Wednesday, August 9, 2017

This Day in 1989: May 24, 1990, US Extends China's "Most Favored Nation" Status

On May 24, 1990, American President Bush announced that, after a long deliberation, he had decided to extend the "Most Favored Nation" trade status.

The Most Favored Nation (MFN), later renamed as Normal Trade Relations (NTR), was the default relation status between US and most of her trading partners. However, as a non-market-economic country, China's status required annual review and approval.

The 1990 review was hugely controversial, coming right at the first anniversary of Tiananmen Massacre. There were strong opposition from both the Congress and grassroots. Bush explained that, without the status, Chinese people, Americans, as well as Hong Kong would face great losses, which was not what he wanted to see. He pointed out that, Britain, Japan, South Korea, Thailand, Singapore, Taiwan all hoped for the extension of MFN. The US Ambassador to China also reported that students and intellectuals in China, with whom he had contacts, were also in support of the extension.

After 1990, the annual review of China's MFN remained a contention in American politics, until a decade later when President Clinton signed into law to permanently grant the status to China. Soon after that, China successfully joined the World Trade Organization, making the MFN obsolete.

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