China raps (again) at WTO door

This week's reenergized talks on WTO entry raises optimism that Chinacan play by others' rules.

Six months after Chinese protesters angrily stoned the US Embassy here in reaction to NATO's bombing of Beijing's diplomatic outpost in Belgrade, the American building was again besieged.

But this time, the grounds were surrounded by camera crews waiting for word on whether the two Pacific Rim titans had reached an agreement on China's joining the World Trade Organization.

A high-powered team of US negotiators, led by White House economic adviser Gene Sperling and US Trade Representative Charlene Barshefsky, talked through the night Wednesday and was expected to delay a scheduled morning departure today to try to clinch a deal.

Although the US delegation - which includes leaders from the National Security Council, Treasury, State, and Commerce Departments - has released few details of a final WTO pact, both sides have been upbeat and optimistic.

Foreign Trade Minister Shi Guangsheng was quoted in the official China Daily as saying "China is holding out strong hopes for entering the WTO." Mr. Shi, featured shaking hands with Mr. Sperling in a huge, front-page photo, added he expected significant advances during this week's talks.

China's entry into WTO would not only force the last communist giant to follow global trade rules, but would also put ties between the world's sole superpower and its fastest rising economic force back on an even keel.

Within the next decades, "China could overtake the US as the world's largest economy, and it's in Americans' best interests to forge a deal now that will guide China's behavior on the global stage," says a Western official who asked not to be identified.

Frosty relations since May bombing

Trade talks, along with Sino-US ties on other fronts, were suspended following NATO's May 7 bombing, but President Clinton laid the groundwork to restart negotiations with Chinese leader Jiang Zemin during the recent APEC meeting in New Zealand.

The Western official says that reaching a pact on Beijing's accession to WTO, which makes international trade rules and provides a forum to resolve disputes, would boost overall relations and help end the acrimony that surrounds an annual US congressional debate on granting China normal trade ties.

President Nixon's first trip to China "started a thaw in Sino-US ties and began opening China to the rest of the world," he says."China's joining WTO would be another great step toward integrating Beijing with the world, and that will benefit the US."

A Western economist based in Beijing, who has high-level contacts within the Chinese government, says that "integrating China into a rules-based system will lessen people's primordial fears of China as a security threat in Asia and in the world."

During a state visit to the US last April, Chinese Premier Zhu Rongji offered a wide-ranging package of market-opening measures that would reduce import tariffs and allow much greater foreign investment in such services as banking, telecommunications, and Internet firms here.

Clinton backed away from the proposal, but he and several of his top advisers have since come to regret the move, says the Western official.

Within China, "The heads of state monopolies and conservatives in the Communist Party have joined together to criticize Zhu Rongji for offering too many concessions and endangering key Chinese industries," says a senior Chinese official. "Premier Zhu is not in danger of losing his post, but his prestige and authority have been weakened."

In the US, organized labor leads the opposition to a WTO agreement with China. "Last year, the US trade deficit with China reached almost $60 billion ... and that translates into hundreds of thousands of jobs," says Thea Lee, a trade specialist at the AFL-CIO's office in Washington, D.C.

Ms. Lee says that when the WTO opens its next meeting in Seattle on Nov. 30, "We're mounting a big march and rally. If China joins the WTO, that will be one of the issues." China has "routinely violated bilateral trade agreements in the past, including a pact that bans goods produced by prison labor."

Although Beijing signed a 1992 pact that promised to give US officials free access to prisons suspected of producing exports, it has consistently broken its pledges, says a recent US State Department human rights report on China.

Yet US labor's biggest objection to China's entry into the world trade body is that "A lot of American companies will move operations to China, paying low wages to Chinese workers," says Lee.

$1.50 wages in China

The Western economist says while some US manufacturing firms may move production to China, that is only a small piece of the overall globalization picture. "The AFL-CIO wants to protect higher wages for Americans in low-end industries," he says. He explains that workers in the industries most likely to relocate - garments and basic electrical goods - "might earn $12 per hour in the US, but $1.50 here." But while some American garment workers could lose their jobs, "consumers in both countries will benefit enormously from lower prices through lowered trade barriers and more efficient production worldwide," he says.

And while China's low-tech exports to the US may surge, its imports of high-tech goods and services will balloon. "Communist governments are notoriously poor at providing services, and US companies could rush in to fill the void," says the economist. "Banks, insurance firms, and high-tech American firms are just salivating at the prospect of taking over the Chinese market."

The Western official, along with many US and Chinese scholars, says that economic globalization is already having a strong impact on the rights of Chinese citizens. During the past 20 years of capitalist reforms, the government has lost its extensive controls over workers who have left state firms for the private sector.

At the same time, foreign investment has forced Beijing to take notice of international reactions to its domestic human rights policies. "As the state's role continues to decline under WTO rules," says the Western official, "so will the party's power over the people."

(c) Copyright 1999. The Christian Science Publishing Society