The status of permanent normal trade relations (PNTR) is a legal designation in the United States for free trade with a foreign state. The designation was changed from most favored nation (MFN) to normal trade relations by Section 5003 of the Internal Revenue Service Restructuring and Reform Act of 1998. Permanent was added to normal trade relations some time later.
In international trade, MFN status (or treatment) is awarded by one country to another. It means that the receiving nation will be granted all trade advantages, such as low tariffs, that any other country also receives. Thus, a country with MFN status will not be discriminated against and will not be treated worse than any other country with MFN status.
Embargoes also apply to additional parties; see United States embargoes.
History
In 1948, the United States joined the General Agreement on Tariffs and Trade (GATT), the predecessor organization of the World Trade Organization. In accordance with GATT provisions the United States agreed to extend what was then called Most Favored-Nation status (MFN) to all GATT member countries. This status was also applied to some countries that were not GATT members. However, a member may opt out of its obligations by invoking the non-application provision (Article XIII of the WTO or Article XXXV of the GATT) if it determines it cannot extend GATT/WTO principles to newly acceding members for political reasons. During the Cold War, most Communist countries were denied MFN status if they did not meet certain conditions.
In December 1960, Poland was granted MFN status by President Eisenhower.
By Act of Congress, the United States granted permanent normal trade relations (PNTR) status to Czechoslovakia (later the Czech Republic and Slovakia), Hungary, and Romania after the fall of the communist governments in those countries. The United States granted PNTR to Albania, Bulgaria, Cambodia, Estonia, Latvia, and Lithuania before their countries acceded to the WTO. The same report said that in accordance with the Jackson–Vanik amendment, Belarus and Turkmenistan had been temporarily afforded NTR treatment by presidential waiver and that Azerbaijan, Kazakhstan, Tajikistan, and Uzbekistan were temporarily afforded NTR treatment by a presidential compliance determination. Vietnam had a temporary free trade status on a year-to-year waiver basis as a prerequisite for accession to the WTO since 2001. This happened as part of a coordinated action of the European Union and G7 countries to collectively revoke any MFN status from Russia in response to the 2022 Russian invasion of Ukraine.
U.S. and China
The Trade Act of 1974 required the trade status of PRC be reviewed annually. On May 15, 2000, Representative William Reynolds Archer, a Republican from Texas, introduced H.R. 4444 to make the trade status of China permanent, saying that the bill was a top priority for the rest of the year and it was vital to the U.S. agriculture market to have access to a market that accounts for one-fifth of the world's population
Congress added some important points into the legislation to make sure that when the PRC entered the World Trade Organization it could be reprimanded for crimes against the workers of the country, and certain markets would be mutually exclusive between the two countries. The People's Republic of China would need to abide by human rights for their workers as stated in the internationally recognized worker rights. To monitor the workers' rights Congress established the Congressional–Executive Commission on the People's Republic of China. The commission was to monitor acts of China which reflect compliance or violation, compile lists of persons believed to be imprisoned, detained, or tortured due to pursuit of their human rights, monitor the development of the rule of law in China, and encourage the development of programs and activities of the U.S. government and private organizations with a goal of increasing the interchange of people and ideas. The committee formed, along with the Office of the United States Trade Representative (USTR), and the International Trade Commission (ITC) was to give an annual report to the President. The most productive and trouble-free way to keep the economy growing strong was to outsource and trade more with China. China was to help provide America with superior markets in industry, agriculture, and technology. Congress as whole thought that without these things America would fall behind economically and technologically to some enemies of America. If China did not get support from America they could go to another country that would not be so strict on their treatment of people, and they could use that country to gain access to the WTO. The down side to this was that no markets could provide and receive China's goods like the United States markets could. Aside from people's rights activists many business men believed in the bill to help flourish the different areas of industry. The legislation was passed by the House of Representatives on May 24, 2000, and by the Senate on September 19, 2000. Members of the senate wanted to add in amendments on treating their workers even better than stated in previous legislation, and to make the punishment for breaking the rules greater. Congress was up for re-election that year so due to time constraints all twenty four amendments were rejected. The President signed on Oct 10, 2000 and that day it became . Since the passing of the bill there have been three attempts to repeal the PNTR with China. The strongest attempt was in 2005 when House Representative Bernie Sanders and 61 co-sponsors introduced a legislation that would repeal the Permanent Normal Trade Relations with China. Rep. Sanders said to the House, "anyone who takes an objective look at our trade policy with China must conclude that is an absolute failure and needs to be fundamentally overhauled". The Representative cited statistics, including the increase in the trade deficit and the number of American jobs lost to overseas competitors. One point that Sanders did not make due to time constraints and the legislation being passed so quickly was that nothing in the way China treats its workers has changed.
In November 2024, John Moolenaar, chairman of the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, introduced legislation to revoke PNTR status for the People's Republic of China. The same month, the United States–China Economic and Security Review Commission unanimously recommended revocation of China's PNTR status.
See also
- US labor law
- Trade pact