Behind the US Collaboration With EU and Japan on WTO Reform: Should Trade and Human Rights Be Linked in US-China Relations?

May 31, 2019 Updated: June 4, 2019

In addition to the US-China trade dispute, another issue of global concern this year is reform of the World Trade Organization (WTO). Recently, the United States, Japan and the European Union decided to come together to finalize the proposal to reform the global industrial subsidy rules, which will introduce stricter industrial subsidies and state-owned enterprise regulations to other WTO members. Although China’s name was not specifically mentioned, it is clear that the main target of this move is the Chinese regime, and its primary aim is to tackle the Chinese Communist Party’s (CCP) unfair trade practices.

Over the years, the CCP has been unscrupulous in conducting international trade and has repeatedly violated various commitments it made at the time of entering the WTO. Here are just a few examples of its non-market-oriented policies and practices.

Since joining the WTO in 2001, the CCP has squeezed foreign companies in various ways to make profit for itself through both the WTO’s internal and external framework. In order to turn its state-owned enterprises into global leaders in the industries of semi-conductors, electric vehicles, robots as well as other high-tech fields, through the harmful use of subsidy practices and state-owned bank financing, it has indirectly forced many foreign companies to shut down and leave the market. At the same time, the CCP does not allow foreign banks to conduct renminbi business, and forces foreign companies to transfer their technology.

Although the CCP never admits to these market-distorting policies, previous survey has shown that about one-fifth of the foreign companies—many of which belong to the aerospace and chemical industries—have had to transfer technology in order to do business in China. Nonetheless, for more than a decade, a number of WTO members, including previous administrations of the United States, the world’s largest economic powerhouse, did not stand up against the CCP’s violations of the WTO rules that have undermined the global trade system.

This is in stark contrast to today, when the United States, Japan, and the EU have decided to finally taken action.

Recently, many scholars and former policymakers have pointed out that the Clinton administration’s decision to help the CCP enter WTO 20 years ago is the biggest mistake it has made.

Looking back at history, the issue of the most-favored-nation (MFN) status and China’s accession to WTO has been a key issue of debate in the U.S. policy toward China in the 1990s. Before China enjoyed a permanent normal trade relationship with the United States, according to the U.S. Trade Act of 1974, non-market economy countries such as China could not automatically enjoy the MFN status. It required a one-year trial and the President to make an extension request to Congress. Before 1989, China’s MFN status review has nearly all been passed smoothly.

After the Tiananmen Square massacre in 1989, China’s human rights situation raised great concern in the United States. Many human rights organizations and lawmakers proposed to abolish China’s MFN status in order to punish CCP’s abuse of human rights. Although the United States eventually decided to grant the extension, the then Administration and Congress both expressed concerns about human rights in China during the annual review process.

In 1993, the then newly appointed President Clinton officially announced the linkage of China’s human rights conditions and the issue of MFN status. He issued an executive order saying that if the CCP does not make comprehensive and significant progress on human rights, it would lose its MFN status for the years 1994 to 1995. The Clinton administration hoped that the CCP would make concessions on human rights. However, due to greater pressure from domestic political and business circles, right after the public statement was released, in May 1994, Clinton announced that he would continue to grant the CCP MFN status and separate trade from human rights.

The separation of trade from human rights marks a turning point in U.S. policy toward China. Since then economic and trade connections became the main axis in U.S.-China relations, which paved the way for the CCP to eventually join the WTO.

As part of the WTO accession agreement, the United States needed to grant China permanent MFN status first. The U.S. Trade Act of 1974 has restrictions and Congress needed to pass a new legislation. This legislation brought the battle between trade and human rights in the entire American society to a whole new level.

In May 2000, then House of Representatives passed the bill with 237-197, giving China a permanent trade relationship (permanent MFN status). Four months later, the Senate passed the bill with a vote of 83 to 15. In October of the same year, then President Clinton signed the “U.S.-China Relations Act of 2000.” In 2001, China officially became a member of the WTO.

With the hope that “economic freedom will bring political freedom, it only takes time,” with the optimistic assertion that “the U.S.-China economic and trade development will promote China’s human rights progress,” nearly 20 years ago, the Clinton administration helped the CCP enter the WTO. On October 10, 2000, at the grand signing ceremony of the “U.S.-China Relations Act 2000” at the White House, Clinton said to the attendees: “You will remember this day and be proud of what you have done.” Indeed, just as he said, the world did remember this day 20 years later. However, it was by no means remembered as a day of pride in United States’ history.

In October 2018, U.S. Vice President Mike Pence said in reviewing the history of U.S.-China relations: “After the fall of the Soviet Union, we assumed that a free China was inevitable. Heady with optimism at the turn of the 21st century, America agreed to give Beijing open access to our economy, and we brought China into the World Trade Organization. Previous administrations made this choice in the hope that freedom in China would expand in all of its forms—not just economically, but politically, with a newfound respect for classical liberal principles, private property, personal liberty, religious freedom—the entire family of human rights. But that hope has gone unfulfilled.”

Indeed, looking back at this critical part of history, in fact, most fundamentally, for many years, the biggest mistake the United States made in its policy toward China has been that it did not clearly differentiate the CCP from China. Wei Jingsheng, a well-know human rights activist, once said: “If the United States didn’t give China PNTR status and didn’t allow its entrance into the WTO back then, how can the Chinese Communist Party survive to this day, how can it even become a threat to the United States today? It is simply in no way possible.”

But fortunately, under the leadership of President Trump, the United States and the western countries are all waking up too and many have started to take action to combat the CCP’s danger and threats in various realms. During the Cold War period between the United States and the Soviet Union, former U.S. President Ronald Reagan said that freedom and democracy will advance and that communism will be thrown into the ash heap of history. The war between the United States and China is the ultimate battle between freedom and communism. It is clear that the day when the CCP gets thrown into the dustbin of history is not too far away.

Flora Yan is a junior at the University of Washington in Seattle double-majoring in political science and communication. She is conducting research related to the impact of propaganda on public opinion and public policy; the role of propaganda in totalitarian countries; and the connection between human rights and foreign policy. An aspiring China observer, she is particularly interested in human rights issues in China.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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