From NYTimes...
April 15, 1999
How a Push by China and U.S. Business Won Over Clinton
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By DAVID E. SANGER
ASHINGTON -- It took a five-day roadtrip through America by a stalwart of the Chinese Communist Party, Prime Minister Zhu Rongji, and the anger of a lot of American capitalists to force President Clinton, once again, to reverse his tactics in dealing with China.
By Tuesday afternoon, a president who only a few days before had sounded in no particular rush to conclude a huge trade deal with China was suddenly in a big hurry.
Clinton tracked Zhu to a suite at the Waldorf Astoria Hotel in Manhattan, where the prime minister was warning American executives that many of the concessions China had made to try to get into the World Trade Organization would unravel if the deal was not finalized, according to some executives who met with Zhu. Taking his case to American business interests, Zhu insisted that compromises allowing American telecommunications firms, farm products, banks and insurance companies into the Chinese market could all perish.
The president and Zhu talked for 20 minutes, during which Clinton offered to issue the third "joint statement" in five days, administration officials said, struggling to explain why one summit meeting needed three successive announcements.
Clinton promised Zhu that the statement would reiterate that the United States was committed to getting China into the WTO this year, and said the negotiations could be resumed as soon as a team of American negotiators could travel to Beijing, officials said. When Zhu resumed his Waldorf meetings with New York investors and business executives Tuesday night, he confidently relayed that the deal was "99 percent done," the executives said.
White House officials conceded on Wednesday that the turnabout occurred because they had misjudged the dynamics of the China summit. In the end, they had not only angered those in Congress who oppose any deal with China, but those who think one is essential.
Clinton, they said, focused on the issues far too late, and then was stunned by the news reports emphasizing the "failure" to reach a trade agreement rather than the concessions that the administration had wrung out of Beijing on issues that had dogged American trade relations with China for decades.
But what really stung the White House was harsh criticism from the business community. Clinton had earlier complained privately that business lobbyists had not worked hard to persuade Congress to get the deal done, officials said. But as news of the partial agreements was released last week, with details of the concessions by China disclosed, business executives concluded that the president should just take what he had in hand and close the deal. They began a campaign of e-mails and phone calls to try to bring Clinton quickly back to the table to finish the accord.
On Friday, Maurice Greenberg , the chairman of the American International Group, a pathbreaker in selling insurance to the Chinese, complained to Treasury Secretary Robert E. Rubin that the administration "had missed the train." And when the White House hastily that day set up a Monday briefing about the trade deal, the administration encountered what one participant called "a firestorm."
The invitees, Washington representatives of major companies that do business in China, gave a standing ovation to Charlene Barshefsky, the U.S. trade representative, who had negotiated a deal that stunned many executives for how much she had extracted from Chinese. Participants in the meeting said they greeted Gene Sperling, the president's top economic adviser, with stony silence, apparently blaming him for concluding that the deal was not strong enough to make it through Congress.
Within minutes, Sperling was engaged in a heated argument with Robert Kapp, the president of the U.S.-China Business Council, which represents most of the major businesses that operate in China, participants said. Kapp, nearly shouting, told Sperling that the White House had shrunk from a deal that would bring billions of dollars to American businesses, simply because it feared an ugly fight on Capitol Hill. Trying to calm things, Sperling urged both patience, saying the President wanted a deal -- but would wait for the right one -- and concluded "we're all in agreement here."
"No we're not!" Kapp and several other executives yelled back.
Kapp would not discuss the meeting on Wednesday, saying it was a private session. But he added in an interview that "once the U.S. trade representative made clear the extraordinary range of achievement she had wrought," it suddenly became apparent to American businesses that "nothing in this dazzling laundry list would amount to a realized benefit for anyone unless they closed the deal."
All of this, of course, played into Zhu's hands -- and he fueled the fires all weekend, from Denver to Chicago to New York to Boston.
Everywhere he went, he cited the advantages of the deal for American companies. And he sounded persuasive. "Zhu basically went to the country," said Robert Hormats, the vice-chairman of Goldman Sachs (International), the investment house that has handled many of China's bond offerings. "City by city he said, 'Look what's in this for you.' It was remarkable. I've never seen a foreign leader, much less a Chinese leader, pull this off."
Meanwhile, Zhu was keeping an active backchannel line open to Washington, periodically striking fear into the hearts of policymakers who realized that they had underestimated the public relations skills of their negotiating adversary.
After the initial close-but-no-deal announcement on Thursday, Ms. Barshefsky released a list of the Chinese concessions, and said there was an agreement that the deals were "locked in" -- meaning the Chinese could not backtrack.
But a day later, Zhu began to hammer out a theme that would last through the weekend. In a public dinner speech to an array of business representatives, he denounced the administration for bowing to political pressures in Congress, and disputed the administration's account by saying that nothing was locked in.
His insistent note of displeasure with the administration prompted another panicked round of talks, running through Friday night. That resulted in a final agreement on Saturday to allow in American wheat and other agricultural products, giving the Chinese a clear statement that "The United States strongly supports the accession of the People's Republic of China to the WTO in 1999."
Zhu had insisted on that wording, officials say, so that he could go back to China with something to show for his efforts -- and to quiet critics who said he gave away a lot, and got little in return. He later told a group of senior American news executives that he believed Clinton had to personally approve the wording.
Zhu may have had another reason to obtain the American commitment: He wants entry into the WTO before the start of another round of worldwide trade negotiations, involving agricultural issues critical to China. Nonmembers do not get to join in the talks.
Zhu repeated his theme at every stop along his tour of cities. So after the administration's briefing for business executives on Monday, Ms. Barshefsky and Sandy Berger, the national security adviser, suggested that Clinton ask Zhu to return his negotiators to Washington to resume talks and move quickly toward a deal. But Zhu requested that American negotiators be sent on to Beijing.
Some members of the administration downplayed the impact of the business community's influence on Clinton's decision to restart talks so soon. In an interview, Rubin said the decision "reflected zero influence from the business community" and was consistent with getting "the strongest deal possible, and one that could get through the Congress."
Some in Congress say that whether or not it affected Clinton, the business pressure has certainly affected Congress. "The good news is that the business community is being heard from," said Rep. Robert Matsui, D-Calif., and a veteran of many trade battles. "And that could change a lot of votes that would have gone against a deal." But he said many of the open issues, including American rights to enforce the accord, had to be solved to avoid the criticism that the administration was signing a naive deal.
Rep. David Dreier, R-Calif., chairman of the House Rules Committee, said that the fundamental problem of selling the whole deal to Congress remains. "It's going to be tough, it's going to be controversial," he said. "Business people feel very strongly that it needs to get done."
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