After Seattle, China Faces Tough Fight for WTO Entry

The nation's entry was never guaranteed, but the protests and the WTO's failure to reach agreement on trade talks have made it a lot tougher.
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The protests in Seattle and the failure of the

World Trade Organization

to reach agreement on a new round of global trade negotiations will have consequences with respect to China's admission to the trade body in a number of ways.

As Bette Davis said in

All About Eve

, "Fasten your seatbelts. It's going to be a bumpy ride."

China's entry into the

WTO

never promised to be a smooth process, either for China or the rest of the world. Seattle has made it a whole lot tougher.

To begin, approval next year in

Congress

of China's admission to the WTO is now less certain. Anti-WTO protesters, emboldened by their success in Seattle, are planning a massive campaign against next year's vote.

Even if the Seattle ministerial had been a success, next year's debate would have been enormously contentious. The year 2000 is an election year, of course, and Congress has not demonstrated a great deal of willingness to work with the

Clinton

administration on difficult international issues. Now, protesters will paint members of Congress who favor the agreement as supporting a corrupt dictatorship entering a corrupt international body.

As

TSC

's

Thomas Lepri

reported this week, most experts still believe the agreement will pass. And investors are behaving as if it will; many China stocks remain at record levels. It is true the protesters caught the attention of the business community and they will be much more engaged in the issue in the next few months.

White House

staffers have begun meeting with members who favor the agreement to plot a strategy to get it passed. I seem to remember, however, that most experts also were certain that the WTO would launch a new round at Seattle.

At home, the agreement also faces potential difficulties. The Chinese government could now experience stiffened domestic opposition to entering the WTO. Antitrade forces in China, particularly the bureaucrats who manage inefficient state-owned enterprises and who fear global competition, can now point to the protests in Seattle as evidence of the kind of social disruptions and protests that come with increased trade. The central government and the Chinese leadership, in general, recognize the benefits for China of increased trade, but hate the protests and opposition to government authority more than they love free trade -- witness the crackdown on the spiritual meditation group

Falun Gong

. And opposition to the WTO in China will only increase next year as resentment among ordinary Chinese grows as they listen to the inevitable China-bashing during the debate in Congress.

Assuming China does enter the WTO, however, its position within the group now promises to be different as a result of the Seattle meeting. In the past, the WTO, and its predecessor, the

General Agreement on Tariffs and Trade

, tended to ignore the interests and desires of developing nations. Although the WTO (and the GATT) operates on a consensus basis where any country could block an action of the group, typically agreements were reached by developed countries in closed-door meetings. Developing nations, lacking economic clout, usually did not object.

At Seattle, one of the reasons the meetings failed was the anger of the developing nations at being left out of key negotiations. They had every right to be angry, since the issues that were being discussed for the new round were critical to the developing world. For example, reducing agricultural subsidies in the

European Union

and Japan presents enormous potential for increased agricultural exports from developing nations.

However, the developing world lacks a clear leader -- a nation the developed world cannot afford to ignore, but whose interests are the same as many developing nations. Look for China to try to fill that gap in the WTO. The results would be a much more powerful developing country bloc in the WTO, and much less agreement on the issues of labor and environment that divide the trade group and will continue to contribute to antitrade sentiments in the U.S. until they are addressed.

Ironically, China, not yet a member of the WTO, merely had observer status at the Seattle ministerial. Yet it is one of the nations most affected by what occurred there.

David Kurapka wrote speeches for Treasury Secretary Robert Rubin from 1996 until 1999. Before that, he was U.S. Trade Representative Mickey Kantor's speechwriter from 1993 to 1996. Kurapka writes from Oakland, Calif.