Washington's marathon trade negotiations with China produced an eleventh-hour deal Monday on the terms of Beijing's entry into the World Trade Organization. Although details of the deal are not yet publicly known, U.S. business leaders say it contains broad market-opening measures and binds Beijing to significant reforms. On those terms, China would be a welcome addition to the WTO.
China, with 1.3 billion potential customers, has been the land of promise for businesses across the globe. But, despite big strides in domestic reforms, China has not delivered on that promise for investors and trading partners. Even though export growth has propelled the country to among the world's top traders, internal markets remain relatively closed. More important, Beijing continues to set its own rules on how other countries can do business in China, changing those rules to suit its interests.
All of that will change once a trade agreement takes effect. China will have to slash import tariffs, allow foreign companies to import and distribute their own products, eliminate quotas and open its doors to foreign banks, phone companies, lawyers, accountants and transport companies. China will no longer be able to ban imports without consulting its trading partners beforehand and providing compensation. A whole ream of WTO rules of international commerce will apply--including patent and copyright protections--and each of the 135 WTO member countries will have the right to hold China to the rules before a dispute settlement tribunal in Geneva.
Some U.S. industries, including Hollywood, will benefit immediately. China has agreed to double its annual movie imports right away and negotiate further expansion later.
The signing of the agreement cleared the highest but not the only hurdle to China's WTO entry. Beijing will have to come to similar terms with the European Union and Canada--expected soon--and the U.S. Congress will have to repeal laws requiring annual review of Sino-U.S. trading relations, thus granting China a permanent "normal trading" status. Congressional deliberations on this issue are likely to be contentious but should be driven by commercial, not political, considerations.
True, despite its 13-year effort to join the WTO, China has never clearly articulated its reasons for wanting membership. It is also likely to resist, rather than push for, radical trade liberalization measures in the next round of WTO talks, to open in Seattle later this month. But, by signing the deal on minimum WTO terms, China has demonstrated its commitment to the world trading system and should be admitted as a full-fledged member.