时间：2022-09-10 12:46:59
The World Trade Organiza
tion’s (WTO) Doha Round of trade negotiations is on life support and there are intermittent and half-hearted efforts to resuscitate it. It would seem that the postwar framework for multilateral trade cooperation is under existential threat. It is, however, premature to draw that conclusion.
Beginning in the 1990s, when it was becoming clear that China represented a huge market access opportunity, the United States and European Union launched efforts to reduce China’s trade barriers. This initiative was assisted by the fact that the Chinese leadership, or at least some parts of it under Zhu Rongji, wanted to use the WTO as a means for furthering domestic reform and anchoring it in the WTO. China committed to substantially reducing its barriers in agriculture, industry, and services. China was not alone: A number of Eastern European and other communist countries like Vietnam also joined the WTO on similar tough terms.
The trading system has accommodated an emerging China. How will it adapt to and be shaped by a dominant China? Our key argument is that while China will have strong reasons to sustain the open trading order, that cannot be taken for granted. The world needs to tether China to the multilateral system as an insurance against the small possibility that China will seek to translate its power into trading privilege.
China’s current trade ascendancy and its implications
China’s trade ascendancy and presence are not a distant phenomenon. In manufacturing trade, China is now a large supplier to all the major markets, and its presence has grown significantly over the course of the Doha Round negotiations. We identify the world’s ten largest traders and for each of them also identify the largest sources of supply in the manufacturing sector. China’s share in the major import markets has doubled between 2001 and 2009, and in some of the most important world markets China now accounts for more than a fifth of total manufacturing imports. China’s share of manufacturing imports in Japan is 35 percent, in the European Union about 30 percent, and in the United States slightly over 25 percent.
Two points are worth highlighting. First, in the most protected sectors, China’s share of imports in 2009 is substantially greater than for overall imports and dwarfs that of any other supplier in each of these markets. For example, China’s share in these sectors in Japan is over 70 percent, in Korea over 60 percent, in Brazil about 55 percent, and in the United States, Canada, and the European Union about 50 percent each. Second, even in these protected sectors, China’s share has increased dramatically over the course of the Doha Round. In many of the importing countries, China’s share has more than doubled. Also striking is how much market share China has gained, even in countries such as Canada, Mexico, and Turkey, which have free trade agreements with close and large neighbors. Thus, liberalization under the Doha agenda today, especially in the politically charged, high-tariff sectors, is increasingly about other countries opening their markets to Chinese exports. In short, with some exaggeration one might say that the MFN tariff of countries is really a China tariff, or the China tariff is really the least-favorednation tariff.
The Green Room is the venue for key WTO negotiations. And there the great shared but unuttered fear is of competition from an increasingly dominant China. It seems today that progress in the Doha Round hinges critically on greater market opening, not in services or agriculture, but in manufacturing (nonagricultural market access or NAMA in WTO-speak). Services negotiations have been given insufficient attention and are now widely regarded as too complicated to deliver significant market opening in this Round. In agriculture, with food prices high and expected to remain so, import protectionism has become less salient. Rather, it is the threat of agricultural export restrictions that is more serious, but addressing it is not on the Doha agenda anyway despite the efforts of some WTO members. So, Doha today is mostly about the negotiations on market access in manufacturing. And in manufacturing trade, as shown above, China looms large especially in the most protected sectors.
But Chinese dominance per se should not have precluded mutually beneficial bargains. The Chinese market, despite China’s far-reaching WTO accession commitments, remains protected in a number of areas (such as fertilizers, vehicles, and certain other manufacturing items). Moreover, as Laborde, Martin, and van der Mennsbrugghe have shown, other countries would also see increased exports from the proposed Doha liberalization by WTO members. The proposals of the United States and others to move further toward free trade in selected sectors could translate into even greater export gains.
What then is stymieing the reciprocity mechanism that has delivered negotiating success in the WTO in the past? China’s trade dominance has been achieved in large part by China’s successful growth strategy, which has included an embrace of markets and an unusually high degree of trade openness. The problem, however, is the strong political perception that China’s export success has been achieved, and continues to be sustained, in part by an undervalued exchange rate.
It seems unlikely and politically unrealistic to expect China’s trading partners to open further their markets to China when China is perceived as de facto imposing an import tariff and export subsidy not just in selected manufacturing sectors but across the board. The evidence on the existence and extent of undervaluation continues to be debated. On the one hand, in a survey of studies on renminbi misalignment conducted by Cline and Williamson, 17 of the 18 studies concluded that the renminbi is undervalued; the average estimate of the undervaluation was 19 percent for the 2000-07 period as a whole and considerably higher for the 2004-07 period. On the other hand, Dunaway, Leigh, and Li argue that all estimates of renminbi undervaluation are very sensitive to underlying assumptions about models and parameters and therefore not reliable. Nevertheless, the fear persists that China will gain even greater market share as a result of any trade liberalization in the Doha Round, not just in countries’ own markets but also in third markets, in each of which the effects of the exchange rate are likely to be felt.
One sign of this fear is that industrial and especially developing countries are increasingly resorting to contingent protection against imports from China. For example, the share of developing country antidumping actions against China (as a share of their total actions) increased from 19 percent in 2002 to 34 percent in 2009. The corresponding figures for industrial countries were 11 and 27 percent, respectively. But recourse to this instrument will become more difficult when China attains market economy status in 2016. Moreover, the product-specific transitional safeguards that were negotiated at the time of China’s WTO accession are due to expire in 2013. This leaves countries even more anxious about competition from China.
Consider most starkly Brazil’s predicament. Its currency has appreciated sharply (40 percent) over the last few years, while those of competitors in Asia, especially China, have not. Brazil has been trying desperately and repeatedly to use capital controls to stem these pressures on the currency. Its imports from China have surged, especially in the most protected sectors. The political economy would have to be very odd if Brazil, under the current circumstances, would lower trade barriers in these very sectors. And Brazil’s tariffs in these sectors are about 25 percent on average. It is therefore not surprising that Brazilian Finance Minister Guido Mantega said in January 2011 that in relation to exchange-rate policies, “China and the United States are the worst offenders. This is a currency war that is turning into a trade war.” In fact, Brazil has submitted a proposal to the WTO arguing in favor of contingent protection measures against imports from countries with undervalued exchange rates. Recently, the government raised, by 30 percentage points, a tax on cars with a large percentage of imported parts after Chinese-made car imports surged.
From an economic perspective, it is the multilateral trade balance of countries that is important, which could be influenced by the exchange rate. But given China’s large global trade surplus, the bilateral trade imbalance relative to China, which has been attributed in part to China’s currency policy, has become a political problem for many countries.
In effect, the whole basis for exchanging trade policy concessions is being undermined because a de facto trade policy instrument, the exchange rate, is seen as nullifying these concessions while remaining beyond the scope of multilateral negotiations and discipline. What China gives by way of trade concessions, it is seen as undoing through its exchange-rate policy. This connection between the exchange rate and reciprocal trade liberalization has not received adequate attention and may be key to understanding the predicament today.
A corollary of our analysis is that unless Chinese currency policy changes significantly, and unless there can be credible checks on the use of such policies in the future, the perception we outlined above will remain. There are some signs that China has slowly but surely embarked on a process of internationalizing its currency that will over time eliminate the undervaluation of the renminbi. The horizon for renminbi internationalization is as yet unclear but it is unlikely to happen over the next year or two.
The dominance to come
Within the next twenty years China is likely to be economically dominant: By 2030, China’s marketbased GDP is projected to equal that of the United States, its purchasing power parity-based (PPP-based) GDP will be twice that of the United States, its trade in goods will be nearly two times that of the United States and Europe, while the renminbi stands a good chance of nipping at the heels of the dollar, if not eclipsing it, as the main reserve currency. These projections do not require China to grow at anything close to the torrid rates of 11 percent that China has posted in the last fifteen years. They require China to grow at just under 7 percent a year over the next two decades. Nor do these projections require China to maintain its current trajectory of steeply rising openness.
An economically dominant China will be a China that, like other leading powers, acts out of self-interest, at least on key issues. But it is not necessarily a China that will seek to roll back the open trade and financial system bequeathed by the United States after World War II. The view that China will broadly continue the current system relies on the fact that it is exceptionally open.
Taking account of China’s size and the fact that large countries tend to trade less than small countries, China is an exceptionally big importer and trader. China’s openness, measured in terms of trade outcomes, is far greater than anything achieved by the United States in the post-war period and re- sembles the levels of openness achieved by the United Kingdom at the height of empire. To recap those numbers, the ratio of trade to GDP for the United States rarely exceeded 15 percent during Pax Americana compared with China’s current ratio of 57 percent.
The fact of China’s trade dependence will tend to create a strong stake for China in maintaining an open trading and financial system. Historians and political scientists have argued that trade, and the intertwining of interests that it brings, is no guarantee against economic or military conflict: Germany just prior to World War I was also a major trader. But there are two critical differences: China is trade dependent in a way that the United States and Germany never were, and moreover, given China’s low levels of income, China’s stake in openness might be greater because its rise to prosperity, on which the legitimacy of its government is predicated, will depend upon an open system.
Moreover, the depth of China’s international integration may itself preclude protectionist measures. Industrial country firms have made large relationship-specific investments in China, outsourcing assembly and intermediate goods and services production; Chinese firms have formed strong links with locally established foreign manufacturing firms, foreign banks, retailers, telecommunications and transport providers, and are increasingly investing abroad. As a result, the business functions of Chinese customers and suppliers of goods and services are highly intertwined with their counterparts in other countries. Any protectionist action would threaten these relationships and be self-destructive. This mutual dependence situation gives rise to political economy forces that could counteract protectionist pressures.
There is another reason for believing that China’s stake in an open system is deepening. China is in fact promoting and seeking the rise of the renminbi. The latest five-year plan states the goal of renminbi internationalization and“gradually” realizing renminbi convertibility. Over the last two years, it has taken several steps to promote the international use of the renminbi in trade and financial transactions. As a result, the stock of renminbi-denominated bonds issued overseas is expected to reach between 180 billion and 200 billion dollars from negligible amounts a few years ago.
In this sense, it is encouraging that China is becoming more of a routine participant in WTO dispute settlement proceedings both as an initiator of disputes and as a respondent. It is also encouraging that so far, China has largely agreed to comply with the terms of WTO dispute settlement proceedings. For example, of the eight cases brought by the United States, three have been resolved by a memorandum of understanding, two are pending decision, and in three China has alleged compliance with the decision of the Dispute Settlement Body.8 China’s actual compliance will take some time to ascertain especially given the vast amount of economic activity controlled or directed by the state. But there are indications that China takes its WTO commitments seriously.
Conclusion
Although we have framed the future issues for the trading system around China because of China’s likely dominant role, we recognize that future negotiations will not be just about China. Indeed, other countries will have a lot at stake in specific areas. For example Latin American exporters will be key players in agriculture, the oil exporters on issues related to energy access and foreign investment, and the United States and Europe on all issues. Future negotiations will thus have an essential multilateral character and trade-offs across sectors will have to meet the demands of some or all of these countries. But our contention is that the broad nature of issues involving China affords the possibility for securing satisfactory reciprocal deals.
There is also the question of China’s willingness to engage in this new agenda. We cannot be sure, of course, but three factors might be at play. First, the agenda includes issues that China has an important stake in pursuing: clear investment rules, restraints on climate-change-related trade action, as well as assured access to resources (oil and food) and markets overseas.
Second, the challenges for an open system from the “decline of the west” should not be underestimated. If growth in industrial countries does not recover, income distribution continues to worsen, and economic opportunities continue to shrink, the intellectual and political consensus in favor of open markets, in which China has a strong stake, will come under threat. There are already ominous portents.
Third, even on those issues where China is currently defensive, there are incipient signs of domestic political shifts in line with shifting development priorities. For example, China is beginning to change its exchange-rate policy because of the need to curb rising inflation, to reduce export dependence, and to internationalize the renminbi. Similarly, China is taking action on climate change because it sees competitive advantage in being the leader in green technology and because the retreat of the Himalayan glacier threatens its supply of water. China also might eventually move away from or beyond its current technology policy because it has itself become an exporter of technology. If reformists in China could use the relatively one-sided WTO accession process to implement key changes in policy, then surely a more symmetric WTO negotiation can empower progressive forces now to advance reforms that are in any case in the broader national interest. In this respect, it would help for China to articulate its vision for and role in forging the new system.
The WTO has been, and can continue to be, unique among all the international institutions, a vital and effective forum for cooperation between the major nations, even one that will be as dominant as China. The current Doha Agenda may be dying, but the WTO is alive and, with the right agenda, could yet flourish. It could provide a muchneeded growth boost to the status quo powers, and a means to consolidate competitiveness for the new powers. For, China it could provide an opportunity to signal its commitment to multilateralism and to being a benign hegemony, a panda bear rather than a dragon.
(Author: from the Peterson Institute for International Economics)