In the context of the controversy surrounding the renewal of China's most-favored-nation (MFN) status (1) or its permanent grant, it should be pointed out thathistorically the specific MFN issue involved is that of tariffs rather than of the general MFN treatment as envisagedby the General Agreement on Tariffs andTrade or the bilateral commercial compacts to which the United States is a party. Thus, the MFN status incontroversy and, consequently, discussed in this reportis limited to nondiscriminatory tariff treatment of China; that is, the application to imports from China of the sameconcessional customs duty rates agreed to bythe United States in reciprocal negotiations with other trading partners. The United States has applied such MFN tariff treatment as a matter of statutory policy, enacted in 1934, generally to all of its trading partners. This policy wasmodified with the enactment of Section 5 of the Trade Agreements Extension Act of 1951 (P.L. 82-50), whichrequired the President to suspend MFN tarifftreatment of the Soviet Union and all countries of the then Sino-Soviet bloc. Under this statutory mandate, PresidentTruman suspended China'smost-favored-nation tariff status as of September 1, 1951. After China's occupation of Tibet, that country's MFNstatus also was suspended as of July 14, 1952. Whereas earlier the MFN status could, under certain conditions, be restored to a suspended country by presidentialaction, such restoration could take place, sinceOctober 1962, only by specific law, until the Trade Act of 1974, in Title IV, provided specific authority and set outthe conditions and the procedure for itstemporary restoration to "nonmarket economy" (NME) countries and its subsequent continuation in effect. Under Title IV, the key elements of the procedure for temporary restoration of the MFN status to an NME country (2) are (1) conclusion of a bilateraltradeagreement containing a reciprocal grant of the MFN status and additional provisions required by law, and approvedby the enactment of a joint resolution; and (2)compliance with the freedom-of-emigration requirements ("Jackson-Vanik amendment;" Section 402; 19 U.S.C.2432). These requirements can be fulfilled eitherby a presidential determination that the country in question places no obstacles to free emigration of its citizens, or,under specified conditions, by a presidentialwaiver of such full compliance. In accordance with this procedure, the President, on October 23, 1979, transmitted to Congress the trade agreement with China, signed on July 7, 1979, itsproclamation (Pres. Proc. 4697; 44 F.R. 61161), and the executive order (E.O. 12167; 44 F.R. 61167) granting toChina the Jackson-Vanik waiver (H.Doc.96-209). The agreement was approved by Congress on January 24, 1980 (H.Con.Res. 204, 96th Congress) andentered into force on February 1, 1980(together with the reciprocal grant of the MFN status, which it contains in addition to all other provisions requiredby Section 405(b) of the Trade Act of 1974; 19U.S.C. 2435(b)). The continuation in force of China's (or any other NME country's) MFN status is contingent on (1) triennial extensions of the underlying trade agreement and(2) continued compliance with the Jackson-Vanik amendment, the latter in the case of two NME countries,including China, by means of annual renewals of thewaiver authority and existing waivers. The agreement, concluded for a 3-year initial term, itself provides for automatic 3-year extensions, but is subject to termination by either party upon notice at least30 days before the expiration of any 3-year term. The continuation in force of the agreement is also subject to therequirement in Section 405(b)(1)(B) of the TradeAct of 1974 (19 U.S.C. 2435(b)(1)(B)), which applies to any trade agreement concluded under Title IV with anNME. Under that provision, the agreement isrenewed triennially if a satisfactory balance of concessions has been maintained during the life of the agreement andthe President determines "that actual andforeseeable reductions in United States tariff and nontariff barriers ... resulting from multilateral negotiations [whichbenefit China unilaterally because of its MFNstatus] are satisfactorily reciprocated by [China]." Such determination has thus far been published six times, mostrecently as Presidential Determination No.98-14 of January 30, 1998 (63 F.R. 5857), extending the agreement through January 31, 2001. (3) To remain in force, the Jackson-Vanik overall waiver authority as well as the specific China waiver (and China's most-favored-nation tariff status, which iscontingent on it) at present must be renewed annually. The renewal procedure entails (1) a President'srecommendation, which must be made by June 3 of everyyear, that the existing waiver authority and individual waivers be extended for another 12-month period (throughJuly 2 of the following year). Such extension is(2) automatic upon the President's recommendation unless it is disapproved by the enactment of a joint resolution(before 1990, adoption of a one-houseresolution). The language of the disapproval resolution is prescribed by law, and a specific fast-track procedure is provided for its consideration. In its basic legislative steps,the resolution must be reported within 30 calendar days (or else the committee considering it may be discharged),may be amended only with respect to thecountry (or countries) to which it applies, and the debate on it is limited in either chamber to 20 hours, dividedequally between those favoring it and thoseopposing it. The resolution must be approved by August 31. A presidential veto of the resolution must beoverridden by the August 31 deadline or within 15 daysof session after Congress has received the veto message, whichever is later. (4) If the resolution is enacted, the waiver and the MFN status cease to beeffective onthe 61st day after its enactment. Particularly in recent years, congressional opposition to the continuation in force of China's MFN status has increased on various grounds, mostly unrelated to thefreedom-of-emigration considerations. Despite this opposition, legislative action to disapprove its annual extensionshas, thus far, been consistently unsuccessfuland China's waiver and MFN status have remained in force. Moreover, the controversy in Congress has recentlyundergone a decided shift of its focus from theissue of whether to continue in force China's MFN status under the provisions of Title IV to the opposite one ofgranting such status to China unconditionally andpermanently. In a related side issue, the opposition to the application of MFN treatment to imports from China among the public at large has been in some part caused by anobvious misunderstanding of the term "most-favored-nation treatment" itself, taking it in its literal meaning.Congress, primarily prompted by thismisunderstanding with respect to China, consequently, enacted legislation (Section 5003 of the Internal RevenueRestructuring and Reform Act of 1998 ( P.L.105-206 )) replacing the misleading term in all seven instances of the then existing and in any future statutes withthe term "normal trade relations" (NTR) oranother appropriate term. (5) As long as China remains subject to the Title IV regime (see footnote 2), MFN status could be withdrawn fromChina, either permanently or temporarily, in one ofseveral ways: (1) by direct legislation enacted through regular legislative process (6) ; (2) by using the specific means provided in the Trade Act of 1974 for denyingMFN tariff status to a NME country that had it restored under that law, i.e., by the specific fast-track enactment ofa joint resolution disapproving the mid-yearannual renewal of the Jackson-Vanik waiver authority with respect to China, if such renewal is recommended bythe President; (3) by the President's failure torecommend such renewal with respect to China in the first place, for noncompliance with the Jackson-Vanikrequirements; or (4) by direct action by the Presidentsuspending or withdrawing China's MFN status. China also could lose its MFN status if the agreement is terminated,upon notice, at the end of a term, or,presumably, if the 3-year extension of the U.S.-China trade agreement in force does not take place because thePresident declines or omits to make the requireddetermination. (7) In past years, Congress has repeatedly and consistently attempted to terminate or restrict China's MFN status by means of resolutions disapproving the annualextension of China's waiver or by specific legislation, or subject its continuation in force to additional statutoryconditions, primarily in the area of human rights. None of these measures has become law, although two of them (one in either session of the 102nd Congress), settingadditional conditions for the annualextensions of MFN status, came close to being enacted: passed by both houses, they were vetoed by the Presidentand the veto was upheld by the Senate. A special situation arose in mid-1993, when the President extended China's waiver for another year, but at the same time in Executive Order 12850 also setspecific additional conditions for the mid-1994 extension of China's waiver and MFN tariff status.