China's accession to the world trading community could be the largest bridge between East Asia and the West since Marco Polo's voyages. The 13th century explorer knew his mission promised great riches but was also fraught with obstacles. Likewise, we know the benefits from China's joining the World Trade Organization (WTO) can be substantial, but so are the challenges.
Negotiators made progress in meeting these challenges last spring. They obtained commitments from China to dramatically reduce tariffs in some key sectors, eliminate import quotas, open access to product distribution networks, remove barriers to investment and impose some commercial disciplines on state-owned enterprises.
As negotiations restart, some are urging President Clinton to conclude the agreement quickly, even before some vital issues are resolved. Others have said that no deal can be acceptable, given China's breaches of U.S. national security and of international human rights standards.
In the end, Congress will determine the fate of an agreement based on its economic merits. To be sure, we need new vehicles to assert our human rights and national security concerns once Congress has relinquished its annual review of China's trading status by granting permanent normal trade relations as part of an accession agreement. But in deciding whether to support an agreement, most members of Congress will ask themselves: "How will it affect the living standards of my constituents and the American people?"
The answer will depend on the terms of China's proposed accession. Currently China's economy lacks clearly defined, consistently applied rules and still is far from a free market compared with other WTO members. China's joining the WTO means integrating a huge non-rules-based, emerging free market country into an organization built on rules and established free markets.
To date the administration has focused on the specific commitments that China has offered to open its markets to particular goods and services. But an agreement's costs and benefits to the United States depend not only on these commitments but also on how they are monitored and enforced.
When businesses compete in countries with well-established commercial laws,they can anticipate the legal consequences of their actions and make efficient business decisions. In the absence of such laws in China, U.S. businesses remain vulnerable to arbitrary decisions by China's regulatory authorities. Hence the agreement itself must establish mechanisms enabling businesses and the U.S. trade representative to detect whether China is living up to its commitments and to enforce U.S. rights.
Moreover, trade with China is a two-way street. China is not only a source of vast opportunities but also increasingly a competitor. An evaluation of an agreement must look beyond the environment U.S. businesses encounter in China and also consider the rules governing sales of Chinese products in the U.S. market.
Last winter's surge of Chinese steel imports provided a vivid reminder of the hazards of competing with an economy unconstrained by market disciplines. When production decisions are a matter of social policy rather than supply and demand, as in the case of Chinese steel, overcapacity may result. In the first two months of 1999, China exported to the United States almost as much hot-rolled steel as it exported to this country in all of 1998, thereby undercutting American businesses and workers.
U.S. trade laws contain special provisions that apply to imports from non-market economies that harm U.S. industries. We must retain the right to apply these provisions to China until it has a free-market economy. We must also consider a general escape clause in the event that our already large trade deficit with China explodes, hitting key sectors of the American economy.
China's accession to the WTO will not only change China; it will change the WTO. The integration of the world's largest developing economy into the WTO requires that the administration address the issue of the rightful place of labor standards in trade negotiations and agreements in this fall's WTO conference in Seattle.
As negotiations recommence, it would be foolhardy for the administration to proceed without the fullest consultation with American business, workers and Congress--simply presenting a final agreement on a take-it-or-leave-it basis. Because of its economic significance for the new millennium, bringing China into the WTO needs to be done and done right.
The writer is a Democratic representative from Michigan and ranking minority member of the Ways and Means subcommittee on trade.