No WTO regrets
Ex-negotiator says China joining trade group has benefited world
Charlene Barshefsky is known in China for her role as the chief US negotiator in the marathon talks that led to Beijing’s accession to the World Trade Organization in 2001.
In her spacious office in downtown Washington, the former United States Trade Representative said she looks back with “great pride” on her role in helping China achieve WTO membership after 15 years of trying.
She said it has been “extremely positive” for the country and the world, and she has never regretted supporting it — in stark contrast to the Trump administration’s attitude.
Barshefsky’s role in the process culminated in the signing of a landmark market access deal between the US and China in Beijing on Nov 15, 1999, that paved the way for the country’s entry to the global trading bloc.
In an exclusive interview, Barshefsky defended globalization, which she said has benefited the US tremendously. She also cautioned on the “uncertainty” caused by escalating tariffs, which is hurting American businesses, while urging Beijing and Washington to stick to the common goal of a “mutually beneficial, stable relationship”.
‘A point of great pride’
In a January report to the US Congress on China’s compliance with its WTO commitments, the US administration said, “It seems clear that the United States erred in supporting China’s entry into the WTO on terms that have proved to be ineffective in securing China’s embrace of an open, market-orientated trade regime.”
But Barshefsky said: “Could there be any doubt that China should be in the WTO? Of course not. I’m often asked, ‘Was it a mistake?’ And I’m answering you unequivocally: No. It was not a mistake; it was an extremely positive move for China and for the world.”
Nearly 18 years after China joined the WTO, Barshefsky, now 68, said she remembers anecdotes from the talks, the difficulties China experienced in satisfying membership requirements, and, most of all, the pride she derived from the historic achievement.
She also recalled a moment that had nothing to do with the negotiations, but one she feels strongly about.
One day, while walking in Beijing, Barshefsky heard a man call her name in the way a Chinese speaker would say it. She stopped, only to find a family of three walking toward her.
“I turned around, and it was this gentleman, and he thanked me for WTO, which of course made me laugh, because most people in the United States would have no idea what the WTO is,” Barshefsky said.
“He simply wanted me to know that his son would have a better life. This was completely overwhelming to me. Obviously, he equated WTO entry with personal development, with that rise as part of this process for China.”
Barshefsky said joining the WTO was a “leap” for China, and she understood membership came at a price.
Chinese enterprises were suddenly thrown into direct competition in the global market. Some did not make it, leading to massive layoffs all over the country, Fu Ying, vice-minister of foreign affairs in the late 2000s, told a roundtable discussion in New York on Aug 29.
Barshefsky said there were substantial job losses in the State-owned sector, particularly in the early 2000s. But despite the “disruptive side”, the Chinese market became increasingly competitive, she said.
“China brought itself to the WTO and the reason is that I didn’t change my behavior one bit; China changed,” she said. “It did not have experience with the nature and extent of reforms that had to be made, it didn’t have experience with rewriting so much of its legal code. It was a leap.”
Following its WTO accession, China went through a painful overhaul. In a short period of time, Fu said, more than 2,000 laws and regulations were revised or abolished at the national level, and about 200,000 more below national level. “To the extent that I was the negotiator with China, it’s a point of great pride for me,” Barshefsky said.
Globalization benefits US
The current US administration has been lashing back against the multilateral system, trying to withdraw from or revamp agreements it claims have worked only to the advantage of its trading partners.
It has portrayed itself as a victim of globalization, and US President Donald Trump has threatened to retreat from the WTO “if they don’t shape up”, claiming the US has been cheated and taken advantage of by its trading partners.
The perception in part animates the US administration’s policy of renegotiating those agreements under threat, or arbitrarily imposing tariffs, either as a means of gaining leverage or to force US-owned manufacturers back to the US — which Barshefsky doesn’t think will happen.
“It’s globalization that has helped to make the US as wealthy as it is, our economy as robust as it is,” she said.
Few countries could have survived the 2008 financial meltdown that the US had to weather, she said. And even though there was a lengthy and slow period of recovery, the US has adapted and adjusted to grow again, and China played a positive role in that.
“So, no, the US has not been cheated, not by our trading partners and certainly not by China,” Barshefsky said, adding that the word “cheated” is neither accurate nor productive. “You can say we’ve been disadvantaged by certain Chinese practices, and China may believe it’s been disadvantaged by certain American practices.”
She also recalled the “critical impact” China has had in difficult times, saying such areas should be acknowledged.
Well before its WTO accession, China played an important role during the 1997 Asian financial crisis by keeping its currency stable.
Then, in the 2008-09 global financial crisis, the country became the source of critical demand in a world that was demand-deficient. It was China’s economy that helped bring the global economy back to life, Barshefsky said.
But now there is “substantial friction” between the US and China, she said. “Even amid trade tensions, we cannot lose sight of the important contributions every nation makes — they are to be complimented wherever they come from, as the world works through this intense globalization, intense degree of integration, and all of the frictions and competitive pressures that arise from it.”
‘Wrong measure’
The world’s top two economies have been embroiled in blistering trade tensions since early this year.
“The (Trump) administration has the view that trade deficits are a measure of unfairness in trade,” Barshefsky said. “This is not the case. Our deficit goes up the more the economy grows; our deficit goes down when we’re in recession. So the US had a trade surplus in the Great Depression — our economy was decimated.”
The US economy and job losses tend not to correlate with trade deficits, she said.
“So I think the administration is using the wrong measure. What it should do, and as it has done in past, is to identify the practices it believes are ‘unfair’ and address them, through negotiation preferably.”
In her view, the imposition of tariffs is in effect the imposition of taxes on US purchasers and not an effective policy.
Barshefsky said she is worried about the uncertainties created by a ratcheted-up and protracted trade war. “It’s the creation of economic uncertainty that is extremely difficult for businesses to deal with, and for governments to deal with. This is not in either country’s interest, and both countries should get back to the table and try and sort these differences out.”
Among the concerns on the US side, she said, are whether China’s economic reform process is becoming more robust and whether policies that it alleges give an “unfair advantage” to Chinese companies will change.
China has vowed to stay the course of reform and increase opening-up. It has been a consensus in China that opening-up was key to the phenomenal economic growth in recent decades.
Speaking at the Boao Forum for Asia in April, President Xi Jinping said, “Our next step in development can only be achieved with deeper reform and wider openness.”
At the New York panel discussion, Fu Ying, the veteran diplomat, said: “The changes in China-US relations, though presenting a challenge, can actually help push China’s reform. Some of the requests raised by US businesses, like market access, are also what China is trying to address through reform.”
She cited the series of market opening measures China announced for the financial sector in April as an example, and said eight of 11 items have been implemented, including the removal of restrictions on foreign ownership of banks and asset management companies, equal treatment of domestic and foreign capital, and allowing foreign banks to establish branches and subsidiaries in China.
‘Special responsibility’
Asked to comment on reported attempts to “delink” to some extent the US economy from the Chinese economy, Barshefsky said: “I don’t see the point in that. They would just make both countries poor.”
She said China and the US are in sharp competition, but they also have a special obligation to each other and to the world, “which is to say, to get along — find the areas of common ground, but the differences do need to be addressed”.
“My hope would be that the leaders of both nations would understand they have a special responsibility to work it out,” she added.
Some people in the US appear frustrated that, after years of relations between the two countries, China has not become similar to the US. But Barshefsky said: “China is never going to be the way America is. It has no history being the way America is any more than America has a history of being Chinese.”
As a WTO chief negotiator, she said her goal was always to see greater compatibility between China and the US, not similarity.
“But greater compatibility goes along with my theory that large powers have to find a way to work out their problems,” she said. “They have to act in a manner more compatible with each other’s interests, as a means of diffusing tensions and as a means of creating a stable environment.”
Drawing experience from countless negotiations in her career, Barshefsky said both China and the US must maintain flexibility in working toward a “sensible goal”, especially in the face of what she said was “a down in the cycle of ups and downs” in bilateral relations.
“Each side has to maintain flexibility, each side has to believe in the same goal, the same goal in very broad terms,” she said. “The same goal in this case would be a mutually beneficial, stable relationship — seems to me that’s a completely set, sensible goal, both for China and for the United States.”
Barshefsky said she remembers playing the game “digging to China” in her father’s garden when she was a child, using her mother’s soup spoons, hoping that she could dig all the way through the Earth to China.
From “digging to China” to dealing with China for decades, Barshefsky said she had unveiled the mystery of a country half the world away and had found that Chinese people, just like those in the US, have the same aspiration that tomorrow will be better than today.
The Chinese people, in return, will forever link her with China’s WTO accession, an event they believe is continuing to change the country for the better.