As China and the US fight in a multi-front trade war, there is at least one thing they both seem to agree on, and that is that the World Trade Organization (WTO) is broken and in need of a serious shakeup if it is to continue serving their best interests.
The White House has on various occasions blamed the WTO for letting China maintain its developing country status, taking advantage of preferential treatment in trade deals. Chinese officials, on the other hand, complained that some of the organization’s rules, like those on agriculture subsidies, unfairly favor its rich members.
In a recent interview with news portal guancha.cn, Zhou Xiaoming, former deputy permanent representative of China’s mission to the UN office in Geneva, Switzerland, discussed what is at stake as China and Western countries seek to shape WTO reforms, and why his government should be seizing the opportunity to exert its influence on global governance.
The following is an excerpt from the interview.
The US and its allies have put a lot of work into pushing for changes in trade rules. They accuse China of market distortions which they say are why the WTO is in a mess now. They want to set new rules regarding the market economy, industry subsidies and State-owned enterprises — all designed to weaken China and make it hard for it to use its institutional advantages to compete with Western countries.
If they have it their way, China will be labeled a “non-market economy.” Chinese overseas investments will likely face more scrutiny and Chinese exports could be subject to more tariffs. If admission to the WTO helped drive growth in China for the past 20 years or so, the new rules promoted by the US will put an end to that growth. The WTO reforms are a battle over the right to economic development. In addition, the US has repeatedly blocked appointment of WTO judges.
This is why China must take the opportunity to participate in rule-making for global trade governance. It will be the first time China has had an opportunity to do so and it has to do it right in order to create a friendly international environment for its rise.
China put forward a proposal on WTO reforms in May. In its proposal, China spoke for developing countries and called for action to fix WTO rules that allow advanced members to excessively subsidize their agriculture, at the expense of farmers in developing countries.
Even as advanced economies push their agenda, however, developing countries have not come together to formulate their plan for a new WTO. Unless they do, history may well repeat itself. Rich countries will again set the agenda for everyone and poorer countries will again play by their rules. China should not stop at bargaining over the rules Western countries have written. It should propose its own ideas about the WTO reform. That is the only way to stop being reactive in trade talks and start protecting its interests in a real and proactive way.
Zhou also warned that China should keep wary against entering any agreement with the US which could be against the WTO rules.
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