CPA Statement on China’s WTO Compliance

September 17, 2020

Each year, the Office of the U.S. Trade Representative (USTR) produces a report on China’s compliance with its World Trade Organization (WTO) commitments. Ahead of this year’s report, the Coalition for a Prosperous America (CPA) has submitted comments to the USTR. CPA’s letter focuses on China’s many broken promises, particularly in the automotive and electric vehicle market—industries that Beijing has targeted as part of its ‘China 2025 plan.’

Said Michael Stumo, CEO of the CPA:

"The WTO was designed with western market economies in mind. Many western leaders believed that 1989, when the Berlin Wall fell, was The End of History. In other words, history had judged that democratic capitalism had won over state-directed capitalism, which would and could never rise again. China’s state capitalism with Chinese characteristics could not last. China’s push to get into the WTO was proof of history’s judgment.

We were wrong. Beijing has no intention of moving to a democratic capitalism model. The WTO is not equipped to handle the whole-of-government-and-industry strategy utilized by the Chinese Communist Party to pursue its interests. Beijing’s goal is to bend the WTO and the world to its vision, rather than bend to the western world. Indeed, China’s intent is to reduce the power of the US and the international institutions. As longtime diplomat Michael Pillsbury observed: “[T]hey see a multipolar world as merely a strategic waypoint to a new global hierarchy in which China is alone at the top.”

CPA believes the United States must move further in decoupling the U.S. economy from China. We support utilizing leverage to protect our economic, security and geopolitical interests through a whole-of-government effort including a full suite of trade intervention tools."

View CPA’s Official Comment here.

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  • Ben Leet
    The needed corollary to this assessment must take into account the failure in the U.S. to create a shared prosperity economy. And a failure to reign in or stop U.S. capital flow into China in a complicit arrangement to “soak” the U.S. consumer. Corporations have taken all the profits for shareholders, and the wealthiest have shipped their capital to the low-wage labor pools in poorer countries, not just China, and Mexico is a good example where the minimum wage is around 80 cents an hour, $5 per day. You may call this free-trade, it’s actually exploitation. The RAND Corporation last week published a study, “Income Trends from 1975 to 2018”, and it stated that the average full-time year-round prime age worker earned $50,000 in 2018, and it could have been $92,000 had the wage growth kept pace with the total economy growth rate since 1975. Since 1975 that average grew from $42,000 to $50,000, and it could have grown from $42,000 to $92,000. Trump was going to fix that, but he hasn’t and won’t. It requires unions, higher minimum wage, and as a consequence the EITC boosts low income workers’ income a little. Biden will try to create wage-led growth, good luck. The lower-earning 40% own almost nothing, they own 0.1% of all net worth says the Credit Suisse report on Global Wealth, and earn less than $20 an hour. Their annual income is below $14,000 on average. The Social Security report on wage income shows that $32,838 was the median annual income for 165 million workers, and the total income for the lower half was $1.02 trillion, or less than $15,000 per worker, which is less than the earnings of a minimum wage worker working 2000 hours, full-time, a year. That part of the economy needs a boost. The trade issue with China is important, but the wage issue inside the U.S. is more important.