Americans doing business in China often say that once the contract is signed, the real negotiating begins.
The agreement between China and the United States over China's entry into the World Trade Organization marks the start of an arduous effort to get China to stick to the terms of the deal. Success will make the WTO stronger than ever; failure could be its undoing.
"People should be glad there is a framework, but this will be the beginning of a long, painful process," said David M. Lampton, professor of Chinese studies at Johns Hopkins School of Advanced and International Studies. "This sets the framework for more significant negotiators, who will be the hundreds and thousands of American companies trying to get China to implement those commitments in thousands of towns and counties."
One cause for concern: If it took seven years to persuade a deeply divided Chinese government to sign an agreement to open its markets, how vigorous will that government be in enforcing the accords?
Earlier economic agreements have often required extensive renegotiation, after the fact, before they truly were put into effect. A 1995 intellectual property rights agreement negotiated by the U.S. trade representative was an extension of an earlier agreement. A year later, yet another pact was hammered out to tighten enforcement of the 1995 accord. An agriculture agreement reached in April languished as a hostage to the WTO talks until last week; the official reason for the delay was that China had not yet come up with a suitable Chinese translation of the agreement to sign.
"No doubt about it. Enforcement is the name of the game with respect to the Chinese legal system," said Jerry Cohen, a partner at the law firm of Paul Weiss Rifkind Wharton & Garrison who also teaches Chinese law at New York University.
But Cohen and others argue that a WTO agreement will help both foreigners and Chinese seeking to strengthen the rule of law in China. It will also make trade disputes multilateral, weakening the ability of Chinese nationalists to label the United States as a trade bully.
Getting China into the WTO is only the latest in a series of efforts to make China part of international agreements governing issues such as missile proliferation, nuclear weapons tests and human rights as well as trade. Pei Minxin, a fellow at the Carnegie Endowment for International Peace, says the U.S. policy of "engagement" should be called "entanglement" to better describe the process of reducing China's ability to veer from international norms of behavior.
If China does abide by the rules of the WTO, it will make the organization stronger. "This is important for the global economy," said Kenneth Lieberthal, senior director for Asian affairs at the National Security Council. "You cannot have an economy that incorporates more than a fifth of the world's people and that will perhaps be the world's third-largest economy within a few years operate on a fundamentally different basis from the way the rest of the world is going."
But while China's entry to the WTO will push the world's most populous nation further toward international norms, it also will limit U.S. latitude for using trade as a weapon of foreign policy.
Only 10 years ago, trade with and investment in China came to a virtual halt in the wake of the Chinese army crackdown on student-led demonstrators in Beijing. American companies evacuated employees. Seven years ago, President Clinton was one of those advocating a linkage between China's human rights practices and its trade privileges.
Now Clinton is urging Congress to grant China permanent "normal trading relations" (NTR) status so that the United States will enjoy the benefits of China's opening under the WTO accords. And American companies are eager to get into the Chinese market.
Part of the shift can be traced to the changing nature of the U.S.-China relationship. When President Richard M. Nixon went to China seeking help in his geopolitical strategy of containing the Soviet Union, he paid little attention to trade. His secretary of state, Henry Kissinger, even tried to reassure then-Chinese leader Mao Zedong that the United States hadn't come to seek economic benefits or to threaten Mao's communist system.
Today, however, trade is the glue that keeps the United States and China together when strategic issues threaten to drive them apart.
In 1980, when China was emerging from the Cultural Revolution and embarking on economic reform, it exported just $18 billion worth of goods. In 1998, its exports reached $184 billion. Toys, athletic shoes, portable stereos, skirts, bicycles, computer parts--today almost every U.S. household contains something that bears the phrase "made in China." And the big U.S. multinationals--such as Coca-Cola, United Technologies, AIG, General Electric, Motorola and General Motors--all have hundreds of millions if not billions of dollars invested in China.
Trade policy now often trumps foreign policy issues. The closest Clinton came to imposing sanctions was over intellectual property rights, not human rights.
Pei compares the U.S.-China relationship to a three-legged stool. "In the past 10 years, whenever the United States and China had disputes in areas such as human rights or the security relationship, critics in China and in the United States would go after the commercial relationship, hoping that if they cut off that leg the relationship would collapse," Pei said.
With a WTO agreement and permanent NTR, he said, the commercial relationship will turn into the strongest leg.
Because of its focus on opening China's market to American companies, the WTO agreement also is aimed at defusing the biggest threat to that relationship: the U.S. trade deficit with China. In August, that deficit climbed to $6.9 billion; the U.S. deficit with Japan, by comparison, was $6.4 billion. But the biggest benefits of the deal will be for American companies investing in China, not for American exporters.
"This agreement reflects the increasing importance of economic ties and multilateral institutions in assuring prosperity and a reduction of international tensions at the end of the 20th century," Lieberthal said. At the same time, he said, "No one is naive. Human rights issues, military issues and transnational crime will all remain extremely important."
CAPTION: A SNAPSHOT OF TRADE (This graphic was not available)