Exporting Peace

After the recent tumult over product safety, new agreements establishing rules for trade in food and goods should help the United States and China improve their relationship.

With each passing day, China's booming economy makes Beijing an even bigger factor on the world stage-a trend that is likely to continue. Yet recently, anxiety has been rising in the international community over widespread recalls of food and goods produced in China that posed serious hazards to consumers. Increasing economic integration makes establishing agreed-to norms and safety standards a must.

Two memorandums of understanding (MOUs) were signed this week at the Joint Committee on Commerce and Trade and "Strategic Economic Dialogue" (SED) meetings in Beijing, the primary bilateral forum for U.S.-China engagement on economic relations. The two agreements, one covering trade in food and feed and the other drugs and medical devices, will help ensure that Chinese exports are better regulated and that exports meet established U.S. standards.

With trade and economic integration rapidly growing, the forthcoming MOUs will affect all Americans, making these agreements vitally important. In particular, the principles agreed to in the food and feed memorandum represent a major transformation in the U.S. approach to regulating food imports. Unlike many U.S.-China MOUs, which are normally brief, vague and simply express agreement to address a problem, this MOU is lengthy and detailed. According to the U.S. Secretary of Health and Human Services, "it's binding, it does have benchmarks."

The most momentous change that will be brought about by this agreement is the initiation of a voluntary third-party certification process in a public-private partnership regime. This will allow independent experts-individuals who have recognized expertise-to visit factories and food processing plants in China to certify that processes are safe and that facilities meet U.S. hygiene standards. Neither the U.S. nor Chinese governments have the capacity to effectively monitor all the existing global food and drug processors, much less potential Chinese exporters to the United States, so this new approach will permit trade in safe products to expand while still ensuring safety for U.S. consumers.

The MOU encourages the private sector to better self-regulate, increasing efficiency and effectiveness. Rather than waiting for a U.S. government inspector to make a rare visit overseas, an independent expert without conflicts of interest can certify that the factory meets U.S. standards and that a particular product's production process is safe. This does not mean that the U.S. government is extricating itself from the business of food safety. On the contrary, Washington is pushing to build capacity and ensure that it has the capability to make sure U.S. regulations and standards are adhered to throughout the product lifecycle-and that companies that fail to comply are held accountable.

But even though the U.S. and Chinese governments are addressing the problem and agreeing to innovative solutions, the challenge will be implementing them. The Chinese agriculture and food processing sector is massive and decentralized. Chinese authorities regularly discover tens of thousands of unlicensed manufacturers in periodic crackdowns. Transparency is lacking. Despite campaigns and high-level political will, the root causes of corruption are not being addressed. Even though importers and exporters have the greatest incentive to ensure safe production and trade, these new strategies will not prevent counterfeiters and bad actors from cutting corners and substituting dangerous inputs for more expensive approved ones. Building enforcement capacity and increasing disincentives for violators at local levels in China will be critical to ensure that the principles set out in the food and feed MOU contribute to increasing trade in safe products.

The emergence of China as a global economic power is one of the most critical geopolitical occurrences of the 21st century, presenting both challenges and opportunities for the West. The SED is turning out to be an important mechanism that gives the United States an opportunity to engage China and initiate new policies and practices that help ensure that China's rise follows a positive and industrious course. In the wake of the crisis of confidence over Chinese products, the MOUs signed at the SED demonstrate willingness on the part of the United States to "open up" and expand trade-not limit it, as some Chinese critics have contended. The SED process in general, and the forthcoming MOUs in particular, should send a clear message to Beijing: The United States welcomes the rise of a peaceful and prosperous China.

 

Drew Thompson is the Director of China Studies and Starr Senior Fellow at The Nixon Center.