Trading Places
We all know why trade with
China is vital: It exposes that country's executives and entrepreneurs to the
democratic civilizations of the industrial West. It also instructs them about
how things can be different from what they are in today's China--where all
power resides in the bloody hands of a narrow oligarchy and a broader party of
bootlickers. The best way to change China's abysmal human-rights record is to
"engage" China so that its government has a stake in the good opinion of the
rest of the world.
And we
all know why no trade with Cuba is vital: It would give Fidel Castro and his
lieutenants a powerful boost. Prosperity from trade would strengthen the regime
and delay democratization. The best way to nurture civil society and dissent in
Cuba is by embargo. Only by making the economic failure of the Cuban regime
crystal clear can the United States "help" Cuba.
This Washington hypocrisy is bipartisan: Congress is eager
to vote for sanctions on Cuba and reluctant to vote for sanctions on China. The
president is eager for "engagement" with China and happy to sign the
Helms-Burton act punishing Cuba. But today's inconsistency is no worse than the
inconsistencies under George Bush, Ronald Reagan, and other prior
administrations. The legacy of the Cold War, the hatred of Castro among Cuban
emigrants, provocations like the shoot-down of "Brothers to the Rescue" planes
over international waters (along with Castro's belief that he is strengthened
by confrontation with the United States) have brought us to this point, where
American politicians are comfortable with one set of principles for the
Caribbean and another for the Pacific. The embargo has been tough luck for 12
million Cubans who cannot buy or sell in the United States, but it has made
little difference otherwise.
But the
United States' different principles for trade with Cuba are about to cause it
trouble, thanks to the World Trade Organization--the newly established referee
to police international trade disputes that Clinton was so proud to establish
(and Congress to vote for) at the end of 1994. The WTO is supposed to ensure
that countries stick to the spirit and letter of the trade-liberalization
agreements they have signed, and to authorize sanctions against countries that
break the trade rules they had agreed on. It keeps other countries from
breaking trade commitments that benefit the United States in exchange for
keeping the United States from breaking trade commitments that benefit those
countries, and it keeps all of us from indulging in the everyone-loses pattern
of trade sanction and retaliation. If we in the United States are the good guys
more than half (or even half) the time, a strong WTO is in our interest.
Yet now the White House--noticing the WTO for
the very first time since the signing ceremony--is trying to make sure it gets
off to a bad start. Last year's Cuba-punishing Helms-Burton act denies U.S.
visas to executives of companies that use buildings or equipment seized by
Fidel Castro, and threatens the companies themselves with financial judgments
by U.S. courts. Because of Helms-Burton, the United States is threatening to
fine Wal-Mart if its Canadian subsidiary sells Cuban-made pajamas, and is
denying Italian executives visas to the United States.
Europeans and Canadians
point out that Helms-Burton infringes upon their nations' sovereignty and
violates U.S. commitments under the WTO. They are right. In retaliation, Canada
promises to fine the U.S.-based Wal-Mart's Canadian subsidiary if it does not
sell Cuban pajamas. The Europeans ask that the WTO hear the case and authorize
sanctions against the United States. This is exactly the kind of messy dispute
that calls out for a referee--like the WTO.
But the
United States counters that 12 million Cubans threaten the "national security"
of 260 million Americans, and that the WTO has no jurisdiction over such
national-security matters. The Clinton administration declares it will boycott
any hearing the WTO schedules.
Now this is a strange position for the president to take.
The Helms-Burton clash is shaping up to be the WTO's first big case. A strong
WTO will block a lot of measures that hurt the U.S. economy in the long run, if
it is allowed to gain strength and authority. If the WTO proves powerless in
its first big case, all will observe that its rules are only binding when the
strong wish them to be. The point of having the WTO as a referee would be lost.
And a chance to remove trade disputes from the cycle of unilateral sanction and
subsequent retaliation would be lost as well. If the administration "wins" the
dispute over the jurisdiction of the WTO, then in the long run, the U.S.
economy loses.
Trade liberalization has been
the principal (and by some counts, the only) achievement of the Clinton
administration. The creation of the WTO was the capstone of trade
liberalization. The WTO had, in fact, been first proposed by Franklin D.
Roosevelt and Harry S. Truman. It was one of three sister organizations (the
other two being the International Monetary Fund and the World Bank) they had
sought to establish. They had wanted to make the post-World War II
international economy a free-trade, free-investment economy oriented toward
growth--in sharp contrast to the pre-World War II economy riddled with high
tariffs and import controls and oriented toward stagnation. But tariff-loving
senators killed the WTO in the late 1940s.
Thus, the
putting-in-place of the final piece of Roosevelt's and Truman's grand design
for a free world--a piece that they had tried and failed to put in place in
their day--would be an accomplishment to be proud of.
So why Clinton's aggressive defense of
Helms-Burton? Why the willingness to weaken his major substantive achievement?
It's not that he has changed his mind and is now pursuing a general policy of
"linkage" between trade and democratization that applies to Cuba. Consider
China again: It exports 24 percent of its GDP, up from 4 percent in 1978. Today
China's economy is more vulnerable to coordinated sanctions that would cut off
its exports to industrial countries than ever before, yet it seems less open to
democracy than ever before. China's leaders have drawn conclusions from the
collapse of the Soviet Union: that if they allow dissent or take steps toward
democracy, they will be dead or jailed in a decade; and that no amount of
economic benefit is worth the destruction of their regime. If increasing
democratization is the test for access to the international-trading system,
China has flunked. Yet, sanctions against China are not in the cards.
It is as
if the White House thinks that the end of every story is a signing ceremony on
the White House lawn: that the sole point is to sign documents and then
distribute the pens as party favors. But useful, functioning institutions are
not created by a single stroke of the pen.
We remember the Marshall Plan today not because Secretary
of State George Marshall gave a great speech (he didn't) or because President
Truman maneuvered the bill creating the staff and bureaucracy of the European
Recovery Administration through Congress. We remember the Marshall Plan because
Truman had follow-through: He knew that stories did not end with a White
House-lawn signing ceremony, and he fought for half a decade to breathe life
(and money) into the Marshall Plan so that it would make a difference.
Will anyone remember the
World Trade Organization in half a century?
