In his Wall Street Journal column William Galston lurches uncontrollably into the point I made way back when before China’s admission to the World Trade Organization:
Some policies undertaken with the best of intentions don’t work out as expected. In March 2000, President Clinton (for whom I worked during his first term) said of China’s accession to the World Trade Organization: “Economically this agreement is the equivalent of a one-way street. . . . It requires China to open its markets . . . to both our products and services in unprecedented ways. All we do is to agree to maintain the present access which China enjoys.” The gains would be more than economic, he added: “By joining the WTO, China is not simply agreeing to import more of our products; it is agreeing to import one of democracy’s most cherished values—economic freedom.”
In his remarks later that year, when Congress effectively ratified China’s entrance into the WTO, President Clinton predicted that “10 years from now we will look back on this day and be glad we did this.” He was not alone; I could fill this column with optimistic predictions from senior officials of both political parties.
Ten years later, the U.S.-China Economic and Security Review Commission convened to examine the effects of this momentous agreement. In lengthy testimony, Robert Lighthizer, a Reagan administration trade official who now serves as President Trump’s U.S. trade representative, argued that this policy had failed in virtually every respect. Mr. Lighthizer attributed part of the blame to our underestimation of the extent and persistence of China’s mercantilist practices. But more fundamentally, he argued that the very structure of the WTO cannot accommodate countries that deploy large state sectors to advance their national interest at the expense of others.
China never lived up to the commitments it made on being admitted to the WTO, particularly in the area of banking. Its banking system is still opaque and mostly state-owned. And it’s no coincidence, as I have documented here, that the number of complaints about unfair trading practices lodged against China is disproportionately high, even taking the volume of China’s export trade into account.