China's status in WTO: Better in than out
SINGAPORE: After years of often bitter debate, the vote was not even close. By an overwhelming margin of 83 to 15, the United States Senate passed the Bill extending Permanent Normal Trading Relations (PNTR) to China.
Since the House of Representatives had already approved the measure earlier this year, the Bill can now go to President Bill Clinton for his signature, finally ending a 20-year charade when China's trade status in the United States was subject to an annual congressional review.
More importantly, with the Bill out of the way, China can now be admitted into the World Trade Organization, the 135-member entity which sets the rules for global trade. China would probably have gained admission even if the United States had denied it permanent trading status, but in retaliation, it could have withheld some trade benefits from the United States that it extends to others in the WTO.
Now that PNTR has passed, American companies will get the same access to China that others will get; the United States can no longer threaten to impose trade sanctions against China to force it to make concessions on non-trade issues, for that would violate WTO rules; and China, like the rest of the world, will have to revise its laws and practices in accordance with global standards.
Without doubt, all this is in the interest of both China and the United States, not to mention the rest of East Asia. Clinton was probably over-egging the pudding a little when he predicted that America will now find that it has "more influence in China with an out-stretched hand than it did with a clenched fist", but he was right to suggest that denial of PNTR would have been tantamount to showing China the clenched fist.
As he is said to have told wavering lawmakers privately, a nay vote would have undermined China's reforms, scared the daylights out of U.S. allies, and sent a message to the world that at the pinnacle of its power, it was in retreat.
He, more than anyone else in the United States, deserves credit for the Bill's passage, for he pushed it through despite the strong opposition of crucial elements of his party's base, the trade unions and environmental groups.
Passage, however, does not mean that there is nothing but blue skies and fair weather ahead in U.S.-China relations. That relationship will inevitably be a complex one, as a regnant power will have to learn to deal with and accommodate a resurgent one.
For China, PNTR will guarantee its goods the same low-tariff access to the U.S. market as the products of other countries, but in exchange, it will have to open up its agriculture, telecommunication and other sectors to competition.
The Chinese leadership knows that such openings are necessary if the country's industries, especially its state-owned enterprises, are to be reformed, but the transition will not be easy.
In the long term, the competition that free trade and open markets bring in their wake will translate into better paying jobs and more efficient enterprises, but in the short term, some Chinese enterprises may fall by the wayside and urban unemployment may worsen.
For the rest of Asia, China's entry into the WTO will bring many benefits, but it will also pose some challenges. A more open, market-oriented and law-abiding China will undoubtedly contribute to regional stability, but it will also be a tougher competitor, siphoning off investments that might have gone elsewhere.
Despite all these worries, though, the bottom line is this: China's entry into the trade body is in the interest of all. To paraphrase a former U.S. President, it is better to have so huge a nation inside the tent pissing out, rather than outside, pissing in.
-- The Straits Times / Asia News Network