HIGH-TECH JOBS FOR SALE

By LEWIS M. SIMONS/SEATTLE

Cobbling shoes is an honorable occupation, but it's not rocket science. It requires only limited skill and technology, and the country with the lowest wage tends to get the business. That's why China sells so many sneakers to Americans, including David Clay, 42, a toolmaker who helps build humpbacked Boeing 747 aircraft in a giant hangar just north of Seattle.

What Clay and his co-workers do by contrast is rocket science. And even though seasoned machinists like Clay earn more in an hour (about $50, including fringe benefits) than a comparable Chinese worker is paid in a month, the American worker still is more productive.

That ought to mean that, under various trade treaties, China buys U.S.-built aircraft the way Americans buy the shoes, toys, clothes and other products--$45 billion worth last year--that China can deliver at better value. But that's not happening. Instead, China refuses to buy planes, as well as cars, cellphones and other U.S. products unless the American manufacturers agree to establish more factories there, transferring precious technology and skills.

And jobs. According to the AFL-CIO, more than 500,000 U.S. industrial workers last year had their jobs exported to China. A study by the liberal Economic Policy Institute in Washington predicts that over the next four years, 250,000 more jobs in the aerospace industry alone will be lost to China. That's why Clay and others wonder if their futures will be sacrificed so that Boeing and companies like it, lured by the potential of 1.2 billion people, can boost their share of the China market. Laments Clay: "Companies in this country are sending manufacturing of just about everything to China." Clay's friend Ray Baumgardner, 36, his red-and-green golf shirt emblazoned "Fighting Machinists," says "Boeing isn't in the business of just selling airplanes anymore. Now they're selling jobs."

Mere labor union boilerplate doctrine? Not necessarily. Critics like California Democratic Congresswoman Nancy Pelosi fear that American companies, in their quest for sales are handing China "our technology, our production and our genius, the very blueprints of our economy." President Clinton and Congress, with support from Republican presidential candidate Bob Dole, are renewing China's most-favored-nation trade status. Yet, during his 1992 campaign Clinton pledged, "If other nations refuse to play by our trade rules, we'll play by theirs"--implying that he would retaliate against protectionism. Pressed to explain the gap between his rhetoric and his record on China trade, Clinton told TIME, "Well, we could hurt them pretty bad, since we take about a third of China's exports. But I'm advised that wouldn't have the desired effect of opening their market, at least in the short term."

Boeing's top official for international development, Lawrence Clarkson, insists the company would have fewer jobs for Americans if it did not abide by China's demands: for example, in shifting half of the tail-section production for its 737s from Wichita, Kansas, to Xian. "If we hadn't moved work to China," Clarkson says, "we wouldn't have got orders." China is expected to spend $185 billion on commercial aircraft over the next 20 years.

Even this tradeoff may prove unyielding. Last week the state-owned Aviation Industry of China announced it was granting a contract worth an estimated $2 billion to a Europe-Singapore consortium to build 100-seat jetliners. And in April, during a visit to Paris, Prime Minister Li Peng also snubbed Boeing by approving a deal to buy 33 French-built Airbus planes. It was a not so subtle message to the U.S. to back off its criticism of China's trade and human-rights policies.

China has been adamant in swapping jobs for market access, even though this violates a 1992 trade agreement. Since 1994, for instance, American-built cars have faced illegal 100% duties in China, which caused a reduction in sales from 40,000 in 1993 to 4,700 last year. In response, General Motors recently entered talks with Shanghai Automotive Industry Corp. to build more than 100,000 mid-size cars a year, employing Chinese workers. Other U.S. employers such as electronic giant Motorola and computer-chip manufacturer Intel have also felt compelled to shift American jobs to less productive employees in China in order to gain a relaxation of the country's trade barriers.

With results like this, and the likelihood that its trade surplus with the U.S. will swell to $40 billion this year, the Chinese have little incentive to change their stance. American policymakers face strong pressure from U.S. firms who fear that, unless the U.S. tolerates China's cheating on trade, they will be locked out of the world's fastest-growing market. Boeing will still benefit as long as it has orders for planes--even if they are built by Chinese workers. Whether Clinton and the Congress intend it or not, the practical effect of their trade policy toward China, at least for now, is to defend the interests of some American shareholders over the interests of some American workers.