Philip Bowring | International Herald Tribune
HONG KONG - The last hurdles are being removed. China may be able to join the World Trade Organization in time for the crucial November ministerial meeting in Qatar. But this step forward is likely to make progress on other WTO issues even more difficult.
No one likes to be heard saying it out loud, but there are plenty of other members, developing at least as much as developed, who are nervous both about China's trading muscle and about the political clout it may wield within the WTO. While the wrangling in Geneva over the Qatar agenda is about all the familiar topics - agriculture, textiles, anti-dumping and so forth - foot-dragging is partly attributable to these unspoken concerns.
This is not necessarily a rational reaction. Other members would do better to find common ground now before China's entry makes it even harder for the organization to reach, by horse-trading, the consensus that is its only way of working. China has added to concerns about its impact with aggressive retaliation against Japanese restrictions on some farm products from China. Japan's action, if temporary, would be permissible under WTO rules, but China's retaliation against Japanese cars and mobile phones is out of proportion to its own possible losses. China has treated South Korea to similar retaliation, over garlic.
Beyond these probably transient issues are more fundamental ones. Developing countries as a group are anxious to know quite how China, which usually claims to be their champion, will position itself at Geneva.
It will certainly have no truck with the environmental and labor rights issues that the European Union and U.S. congressmen are trying to tack onto the WTO in return for liberalizing farm and textile trade and clamping down on anti-dumping restrictions. The West would do well to forget about these concerns if it wants to make any progress at Qatar.
After that, though, things get murky. Big developing countries, especially India and Brazil, are well entrenched in Geneva and will use their diplomatic wiles to ensure that China's entry does not undercut their influence too much.
Agricultural exporters are not sure if China is friend or foe. Its efforts on behalf of mushroom and garlic exporters are not matched by willingness to open its grain or meat markets.
Developing countries have long been anxious to restrict the use of anti-dumping measures by the rich nations. However, there has recently been a surge in anti-dumping measures by countries ranging from Mexico to India against China.
In addition to China's ability to use its size and low labor costs to penetrate overseas markets of all kinds, two philosophical differences have emerged which make others wary.
First, countries like India and Brazil, which want to develop their own large manufacturing companies, resent the way China has become an export platform for foreign multinationals even while its domestic economy has remained only partly market-driven. (Foreign-invested enterprises account for half of China's exports).
India has itself benefited from more liberal trade and could gain a lot more if, like China, it improved its infrastructure and decreased its bureaucracy. But it is easy for opponents to present globalization as a means of enhancing both China and foreign multinational companies at India's expense. Second, many countries see China's increasing share of markets for low-end products such as textiles and toys as in part at least driven by the ability of state-owned enterprises, many losing money or enjoying a zero cost of capital, to sell at or below marginal production cost. The allegations against China may be half-truths, but in Southeast and South Asia and Latin America there are fears of industries and exports being further undercut by a China whose share of trade has been growing at an astonishing pace even without WTO membership. The fears may be exaggerated. China's behavior in international organizations such as the World Bank and the IMF has generally been mature and restrained. It knows, too, that it needs friends, especially in Asia, and aggressive, bullying actions on trade issues will not help.
The rest of the world, India included, is better off with China in the WTO and thus subject to formal rules. But let us not pretend that its presence is warmly welcomed by all, or that it will speed the horse-trading needed to ensure that the impetus for freer trade survives the global downturn.
Copyright c 2001 The International Herald TribunePhilip Bowring:
