Word: mfn
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...coercion, to influence the internal affairs of a Communist regime, consider the case of Cuba. The united States has maintained a tight embargo on Cuba for over 30 years. The effects of this embargo on the Cuban economy are arguably much worse than the effects that the annulment of MFN would have on the Chinese economy. Yet Castro has maintained a firm clutch on the reigns of his Communist regime, while the citizens of his dictatorship have suffered the combined economic consequences of both his economic policies and the U.S. embargo...
...their citizens. In the case of China, whose size, population, and regional influence, make it abundantly more independent than the comparatively tiny island of Cuba, there is all the more reason to believe that Deng Xiaoping's government will find ways to adapt to the loss of its MFN status without changing its policy on human rights...
...revocation of china's MFN status would not only fail to produce the policy's desired effect (i.e. better human rights for the Chinese), but could actually lead Deng's government to grow more intransigent on human rights, and, in general, more recalcitrant in its dealings with the United States. Failure to renew MFN would rightly be perceived by China as a kind of economic ultimatum; this perception could start a vicious circle of political retaliation. China could decide not only to treat its pro-democracy dissidents more severely, but it could choose not to cooperate on other issues important...
Economically, the policy of revoking China's MFN would be deleterious both to the U.S. and to China. This policy would involve raising the average tariffs on Chinese goods by 5 to 10 times, which, according to a study by the World Bank, would reduce Chinese exports to the US between 42% and 96%. Some estimate that such a reduction could cost China up to $10 billion in annual exports to the U.S., and millions of jobs in export industries. China would surely retaliate, and this would hurt...
Failure to renew China's MFN status could provoke an all-out trade war between China and the U.S. The Chinese government could impose high tariffs on American products and effectively threaten many of the 200,000 U.S. jobs that depend on the $9 billion in goods and services that the U.S. exports to China. Giant companies like Boeing and AT&T would quickly be overtaken by their Japanese and European competitors...