Clinton’s China Blunder


The U.S. bombs that hit the Chinese embassy in Belgrade may have destroyed far more than many Americans realize. In addition to the lives tragically lost, gone may be any hope of reaching an immediate agreement that would lead to China's entry into the World Trade Organization.

Fortunately, the prognosis is not entirely bleak. Despite an initiallyharsh reaction, Chinese officials are now more circumspect. Entering theWTO"is not only in China's interest, but also in the interest of membercountries," said Foreign Ministry spokesman Zhu Bangzao a few days afterthebombing. President Clinton phoned Premier Zhu Rongji shortly thereafter topersonally express his regret and to urge that both countries continue towork toward an agreement that would lead to China's membership in the WTO.

Regardless of the ultimate outcome, the tension over China's WTO statushasbeen senseless. Indeed, it could have been avoided entirely if the Clintonadministration had signed an agreement during Premier Zhu's visit toWashington last month. At that time, China offered a trade-liberalizationpackage that was unprecedented in scope. The historic chance to subjectChina to the discipline of the WTO was squandered because the UnitedStates -- not China -- caved in to domestic special interests. To benefit afew politically influential groups -- most notably labor unions and textileand steel manufacturers -- the administration rejected a deal that wouldhave benefited the vast majority of Americans as well as Chinese.

The administration wants China to accept conditions on WTO membership thatdon't apply to other nations. On textiles, Washington says Beijing mustagree to be bound by U.S. quotas until 2010 -- five years longer than islegal for existing WTO members. To appease steel companies, the UnitedStates is asking that China remain a "non-market economy" for the purposesof calculating anti-dumping penalties (Australia and the European Unionhavealready upgraded China to market economy status). The process ofcalculatinganti-dumping penalties against non-market economy firms has been, as tradejournalist Greg Rushford recently observed, "one of the most abuse prone ofthe American anti-dumping regime."

China has understandably balked at those special conditions, and it's notdifficult to see why. First, they have no economic justification. Chinahasa legitimate comparative advantage in the production of textiles and somekinds of steel and should be allowed to sell those products under the samerules that govern other nations. Second, it will be very difficult forreform-minded Chinese leaders to sell a deal that opens the home market toforeign products but offers little new market access abroad. That, inessence, is what the Clinton administration is asking China to accept.

If the administration were serious about promoting trade, it could use thebombing as an excuse to drop its own protectionist demands. That would beanironic twist: the communists in Beijing pressuring the United States tofollow the free-trade path. But doing so would be in America's bestinterest. The United States has everything to gain -- an open market inChina -- and nothing to lose except a few self-defeating protectionistrelics.

But even if the administration charts a sensible course, Congress couldstill wreck the deal. Specifically, anger at alleged Chinese spying andillegal campaign contributions could prompt some members to reject a WTOaccession agreement out of hand. That would be a mistake. Foreign and tradepolicies shouldn't work against each other -- it is vitally important thatthe two be kept separate.

Critics charge that allowing China to enter the WTO would be to reward itfor bad behavior. But WTO membership is not a reward; it is a commitment toinstitute unprecedented reform and economic openness. To block China fromtaking such positive steps because it has made mistakes in other areas onlyensures that China's policies will remain uniformly unsound.

Besides, as despicable as China's behavior has been, the real blame mustfall on the administration. After all, can we reasonably expect China torefrain from trying to influence U.S. elections if such influence is forsale? Washington routinely throws dollars at other countries for exactlythesame purpose. Similarly, that China worked to obtain U.S. nuclear secretsisnot a shocking revelation. To the contrary, espionage between great powershas always been the norm. Much more troubling is that the administrationfailed to plug security leaks after they were discovered.

Regardless of who is to blame, it is now the responsibility of theadministration and Congress to look beyond short-term domestic politics andwork together to further the national interest. The United States shouldendthe wasteful annual debate over China's trade status and instead agree toadmit China into the WTO as soon as possible.