Too Late Shmart

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.

3 comments… add one
  • Guarneri

    I wonder how many agreements really get honored, whether this one, or, say, Bill Clinton’s 1994 admonition that a package of goodies for NKorea will induce them to “dismantle” their nuclear weapons program. “A good deal for America.” Ahem. And can anyone say “Iran.”

    Add in one sided agreements like Paris Accords and we certainly seem to be sloppy. You can afford to be sloppy when safety and economic prosperity seem assured. (Well, at least women and children….) When things get tighter, not so much.

  • I have a drastically different view of treaties and other international accords than American politicians and diplomats appear to. I believe that we should enter into relatively few such agreements and when we do should conform rigorously to their terms.

    Unlike President Trump, I also don’t believe in threats. If we’re going to attack North Korea, we should attack North Korea. We shouldn’t threaten them.

    When casual views of international commitments are paired with casual threats, it conveys mixed messages.

  • Guarneri

    I certainly agree with the sentiment in your first paragraph. For the most part legacy building seems more important than efficacy to high level politicians, in particular presidents.

    I’m less concerned about “threats” from Trump, for the same reason. (He certainly didn’t mean we are going to rain down nukes on NK.) I think he was mostly intending to put himself out there and send a message to NK, and China, that he was serious, unlike his posturing predecessor. Wars aren’t word driven, they are calculus driven. Sadaam thought he could get away with annexing Kuwait, he found out differently. In addition to Clinton’s blunder, the world knew GWB was preoccupied with his blunder in Iraq, and Obama would mostly just hold his pud in his hand.

    In any event, I see NK’s words and actions as a side show. Its the pressure we bring to China and how they respond that bears watching. If we can’t get China to engage and handle this with their client we risk a real shit show.

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