2020欧洲杯官方网站Columns share an author's personal perspective and are often based on facts in the newspaper's reporting or from personal experience.
The saga of China and the World Trade Organization (WTO), an organization whose goal is to “help trade flow smoothly, freely, fairly and predictably” and to which almost all the world’s countries belong, is a symbol of the larger struggle for technological supremacy between China and the U.S.
2020欧洲杯官方网站In 1948, a group of 23 countries interested in reducing customs tariffs founded the General Agreement on Tariffs and Trade. Designed as an interim system for multilateral trade negotiations, it lasted nearly 40 years, until the WTO was established in 1995.
China had been seeking to join the WTO and its predecessor since 1986 as part of China’s long march toward a “market-based” economy. Negotiations had seemingly died multiple times in the wake of events such as Tiananmen Square in April 1989 and the Asian currency crisis in the summer of 1997, only to be resurrected.
A breakthrough came in 1999, when China and the United States agreed on terms for China to join the WTO with support from both President Clinton and a Republican controlled Congress. The administration then persuaded Congress to grant China most-favored nation status, giving it the same trading privileges as virtually all the United States’ other trading partners.
2020欧洲杯官方网站To cut this deal, China made numerous promises that they have ignored with impunity. Before the ink on the deal was dry, China began flooding American markets with illegally subsidized exports, while the big multi-national companies that had lobbied hard on China’s behalf accelerated the offshoring of American factories and jobs to China.
2020欧洲杯官方网站It was not supposed to turn out this way when President Clinton and the usual suspects masterfully sold China’s entry into the WTO to the American people. They promised a bright future for American workers and manufacturers, and that China’s entry would democratize the Chinese tiger and free its people.
China was approved for WTO membership on Sept. 17, 2001. After the 9/11 attacks, the Bush administration directed its attention to Al Qaeda and ignored China’s rise. For China, the attacks were a blessing in disguise.
2020欧洲杯官方网站In theory, WTO member countries abide by a set of rules as they liberalize trade. One rule stands out: member governments are not to influence, directly or indirectly, the commercial decisions of their state-owned enterprises (SOEs). China has not abided by this rule. SOEs dominate China’s banking, energy, telecom, health care, and technology sectors. Overall, they account for about 40 percent of the country’s gross domestic product, according to estimates from the U.S.-China Economic and Security Review Commission.
Rather than responding to market forces, Chinese SOEs serve state objectives. They flood global markets and depress prices - think steel, aluminum, and solar panels. Dragging its feet on the promises it made to gain WTO membership has paid off for China. As it grows stronger, other countries will have to play by its rules.
Many experts believe Huawei, the Chinese telecom giant that the U.S. government views as a security threat, is a state-owned enterprise. It is the world’s largest provider of telecommunication equipment, with over $122 billion in sales last year. With its government subsidies and access to cheap labor, Huawei will always be less expensive than rivals.
Last year, the United States indicted Huawei’s chief financial officer, Ms. Meng Wanzhou, accusing the company of fraud and sanctions evasion. Meng, the eldest daughter of Huawei’s founder, was arrested in Vancouver and is awaiting extradition to the U.S. to face charges. Several weeks ago the government announced new charges of violating racketeering laws usually reserved for the Mafia.
Washington’s opposition to Huawei’s rollout of the 5G technology is another skirmish in the technology battle between the U.S. and China. The stakes are high, with national security concerns and the prospect of big profits both at stake.
2020欧洲杯官方网站Allowing China into the WTO and ignoring its non-compliance with WTO house rules is an example of how, when you get in bed with the Chinese, you get more than a good night’s sleep.Joseph M. Giglio is a professor of strategic management at Northeastern University's D'Amore-McKim School of Business.
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