World Trade Organization The World Trade Organization (WTO) was formed on January 1, 1995, as successor to the General Agreement on Tariffs and Trade (GATT), which had regulated tariffs worldwide since 1947. The WTO regulates tariffs on services, intellectual property, food, and government purchasing. The Clinton administration has been working very hard to negotiate a deal with China, a nation we have given Most Favored Nation’ status to, to enter into the World Trade Organization. After a long negotiation process, we have reached a deal with China. The conditions of the deal require China to open its markets to a wide range of US products and services and to permit increased investment in China by US firms. Of course the agreement has to be passed by Congress, which is bound to create a lively debate on the matter.
US Commerce Secretary, William Daley, is trying to convince America that this deal with China is critical to their pocketbooks. He says, “If you enjoy this economic success we are participating in, this is an important piece of its future.” I have a hard time seeing how things will change if China is admitted to the WTO. We already trade a great deal with China and have given them Most Favored Nation’ status already. I think there are several reasons why we should not let China into the WTO. There are several political risks involved with this deal with China. Organized labor and environmental groups are using this deal to somehow introduce environmental conditions and labor rights into the WTO rules.
Although they are in opposition to the deal right now, they will construct a bargain in which they will trade their support of Chinese membership for the rules to be added. Chinese membership is also a great risk for China. The increased imports from the United States and other countries and the production in China by foreign firms will provide strong competition to many of the state-owned industries. I think this will force many Chinese businesses to close down. The only other solution would be to cut back on workers at these companies, which would increase the unemployment rate in China.
The resulting rise in unemployment can hurt their economy and cost them a lot of money. The last, and perhaps most important issue in this debate is over China’s human rights and labor standards. China is a communist country, which is something Americans seem to completely disagree with. If I recall, Little Elian from Cuba (another Communist country) is stuck in the middle of a debate over whether we should send him back to his country because it is Communist and we are so against that form of government. If we are so appalled by Communism, why do we want to give Most favored nation’ status to one of the few remaining Communist countries? That is why we have an embargo on Cuba.
When China is ready to take steps forward in human rights and labor standards, then we can talk about trade agreements.