China and G-7 Summits

The United States can draw together the security, economic, and
political dimensions of its strategy by promoting China's phased
membership in the G-7 summit process. This overture would signal
America's strong commitment to integrating China into the global
system as long as it accepts international economic and security
norms. China would welcome the acknowledgment of its genuine
accomplishment and status, especially since Russiahas already had a
special seat at the summit tables.

Indeed, China's participation with the G-7 might strengthen the hand
of the reforming modernizers who want to ease it into a cooperative
relationship with the rest of the world. In contrast, the recent
pattern of conflicts has played to the advantage of Chinese leaders
who are stirring the pot of fiery nationalism as substitute fare for
the legitimacy that communism no longer offers. These leaders assume
that China can set its own rules, or at least play a good game of
global power politics by manipulating the interests of others against
U.S. demands. China's gradual introduction to the G-7 might be
employed both to convince the Chinese that World Trade Organization
(WTO) membership really does require a commitment to meet basic
trading system standards, and to maneuver Europe and Japan into a
unified presentation on WTO requirements. If the United States,
Europe, and Japan sit down together with China regularly, the
democratic threesome is more likely to develop a united position and
stick to it.

The nature of China's relationship with the G-7 would depend on its
degree of cooperation and commitment. For example, initially it might
participate with Russia in the political discussions by heads of
governments. Once China and the WTO worked out terms of accession, it
might also participate in the economic discussions at the summits. As
it approaches world financial and trade standards, it might take part
in the more extensive G-7 finance ministers' process.

Adding China would also have the benefit of making the G-7 less of a
Eurocentric gathering. Not surprisingly, the presence of Germany,
Great Britain, France, Italy, and the European Commission at summit
meetings leads to a European bias in a group that is supposed to be
examining world economic--and frequently political--problems. China's
participation might prod Europeans to broaden their outlook and weigh
the implications of their actions--or inaction--for regions outside
their continent.

China, Taiwan, and the WTO

The United States also should adjust its approach toward the
accession of China and Taiwan to the WTO to fit this overall
strategy. All parties would benefit from China's accession to the WTO
if the parties could determine acceptable "executory" terms.
Unfortunately, it appears that the United States has unintentionally
transformed WTO accession into a bilateral Sino-American conflict.
Moreover, the tension has been exacerbated by trading partners who
have emphasized their support for China's early accession, instead of
focusing on the standards that China needs to meet. Even Chinese
economic reformers now maintain that WTO accession is a "political",
not an economic, question. They believe that the United States alone
is keeping China out of the organization in order to secure political
leverage or to punish China. These misconceptions have created
dangerous possibilities for miscalculations on all sides, as well as
for widening fault lines among current WTO members.

Working with the WTO's leadership, the United States should reach
agreement with the European Union, Japan, other North Americans, and
ASEAN and other APEC (Asia Pacific Economic Cooperation) members on a
core set of principles that China must accept in order to accede to
the WTO. These might include, for example, transparency of the trade
regime, uniform nondiscriminatory application of trade rules,
national treatment (applying the same rules to both foreigners and
nationals), the minimum international protections for investment,
reasonable opportunities for market access, adequate and effective
protection of all forms of intellectual property, and use of dispute
resolution mechanisms. If China accepts such a core set of
principles, the WTO can be more flexible in phasing in China's
obligations. In the meantime, the WTO would need to have processes in
place to work with China to identify and address problems of
implementation. The WTO might maintain certain provisions that have
been used with non-market economies, which could be phased out as
China's reforms enabled it to adhere effectively to the principles.

The United States should not let itself become the sole advocate of
this accession regime. On the contrary, we should be the catalyst for
organizing ongoing common efforts. American diplomacy should make
clear to allies and partners that this effort has significant
strategic implications, and that therefore the United States values
and expects cooperation.

This effort should also seek to bring Taiwan into the WTO as a
developed economy. There is ample precedent for membership in
economic groups by both China and Taiwan as "an economy." Both belong
to the Asian Development Bank. In 1991, with U.S. help, Korea managed
to negotiate the APEC membership of China, Taiwan, and Hong Kong.
Obviously, this effort can succeed only if the United States assures
Beijing that it is not seeking to dismantle China and that it stands
behind the commitments of the three communiqués and the Taiwan
Relations Act. Again, the United States would be wiser to pursue this
approach to China and Taiwan in concert with others, and on a
systematic rather than episodic basis.

APEC and ASEAN

The APEC group, first convened in 1989, is a fledgling body that is
still developing cohesion and a sense of purpose. Nevertheless, it
offers another forum for the United States and its economic partners
to engage China on the benefits and responsibilities of integration
in international economic systems. As a promoter of "open
regionalism", APEC should encourage China to develop internal and
external reforms in a multilateral context. APEC's message should
reinforce other communications about the WTO accession process. And
until China joins the WTO, APEC could serve as the primary vehicle
for introducing China to the norms of the multilateral market economy.

The United States will need to work, preferably discreetly, with the
other APEC nations to persuade them to take on these tasks. Most APEC
nations are looking to accommodate China, which they perceive as the
rising power in the region. But many Asians also recognize the
strategic importance of persuading China to accept security and
economic rules. Moreover, these nations would like the United States
to remain as the "balancing wheel" in the Pacific, and at least some
could be persuaded that the integrationist approach outlined here
serves mutual purposes--especially in contrast to the recent pattern
of Sino-American conflict.

ASEAN's Regional Forum (ARF), recently initiated by ASEAN to discuss
security issues with other nations in the region, offers a means of
engaging China on collective security topics. This approach can be
useful for the United States in three respects.

First, the discussions can communicate to China the benefits of
abiding by the core security norms that underpin the U.S. strategy of
engagement in the region; alternatively, China may see firsthand that
aggressive actions are likely to generate group condemnation and
perhaps even opposition. Second, ARF may usefully press others in the
region to recognize that security, including that involving China, is
a mutual responsibility--necessitating their contributions as well as
that of the United States. Over time, for example, the United States
may persuade ASEAN and others in ARF to address the dangers of
proliferation, creating a regional multilateral context that could
encourage China's cooperation as a member. Third, ARF offers a
vehicle for gradually involving Japan in security questions to a
greater degree and in an open fashion.

Bilateral Battles

Instead of catalyzing multilateral efforts to draw China into
international economic groups, the United States has drifted into a
campaign of bilateral battles. The United States is bearing alone the
burden of contentious disputes with China, even though the issues are
of interest to many countries. Even when America's leverage is great,
this approach can be risky and counterproductive because China's
leadership, jostling in the succession struggle, is vulnerable to
nationalistic pressure against yieldingto American demands. What is
worse, if the United States makes threats it is unwilling to carry
out, China will sense weakness and be emboldened to confront America.

In 1993-94, the linkage of most favored nation (MFN) status to human
rights improvements fell into this trap, and the administration then
had to crawl out. The United States has now granted annual extensions
of MFN in 1995 and 1996. The president and Congress should reconsider
whether this annual excoriation continues to serve U.S. interests.
Despite the appellation "most favored nation", this status is in fact
not a favor at all; it is the baseline trade relationship accorded to
virtually all countries. A debate each year on whether to terminate
this status certainly does not accord with a long-term strategy of
engagement with China. It draws America away from the more promising
multilateral approach, and the reality is that even when the United
States has objections to some of China's policies, it is highly
unlikely to terminate MFN status. Moreover, the Jackson-Vanik
Amendment on which this exercise is based only requires presidential
certification that a non-market economy is not impeding emigration.
(Deng Xiaoping once offered to permit ten million Chinese to emigrate
to the United States in order to prove the absence of restrictions.)
In sum, as a practical matter the annual MFN exercise produces
ineffective criticism of China and serves as a stark reminder that
the United States is not willing to take the extreme step of ending
MFN to address its concerns.

Essay Types: Essay