Can the World Trade Organization Be Saved?



Andrew Browne | Bloomberg

Can the World Trade Organization be saved, or should it be dumped once and for all?

I put that question this week to Charlene Barshefsky, the former U.S. Trade Representative who negotiated China’s entry into the global body, during a Bloomberg New Economy Conversations panel. Her response: The WTO “has been moribund for 20 years.”

That’s almost exactly how long China has been a member. During that time, Barshefsky said, progress toward resolving global trade problems has come about in spite of the WTO, not because if it, largely within the context of bilateral free trade agreements.

However, British Labour Party peer Peter Mandelson, a former European Commissioner for trade, wasn’t ready to declare the organization irrelevant. In fact, Mandelson sought to run the WTO when the top job came open in May. (The British government declined to endorse him.) The world needs a rules-based trading system, he said, but added that “the WTO rulebook needs updating” to take into account the rise of state-backed economies, like China.

Representing business, Austin Ramirez, chief executive of global engineering and manufacturing company Husco International, called for a more effective WTO. “We’re looking for low-trade barriers, whether they’re tariffs or other non-tariff barriers,” he said. “And I think it’s really hard to achieve that in a unilateral or bilateral trade agreement world.”

The audience overwhelmingly agreed. In a vote, 93% supported reform of the WTO; only 5% wanted to dump it.

Now that Beijing has imposed a “national security law” on Hong Kong, and its secret police have set up headquarters in a local tourist hotel, a crackdown is underway. Its swiftness may have shocked those who envisaged the new law as a “sword of Damocles,” a potent threat rarely if ever used. But the new regime has already been used on schools and colleges, given the concern Chinese authorities have with Hong Kong’s youth, some of whom they see as “infected” by the bug of liberal democracy.

This week, authorities also moved to change the Hong Kong legislature, disqualifying dozens of candidates in the pro-democracy camp from running in planned elections. On Friday, Hong Kong’s leader, Carrie Lam, announced the elections themselves would be postponed by a year, citing Covid-19.

The wider context here is Beijing’s fear of instability on its vast periphery. The U.S. scholar Carl Minzner is among those who see parallels between Beijing’s efforts to pacify Hong Kong and its roundup of one million or more mainly Muslim Uighurs in Xinjiang in the far western borderlands. Bloomberg Businessweek reports growing concerns in Taiwan that the self-ruled island could be Beijing’s next target.

Indeed, Taiwan is shaping up to be the latest U.S.-China flashpoint. President Donald Trump’s White House is now weighing the question of who to send to the funeral of Lee Teng-hui, the first democratically elected Taiwan president. Expect a sharp reaction from Beijing if Trump dispatches a senior official.

As we’ve written before, the Trump administration is pursuing a scorched earth policy on China. It appears that the goal of Republican hardliners led by Secretary of State Mike Pompeo is to reduce the U.S.-China relationship to a smoldering ruin that can’t be easily rebuilt should former Vice President Joe Biden win in November. The U.S. move to close the Chinese consulate in Houston, allegedly because it had become “a hub of spying and intellectual property theft,” helps serve such an end.

Journalist Mara Hvistendahl, who explored Chinese economic espionage in her recent book “The Scientist and the Spy,” takes a skeptical view of the White House accusations in a July 26 article in The Intercept. A local attorney told her the episode revealed “more smoke than fire.”

Beijing, which responded by closing the U.S. consulate in Chengdu, is carefully calibrating its response to Trump’s confrontational approach. In an article in Politico this week, Cui Tiankai, the Chinese ambassador to the U.S., wrote that his government is “still willing to grow China-U.S. relations with goodwill and sincerity and hope the U.S. will return to the right track.”

Events in Hong Kong make that goal more difficult—and the clampdown may have only just begun. Britain has offered an escape route for three million British passport holders in the territory, but China is taking steps to close that pathway down, saying it will not recognize the travel documents.

Andrew Browne is the editorial director of the Bloomberg New Economy Forum. Prior to joining Bloomberg, he was China editor, senior correspondent and columnist for the Wall Street Journal.

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