The New York Times

Tuesday, November 16, 1999

Opening China's Markets

The Clinton administration appears to have salvaged the trade agreement with China that it could have concluded in April if President Clinton had not rejected it. The new agreement, announced yesterday in Beijing, paves the way for China to join the World Trade Organization, committing it to obey rules that apply to all other major trading partners.

Zhu Rongji, the Chinese prime minister, offered much the same terms seven months ago on a visit to the United States. Mr. Clinton's last-minute rejection, based on his fear that Congress would not go along, embarrassed Mr. Zhu and gave his domestic critics time to build opposition to an arrangement that would have accelerated China's push toward freer markets. Since April the administration has scrambled to correct its blunder. Yesterday it succeeded.

The new terms appear about as bold as the old ones. China promises to cut tariffs below those of many of America's other trade partners. It agrees to end export subsidies, give American exporters the right to distribute goods and open up Chinese markets to American farmers, banks, insurance, telecommunications and internet companies.

By one calculation, the agreement will do little for the Chinese economy because its exports already enjoy unfettered access to American consumers. One exception is textiles and apparel. The new terms grant the Chinese an important concession -- the United States will phase out quotas on Chinese goods as fast as it phases out quotas on textiles from other trade partners. This provision will not hurt American manufacturers, since Chinese apparel sales mostly come at the expense of other third world exporters.

But by a second calculation, the impact on the Chinese economy could be profound. By joining the trade organization, China's market advocates now have the weight of international law on their side. Mr. Zhu expects trade accords to tilt domestic debate over economic reform in his favor.

There are critics who say that China will not live up to its trade promises, and that the trade organization is incapable of forcing it to do so. Perhaps. But with China outside the organization, the United States has no real leverage. With Chinese membership, the United States can marshal international sanctions for violations. Besides, the imposition of the rule of law on trade might strengthen the hand of domestic forces fighting for the rule of law for the rest of Chinese society.