foreign-owned businesses greater access to its consumers and promised to abide by international trade rules.

So what's the potential impact on Illinois? Like the image of the dragon, it could be good or bad, depending on whom you ask.

As a major exporter of agricultural and industrial goods, this state presumably could profit from increased trade. Farming interests believe the move would help reverse years of sagging commodity prices. And telecommunications and heavy equipment manufacturers believe Chinese consumers are hungry for their products.

As a major exporter of agricultural and industrial goods, this state could profit from increased trade with China. But Illinois also could lose jobs to poorly paid Chinese workers.

Schaumburg-based Motorola, for one, estimates China would become the second biggest market for cellular telephones, behind America. Thus, the company is eager to take advantage of cuts in tariffs, which drive up costs of goods shipped in and out of overseas ports.

Motorola already claims to be the largest American investor in China, having pumped $1.5 billion into that market over the last decade. Motorola's sales to China accounted for about 10 percent of the company's $31 billion in revenues last year. And it employs about 10,000 Chinese who are making such products as phones and pagers, says Norm Sandler, director of global strategic issues.

"We want more opportunities to sell to Chinese consumers. And we want to level the playing field with our competitors," Sandler says. Those competitors include Nokia and Ericsson, two European firms that might have a leg up if Congress does not agree to permanent trade status.

Peoria-based Caterpillar Inc. is a China booster, too. That company opened an office in Beijing more than 20 years ago and now has about 500 employees in the country. One Chinese operation, the An Tai Bao coal mine on the border of Inner Mongolia, uses 160 pieces of Cat machinery, including massive $2 million trucks that were manufac-tured at the firm's Decatur factory.

Meanwhile, the promise of tariff reductions has lots of other Illinois exporters salivating over the prospect of selling to the 1.2 billion Chinese. By 2005, tariffs on agricultural commodities could be cut in half and entirely eliminated for high-tech goods, according to goTrade, a lobbying arm of the Business Round-table. The organization found that Illinois exported goods and services worth $1.03 billion to China in 1998. That's substantial, but minor compared to the $36.5 billion the state exported that year.

The city of Chicago also is aggressively wooing the Chinese. The public/private Chicago Partnership for Economic Development sent a delegation of several dozen high-powered business representatives, academics and legal experts to Shanghai last month, addressing questions about e-commerce, intellectual property law and venture capital in a series of seminars.

Other proponents of the change in China's status, though, are wary about making precise projections on how much Chinese trade could grow. "I think some have been making promises they can't keep. It's up to us to increase our [exports]," says Mark Lambert, communications director for the Illinois Corn Growers Association. Still, Lambert says Illinois corn farmers could triple the current 47 million bushels they send to China annually.

There isn't unanimous support in Illinois for change. Union and human rights activists see it as a sellout to corporate influence. They argue American jobs

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The AFL-CIO, which represents nearly one million Illinois workers, has actively fought the proposal. That organization charges American corporations would locate in China, pay subsistence wages and sell their products to the Chinese. “This is for multinational firms, not for workers,” says Bill Looby, the group’s spokesman. “[China doesn’t] have to abide by rules of workers rights or human rights. They have forced labor camps where workers earn pennies.”

The AFL-CIO is for international trade, says Looby, as long as workers aren’t pitted against workers in a race to the bottom. “Trade is good if it’s fair. Exports mean jobs. Our workers are among the best in the world. We just don’t want [trade] where the game is rigged.”

According to the Economic Policy Institute, a progressive think tank, the United States could lose 872,091 jobs in the next decade as firms move their operations to China. Illinois, according to that report, would be among the hardest hit states, losing more than 38,000 jobs.

China’s low-cost products already are flooding this country. The U.S. Department of Commerce has reported that the United States is on track this year to a trade deficit of $80 billion with China.

Political reaction has been mixed. Illinois’ U.S. Sens. Richard Durbin, a Democrat, and Peter Fitzgerald, a Republican, each support normalized trade relations. But the 20-member Illinois delegation to the U.S. House split evenly along party lines. Ten Democrats opposed the trade measure and 10 Republicans supported it.

Opponents in the delegation are skeptical that China would abide by its pledge to open its borders. In his agonizing decision to oppose the measure, U.S. Rep. David Phelps, a Democrat who represents workers in the Decatur Caterpillar plant, as well as agricultural interests, expressed disappointment at the results of the 1994 North American Free Trade Agreement among the United States, Canada and Mexico. Supporters of that agreement also argued it would mean more jobs and increased exports.

“I think the benefits [of China trade] are overrated, just as they were with NAFTA,” says Phelps. “We have the lowest commodity prices since the Depression. We’ve lost American jobs in textiles and steel after NAFTA. I’m sure we’ll lose jobs after the China vote.”

U.S. Rep. Danny Davis, a Democrat whose district includes Chicago’s Chinatown, also voted against the measure. “This will benefit China, the multinational corporations and some businesses. But how does that benefit get to the average citizen?”

U.S. Sen. Durbin sees both sides of the equation. He says labor and business represen-tatives have valid points. But he chides unions for not embrac-ing globalization.

“We have to accept the reality of world trade. This is a fact. And to think we can reverse it and go back to some day in the past and see prosper-ity, I don’t think that is realistic,” he says. Instead, Durbin believes, unions should have grabbed this opportunity to demand better train-ing for workers who could lose their jobs. In fact, he argues, more American jobs could be lost to technological change than to cheap foreign labor.

In the near term, he supports an “antisurge” safeguard to prevent under-priced Chinese-made products from flooding the United States and wiping out American producers. In any event, a thumbs-up congres-sional vote — with President Bill Clinton’s certain signature — would guarantee more Illinoisans visit the dragon’s lair. It remains to be seen whether anyone will get burned. 

GOING GLOBAL
Illinois exported $33.2 billion in goods in 1999, according to studies for the state’s commerce depart-ment. In an effort to boost that figure, Gov. George Ryan opened Illinois’ eighth overseas trade bureau in Johannesburg last May. He’s also talked about leading a trade mission to China, though there are no plans to open another office in that country.

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