Excerpts from President Bill Clinton's remarks to the Pacific Basin Economic Council on May 20, 1996 in Washington, D.C. announcing the extension of MFN to China for 1996

"Finally, let me turn to our relations with China, for they will shape all of our futures profoundly. How China defines itself and its greatness as a nation in the future, and how our relationship with China evolves will have as great an impact on the lives of our own people and, indeed, on global peace and security, as that of any other relationship we have.

"China is Asia's only declared nuclear weapons state, with the world's largest standing army. In less than two decades it may well be the world's largest economy. Its economic growth is bringing broader changes as steps toward freer enterprise fuel the hunger for a more free society.

"But the evolution underway in China is far from clear-cut or complete. It is deep and profound, and today, China stands at a critical crossroads. Will it choose the course of openness and integration, or veer toward isolation and nationalism? Will it be a force for stability, or a force for disruption in the world? Our interests are directly at stake in promoting a secure, stable, open and prosperous China -- a China that embraces international non-proliferation and trade rules, coo-perates in regional and global security initiatives, and evolves toward greater respect for the basic rights of its own citizens.

"Our engagement policy means using the best tools we have -- incentives and disincentives alike -- to advance core American interests. Engagement does not mean closing our eyes to the policies in China we oppose. We have serious and continuing concerns in areas like human rights, non-proliferation and trade. When we disagree with China, we will continue to defend our interests and to assert our values. But by engaging China, we have achieved important benefits for our people and the rest of the world.

"We worked closely with China to extend the nuclear non-proliferation treaty and to freeze North Korea's nuclear weapons program. We welcome China's constructive position regarding the proposed four-party talks for peace on the Korean Peninsula. We are working with China to conclude and to sign a comprehensive nuclear test ban treaty by September. And we are cooperating to combat threats like drug trafficking, alien smuggling and, increasingly, environmental decay.

"Last week we reached an important understanding with China on nuclear exports. For the first time, China explicitly and publicly, committed not to provide assistance to unsafeguarded nuclear programs in any country. China also agreed to hold consultations on export control policies and practices. We continue to have concerns about China's nuclear exports. This agreement provides a framework to help deal with those concerns.

"Our economic engagement with China has also achieved real results. China's elimination of more than 1,000 quotas and licensing requirements had helped to fuel a rise of more than 200 percent in United States exports of telecommunications equipment since 1992. China has become our fastest growing export market, with exports up nearly 30 percent in 1995 alone.

"Much remains to be done. Our bilateral trade deficit with China is too high, and China's trade barriers must come down. But the best way to address our trade problems is to continue to work to open China's booming market by negotiating and enforcing good trade agreements. that is why we will use the full weight of our law to ensure that China meets its obligations to protect intellectual property. That is why we are insisting that China meet he same standard of openness applied to other countries seeking to enter the WTO -- no more, no less. And that is why I have decided to extend unconditional Most Favored Nation trade status to China.

"Revoking MFN and, in effect, severing our economic ties to China, would drive us back into a period of mutual isolation and recrimination that would harm America's interests, not advance them. Rather than strengthening China's respect for human rights, it would lessen our contact with the Chinese people. Rather than limiting the spread of weapons of mass destruction, it would limit the prospect for future cooperation in this area. Rather than bringing stability to the region, it would increase instability, as the leaders of Hong Kong, Taiwan and all of the nations of the region have stated repeatedly. Rather than bolstering our economic interests, it would cede one of the fastest-growing markets to our competitors.

"MFN renewal is not a referendum on all China's policies. It is a vote for America's interests. I will work with the Congress in the weeks ahead to secure MFN renewal and to continue To advance our goal of a secure, stable, open and prosperous China. This is a long-term endeavor, and we must be steady and firm.

"Where we differ with China -- and we will have our differences -- we will continue to defend our interests. We will keep faith with those who stand for greater freedom and pluralism in China, as we did last month in cosponsoring a U.N. resolution condemning China's human rights practices. We will actively enforce U.S. laws on unfair trade practices and nonproliferation.

We will stand firm for a peaceful resolution of the Taiwan issue within the context of the one china policy, which has benefited the United States, China and Taiwan for nearly two decades.

"But we cannot walk backward into the future. We must not seek to isolate ourselves from China. We will engage with China, without illusion, to advance our interests in amore peaceful and prosperous world."

Submitted by Bhuchung K. Tsering, ICT