At long last, Chinese and US negotiators have apparently struck a deal that could lead to China's membership in the WTO. Although China still needs to reach separate access agreements with Europe and its other major trading partners, the US-China pact removes a major stumbling block to China's WTO accession.
There is now a real possibility that China could join in time to participate in the next round of trade talks, expected to be launched in Seattle later this month.
The agreement is a welcome development, but the obvious question is: what took so long?
The recent tension over China's WTO status illustrates the seemingly reckless nature of Clintonian trade policy.
Much of the rocky relations between the US and China could have been avoided if the administration had signed an agreement during Chinese Premier Zhu Rongji's (
At that time, Beijing offered a credible trade-liberalization package that was unprecedented in scope.
The historic chance to subject China to the discipline of the WTO was nearly squandered because the United States -- not China -- caved in to domestic special interests.
To benefit a few politically influential groups -- most notably labor unions and textile and steel manufacturers -- the administration nearly lost the opportunity to open the Chinese market, and eventually succeeded only in striking a bargain that is worse for most Americans and Chinese than the one offered in April.
The administration has consistently demanded that China accept conditions that don't apply to other nations.
On textiles, Washington got Beijing to agree to US quotas through 2009 -- five years longer than is legal for existing WTO members.
To appease steel companies, the US insisted that China endure a 15-year phaseout of its non-market economy status for the purposes of calculating anti-dumping penalties (Australia and the European Union have already upgraded China to market economy status).
The process of calculating anti-dumping penalties against non-market economy firms has been one of the most abuse prone of the generally flawed American anti-dumping regime.
On top of extended NME status, a special safeguard provision against import surges specifically from China was tacked on.
None those special conditions can be justified economically.
China has a legitimate comparative advantage in the production of textiles and some kinds of steel and should be allowed to sell those products under the same rules that govern other nations.
Moreover, US trade law already provides overly generous protection to US producers from so-called dumping and import surges. Subjecting China to extended textile quotas, increased anti-dumping penalties, and additional anti-surge provisions harms not only Chinese producers, but US consumers and import-using industries.
As for market-opening, China has apparently pledged slightly better access than under its April commitments.
Unfortunately, that positive reality is tarred by the US success in keeping its own market more closed.
On balance, Beijing was right to agree to a new deal, but it was ironic that China's communists found themselves pressuring the US to follow the freer-trade path, while administration officials clung doggedly to self-defeating protectionist relics.
On the positive side, admitting China to the WTO should also open the door for Taiwan.
RSS