After 13 years of negotiation, the US and China have agreed to terms on China's entry into the World Trade Organization. Assuming that a similar deal soon will be struck with Canada and the European Union, China's WTO membership is inevitable and imminent. Congressional approval is not required for China's membership. In fact, Congress has no legal mechanism to force the Administration to use its influence one way or the other regarding WTO membership.
Congress does have a role, however, in determining the degree to which the United States will benefit from the fruits of these hard fought negotiations by voting early next year on whether to extend on a permanent basis China's normal trade status -- a fundamental benefit extended to all WTO members. A vote to deny permanent extension of normal trade relations to China will not block China's WTO membership, but would deny the United States (and no one else) all of the market access concessions offered by China in the accession process.
Debate is already underway over how beneficial or harmful this trade pact will be for US interests and whether it will lead to positive change in China. Policymakers should be very cautious when evaluating the extremely polarized views that now characterize nearly every China or trade policy debate. One side argues that American jobs will be sacrificed to Dickensian Chinese factories and a modernizing hostile military, while the other heralds the advent of a new liberal era in China fostered by its integration into a rules-based international institution.
In reality, China's membership in the WTO is not likely in the near future to dramatically increase American investment and participation in China's market or ignite a passion for liberal democracy within China. But neither will China's WTO membership hinder the ability of the United States to protect its national security interests and promote freedom in China.
China's WTO agreement is a step in the right direction, despite the fact that it will take several years before market opening pledges are realized. The US-China WTO agreement advances American commercial interests by:
Expanding China's private sector: Lowering barriers to foreign participation in China's economy will necessarily help expand China's fledgling private sector. Private sector expansion of course does more than increase the potential consumer base for American exports. It also limits the Chinese government's ability to micromanage people's lives and liberates Chinese citizens from the world's largest welfare state.
Implementing the Trade Related Investment Measures (TRIMs) Agreement: Full implementation of the TRIMs Agreement will protect American firms against forced technology transfer, local content, and foreign exchange balancing investment requirements. Especially in the area of dual-use technology, this agreement should help improve protection of sensitive military technology and valuable intellectual property.
Moderating China's external behavior. The WTO's multilateral mission to reduce import barriers will limit China's ability to continue past practices of playing one trading partner off against the other (ie, the US vs Europe or Japan) and raising mercantilist barriers to foreign competition. Making China a stakeholder in a multilateral regime also increases the likelihood that it will abide by the regime's rules and obligations.
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