For more than 20 years, China’s leaders have broken promises and failed to meet legally binding trade obligations. Nevertheless, China has continued to enjoy the benefit of Congress’s grant of Permanent Normal Trade Relations (PNTR) and the benefits of membership in the World Trade Organization (WTO). Congressional action is needed now to suspend China’s membership.
The authors of this piece serve as Republican and Democratic commissioners on the congressionally created US-China Economic & Security Review Commission (USCC). While we came to the commission with different views on the advisability of granting China PNTR, that question no longer seems relevant. We are united in our view that China has not upheld its legally binding commitments.
In 1999, the Clinton administration signed the Agreement on Market Access Between the People’s Republic of China and the United States, which included obligations across multiple sectors, from agricultural to financial services, and reforms to end quotas and other trade barriers. President Clinton stated that this was “not a favor to China but a means of opening and reforming China’s markets and holding China to the rules of the global trading system.”
Congress concurred and voted to pave the way for China’s entry to the WTO. After more than 20 years, the record of the Chinese Communist Party (CCP) is clear and should compel Congress to take steps to suspend PNTR and establish new terms for trade relations with China.
Membership in the WTO fueled China’s economic rise, guaranteeing its access to Western markets at reduced tariff levels, shielding it from bilateral enforcement measures and encouraging a massive wave of investment by Western firms. The resulting flood of heavily subsidized Chinese imports contributed to the hollowing out of American manufacturing and created unsafe and unacceptable supply chain dependencies for American consumers, industry and the military.
A generation after PNTR was granted, China’s failure to comply with their promises is clear, well substantiated and pervasive. The Office of the U.S. Trade Representative has stated, “As we previously documented, and as remains true today, China’s record of compliance with these terms has been poor.”
To address this record, in its most recent annual report, the USCC’s top recommendation advised Congress to direct the Biden administration to assess China’s compliance with the terms of the 1999 agreement. All 12 commissioners, six Democrats and six Republicans, supported the report. The recommendation is straightforward and simple: We need a checklist to identify the “comply/noncomply” status regarding each bilateral commitment China made, which should inform and drive congressional consideration of suspension of China’s PNTR.
To be fair, some of China’s specific tariff reduction commitments were implemented; however, behind those tariffs lay deliberate policies and practices that limited market access and undermined the accountability and transparency essential for fair trade. As one of many examples, China committed to “eliminate and cease to enforce” local content and export performance requirements. These terms would have afforded U.S. businesses the opportunity to sell their products to Chinese consumers. Regrettably, compulsory joint venture restrictions as well as municipal, regional and national rules choke sales of American-made products and services. The 1999 agreement is a catalog of specific legal obligations made by China, many of which we would argue were not met.
It may be a statement of the obvious to note that risks related to China’s role in the world are on the rise. President Xi Jinping’s personal commitment to a partnership without limits with Vladimir Putin likely contributed to Russia’s unprovoked war against Ukraine. The CCP is engaged in intimidation and detention of Chinese citizens living abroad and erasing the political and cultural aspirations of millions at home. The People’s Liberation Army is increasingly bold in the Taiwan straits, throughout Asia, and as far from Chinese shores as Latin America. Xi and the CCP’s ability to exercise control are heavily dependent on an economy sustaining state-managed and trade-manipulated growth.
The commission’s recommendation, although short, was carefully crafted yet allows room for multiple options. As was true decades ago, before PNTR was granted, Congress could require an annual presidential waiver or certification of China’s compliance with the existing agreement; it could link suspension to immediate action by the CCP to negotiate new commitments that must include consequences for failure to comply. Congress could also simply suspend PNTR status in its entirety for a specific period — or indefinitely.
Complete revocation of PNTR could result in across-the-board tariff increases for some products. The terms of the suspension would determine that. Economists and policy makers have said that the inflationary impact of the existing Section 301 tariffs has been limited. Moreover, the needed reassessment of the consequences of China’s failed commitments may accelerate reshoring or near-shoring supply chains to strengthen America’s economy, promote employment and enhance our national security.
Trade debates too often focus on questions of fairness, but that is an elusive concept — China made commitments and its adherence can be measured. The CCP’s failure to fulfill its legal obligations has served its interests with real negative consequences for America’s economic and national security. The benefits have largely been one-sided. That should end with a clear reckoning.
Michael Wessel and Robin Cleveland serve as Democratic and Republican, respectively, members of the U.S.-China Economic and Security Review Commission. The views expressed are their own and are not intended to reflect those of other commissioners or the Commission.