By Miao Yingchun
US President George W. Bush nominated Henry M. Paulson as his
new treasury secretary on May 30. In his Rose Garden announcement
of the nomination, Bush stressed that Paulson will "help ensure
that our trading partners play by the rules, respect intellectual
property rights and maintain flexible, market-based exchange rates
for their currencies."
All of the three agendas mentioned are undoubtedly important
topics in terms of economic ties between China and the US.
This is a significant declaration indicating that the US is
actually adjusting its trade policies toward China.
It is easy to track the adjustment after going through a string
of documents on various economic topics, including a report titled
"US-China Trade Relations: Entering a New Phase of Greater
Accountability and Enforcement" released by the Office of the US
Trade Representative (USTR) on February 14, the 2006 Economic
Report of the President issued by the White House, the President's
Trade Policy Agenda 2006 and several other documents.
Analyzing current policies, it is possible to see the adjustment
manifest itself in several ways.
First, the policies point to intensified discrimination against
China.
The USTR decided to establish an internal enforcement task force
to focus on preparing and handling potential WTO cases with
China.
Creating the first enforcement task force devoted to a single
country, the USTR is clearly trying to set China apart from the
rest of Washington's trade partners.
But it's not the first time that we have seen such
discriminatory measures. China was placed on the Priority Watch
List by the USTR in its 2005 Special 301 Report.
Returning to the list again after its removal in 1996, China was
tagged as one of the countries failing to provide an adequate level
of protection to intellectual property rights (IPR).
This is obviously an unfair accusation, and clearly ignores the
efforts China has made in recent years in its IPR protection.
Besides, the US is also pushing China to offer wider market
access beyond the commitment made on its WTO entry in late
2001.
According to the USTR's February report, the US is also urging
China to "play a role in strengthening the international trading
system commensurate with its commercial heft and the level of
benefit it has obtained from that system."
To be specific, the document listed several priority areas,
including fostering a rule-based competitive environment for
foreign and domestic interests, expanding market access to
IPR-intensive sectors, addressing limitations to market access and
regulatory barriers in the telecommunications and other service
sectors.
These items are all beyond China's WTO commitments. As a
developing country, it is certainly unfair for China to be pushed
to comply with such requests.
Second, the US government repeatedly stresses China's
responsibility as a member of the international community in an
attempt to contain China through economic diplomacy.
The USTR said that US trade policy toward China has come in
three stages.
The first stage was from 1986 to 2001 when China was working to
join the General Agreement on Tariffs and Trade, the forerunner of
the WTO. US trade policy at the time focused on bringing China into
the rule-based world trade system.
The second stage was from 2001 to 2005, during which the US
tried to monitor China's integration into the global trading system
and ensure its compliance with its accession obligations.
This policy entered its third stage in 2006 when China reached
the deadline for the fulfillment of most of its WTO obligations.
The crux of the bilateral trade policy was to propel China to play
a larger role in the world trading system and global balances.
The changing policy focuses through the three stages clearly
indicate that the trade policy has gradually centered on enhancing
China's responsibilities in the international community, which
could contain China's means and modes of economic growth with
various international rules.
Such intentions have been clearly set out by Robert B. Zoellick,
the US deputy secretary of state, in his speech in September 2005.
"We now need to encourage China to become a responsible stakeholder
in the international system. As a responsible stakeholder, China
would be more than just a member it would work with us to sustain
the international system that has enabled its success," he
said.
This marks a new pathway to containing China diplomatically.
Defining China as a "stakeholder," Zoellick has used a term that is
actually calling for China to be a "responsible big country."
According to this, issues once regarded as internal affairs of
China became the responsibilities of a big international player,
such as the exchange rate of the renminbi, IPR protection and
market access to China.
Following the same track, the 2006 Economic Report of the
President reiterated that "China's WTO membership also brings new
responsibilities, such as improving the protection of intellectual
property, full compliance with trade agreements and continued
progress toward a flexible and market-based exchange-rate
regime."
Third, US trade policy is interfering more deeply into China's
internal affairs.
US Secretary of State Condoleezza Rice defined a
transformational diplomacy in her speech to Georgetown University
in Washington D.C. on January 18.
Compared with traditional diplomacy, this new type of diplomacy
is aimed at supporting internal reform from within the country
instead of solely eying the relationship between nations.
Transformational diplomacy is actually an enhanced interference
in the internal affairs of other countries.
Given the overall shift of focus in US diplomatic policy,
economic and trade policies toward China have also undergone
substantial adjustment in a similar direction.
Resorting less to means like anti-dumping investigations against
Chinese businesses, the US presses the Chinese government on issues
of concern, in an effort to forge China's economic and trade
policies.
At the same time, the US government is also stepping up its
cooperation with other trade partners, like EU member states and
Japan, on their stances toward China.
Fourth, the US focuses on three major areas in its bilateral
trade with China.
The US now focuses on market access, the exchange rate of the
renminbi and IPR, all of which would lead to an imbalance in
bilateral trade. In fact, none of the accusations made against
China on these three topics are soundly based.
China has seen a stunning increase in its imports in recent
years, making it the world's third largest importer by the end of
2005. And its import from the US has been growing at an annual rate
of more than 20 percent in recent years.
The Chinese currency has appreciated 3.2 percent since it was
floated on the market on July 21, 2005. The US still thinks such a
rise is "too cautious" just because it is not as dramatic as the 15
to 25 percent that Washington had expected.
Fifth, the adjustment of US trade policy toward China has been
clearly set with specific targets and detailed measures of
enforcement.
The USTR report raised three core principles in trade policy:
promoting an increasingly open, rules-based international trade
system, capturing the economic benefits of more open global markets
for the American people and pursuing a trade relationship that is
more equitable and durable with more balanced opportunities that
generate corresponding growth in US export-supported
employment.
From the list of the specific and detailed enforcement actions,
it is clear that the recent adjustment in US trade policies is both
enforceable and aggressive. It not only stresses cooperation
between different branches of the government and the legislature,
but also positions it well to deal with the overall shift in
diplomatic policy toward China.
The author is a researcher with the Department of World
Economics at Wuhan University.
(China Daily June 27, 2006)
