To Sanction or Not: China Trade Policy Vexes Clinton Again

CHINA'S worthiness to enjoy trade privileges with the US, a topic that has vexed the Clinton administration in the past, is again under debate in light of allegations that China sold nuclear-weapons technology to Pakistan.

At stake, say some arms-control experts, is the viability of global efforts to retard the proliferation of nuclear weapons.

"Robust US-China relations are important, but at some point we have to draw the line," says Evan Medeiros, a senior research analyst at the private Arms Control Association, in Washington. "If we overlook this incident, it's unclear what kind of leverage we're going to have with China on proliferation issues in the future.

"If Clinton waives sanctions, he will vitiate the credibility of the Nuclear Non-Proliferation Treaty (NPT)," adds Mr. Medeiros, referring to the 1968 agreement, which China has signed, to halt the transfer of nuclear-weapons technology to nonnuclear states.

This is not the first time the administration has grappled with trade and commerce considerations because of provocations by China. Within months of becoming president, President Clinton abandoned a campaign promise by granting China trade privileges despite its repeated violation of human rights.

Currently, White House and State Department spokesmen say, two issues are under review: whether the technology transfers actually took place and, if so, whether they are inconsistent with the NPT or US laws.

"We are concerned about reports of transfers from China to Pakistan, and we have a body of material that we are looking at to try to make a determination about how to proceed on that," a State Department spokesman said Friday.

According to CIA reports, which have been denied by China and Pakistan, China sold 5,000 ring magnets to Pakistan last year. The magnets are used to enrich uranium, the key component of nuclear weapons.

Any such sale would violate the NPT. It would also violate the 1994 Nuclear Proliferation Prevention Act, which requires the president to impose sanctions on nations that export nuclear-weapons technology to nonnuclear states.

The legislation allows the president to waive sanctions if greater matters of "national interest" are judged to be at stake. No matter how he calls it, Mr. Clinton can expect criticism.

On one hand, he is eager to keep Pakistan from enhancing its nuclear-weapons capabilities, especially given its tense relations with India. Both nations are "threshold" nuclear states that could quickly assemble nuclear weapons in a crisis.

On the other hand, Clinton is reluctant to restrict US economic activity in China, with which the US is on the short end of a huge trade imbalance. If sanctions are imposed, Mr. Clinton would have to suspend up to $10 billion in loan guarantees for American corporations doing business in China. He would also have to suspend export financing, which, to cite one example, would strip Boeing of its competitive advantage in aircraft sales to China.

American companies, backed by the Commerce Department, are urging the administration to issue a waiver. "There's a straightforward connection between financing and jobs," notes one Commerce Department official. "We lose sales and Americans lose jobs."

The United States has been at odds with China over proliferation matters since the early 1980s, when, according to US intelligence sources, Beijing provided Pakistan with a complete design for a nuclear weapon. But for various reasons, Washington has seldom responded forcefully.

WASHINGTON'S response to the latest disclosures has been cautious because relations with Beijing are already strained over recent Chinese threats against Taiwan and alleged Chinese piracy of US intellectual property.

Paradoxically, the alleged sale of the ring magnets was occurring just as the administration was lobbying Congress to approve transfer of $368 million in military equipment to Pakistan that had been frozen in the pipeline because of a US law - the "Pressler Amendment" - barring US military and economic aid to the south Asian nation because of its nuclear-weapons program.

"We face the real and embarrassing prospect of having weakened US nonproliferation law for Pakistan at the same time Pakistan was expanding its nuclear-weapons capability in violation of US law," says Sen. Larry Pressler (R) of South Dakota, author of the amendment, which was waived last year.