Gazing into the Chinese/WTO Crystal Ball.

• Author: Obregon, Alfredo Carrillo
• Position: WORLDVIFW

"... China's trade and economic policies are--and will remain--intertwined with concerns about geopolitics, human rights, and illiberalism." LAST MONTH marked the 20th anniversary of China's accession to the World Trade Organization (WTO). The world has changed dramatically since then, and U.S.-China relations are increasingly marked by tension. Over the years, Cato Institute scholars have weighed in on China's entry into the rules based international trading system, and this article provides a summary of many of those contributions and reflects on the lessons learned from this momentous policy.

One of the challenges to having a frank discussion about China's entry into the WTO is that there are pervasive myths surrounding China's WTO accession and integration into the global economy, the impact of the "China shock," and fears surrounding the Communist country's economic growth.

In "U.S. Trade Policy toward China: Learning the Right Lessons," Scott Lincicome explains that the U.S. did not simply rubber-stamp China's WTO accession, and instead made a hard bargain, pushing China to accept the most stringent entry rules of any WTO member, which still are considered some of the deepest commitments ever made--nor, he indicates, did the U.S. see China's accession to the world trade body as a precursor to China's democratization.

In 'Testing the 'China Shock': Was Normalizing Trade with China a Mistake?," Lincicome argues that the "China shock" is overstated, and that "it is a mistake to pretend that there was a better trade policy choice in 2000 than Permanent Normal Trade Relations and engagement with China more broadly."

In fact, in April 2000, Mark Groombridge made the case for establishing Permanent Normal Trade Relations with China, ahead of its WTO accession, in "China's Long March to a Market Economy: The Case for Permanent Normal Trade Relations with the People's Republic of China," where he contends that it was in the U.S.'s national interest for China to liberalize and reform its economy.

In subsequent years, Cato scholars have covered a wide range of issues in U.S.-China trade relations. A topic that has generated a large body of work is the use of trade remedies against China. Here, Cato scholars have called for both restraining their use and reforming aspects of the system that are subject to regulatory capture and not compliant with WTO rules. For example, writing about the global steel overcapacity problem, Daniel Pearson explained...