Trade sanctions are a blunt instrument; they often fail to achieve their objectives and end up harming the very people they are intended to help.
In the case of China, placing prohibitively high tariffs on Chinese products entering the United States in order to protest Beijing’s dismal human rights record would cost U.S. consumers billions of dollars.
It would also slow the growth of China’s nonstate sector, which has allowed millions of Chinese to move to more productive jobs outside the reach of the Communist Party. Isolating China would reverse the progress that has been made since economic reform began in 1978 and would create political and social instability. A better approach is to continue to open China to the outside world and, at the same time, use non‐trade sanctions and diplomacy to advance human rights. When China violates trade agreements or intellectual property rights, however, it should be held accountable, and carefully targeted trade sanctions may be warranted.
The piracy of intellectual property is a serious problem for Western firms. China has been a major offender of copyright laws and needs to comply with the rule of law. China’s membership in the World Trade Organization should be conditioned on Beijing’s adherence to international law.
The problem is that most less‐developed countries, and even some developed countries, violate intellectual property rights. Using economic sanctions to punish pirates sounds good in theory, but in practice sanctions are seldom effective.
The real solution to piracy may have to wait for technological changes that make it very costly to steal intellectual property. And it may have to wait for the rule of law to evolve in China and other less‐developed countries.
As China develops its own intellectual property, there will be a demand for new laws to protect property rights. The uncertainty created by China’s failure to protect these rights can only harm China in the long run. Investors will not enter a market if they cannot reap most of the benefits of their investments.
Fan Gang, an economist at the Chinese Academy of Social Sciences, predicts that things will change in China as people discover that clearly defined and enforced property rights are to their advantage.
People, he said, “are bound to find that all this cheating and protecting yourself from being cheated consume too much time and energy, and that the best way to do business is playing by a set of mutually respected rules. New rules and laws will be passed, and people will be ready to abide by them.”
The United States has considerable leverage in dealing with China and should not let it dictate U.S. foreign policy or allow human rights to be a nonissue.
The United States is China’s largest export market, and U.S. investors rank third in terms of foreign direct investment in China. Clearly, China would be harmed by any significant cutback in trade with and investment from the United States.
The problem is that any sizable cutback would also harm the United States and the world economy.
To avoid the high costs (and low probable benefits) that stem from the use of trade sanctions, Congress should consider using non‐trade sanctions such as cutting off the flow of taxpayer‐financed aid to China — including aid from the International Monetary Fund, the World Bank, and the Asian Development Bank.
Another possible non‐trade sanction is making public the names of companies known to be using prison labor or companies run by the People’s Liberation Army so that U.S. consumers can boycott their products.
The China Sanctions and Human Rights Advancement Act, S. 810, introduced in the 105th Congress by Sen. Spencer Abraham, R‐Mich., lists those and other measures designed to move China toward a free society.
The 106th Congress should return to that and other legislation designed to change China’s stand on human rights and to liberate the Chinese people from religious and political prosecution.
(The passage of H.R. 2647, one of four “Freedom of China” bills enacted by the 105th Congress as part of the 1999 Defense Authorization Act, is a step in the right direction. That bill requires publication of the names of PLA‐run companies operating in the United States.)
Congress should recognize that advancing economic freedom in China has had positive effects on the growth of China’s civil society and on personal freedom.
According to Chinese dissident Wang Dan, “Economic change does influence political change. China’s economic development will be good for the West as well as for the Chinese people.”