Robert D. Atkinson is founder and president of the Information Technology and Innovation Foundation and former co-chair of the Obama administration’s U.S.-China Innovation Experts Group. Clyde Prestowitz was a trade negotiator during the Reagan administration and is president of the Economic Strategy Institute.
On April 4, 1949, compelled by the threat of Soviet military aggression, the United States and 11 other nations formed the North Atlantic Treaty Organization, a security pact holding that an attack against any of the signatories would be considered an attack against them all. Today, Chinese economic aggression requires that the United States and its allies form a NATO for trade.
The past few months have shown why it’s necessary. As covid-19 has mushroomed into a global pandemic, Beijing has tried to intimidate foreign governments and even individuals who dare to question its handling of the original outbreak.
The campaigns of intimidation usually begin with claims of victimhood and accusations that any criticism smacks of racism or of efforts to deflect attention away from the critics’ domestic failures. But if that fails to produce the desired obsequious result, China quickly moves to direct economic threats. Australian Prime Minister Scott Morrison found this out when he did nothing more than call for a formal inquiry into China’s actions at the outset of the pandemic. In response, Beijing threatened a boycott of Australian universities and tourist operators as well as trade sanctions against Australian beef and wine.
Likewise, when Sweden supported human rights victims in China, Beijing’s ambassador responded, “For our enemies, we have shotguns.” The ambassador threatened that China would restrict Swedish exports. When Germany considered banning procurement of 5G gear from the Chinese telecom giant Huawei due to security concerns, China’s ambassador in Berlin abandoned any pretext of global trade rules, asking: “Could German cars be deemed unsafe by Chinese authorities?” And when Japan claimed ownership of some islands in the South China Sea, the Chinese government orchestrated riots to destroy Japanese company assets.
As the world’s second largest importer, China can cripple foreign industries by cutting off access to its domestic market, as it did in response to tweets made by the general manager of the National Basketball Association’s Houston Rockets in support of the Hong Kong protesters. The costs Beijing can impose in this way are too high for most industries to bear. For example, the European Union considered bringing a World Trade Organization trade case against China for showering subsidies on telecom companies Huawei and ZTE, which enabled those companies to sell below cost, but the E.U. backed down after China made clear that European producers Ericsson and Nokia would be shut out of the Chinese market.
Beijing’s intimidation meets with success — as when, fearing Chinese displeasure, the E.U. recently watered down its report on the coronavirus by omitting the fact that it originated there — for the simple reason that no nation wants to bear the brunt of a Chinese economic attack on its own, so most quietly capitulate. China knows that, of course, which is why it so often gets its way. Beijing’s strategy is all about picking off adversaries one at a time and bullying them into submission.
It is time for a new approach under which democratic, rule-of-law-nations agree to come to each other’s economic aid against an outside adversary. This new organization — call it the Democratically Allied Trade Organization — should be governed by a council of participating countries, and if any member is threatened or attacked unjustly with trade measures that inflict economic harm, DATO would quickly convene and consider whether to take joint action to defend the member nation.
Success would depend on DATO members not engaging in economic aggression against each other, as the Trump administration regrettably did in 2018 when it imposed tariffs on Canadian and European steel products. They should instead address their grievances through the WTO, as the United States did recently by imposing punitive tariffs after the E.U. had engaged in illegally subsidizing airline maker Airbus.
DATO nations should cooperate to deter individual episodes of Chinese economic aggression against individual members and to provide a mutual defense umbrella against broad Chinese policies that harm all nations — particularly mercantilist policies such as the “Made in China 2025” initiative, which is crafted with a goal of achieving global dominance in strategically important technologies.
Given the United States’ still-indispensable role in defending freedom globally, only it can lead in establishing a DATO. The next administration, whether it be Republican or Democratic, should embrace the idea. Any democratic government, including Taiwan, should be welcome to join, but all must be prepared to take the steps necessary to enact a DATO decision, or lose the right to membership.
China is powerful. And under its Communist Party, it is anti-democratic and authoritarian. But it is not invincible. It can be forced to back down if democratic nations stand together.