Long Beach port looks to lose big if China trading status is not renewed.

As President Bill Clinton ponders whether to extend China's Most Favored Nation status, a Port of Long Beach official says port activity could drop by up to 15 percent if that status is revoked.

The United States extends MFN status to 160 countries and charges low duties on goods imported from those countries. These duties fall in about the 5-percent range, in contrast to non-MFN rates of 35 to 60 percent. In turn, those countries charge the U.S. their lowest duties.

The Tiananmen Square incident in 1989 and subsequent developments placed China's MFN status in jeopardy. President Clinton in May 1993 extended China's MFN status for another year, but put conditions upon its subsequent renewal. These included continued freedom of emigration, release of pro-democracy demonstrators and humane treatment of prisoners, among other things.

Earlier this year, the Clinton administration made it clear that, as of then, there had not been sufficient progress to warrant extension of China's MFN status, which ends July 3. Clinton has until June 3 to announce whether he plans to extend it.

At the Port of Long Beach, the total volume of cargo passing through could drop by up to 15 percent if China's MFN status isn't renewed, said Don Wylie, director of trade and maritime services for the port.

"Almost every steamship carrier does business in China," he said.

Activity with China comes mostly in the form of imports of toys, textiles and other labor-intensive manufactured goods, Wylie said.

But he said he believes the status will be renewed. The Clinton administration is seeking a compromise that would send appropriate signals to China regarding its human rights situation but wouldn't hurt the U.S. economy, he said.

Brenda Stringfield, president of the Los Angeles Custom & Freight Brokers Association, said her members are also hopeful China's MFN will be renewed. "We really hope human rights issues can be discussed outside the realm of trade discussions," she said.

China is a very rapidly developing economy, and the local trade community expects to see a tremendous increase in the amount of imports and exports there in the future, Stringfield said.

California exported $70 billion worth of goods to China during 1993, compared with $69 billion in 1992, a 2-percent increase, according to statistics reported by the California Council for International Trade.

Foreign trade attorney Michael Doram said he believes China's MFN status will be renewed with certain conditions attached to it, although he did not know what those conditions would be.

Representatives from 450 California companies signed a letter sent to President Clinton urging him to extend MFN status for China without conditions and unlink MFN from human rights issues.

Signing the letter dated April 26 were officials from L.A. County-based companies such as Atlantic Richfield Co., L.A. Gear, Mattel Inc., Southern California Edison Co. and Unocal Corp.

"While our business covers all sectors of the economy -- ranging from agriculture and high-tech manufacturing to light industry, financial and entertainment services, and toy, footwear and apparel retailing -- we are united in our conviction that continued MFN tariff treatment for China is crucial to California's future," the letter stated.

"The loss of MFN would be an additional devastating blow to the California economy, depriving our companies and workers of a critical overseas market," the letter further said.

El Segundo-based Mattel operates two manufacturing plants in China. If that nation's MFN status were not renewed, "it would be disruptive, but we have contingency plans that would allow us to recover," said Mattel spokesman Glenn Bozarth.

Mattel would move those operations to plants elsewhere or have vendors do some manufacturing. Mattel has 12 manufacturing plants worldwide, Bozarth said.

Downtown Los Angeles-based Arco is participating in a $1.2-billion joint venture that involves drilling for natural gas in the South China Sea and constructing a pipeline from there to Hong Kong so the gas can be transported, said Kenneth Dickerson, senior vice president of external affairs for Arco. Arco has hooked up with the China National Offshore Oil Corp. and a Kuwaiti oil company for the project.

Even if China's MFN status is not renewed, Arco's investment should not be affected, Dickerson said.

This project is not part of a trade agreement. It's a long-term project that cannot be turned on and off, and it is in everybody's best interest, including the Chinese, to complete it, said Arco spokesman Al Greenstein.