International Trade Economics - Page A1

TOKYO DESK - Senator Bob Kerrey(D) on the Intelligence Committee, said in a reported telephone interview, he was deeply concerned about news stories in the Daily Republican and the Washington Post over the week-end about the major Democratic contributor with a checkered background, Roger Tamraz, who got unusual access to NSC staff members.

Kerrey said that his concerns had not been lessened in conversations with both White House officials again on Monday. He then called Lake. Shortly afterward, Lake met with Clinton and withdrew his nomination in a letter which contained an oblique reference to Thomas Hobbes(1588-1679) view of human nature. Lake depicted the confirmation process,as '... nasty and brutish but not, short!'

By, Wednesday, the case against the Clinton administration had worsened as Time Magazine launched its March 24th Issue on the Internet Web. It is now known that two investigators from the FBI actually reported to the White House on June 3, 1996 on classified information. A surveillance operation launched earlier that year by the satellite from the National Security Agency had warned the FBI of Chinese government plans to funnel money into American politics. This was an attempt to influence the outcome of the 1996 presidential election.

FBI analysts had discovered the Chinese plan after close comparisons of various electronic communications in which the Chinese mentioned as many as 30 candidates for Congress by name. National Security Council aides Rand Beers and Ed Appel were briefed by the FBI. An investigation has been launched in Congress to determine why both president Clinton and NSA advisor Anthony Lake claim they were never told about the briefing and that potential donors with China connections were trying to subvert the presidential elections.

The FBI and the White House started accusing each other last week over what the president knew and when he knew about the alleged Chinese attempt to throw the election Clinton's way. But on the eve of vice president Al Gore's trip to Beijing, the emerging picture of China's role in putting Bill Clinton back in the White House and the spectre of a shady Chinese cargo shipping firm taking over long Beach Harbor shocked the nation.

What does China expect to get from throwing the presidential election into Bill Clinton's corner? Beijing believes it can export whatever it wants while barring imports on any pretext it chooses. It can undercut other manufacturing nations by the use of cheap labor. It can steal American ideas and ignore American copyrights without much risk of retaliation.

When it can do this with impunity, it can blackmail multinational American companies into transferring jobs and technology as the price of cracking open a labor market of 1.2 billion Chinese children and their parents. All in all, those practices are well established and help account for the tripling of the U.S. trade deficit with China since Clinton took office, to $40 billion a year.

In 1995, Intel chief Andy Grove told Time he thought his biggest competition in 10 years would come from China. Asked last year if he stood by that forecast, Grove replied yes '...but probably in eight years.'

Given the growing trade imbalance, it especially irritates some American lawmakers that China is pressing for permanent Most-Favored-Nation status, a guarantee of minimum tariffs. China wants to be admitted to the World Trade Organization, a goal the U.S. and other nations are obstructing until China lowers trade barriers.

Ironically, the world's last communist power largely relies on the FORTUNE 500 to advance its economic agenda. Whenever Congress considers China's MFN status, such companies as Lockheed Martin, Motorola, Intel, General Motors and IBM lobby on China's side. For Boeing, the stakes could not be higher: Beijing is expected to spend $124 billion on new planes over the next 20 years, making it the world's fastest-growing airline market. 'When the U.S.-China relationship goes in the tank, so do our order books,' Boeing spokesman Thomas Tripp told Time reporters.

But, in 1996 China made a big change in its dealings with the White House. For example, Beijing used some conventional means of cultivating favor, like inviting members of Congress for get-acquainted trips to mainland China. Ma Yuzhen, China's personable former ambassador to Britain, was put in charge of improving his nation's image abroad. At the Chinese embassy in Washington, more staff members were assigned to handle Capitol Hill.

By early 1996 the Chinese plan was well under way. In their haste, however, the Chinese activity came under the scrutiny of the National Security Agency who had intercepts of incriminating communications among Chinese officials. These included discussions of a covert operation aimed at influencing the 1996 presidential election. Other intercepts indicated that front companies for the Chinese government might try to funnel cash. A few months later the NSA took its information to the FBI, which began a probe. Of the six U.S. lawmakers who emerged as major targets, four were leading members of the Democrat Party in California. Democratic Senators Dianne Feinstein and Barbara Boxer (related to first lady, Hillary Clinton) are longtime supporters of China's MFN status. Feinstein's husband has extensive Chinese business interests. Representative Nancy Pelosi, a Democrat, is a leading opponent. Representative Tom Campbell(R) is a member of the House International Relations Committee. Another target was New York Senator Daniel Patrick Moynihan(D) critical of China's occupation of Tibet.

One person who should have gotten the word, but claims ignorance as a defense, was Bill Clinton. At a press conference last week he complained that he had not been informed about the warnings of Chinese influence delivered by FBI agents in June. 'The President should know,' he insisted.

A prime focus of Congress is the Lippo Group, the Indonesia-based conglomerate with major development projects in six Chinese cities. Its most famous former employee is Huang, the Commerce Department official turned fund raiser for the DNC, who stayed in regular contact with Lippo no matter what his occupation.

Also under scrutiny are the CP Group of Thailand, headed by Chearavanont and represented in Washington by former Democratic fund raiser Pauline Kanchanalak, and San Kin Yip Group of Macau, a business partner of fund-raiser Charlie Trie. Like Lippo, both companies are owned by ethnic Chinese and have ties to Beijing officials.

Federal investigators are also looking into the business practices of Johnny Chung, the Chinese-American entrepreneur who gave the Democrats $366,000 during a period in which he helped raise about $1.5 million from foreign investors.

The blowup over the Chinese connection has already made it doubtful that Beijing will get Congress to grant it permanent MFN status this year. Time speculates that even longtime supporters are worried about appearing to be in China's pocket.

In Long Beach, California, residents are protesting a city plan to lease the abandoned Long Beach Naval Station to the China Ocean Shipping Company Americas, a firm controlled by the Chinese government. California Senators Feinstein and Boxer, who are ordinarily dependable China boosters, have asked the Pentagon to look into the security implications of the lease.

House Speaker Newt Gingrich is having second thoughts about visiting China this month as part of an Asian tour by members of Congress. Last week a group of prominent conservatives met with the speaker to insist that he highlight human rights in his discussions with Chinese officials. Gore has not hesitated, however, and leaves next week on his long-scheduled China trip.

At a press briefing in Beijing last week, Chinese Foreign Ministry spokesman Cui Tiankai abruptly refused to answer questions about the campaign-finance scandals.