2 Decades After Joining WTO, China ‘Remains Woefully Short’ of Meeting Pledges: Report

By Adam Michael Molon
Adam Michael Molon
Adam Michael Molon
Adam Michael Molon is an American writer and journalist. He holds a master’s degree in journalism from Columbia University and undergraduate degrees in finance and Chinese language from Indiana University-Bloomington.
August 7, 2021 Updated: August 9, 2021

Should China have been admitted to the World Trade Organization (WTO) in 2001?

“Knowing now the behavior that China has exhibited as a member of the WTO over the past 20 years, with a really significant failure to live up to their commitments, the answer would be no,” Stephen Ezell, vice president of Global Innovation Policy at the Washington-based Information Technology & Innovation Foundation, told The Epoch Times.

In a new report (pdf), Ezell details how the Chinese regime “remains woefully short” of meeting the commitments it made as conditions of its WTO accession in December 2001, including in the areas of “industrial subsidization, protection of foreign intellectual property, forcing joint ventures and technology transfer, and providing market access to services industries.”

According to the WTO, economies that join the organization benefit by realizing “structural and trade-liberalizing reforms” that “help to secure integration into the global economy.” In 1999, then-President Bill Clinton said in a press conference with Chinese Premier Zhu Rongji that bringing China into the WTO “on fair commercial terms” would “go far toward leveling the playing field for [U.S.] companies and [U.S.] workers in China’s markets” and “commit China to play by the rules of the international trading system.”

Instead, Beijing has engaged in “decades of gaming the global trading system,” enabling it to “accumulate tremendous trade surpluses and foreign currency reserves, which it uses to pursue domestic and foreign policy objectives,” Ezell wrote. The Chinese regime’s domestic policies include the imprisonment of more than 1 million Uyghurs in internment camps and the repression of remaining civil liberties in Hong Kong. On the foreign policy front, the regime has threatened to invade and subjugate democratic Taiwan, is expanding its territory in the disputed South China Sea, and is seeking to build global political and economic clout through the Belt and Road Initiative, a massive infrastructure investment project.

Advocacy

In the years leading up to China’s accession into the WTO, Doug Guthrie, then an associate professor of sociology at New York University, advocated for China’s WTO entry. He was one of a dozen academics to sign an open letter supporting WTO membership for China, presented as part of a U.S. House of Representatives hearing on the subject in May 2000.

Now a professor of global leadership and director of China Initiatives at Arizona State University’s Thunderbird School of Global Management, Guthrie told The Epoch Times that he was “part of a group of scholars who believed that [admitting China into the WTO] was the right thing to do.”

“We were available for talking to people on Capitol Hill, and we did,” he said.

Two decades later, Guthrie, who also co-founded On Global Leadership, an advisory firm focused on Chin, has no regrets.

“I absolutely would advocate for China entering the WTO again,” he said. “It just didn’t seem right to me that the United States should have control over holding the world’s most populous nation … out of the world trading system.”

Prior to China’s entry into the WTO, the United States reviewed China’s most favored nation (MFN) trading status on an annual basis, with a focus on issues such as the regime’s systematic human rights abuses. Congress passed legislation in 2000 to make this status permanent, known as permanent normal trade relations (PNTR), once China joined the WTO. This eliminated Congress’ annual MFN review of China and allayed political uncertainty for multinational corporations considering expansion of their businesses into China.

Back then, the conventional wisdom was that allowing Beijing to join the WTO would lead to greater economic liberalization, which would, in turn, lead to more political freedoms in the communist-ruled country. This projection didn’t materialize.

The PNTR legislation passed in 2000 explicitly stated that “Congress deplores violations by the Government of the People’s Republic of China of human rights, religious freedoms, and worker rights,” and cited the Chinese Communist Party’s (CCP) “extrajudicial killings and torture, forced abortion and sterilization, restriction of access to Tibet and Xinjiang, [and] perpetuation of ‘reeducation through labor.’”

For Guthrie, this was an issue outside his scope.

“I try to steer away from topics like human rights,” he said.

American Workers Left Behind

China’s WTO accession had a “substantial” effect on the U.S. economy and American workers, according to Guthrie.

It meant the “beginning of a flow of capital from places like the United States and Europe to Asia and, in particular, China,” he said. “And so, if you’re somebody who thinks deeply about labor and economic development, maybe China’s entry into the WTO wasn’t a good thing for the U.S. economy.”

According to the Council on Foreign Relations (CFR), nearly 6 million U.S. manufacturing jobs were lost between 1999 and 2011, with a study published by the University of Chicago attributing almost 1 million of these manufacturing job losses and 2.4 million total job losses to competition with China. Meanwhile, according to the same CFR report, multinational corporations such as Apple have benefited from increased access to China’s market. Consumers in the Greater China region accounted for approximately 15 percent of Apple’s revenue in 2020.

Guthrie, who was a China-based senior director at Apple from 2014 to 2019, agreed that large multinational corporations have benefited from China’s membership in the WTO, while U.S. workers didn’t.

“If you look at the Chinese market, companies like Tesla and Apple, the Chinese market is second only to the United States. And so, they all benefit,” he said. “The people who don’t benefit are working-class people who had working-class jobs in America.”

‘China Wants Absolute Advantage’

Roger Garside, a former British diplomat and author of “China Coup: The Great Leap to Freedom,” told The Epoch Times that he thinks the Chinese regime has followed the WTO’s rules “only selectively, and not in good faith, overall.”

The United States and other liberal democracies, in their approach to China, have chosen short-term economic benefits over fundamental principles such as freedom, he says.

“U.S. leaders were optimistic rather than naïve in believing or hoping that [China’s] WTO entry would have political benefits,” Garside said in a statement. “The U.S. has for far too long been blind to the downside, failing to weigh the defense of freedom in the balance against promotion of their short-term economic benefits. In this respect, the leaders of Italy, Germany, France, and the UK have been as bad as the Americans or even worse, and are still now reluctant to acknowledge the political threat.”

Ezell said that Beijing has taken advantage of its WTO membership to gain increased and non-reciprocal access to other countries’ markets. To address these abuses, he provided policy recommendations in his report, including revoking China’s PNTR status and renegotiating tariff rate schedules for Chinese goods and services at the WTO.

According to Ezell, WTO membership has helped the CCP in advancing one of its overarching objectives: achieving superiority over the United States in advanced technology.

“China wants absolute advantage in all of the advanced technology industries, and they want to get there … by restricting other firms’ access to their market, but then … giving their own firms the ability to go out on an unfair basis into international markets, and they’ve been very successful at that,” he said.

Garside said that the CCP will continue to utilize its growing economic might to push the world in a totalitarian direction.

“I would expect [the CCP] to use its power to impose totalitarian rule on as much of the world as possible, eliminating freedom, democracy, and human rights as it is doing in Hong Kong. That is what totalitarian regimes do. How much of the world it could dominate to this extent is quite impossible to predict, because it would depend on how it arrived at that supremacy,” he said.

But it doesn’t have to continue in this way, Garside said. In his book, “China Coup,” Garside outlines how the United States and other liberal democracies can utilize their economic tools to pressure the CCP and enable those within China who want political change to achieve it.

“The political effects [of China joining the WTO] are not all negative, because the opening of China has produced an ever-growing property-owning class which will make itself felt in politics,” he said. “Many commentators speak and write as if the story has ended. It has not. Far from it.”

Adam Michael Molon
Adam Michael Molon
Adam Michael Molon is an American writer and journalist. He holds a master’s degree in journalism from Columbia University and undergraduate degrees in finance and Chinese language from Indiana University-Bloomington.