Tomorrow (Saturday) is the 20th anniversary of China’s World Trade Organization (WTO) entry. There is no doubt that its membership helped contribute to the explosion of global trade: China was the sixth-largest exporter of goods in the world in 2001, and since 2009, it has been the largest.
But the WTO rule book was designed for market economies in which politics exercise a minimum of control. That does not describe China today.
China entered the WTO with a special status as a “developing nation,” but that was to end at a pre-determined date. Since then, China has used every trick to keep the special “developing nation” status it was granted 20 years ago and to keep its trade-distorting network of subsidies in place.
The Chinese government reformers who signed the WTO agreement are long gone, replaced by aggressive economic nationalists. A 2017 report to Congress from the United States’ trade representative stated that, “It seems clear that the United States erred in supporting China’s entry into the WTO.”
Jim Bacchus, a former Florida congressman and a former chief judge of the WTO’s highest court of world trade, told National Review that it’s unrealistic to expel China from the WTO. But the U.S. has been slow to file legal complaints against China which include forced technology transfer, general intellectual property protection and enforcement, trade-secrets protection, and trade‐distorting subsidies. When confronted with a firm WTO decision, China has often complied with the letter of the law. It might do even more in return for the U.S. cutting its agricultural subsidies and standardizing its national-security trade barriers.
China is clearly a bad actor on trade, and the U.S. may have to again impose tariffs to counter its most egregious moves. But it would be far better if the Biden administration first used the WTO framework to press for as much progress as it can.