Coming to Terms with the "WTO Effect" on U.S.-China Trade and China's Economic Growth
Mark W. Frazier
In the heated political debate over how China’s accession to the World Trade Organization might impact the U.S. economy, neither side recognizes the importance of continued economic growth in China for U.S. exporters and their employees. Studies, basing their estimates of export growth and other measures on proposed tariff cuts and the gradual removal of non-tariff barriers, generally overlook one important fact: the continued expansion of U.S. exports to China depends on the continued growth of the Chinese economy. For the most part, U.S. exporters have already benefited from cuts in tariffs, which on average have declined substantially over the past two decades, thus the real significance of WTO accession lies in China’s long-term restructuring, not short-term benefits. Despite the lack of short-term gains, the article’s policy prescription is clearly that it is in the United States’ long-term interests to avoid undermining the stability of the tenuous restructuring process.