DON'T REMOVE THE LEVER AGAINST CHINA'S MISBEHAVIOR

by Robert E. Lighthizer

The New York Times - The International Herald Tribune

Monday, April 19, 1999

NEW YORK - No soonerhad President Bill Clinton pulled the plug on the deal to bring China into the World Trade Organization than he called the Chinese prime minister, Zhu Rongji, last week to restart the negotiations. In pulling back from the deal, the president seemed to feel vulnerable on the trade front because of the Chinese political contribution scandal and reports about nuclear spying. Although this show of backbone seemed paradoxical - for six years his "engagement" policy has denied a link between Beijing's foreign and military policies and American economic ties to China - his action was nevertheless welcome. Using economic pressure to counteract Chinese military or diplomatic aggression is exactly what is needed. If China joins the WTO on current terms, the ability of future U.S. presidents to exercise this "linkage" may be severely limited. Unless changes are made when talks resume in Beijing this month, the United States 'may not be able, once China is in the WTO, to restrict Chinese imports in

response to threats toward Taiwan, human rights violations in Tibet or religious persecution. If it did so, China could complain to a dispute-settlement body. within the organization that the United States had violated several of its rules, ineluding the most-favored-nation principle, which prevents Washington from discriminating against the imports of any particular member of the WTO. Of course, the United States could always invoke the trade organization's "national security" exception to justify a trade action against China. This exception purports to allow a WTO member to decide unilaterally when a trade action that otherwise would violate thr rules is necessary for reasons of national security. But China would probably argue that its, actions did not threaten America's "essential national security interests' or that there was not an " emergency in international relations," both WTO standards. While the United States would argue the contrary, the decision of a panel of international bureaucrats might we

ll go against it. Indeed, the European Union, Canada and Mexico, (among others) already have' argued vociferously that the national security exception may provide no defense against a challenge to economic sanctions. They did so in challenging American action against countries that do business with Cuba, Iran and Libya. (The case was settled before it went before a WTO panel.) So it is reasonable to expect that the Europeans, Canadians and Mexicans might support Beijing in a complaint against a future American use of the national security exception to impose such sanctions against China. If an international panel found against the United States, then it would have to back down, acquiesce in Chinese retaliatory trade measures, or ignore the ruling and do great damage to the authority of the WTO - all bad options. These considerations would, of course, greatly influence internal debate within a future U.S. administration and would discourage linking trade sanctions to Chinese misbehavior in the first place.So

what lever would the United States have against the Chinese if, for example, they truly menaced Taiwan? Without sanctions and other economic penalties, it might be forced to resort to more drastic approaches, including military intervention. The Clinton administration may not see the link between China's actions in various areas, but you can be sure that the Chinese do. After all, China is neither a free market nor a democratic country. Its leaders view economics the same way they view defense, foreign policy or human rights. It is a means of expanding the power of the state and maintaining control of its population. Since the U.S. administration made clear its intention to separate economic from other issues, China's behavior has taken an alarming turn for the worse, virtually across the board.

As reported by The New York Times, a classified report by the U.S. Department of Defense to Congress on security issues in the Taiwan Strait has concluded that China has installed a bristling array of missiles pointed at Taiwan, with many more on the way. Backed by naval forces, it has also staked out an aggressive claim to the Paracel and Spratly Islands in the South China Sea. These islands lie as far as 1,600 kilometers (1,000 miles) south of China. They are close to virtually every, ally of the United States in Southeast Asia and won Id give the Chinese a powerful platform from which to intimidate those countries, as well as Japan and Korea, whose principal sea lanes run straight through the area. China is also reported to have helped North Korea build a pew three-stage rocket that could soon give that country the ability to launch nuclear missiles at Alaska, Hawaii and eventually the West Coast. Taken together, these events leave no room for reasonable doubt that the Chinese are intent on becoming the d

ominant power in Asia, wholly without regard for the legitimate security concerns of the United States. Likewise, China's behavior on human rights issues has deteriorated significantly. In its recent report on human rights, the U.S. State Department ,forthrightly conceded as much. The United States cannot allow itself to be put in a position where its options in reacting to such behavior are limited. If the Chinese must be admitted to the WTO, all of the organization's relevant agreements should be amended to make it clear that any action taken against imports from a particular country for national security reasons do not violate the WTO's obligations. Moreover, Congress should adopt a provision stating that, if the WTO ever finds that actions taken by the United States for national security reasons are inconsistent with its obligations the trade organization, this so-called inconsistency shall be solved by its prompt and atomatic withdrawal from it. While admirers of the WTO claim that these would be extrao

rdinary measures, the simple truth is that such steps are called for in this instance. Under the WTO and its predecessor organization, the United States has never been in a situation remotely similar to the one that would exist if the Chinese were admitted. Until now, those countries that were viewed as potentially hostile to America were not members of the World Trade Organization, did not export anything of consequence to the United States, or both. China is entirely different in this respect. If the Clinton administration is unwilling to recognize this fact, Congress should insure that this White House does not deprive future presidents of the right to do so.

The writer, a trade lawyer whose clients include several U.S. steelmakers, was a deputy trade representative in Ronald Reagan's administration. He contributed this comment to The New York Times.