WTO Deal: Wisdom or Folly?
The deal the Clinton administration has just worked out for China’s admission to the World Trade Organization could well be called, symbolically, the deal from Boeing. The question remains whether it should be called a deal of wisdom or of folly.
Many other major U.S. companies worked long and hard for the WTO agreement, but Boeing--for whom China is a major customer--was among the leaders. For the past year, its hand has been visible over and over again in the behind-the-scenes efforts to reach a deal.
Boeing’s Washington, D.C., office helped organize the intensive lobbying campaign to persuade the administration to push for China’s WTO membership and to make sure Congress didn’t stand in the way. When U.S. Trade Representative Charlene Barshefsky needed a new spokesman as the deal neared completion, she got one from Boeing.
And more: When former U.S. Trade Representative Mickey Kantor left the administration to join a Washington law firm in 1997, he took the trade office’s top two China negotiators with him. Boeing became a big client as they continued to visit China, see Chinese trade officials and work toward a deal.
All these efforts would be beneficial, if you believe--as, indeed, many American business leaders and Clinton administration officials do--that what’s good for companies like Boeing is good for America and for the rest of the world.
But is it?
In the wake of the deal concluded Monday, extravagant claims are being made about the sweeping impact China’s entry into the WTO will have on the future of the world’s most populous country. The agreement, it is said, will extend beyond economics to politics; it will help establish the rule of law in China, create pressures for Chinese democracy and, at the same time, strengthen the world’s trading system.
The WTO agreement, Barshefsky asserted, “could have strong potential spillover effects. . . . It could be the first step in what could be a more regularized and productive way of dealing with China.”
It would indeed be nice if such predictions turned out to be true. But there are strong reasons for skepticism.
First, the WTO deal is being hailed as a big step forward for the rule of law in China. And yet it must be asked: What kind of rule of law and for whom?
It will be hard enough for China to establish the sort of legal protections foreign businesses and investors are guaranteed under the rules of the World Trade Organization. There is not the slightest reason to believe these will be extended outside the realm of business.
In fact, if China lives up to the WTO requirements, then it may eventually become, in political terms, a gigantic new version of Singapore. The court system may be used both to protect foreign investors and to repress political dissent or organized opposition.
Foreign businesses love Singapore. They are treated decently by its legal system. And, at the same time, the few brave souls in Singapore who challenge the regime are endlessly harassed with libel suits and other legal impediments. Maybe China’s 1.3 billion people will someday find themselves in the same boat. Economically, this would represent big progress for China; politically, it would mean merely the legalization of repression.
Second, the WTO deal is reviving predictions that China’s increased economic interactions with the rest of the world will lead to political democracy. Under a new version of this theory, the WTO deal will allow foreign firms to participate in Internet ventures in China, and the Internet will lead to a political flowering.
The Internet is indeed a powerful tool for political freedom. But China seeks to block politically sensitive Web sites and otherwise control the Internet. The WTO deal won’t change that.
More generally, the idea that China’s interaction with foreign companies will lead to democracy is at best a theory. Sure, capitalism thrives with democracy, but elsewhere over the past century, it’s also been compatible with fascism. We simply don’t know where China’s Communist system, now seemingly devoid of ideology, is headed.
Finally, those who pin their hopes on the China deal say it will strengthen the world trading system. China is one of the world’s largest trading nations, and (the argument goes) it’s best to have it under the rules of the WTO.
But that’s true only so long as the rules can be carried out. If not, China’s entry will actually weaken the system.
It has been more than two centuries since the historic mission in which King George III sent Lord George Macartney to seek an easing of China’s restrictions on trade. In Beijing, the Qianlong emperor rebuffed him with the famous words: “We have never valued ingenious articles, nor do we have the slightest need of your country’s manufactures.”
Today, China is far more willing to accept the world’s manufactures. Its economy needs both trade and investment. But those who believe WTO membership will change China’s political system are likely to be even more disappointed than were the British 206 years ago.
