WTO: No Free Ticket for China

A month ago, the United States and China came close to clinching a deal on Beijing’s membership in the World Trade Organization. But the Clinton administration insisted that China open its securities markets and--in an item particularly important for Southern California--ease “cultural” restrictions on the imports of U.S. films and music. Now, stung by the mistaken bombing of the Chinese Embassy in Belgrade and pressured by companies eager to do business with China, President Clinton is being asked to reconsider and accept the deal he had turned down. But neither the flap over the bombing nor the political pressure is a sufficient reason for such a move. The United States has had a clear goal for the terms on which it would agree to China’s entry into the WTO. It shouldn’t lower that goal.

For years, Beijing has been promoting the importance of the country’s membership in the WTO. But so far it has not been willing to pay the price of entry. China’s membership in the world trading regime would be of value both to Beijing and the global trading community. In addition to the prestige of becoming a member, China would gain access to new markets.

China’s exports of garments alone, now amounting to $26 billion a year, could double if it joined the WTO. In addition, it would acquire a permanent normal trading status with the United States and would no longer have to go through the highly political annual debate in the U.S. Congress on renewing its trade privileges.

Just as important, by agreeing to the terms of accession China would lock itself into a process of economic reforms that would benefit not only China’s trading partners but the country itself. By opening its economy to outsiders, China would gain from the international division of labor and attract foreign investment, on which its economic growth increasingly depends.

To the United States and other WTO members, China’s accession would be equally beneficial. Membership would make China a more reliable trading partner and open a huge and largely unsatisfied consumer market to Chinese importers. China would be subjected to the discipline of international regulation, and there would be a mechanism for any country--not only the United States or other developed countries--to force China to meet its commitments.

To win WTO acceptance of China, Washington and the European Union, whose conditions are similar, have laid out minimum entry requirements. Despite major concessions, China has not yet met them. Now, the Clinton administration is being pushed by industry--which played a key role in setting the entry terms--to settle for less. The business community and some key members of the Senate argue that it wouldn’t be politically possible for China to improve on its last offer, especially after the unintended NATO bombing of China’s embassy in Yugoslavia. But what is not politically achievable today might be tomorrow. Clinton should hold fast.