(Essential questions) Dan Steinbock: Why is the argument that "WTO accepted China was a mistake" is wrong?

  China News Service, Beijing, December 10th, title: Dan Steinbock: Why is the argument that "WTO accepted China was a mistake" is wrong?

  Author Gao Chuyi

  December 11, 2021 is the 20th anniversary of China's accession to the World Trade Organization (WTO).

In the 20 years since China’s entry into the WTO, what changes have taken place in China’s position and role in the process of actively participating in economic globalization?

  Dan Steinbock, director of the International Trade Research Office of the US think tank India-China-US Institute and a visiting scholar at the Shanghai Institute of International Studies in China, recently accepted an exclusive interview with China News Service on “Questions of East and West” to analyze China’s 20 years of accession to the WTO. The changes brought to the world economy.

Dan Steinbock said that the West should recognize China's extraordinary contribution to the world economy and take it as a responsible partner to participate in its development and cooperate.

  China News Service: On December 11, 2001, China successfully "entered the WTO" and became the 143rd member of the WTO.

Do you think the WTO needs China?

In November 2001, Doha, Qatar, Yusuf Hussein Kamal, Chairman of the Organizing Committee of the Fourth WTO Ministerial Conference of the World Trade Organization, hammered China into the WTO.

Photo by China News Agency reporter Qian Xingqiang

  Dan Steinbock: Of course, it is a two-way relationship, especially when the organization is under the new risk of unilateralism-this threat has cast a shadow on the WTO.

  The WTO was established in 1995 to replace the General Agreement on Tariffs and Trade (GATT) established in 1947.

The basic idea originated from the Bretton Woods Conference in 1944, when people proposed to establish a new international trade institution to expand the International Monetary Fund (IMF) and the World Bank.

Since isolationism and protectionism promoted the arrival of the Great Depression and led to the Second World War, people hope to avoid isolationism and protectionism.

  The economist John Maynard Keynes warned after the end of the First World War that he believed that the harsh peace conditions of the Western allies would lead to the recurrence of a world war, and that was indeed the case.

After the Bretton Woods meeting, he warned that if the allies are unwilling to reach an agreement on a true multilateral trading system, the world will be divided again after the United States loses its hegemony.

By the 1970s, the U.S. trade deficit (and later the budget deficit) became the new normal.

  To this day, the WTO still mainly reflects the interests and agenda of a prosperous economy.

This is why the WTO needs China and other large developing economies: to pave the way for a truly multilateral and inclusive WTO. This goal was proposed as early as the 1940s and can represent the world today. trading.

  China News Service: In your opinion, what role has China played in the WTO in the past two decades?

What are the important contributions to global economic growth?

In November 2021, "A new chapter in the milestone of opening up to the outside world, cooperation and win-win-the 20th anniversary of China's accession to the World Trade Organization" was held in Shanghai.

Photo by China News Agency reporter Sheng Jiapeng

  Dan Steinbock: When China joined the WTO, the agreement stipulated that members could treat China as a "non-market economy."

Due to China's economic scale, government intervention, and state-owned enterprises, advanced economies believe that it is necessary to put aside China's domestic price comparisons, but should use "structural value" to understand the "real situation" of China's economy.

  The key terms of this agreement expired in December 2016, and the United States, the European Union and Japan should grant China its due market economy status (MES).

But it is shocking that they did not do so.

Although China has made historic progress in the past two decades, the United States still insists on denying China's status.

In December 2016, the then Ministry of Commerce spokesperson Shen Danyang responded to the United States, Europe, Japan and other countries’ non-recognition of “China’s market economy countries”, stating that a small number of WTO members were vague on their Article 15 obligations and tried to China expresses its strong dissatisfaction and resolute opposition to the continued use of the "surrogate country" approach in China's anti-dumping investigations.

Photo by China News Agency reporter Li Huisi

  However, just like 20 years ago, China is still being levied high anti-dumping duties (from the West).

We can imagine what would happen if the same double standards were applied to these advanced economies when they were industrialized?

In the 19th century, the United States had the highest tariffs in the world, and its practice was to protect new industries.

The US government believes that US-based manufacturing is essential to sovereignty.

In France, state intervention can be traced back to the era of mercantilism and Colbert.

Friedrich Liszt of Germany rooted the concept of his national innovation system in American-style protection of nascent industries and high tariffs.

The mercantilism of the Elizabethan era gave birth to British free trade imperialism.

  In addition, unlike Western powers that are in the process of industrialization, since 2001, China has been actively working to align itself with WTO rules, open markets, and abide by WTO rules.

China's overall tariff level has been reduced to 7.4%, which is lower than that of developing members of the WTO and close to developed countries.

  China is not the touchstone of WTO or world trade, trade unilateralism is.

The Sheraton Doha Hotel, which looks exactly like a pyramid, is a landmark building on the West Bay Peninsula.

In 2001, this place witnessed China's accession to the WTO.

Photo by China News Agency reporter Mao Jianjun

  China News Agency reporter: Joining the WTO is a milestone in China's opening up to the outside world and a testament to China's firm support for the development of the multilateral trading system.

What do you think of China's role in the multilateral system in the era of globalization?

  Dan Steinbock: Before the end of the 20th century, the world economy was mainly promoted by developed countries.

Over the past two decades, due to economic reforms and opening-up policies, the long-term growth potential of large developing economies has increased, especially in emerging Asia and China.

However, the latest round of multilateral trade negotiations (ie, the "Doha Development Agenda" launched in 2001) ended in a deadlock.

Long-term differences between the United States, the European Union and developing countries have complicated negotiations.

The key issues on the agenda include agriculture, industrial tariffs and non-tariff barriers, services and trade remedies.

  Timing speaks for itself.

With the rise of large developing economies, the world trading system has subsequently fallen into a deadlock.

At the same time, as the creator of the General Agreement on Tariffs and Trade/WTO, the United States is changing its trade stance.

Unlike previous US administrations, Trump, as a trade war hawk, advocates bilateral pressure on multilateralism and international rules.

The Biden administration has taken the same position.

Therefore, today world trade remains stagnant.

  China and other large emerging economies (especially export-oriented trading nations) have been demanding corresponding voice and representation in the WTO for the past ten or twenty years.

This is essential for both rich and poor countries.

And this is also the meaning of multilateral interdependence.

Therefore, it is very important for China to play a pioneering role in the reform of the WTO in the 21st century.

As the West is promoting deglobalization, China's role is extremely important in terms of strengthening the benefits and values ​​of the interdependence of developed and developing economies.

  China News Agency reporter: Pascal Lamy, the former WTO Director-General, once pointed out, “There is an argument among some Westerners that'(WTO) accepting China was a mistake in the first place.' This argument is definitely Wrong." What do you think of such an argument?

Twenty years after joining the WTO, how should the West face up to China's contribution to the world economy?

Pascal Lamy, former Director-General of the WTO.

Photo by Ren Haixia of China News Service

  Dan Steinbock: I agree with Lamy.

Some Western countries believe that China's accession to the WTO is a "mistake."

This view reflects a persistent imperial instinct, which is a dangerous nostalgia for the colonial era.

  When the Cold War ended and China joined the global system, the latter was still dominated by a few wealthy Western economies, the so-called "OECD Club."

As Silvia Osteri, a senior economist at the OECD, used to point out, when economies representing different political heritages begin to consolidate, there will always be "system friction."

But we need to manage this friction, not suppress it.

There is no single "correct" capitalism that is a model for all countries.

Just as there are many forms of capitalism, there are also many forms of market economy.

This diversity and difference is wealth rather than burden.

  Western countries should not try to impose a rigid model on China, which usually serves external economic interests rather than the Chinese people.

The West should recognize China's extraordinary contribution to the world economy and take China as a responsible partner to participate in its development and cooperate.

  We all need to look at issues from different perspectives to avoid the mistakes of the past — from the cruel legacy of colonialism and cold war disagreements to the misguided war on terrorism after the September 11th incident — emphasizing the importance of peace and stability , To ensure more inclusive development and real prospects for multilateral trade.

  Western countries should also view China's contribution to the world economy in this way.

(Finish)

About the interviewee:

  Dan Steinbock, Ph.D. (Dan Steinbock), internationally renowned multipolar world strategist, founder of Difference Group, director of the International Trade Research Office of India China and America Institute, a US think tank, Shanghai, China International Studies Visiting scholar at the Academy and the Singapore European Centre.