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Why China PNTR turned out to be a disaster
Jesse Richman, 10/29/2013

Here is testimony by former Assistant U.S. Trade Representatitve Robert E. Lighthizer on how the predictions of U.S. economic benefit from China joining the WTO went so wrong. Thanks to Bob Hall for circulating this.

This paper has four major parts. First, I analyze the major claims made by those who supported PNTR. I show that during that debate, U.S. policymakers and the public were repeatedly told that China’s WTO accession would lead to significant economic and trade benefits for the United States. Second, I analyze the record of the last ten years, and conclude that, for the most part, those promises have not been fulfilled. Third, I examine why the optimistic expectations associated with China’s WTO accession were not accurate. I conclude that there were several fundamental problems, including the following: (1) U.S. policymakers did not recognize the extent to which China’s economic and political system is fundamentally incompatible with our conception of the WTO; (2) U.S. policymakers significantly misjudged the incentives for Western businesses to shift their operations to China and serve the U.S. market from there; and (3) the U.S. government has been very passive in response to Chinese mercantilism. Finally, I discuss what steps U.S. officials should take to address the problems caused by China’s WTO accession. I conclude that, as a general matter, we should adopt a significantly more aggressive approach than we have followed thus far.

Reposted from TradeReform.org.

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