spend six times as much on defense. We remit annually tornTokyo tens of billions of dollars in interest payments on thernhundreds of billions of dollars of Treasury debt that Tokyo nowrnholds as a result of having run up decades of trade surpluses atrnthe expense of American workers. Historians will marvel thatrnAmerica let this happen.rnEven the American Chamber of Commerce in Japanrn(ACCJ) is showing signs of despair. According to the ACCJ,rnonly 13 of 45 U.S.-Japan trade agreements since 1980 were successfulrnin helping American businesses penetrate Japan’s market.rnTen were total failures. Said ACCJ President Bill Beagles:rnFor many years, the American view was that a tradernagreement with Japan spoke for itself . .. However, thernU.S. Government and American industry came to realizernthat this is not the case. An apparently successful negotiationrnmay not necessarily produce the expected marketrnresult.rnThis is unhealthy. As a First World nation, Japan has much inrncommon with the United States. Our strategic interests are inrnharmony, and the possibility remains for a close relationship.rnBut it is not 1950 anymore. Reciprocity is required. If Japanrncan begin to harmonize her trade policies with ours, open herrnmarkets to our manufactures and agricultural products as we dornfor Japan’s, there is no reason we cannot establish with Tokyornthe same defense and trade relationship we have with Europe.rnThere is no reason we cannot grow closer rather than drift fartherrnapart.rnOur China ProblemrnChina is fast becoming America’s number one trade problem.rnIn its drive for dominance in Asia, Beijing has exploited slave labor,rnconsumed all the Western credit it could extort, stolen intellectualrnproperty, and strong-armed American companies likernBoeing and McDonnell Douglas to manufacture in China asrnthe price of a deal. “Forced technology transfers” are a routinerndemand in dealing with China. “Wlien you invest in China,”rnsays one auto company executive, “China assumes it owns all ofrnyour intellectual property.” The Manufacturing Policy Projectrnputs the piracy rate of U.S. intellectual property’ in China at 98rnpercent: “Three days after Microsoft introduced Windows 95rnin the United States for $89.95, copies were available throughoutrnAsia for $4 or less.”rnFollowing the path to power laid out by Friedrich List, Chinarntreats the United States, the world’s most advanced nation,rnlike a colony, a source of raw materials and a dumping groundrnfor manufactures. China sends us up to 40 percent of its exportsrn—much of it high-tech manufactured goods —but buysrnless than two percent of our exports. While China runs a tiadernsurplus in manufactures with the United States of more thanrn$35 billion yearly, prominent among American exports to Chinarnare fertilizers, food residue and waste, ore slag and ash, woodrnpulp, animal and vegetable fats, meats, live animals, and cereals.rnThe one high-tech export for which America runs a largerntrade surplus is aircraft; but once China masters the Americanrntechnology it has extorted, Beijing will begin building its ownrnplanes. That is the way of economic nationalists.rnFrom 1991 through 1996, China piled up $157 billion inrnsurpluses trading with the United States. Its 1996 surplus of $40rnbillion was almost as large as the Pentagon procurement budget.rnIn October 1996, China invested $11.8 billion of its surplusrnin U.S. bonds, making China the third-largest buyer ofrnU.S. debt, after Japan and Britain. By September 1997, Chinarnhad amassed more than $130 billion in foreign currency reserves,rnthe world’s largest hoard after Japan.rnFor a century Americans have been transfixed by the greatrn”China market”; it was one of the reasons business groupsrnurged McKinley to annex the Philippines. But the China marketrnproved a mirage then, and it is a mirage now, a corporate illusion.rnIf China vanished, the American economy would notrnfeel a breeze. Our sales to China in 1996 ($11.9 billion) werernone-fifth of one percent of our CDP. We sold more to Singapore.rnBut China’s sales to the United States —$52 billion worthrnof toys, textiles, shoes, bikes, computers, etc., in 1996—were arncrucial share of its entire economy and were the primary sourcernof China’s hard currency reserves.rnThe United States has the whip hand in this relationship,rnand it is time we used it. China is not only a trade problem, itrnis a national security problem. China is using the hard currencyrnfrom its trade surpluses and international bank loans to buyrnsubmarines, destroyers, anti-ship missiles, and fighter aircraftrnfrom Russia, and to build long-range missiles to reach the WestrnCoast of the United States. Yet we permit China to launchrnAmerican satellites on Long March rockets, thus subsidizingrnthe development of the Chinese strategic missile force.rnAmerica is taking a terrible risk feeding a regime whose characterrnmay be seen in its treatment of dissidents, Tibetans, Christians,rnand women pregnant in violation of China’s barbaricrnone-child policy. While America should seek no confrontationrnwith China, we should treat Beijing as the great power it has become.rnWe cannot practice true free trade with a nation that has nornindependent judiciar)’, where labor is conscripted, corruptionrnis endemic, American goods face a 17 percent value-added taxrnand a 23 percent tariff, and many of whose corporations are governmentrnfronts. The United States should cancel China’s MostrnFavored Nation status and negotiate a reciprocal trade agreementrnthat recognizes our different societies and conflicting interests.rnWhat About Mexico?rnMexico is another special case. We share a 2,000-mile border,rnten million Americans trace their ancestry to Mexico, and ourrndestinies are not separable. But NAFTA is not sustainable.rnNAFTA puts blue-collar workers from America into competitionrnwith Mexican workers who earn ten percent as much.rnAmerican farm labor, paid a minimum wage near five dollarsrnan hour, competes with Mexican farm labor paid 50 cents anrnhour. American employers now hang over the heads of theirrnworkers this constant threat: accept reduced pay, or we go tornMexico!rnWhat makes the threat credible is that hundreds of companiesrnhave already done so. Under the maquiladora program,rntax concessions are offered to American companies that placernfactories in Mexico to ship products back to the United States.rnNew plants are opening at the rate of two a day. From SanrnDiego to Brownsville, the Mexican side of the border is litteredrnwith signs of Fortune 500 corporations. Xerox, Zenith,rnChrysler, CM, Ford, IBM, Rockwell, Samsonite, and GE havernall opened plants south of the Rio Grande. By moving to Mexico,rnthey evade American laws on child labor, worker safety.rn16/CHRONICLESrnrnrn