Task Force Report

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Beginning the Journey

China, the United States, and the WTO

Chair: Robert D. Hormats
Directors: Elizabeth C. Economy, C.V. Starr Senior Fellow and Director for Asia Studies, and Kevin G. Nealer

Beginning the Journey - beginning-the-journey
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Publisher Council on Foreign Relations Press

Release Date October 2001

Price $5.00 paper

37 pages
ISBN 0876092849
Task Force Report No. 36

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Overview

Both the United States and China will run risks as Beijing moves ahead with membership in the World Trade Organization (WTO), but the potential payoffs for both countries are well worth it. This is the central finding of this independent Task Force. The group also says that increased trade and investment will provide considerable economic benefits to both nations and thereby improve overall Sino-American relations, thus creating a better context for managing security and human rights issues.

The Task Force warns, however, that China’s transition into the WTO poses significant challenges for both China and the United States. For Chinese leaders, the chief challenge is how to manage the tension between maintaining their power and accommodating the social and political pressures arising from continued economic reform. The resulting potential for social dislocation and unrest will test Beijing's resolve for further economic reform and development of the rule of law.

For the United States, the risk lies in a political backlash if China’s entry into the WTO does not produce quick benefits to American workers and industry and if China’s trade surplus with the United States grows too rapidly. This Task Force report discusses possible problems during the transition period but explains ways in which cooperation between Beijing and Washington improves prospects for resolving difficulties. They include the following recommendations outside of the WTO process: build mutual confidence with an agreed agenda of “early harvest” accomplishments in key sectors, such as agriculture and information technologies; remove impediments to the renewal of U.S. trade and technical assistance to China; and develop mechanisms for resolving mutual disputes outside the WTO process to avoid overloading the WTO.

More About This Publication

Robert D. Hormats is vice chairman, Goldman, Sachs and Company.

Elizabeth C. Economy is senior fellow in China Studies and deputy director of Asia studies at the Council on Foreign Relations.

Kevin G. Nealer is senior fellow at the Forum for International Policy.

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