Char­lene Barshef­sky paved the way for en­try to the global trad­ing bloc in 2001 and says both coun­tries should pur­sue a ‘mu­tu­ally ben­e­fi­cial, sta­ble re­la­tion­ship’

China Daily (Canada) - - YEARS ON - By ZHAO HUANXIN in Wash­ing­ton huanx­inzhao@chi­nadaily.com.cn

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”.

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.

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.”

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.

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.

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