ANALYSIS – Communist China’s entry into the World Trade Organization (WTO) under President Bill Clinton on December 11, 2001, was key to transforming the backwater country into an economic powerhouse expected to displace the U.S. as the world’s largest economy sometime between 2028 and 2030. While Clinton aggressively pushed this and other pro-China policies, there was GOP support for these horribly ill-conceived moves as well.
As Phelim Kine at POLITICO’s China Watcher Newsletter notes:
U.S. policymakers in the 1990s pitched congressional support for normalizing bilateral trade ties with China to enable its WTO accession as a market-opening bonanza that would supercharge U.S. economic growth. They also made implicit (and often explicit) assumptions that ushering China into the global trading system would empower reformers committed to market economics and fundamental changes in China’s authoritarian one-party state.
But China upended those expectations by combining relentless exploitation of WTO loopholes with a willful disregard of WTO rules that helped fuel a meteoric economic expansion. In the U.S., this has resulted in economic dislocation, a widening trade deficit and a deep bipartisan belief that China’s rise has come at the price of American decline.
“China brought in technology and intellectual property from the West sometimes legally, sometimes not legally, then used their very large Chinese market to perfect products and to become very efficient at making it and to grow very large, very capable companies often state-owned, often on the backs of subsidies,” said JENNIFER HILLMAN, professor of practice at the Georgetown Law Center and former commissioner at the United States International Trade Commission. “They became hyper competitive in a number of sectors, arguably on the backs of WTO illegal behavior, but it was not often challenged because subsidy disciplines within the WTO agreement are just not effective.”
That strategy has paid off. When China entered the WTO it had the world’s eighth largest economy and an annual gross domestic product of roughly $1.16 trillion, and the U.S. trade deficit with China stood at $83 billion. Last year, the value of China’s GDP hit $15.4 trillion and, at the end of September, the U.S. trade deficit with China stood at $255.4 billion.
China flexed its economic muscles and used the WTO to its advantage, engaging in currency manipulation and using state subsidies to bolster its manufacturing sector, say critics. That’s given Beijing an unfair competitive edge, and has harmed U.S. industry. An analysis by the nonprofit Economic Policy Institute in January 2020 estimated that the U.S. trade deficit with China resulted in the loss of 3.7 million jobs from 2001-2018.
These unfair and illegal Chinese trading practices ongoing since 2001, and the increasing realization of China’s growing global threat since President Trump began his pushback against the Communist Chinese Party (CCP) during his recent term, are prompting calls for the U.S. to demand real accountability for China within the WTO system or to simply pursue fairer trade terms outside of it.
“We’re now at a point where Beijing is clearly in broad violation of its 2001 accession agreement, so the three options Beijing should be given are to renegotiate its [WTO membership] terms, exit as an adult or pledge it’s going to do reforms,” said Harry Broadman, a managing director at Berkeley Research Group and former assistant trade representative with the United States Trade Representative (USTR).
Since critics see the WTO as inherently incapable of dealing with China’s systemic abuses, many are urging Biden-Harris to ‘reset’ its China trade relationship through membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The CPTPP is the successor to the flawed Obama-era Trans-Pacific Partnership which Trump discarded in 2017. It includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Currently both China and the United Kingdom are seeking to join as well.
Whether Biden listens and acts, or ignores and balks, is the big question. ADN