The first major post-Seattle item on the Clinton administration's trade agenda will be China--completing the process of bringing that country into the World Trade Organization and gaining congressional support for the move.
Unfortunately for the Clinton trade team, neither step will prove easy. Europe has issues of its own to settle with China, and Congress has understandable questions about Chinese membership in the WTO. In the wake of the collapse in Seattle, opponents may be emboldened, and the most telling criticism they are likely to level is that a trade agreement with China cannot be enforced.
The United States government, including this administration, has a poor record of enforcing the trade agreements it has reached. There are numerous instances of U.S. trading partners, including Japan, Canada, the European Union and Korea, violating the letter or spirit of agreements with the United States.
China, however, has a worse record of compliance than any other trading partner. In recent years, the United States has struck major agreements with China on topics including protection of intellectual property, market access for U.S. exports, export of goods produced with prison labor, and textile shipments. In each case, there have been serious problems.
The agreement on intellectual property protection was struck in 1992. On paper, it was a strong one, bringing Chinese intellectual property laws on par with those in developed countries. Unfortunately, these laws simply were not enforced, and the problem of piracy of computer programs, music and films actually spread. On at least three occasions, the United States has threatened to impose trade sanctions in retaliation for China's failure to enforce its laws as promised. Almost a decade later, some argue there has been improvement, but as anyone who has visited China personally can attest, piracy is still a widespread problem.
The market access agreement was also struck in 1992, but China seems to have paid it even less attention. It obligated China to undertake a sweeping series of trade reforms. Unfortunately, according to the Clinton administration's own account, China has simply ignored some provisions and added new trade barriers to replace the ones it agreed to eliminate. The Clinton administration has taken no formal action to address China's cheating.
China has all the usual incentives to cheat in order to avoid offending domestic constituencies, but there is the additional problem of the lack of a reliable rule of law. This means that there is literally no reliable domestic mechanism to keep various ministries, state-owned businesses and provincial governments from ignoring the WTO and continuing to conduct trade policy as they please.
Unfortunately, the WTO--perhaps the world's ultimate rule-based institution--is grossly ill equipped to enforce its rules in China. Other WTO members may complain, but given the lack of a clear paper trail in many cases, it could be impossible even to establish the existence of the trade barriers at issue, much less win a dispute settlement panel ruling against it. What is worse, the United States will have given up the option of unilateral trade sanctions, which proved useful in the disputes on intellectual property enforcement.
Enforcement is not a trivial concern. In past agreements, Chinese cheating has been so prevalent as to call into question the wisdom of even negotiating a trade agreement. Further, it is Chinese reformers, such as Zhu Rhongji, who most need pressure from outside to ensure enforcement. After all, a WTO agreement can advance economic reform in China only if it is enforced. Finally, if the WTO cannot curb China, other countries are likely to follow its example, which will greatly weaken the organization's credibility.
Unlike the administration, Congress has demonstrated a real interest in enforcing trade agreements. Enforcement is a repeated theme in congressional hearings on trade, and a topic featured prominently in trade legislation. When Congress considers the WTO pact with China, it will be well advised to write itself a formal role in enforcing the agreement as a quid pro quo for agreeing to permanent most-favored-nation status.
Seattle should raise one other sobering point regarding China's WTO membership. Already the WTO is near paralysis from the increasing tension between developed and developing countries. As China has made clear, it will be a strident advocate of developing views and likely to oppose the United States on virtually its entire trade agenda. In other words, the problems highlighted in Seattle will be made worse by the addition of China. That being the case, the least the United States should demand is that China fulfill its promises.
The writer is director of the Global Economic Policy Project at the New America Foundation.