CLINTON MADE THE RIGHT CALL ON CHINA AND WTO

CLINTON MADE THE RIGHT CALL ON CHINA AND WTO

Last April, Chinese Premier Zhu Rongji offered an impressive slate of concessions to convince the United States to support China's bid for World Trade Organization membership. After reviewing the offer, President Clinton deferred decision in order to complete negotiations and educate Congress on the merits of the deal. The business community was outraged by the delay and attacked the administration.

A few weeks later, the accidental bombing of China's embassy in Belgrade plunged U.S.-China relations into the deep freeze and halted WTO talks. It became fashionable in the business community and among professional second-guessers to criticize the president for his shortsightedness.It remains unclear if the negotiations on China's WTO membership will succeed this year. But, regardless of whether they do, President Clinton made the right call in delaying a decision on China's accession package.

It is true that China's WTO accession may ultimately be in the United States' best interest, if the agreement is supported with the proper enforcement regime.

Some in the business community, however, look enthusiastically at the concessions Zhu offered while overlooking China's poor record in delivering on its trade promises. Every trade agreement the United States has struck with China, on topics as diverse as protecting intellectual property and promoting market access, has run into serious enforcement/compliance problems.

The main trouble appears to be that China lacks the legal infrastructure to force its diverse collection of ministries, provincial authorities and state-owned enterprises to abide by the trade commitments it makes.

President Clinton's critics point to the highly unusual outburst of criticism in Beijing of the trade concessions that Zhu offered and the backsliding since the bombing as evidence that he should have taken the deal when he had the chance. This is based on a backward view of Chinese politics.

First, the Chinese would likely have frozen relations after the bombing regardless of the state of the WTO negotiations; the two have no real linkage beyond the happenstance of timing.

Further, the outburst of criticism is evidence that Zhu did not have sufficient domestic support for the reforms he was offering. If President Clinton had seized the deal, these critics would not have simply disappeared. They would have forced Zhu to back away from the offer. Or, more likely, they would have simply ignored it and violated or frustrated the concessions with the same bureaucratic tactics used to stymie past agreements.

Some naively argue that the WTO could force Beijing to deliver on the promised commitments. This view reflects both an exaggeration of the capabilities of the WTO and a poor understanding of the Chinese system.

As many Chinese scholars are fond of pointing out, China's system is not based upon rule of law and is almost entirely non-transparent. The WTO is premised upon the existence of a rule of law and relies upon transparency in order to evaluate policies and reach enforcement decisions. Far from being a magic bullet, the WTO may prove largely ineffective in policing Chinese trade practices.

It is true that multilateral pressure may be helpful in changing China. But it is also true that WTO membership for China would mean the United States could not employ unilateral trade sanctions to curb Chinese mercantilism - the only tool that has previously demonstrated some effect. It may be possible to build a WTO enforcement scheme that can deal with Beijing, but this certainly was not in place in April.

Further, there are political factors that warrant some discussion. Congressional support for China's WTO accession appeared very strong in the wake of Zhu's visit. But the political reality is that some of the support was just Congress taking an opportunity to criticize the Clinton administration.

Congress has historically been no friend of China, and some congressional leaders were criticizing a possible WTO deal just days earlier. In fact, delaying and forcing many in Congress to go on record in favor of a deal may ultimately have paved the way for congressional support of a WTO agreement - a task that might have proved much harder if it had been presented as a Clinton administration initiative with an election looming.

When the situation is considered in a sober context, President Clinton was right not to accept Premier Zhu's April offer. In fact, a strong case can be made that he should have been even more skeptical pending completion of enforcement provisions.

If a deal does not materialize this year, it will be due to Zhu's inability to deliver on his promises, not Clinton's refusal to take them.