With Congress getting ready in 2000 to vote on the China trade deal that President Clinton and Premier Zhu battled over so fiercely, Clinton marshaled his best arguments for passage. “Economically, this agreement is the equivalent of a one-way street,” the president said at the Johns Hopkins School of Advanced International Studies (SAIS), a Washington, D.C., training ground for China hands. That certainly seemed true. Beijing had agreed to slash tariffs, subsidies, and other trade barriers as the price of admission to the WTO. The United States didn’t have to match any of China’s concessions. None.
But that wasn’t the heart of the president’s argument. WTO membership required China to play by Western-style capitalist rules involving private property, the encouragement of innovation through free choices, and open communication. Those are hardly the hallmarks of a party dictatorship. “By joining the WTO, China is not simply agreeing to import more of our products; it is agreeing to import one of democracy’s most cherished values: economic freedom,” the president said on March 8, 2000. “The more China liberalizes its economy, the more fully it will liberate the potential of the people. . . . And when individuals have the power not just to dream, but to realize their dreams they will demand a greater say.”
Although Clinton didn’t outright promise a democratic China, he came close. What would guarantee change? The growth of the Internet and the ability of ordinary Chinese to criticize government officials and organize themselves. China had 9 million Internet users, he said, a number that was expected to grow to 20 million by 2005. “Now there’s no question China has been trying to crack down on the Internet. Good luck!” he said to gales of laughter. “That’s sort of like trying to nail Jell-O to the wall.” 1
It wasn’t just Clinton at his dreamiest who foresaw WTO membership remaking China; so did hardheaded foreign policy realists. Harry Rowen was about as gimlet-eyed as they come. He had been president of RAND Corporation, the Cold War national security research group, and then ran President Reagan’s National Intelligence Council when the administration launched its Star Wars project to zap Soviet missiles midflight.
In a 1999 article, “Why China Will Become a Democracy,” Rowen predicted the year for the momentous change: 2015. By then, China was projected to have a per capita income of about $7,000, and a middle class itching for change. “Although no one is likely to confuse China that year with, say, Sweden, it’s likely that the Chinese will join the club of nations well along the road to democracy,” he wrote.2 (China hit the $7,000 mark two years ahead of schedule without signs of freedom breaking out.)
Evidence for change abounded. South Korea, Taiwan, and a slew of nations in Latin America had shucked off dictatorships for democracy after mass protests by unions and the middle class. The inability of the Soviet Union to produce a decent middle-class life for its citizens helped lead to its demise, too.
U.S. labor unions weren’t persuaded that China would change. They feared job loss through intensified competition from low-wage workers in a country where independent labor unions were prohibited. When China joined the WTO in 2001, Chinese factory workers earned on average roughly $1,800 annually, about 5 percent of U.S. manufacturing wages. (With liberal adjustments for the different costs in the two nations, Chinese workers made about 20 percent of what U.S. workers did. Still, quite a gap.) About a month after Clinton’s SAIS speech, fifteen thousand AFL-CIO members, decked out in textile worker red-and-blue baseball caps and blue United Auto Workers jackets, rallied at the Capitol carrying signs: “No blank checks for China!”
The arguments used by the two sides of the congressional fight continue to frame the debate over China today. Engage or disengage? Faith in markets as agents of change or skepticism? The Clinton view that drawing China closer to the United States economically would help both countries prevailed then and guided the Republican and Democratic White Houses that immediately followed. A 2005 speech by George W. Bush’s deputy secretary of state, Robert Zoellick, urging China to act like a “responsible stakeholder” in the global economic system, could have been written by a Clinton speechwriter. “While not yet democratic, [China] does not yet see itself in a twilight conflict against democracy around the globe,” Zoellick said.3
Donald Trump and his aides have seized on the arguments by labor that doing business with China results in massive job loss and instability at home. Like left-wing activists then, the Trump team argues that the threat of isolating China is a more effective way of handling China than embracing its leaders. For Trump, like the unions, high tariffs keep out the imports that cost U.S. jobs. But the Trump team only accepted part of labor’s agenda. The administration hasn’t pushed to strengthen U.S. unions or invest in regional development, retraining, and research and development. Those policies might have given communities competing with China a better chance to thrive.
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The vote on China in 2000 recalled the early days of the Clinton administration. Once again, Congress was to vote on whether to give China trade preferences, called Most Favored Nation, which would award Beijing the tariffs, quotas, and other trade policies the United States gives its closest trading partners. In 1994, Clinton said he would no longer require China to make significant progress on human rights to qualify for MFN. Now he proposed another big step. He would eliminate the annual review of China altogether. That was the reward Beijing sought for the many trade concessions it was offering to join the WTO. China would no longer face the threat of losing access to the world’s largest market, depending on congressional whim. China’s leaders would be released from the probation they had been on since the 1989 Tiananmen Square repression.
In some ways, the MFN struggle on Capitol Hill wasn’t a fair fight. Labor and its allies on the left were a tired force. On December 1, 1999, they had shut down a World Trade Organization meeting in Seattle, which was supposed to launch a new round of global trade talks to slash tariffs, regulations, quotas, and other forms of protection. The left portrayed those changes as a way for global elites to further undermine worker wages and attack environmental protections.
The Seattle protests quickly got out of hand. Anarchists costumed in black T-shirts, pants, and bandanas rampaged through the city, smashing store windows, spray-painting signs, and showering police with rocks and bottles. Overmatched and poorly trained police fired tear gas and rubber bullets at the protestors, but couldn’t clear a way for the delegates to get from their hotels to the convention site to start negotiations. “The battle of Seattle” doomed the talks, perhaps fatally; the WTO hasn’t finished a global trade round since then.
But the battle also tarred the left as a disruptive, antidemocratic force, even though labor unions and environmental groups generally weren’t in league with the anarchists. In the fight over MFN, labor unions put together peaceful protests, produced reams of talking points for Capitol Hill lobbying, and shadowed pro-MFN Democrats back to their districts. Their goal was to keep the number of Democrats voting for the proposal well below the sixty to seventy that Clinton Chief of Staff Podesta thought necessary to pass the legislation.
In March 2000, about fifty Tibetan activists pulled up in a school bus at the LaCrosse Footwear Factory in Wisconsin to protest Democratic Representative Ron Kind’s support for the China bill. Their labor allies held placards reading, “Hey Ron, Be Kind to Our Jobs” and “Vote Against Normal Trade Relations with Slave State Red China.” 4 Representative Kind wound up voting for the bill anyway.
The opponents faced long odds. The issue was arcane. What was MFN anyway? Polls at the time said the majority of people weren’t paying much attention to the fight. Labor-backed research groups forecast that closer ties with China would cost nearly one million jobs over a decade but they were largely ignored. Didn’t labor always make such predictions? In 2000, after years of Clinton free trade deals and dire union forecasts, the U.S. economy was humming.
Business lobbyists overwhelmed the opposition, as they sought the rich prize of broader access to the Chinese market at greatly reduced tariffs. So many business groups wanted to claim credit for the campaign—and be seen in Beijing as fighting for China’s interests—that they established an unwieldy management committee of twenty-five companies. The groups hired a facilitator to teach them to work together during a session at Boeing’s offices.
The business coalition spent more than $100 million on the lobbying campaign, says U.S. Chamber of Commerce Executive Vice President Myron Brilliant, who played a leading role in the MFN fight. That’s more than business spent in all the trade lobbying battles afterward, through 2019, he estimates. The battle was sometimes heated. Brilliant says anti-China Republican lawmaker Representative Dana Rohrabacher of California kicked him out of his office, yelling, “You’re selling us out,” and threw a Nerf ball at him.
The Chamber targeted 66 districts of wavering lawmakers; the Business Roundtable, a group of big business CEOs, focused on 83 others. Trade groups paid for more than a dozen “fly-ins” of CEOs and local Chambers of Commerce to lobby their lawmakers.
Individual companies adopted the grassroots lobbying of their labor foes, particularly Boeing. Three years earlier, when China’s president toured the United States and signed a $3 billion deal to buy aircraft, the company flew one hundred Boeing and supplier employees, from forty states, to a celebration in Washington, D.C. Boeing turned the lobby of the Commerce Department into a faux political convention in October 1997, with the attendees carrying placards from their states and lining up like delegates. “Celebrating Boeing Airplane Sales to China,” said a big sign at the front of the lobby. A giant map of the United States was covered with airplanes representing different Boeing or supplier facilities.
In 2000, Boeing dialed up its efforts. It pressed 10,000 suppliers in 420 House districts to lobby their local lawmakers and helped the media find vignettes of small businesses that would benefit from future Boeing sales to China. The Washington Post profiled Daylight Donuts in Wellington, Kansas, which sold pastries to Boeing suppliers in the area.
Motorola copied Boeing’s tactics in Illinois and Texas. Farmland Industries, the largest farm cooperative, with 17,000 employees in thirty states, printed messages about the value of exports to China on the stubs of employee paychecks. The Farm Bureau, a farm organization, with 4.9 million family farm members, met with each of the House’s 435 members.5
Business had a powerful argument. With China set to join the WTO, all the concessions it made to the United States would be available to every other WTO member. If the United States rejected MFN, it would cede the huge China market to competitors, and Beijing would surely take out its wrath on U.S. firms. Better to get rid of the annual MFN renewal drama altogether. That would create the certainty in which business thrived.
The business groups had earlier successfully lobbied to change the name “Most Favored Nation”—a term that sounded as if the United States were doing China a favor—to the duller “Normal Trading Relations.” By 2000, the fight was no longer over permanent approval of Most Favored Nation status for China but rather “Permanent Normal Trading Relations” (PNTR). The more boring the terminology, the less likely the public would care.
Business and the Clinton administration also recruited Chinese dissidents to make the case for China’s WTO accession. The White House trumpeted the words of Martin Lee, Hong Kong’s de facto opposition leader, who argued that WTO accession would make Beijing more likely to accept the rule of law. The Business Roundtable featured Chinese dissidents in advertising and news conferences.
To ensure Democratic votes, the administration made accommodations. Representative Sandy Levin of Michigan, an influential free trade skeptic who Clinton aides had targeted, wanted side deals with China on human rights and WTO compliance. He got the creation of the Congressional-Executive Commission on China, a joint administration-Congress panel, to review Chinese human rights progress. The administration got Levin’s vote and those of his allies.
To secure other votes, the administration promised funding for a pipeline, environmental cleanups, and urban development zones, according to a study by the anti-free-trade group Public Citizen.6
Clinton and his trade negotiator, Charlene Barshefsky, made speech after speech casting China’s joining the WTO as a vote for a brighter future, and one anchored in the Democratic Party’s past. Clinton chose Princeton University, where Woodrow Wilson had once been president, to make the point most clearly. Helping China join the WTO brought the United States “closer than ever to redeeming the vision of Woodrow Wilson, of reaching his dream of a world full of free markets, free elections, and free peoples working together,” Clinton said. Barshefsky reached back to the legacy of FDR. “U.S. trade policy ever since the Second World War has been one element in a larger response, conceived under Franklin Roosevelt,” of collective security, commitment to human rights, and the fostering of open markets, she told congressional panels.
In the end, the congressional vote wasn’t close. PNTR passed in the House by a 237–197 margin. Seventy-three Democrats voted for the measure, somewhat more than Podesta, Clinton’s chief of staff, had thought necessary. The Senate was a romp; the measure passed 83–15. “This is a great day for the United States and a hopeful day for the twenty-first-century world,” Clinton said in October 2000 when he signed the bill into law.
At the time of the signing, the United States was at the height of its power, with its economy purring, markets rising, and its Internet technology remaking society. The American model was the envy of the world. But within months, all that would change. The economy fell into recession in March 2001. America was attacked by Al-Qaeda six months later. A housing bubble was building that would burst disastrously later in the decade. Economic stagnation was to follow, with China’s rise taking a lot of the blame.
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Two decades later, some of the most prominent opponents of China’s WTO bid say it wouldn’t have made much difference if they had won the 2000 showdown. China was too powerful a magnet for international business. If U.S. firms hadn’t been able to cash in on China’s WTO concessions, European and Asian traders would have taken their place. At some point—probably quickly—the United States would have scrapped its annual review of Chinese behavior.
“I don’t know that it [rejecting PNTR] would have made a difference,” says former Democratic whip David Bonior, a longtime critic of China’s human rights and labor practices. “They were large enough that they could have gone their own way. They might have felt that they could have manipulated other economies to go along with them.”
In a dash of humility, he added, “none of us are completely right or wrong on these things.”
At least one China WTO critic, though, thinks that keeping China out of the WTO was not only the right thing to do, but possible. Back then, Robert Lighthizer was an obscure trade lawyer helping steel firms block Chinese imports. In a 1997 opinion piece in the New York Times, he warned, “if China is allowed to join the WTO on the lenient terms it has long been demanding, virtually no manufacturing job in this country will be safe.”7
Barshefsky negotiated tougher terms than Lighthizer expected, and economists say he vastly overstated China’s impact on U.S. manufacturing. But later, as Donald Trump’s U.S. trade representative, Lighthizer had a chance to undo the work of his predecessor, Barshefsky. Continuing the annual review of China’s behavior would have made foreign businesses think twice before investing, Lighthizer says. “Uncertainty would have kept the trade deficit from growing and probably would have saved millions of manufacturing jobs in the U.S.,” he now argues.8
From the vantage point of 2020, the proponents of China’s accession don’t look prescient. President Clinton had counted on the growth of the Internet to make China more free through an engaged public and ideas imported from the West. He underestimated Beijing. At about the time when he compared controlling the Internet to nailing Jell-O to a wall, a Chinese computer scientist, Fang Binxing, was figuring out Jell-O nailing. By designing the technology behind the Great Firewall, Fang helped Beijing first block messages from abroad and then censor internal discussions.
Fang had plenty of critics at home. In 2010, his Internet account was filled with messages from people cursing him. When he spoke at Wuhan University the following year, a student pelted him with eggs. He remained defiant. “I regard the dirty abuse as a sacrifice for my country,” he said, according to China scholar Elizabeth Economy.9 China now has more than 800 million Internet users, but the technology is closely monitored by the government.
Robert Rubin, Clinton’s Treasury secretary, and many other Clinton economic officials say they made the right choice by guiding China into the WTO. “It would be overwhelmingly nonsensical to have the world’s second largest economy—on its way to becoming the world’s largest economy—outside the world trading system,” Rubin says now.
China’s markets would be less open to the United States and Beijing wouldn’t have to follow WTO rules. “In any negotiation, no one gets everything they want,” he says. “You can’t coerce them into doing what they don’t want to do.”10
China’s growth has helped many nations that supply it or invest there. From 2001, when China joined the WTO, until 2008, when the world fell into a deep recession, China accounted for 23.9 percent of global economic growth, the International Monetary Fund estimates. Since 2010, China’s share of world growth jumped to 31.9 percent.
Still, China is no closer today to democracy than it was in the 1990s, though individual Chinese do have more freedom to choose where to live, what to do for a living, and how to dress. New York University law professor Jerome Cohen, who has defended human rights cases in China since the 1970s, backed China’s WTO membership because he thought it would improve the country’s legal system. Now he says, “when it comes to civil rights—protection of the individual against arbitrary power—China has fallen backward. Human rights lawyers are being persecuted; their clients are being persecuted.”
In a powerful foreshadowing of how opinion in the United States would change from hopefulness about China to anger and regret, consider Robert Cassidy, the U.S. chief China negotiator during the WTO episode. He left the government shortly before China joined the WTO in 2001. Unlike many former negotiators, he didn’t cash in by working for law firms that greased the way for clients to invest in new opportunities in China. He worked for firms defending companies battling the onrush of Chinese imports.
In 2008, he published a kind of lamentation about his trade negotiating career. “The beneficiaries of the agreement with China fall into two groups: multinational companies that moved to China and the financial institutions that financed those investments, trade flows, and deficits,” he wrote in an article published by the left-wing Institute for Policy Studies on the anniversary of the Tiananmen Square killings.11
Cassidy says he hoped his life’s work would help ordinary workers. But it didn’t. “I have wrestled with this for many years,” he says from his home in Fort Lauderdale, Florida. “When you retire, you like to think that you have accomplished a lot. I went over all the agreements I did. What kind of benefit did I produce from working around the clock? I was incredibly disappointed.”
He believes the U.S. economy gains overall from trade with China because of greater efficiency and more consumer choice. “But politicians didn’t make sure everyone was better off” by funneling relief to those laid off and retraining them, he complains. “Benefits went to business, not to labor,” a conclusion that many shared over the coming years and which eventually helped elect Donald Trump as president.
At age seventy-five, Cassidy says he hardly ever tells friends that he was once a trade negotiator. “I tell them that I was a bureaucrat,” he says. He raises orchids in his spare time.