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China and the WTO

© Jason Gottlieb

The historic agreement brokered on November 15 between the United States and China is not the last step in accession to the World Trade Organization. Many difficult steps still remain, not least convincing America's prickly Congress to agree to the President's terms. And accession will certainly not come in time for the Seattle round of WTO talks, not may it come before 2001. But come it will, and when it does, it will mark the last step toward the end of the insularity of the Middle Kingdom.

The thirteen year old talks almost ended in failure, again. U.S. Trade Representative Charlene Barshevsky and Chinese Trade Minister Shi Guangsheng were about to walk away from the table before Chinese Premier Zhu Rongji intervened to press for Chinese accession. In figuring out exactly what happened to push the seemingly endless talks to a fruitful end, four questions need to be answered. What did China get? What did it give up? What did the United States and the WTO get? And what did they give up for it?

First, China's gains. Its first major victory is more important in the long run: it gains a seat at the table of important trading nations, with the ability to talk openly at that table. Currently, China has to suffer the rigmarole of convincing countries even to sit down to discuss trade, including pressing the point yet again that its human rights situation is not important enough to affect trade. China is quite tired of this discussion, and so WTO membership isn't just a face-gaining measure that allows it to brag of membership, although that is a consideration, but it raises the question, after all, to whom is China bragging. Membership allows China to skip the first step in negotiations that potential trading partners inevitably use to extract further concessions, regardless of the depth of that countries' actual sympathy for those afflicted by China's government.

Second, China gains tremendous access to foreign markets for its exports. Given its incredibly deep pool of cheap labor and fairly strong understanding of mass manufacturing, "the country is unbeatable in low-margin, quick-to-market manufactures," as the November 20 Economist points out. China has done fairly well without WTO membership; but it will get easier from here. Especially if the proposed next round of multilateral trade talks (the "Millennium Round," as President Clinton calls it) addressed protectionism in textiles as is widely expected, China could stand to gain tremendously through the presumably lowered tariffs that result.

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