Former U.S. Trade Representative Urges Renegotiation With China

By Jonathan Cheng Features Dow Jones Newswires

The U.S. trade representative during China's accession to the World Trade Organization in 1999 on Tuesday accused Chinese President Xi Jinping of accelerating reversals in liberalizing changes, resulting in discrimination against U.S. companies.

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Charlene Barshefsky, the Clinton-era official who negotiated China's accession to the WTO, called on President Donald Trump to renegotiate the trade relationship with China, or to go around China by resurrecting the Trans-Pacific Partnership, a multilateral trade deal that Mr. Trump pulled the U.S. from this year.

Ms. Barshefsky, speaking at The Wall Street Journal's CEO Council event in Tokyo, acknowledged the ballooning U.S. trade deficit with China since its accession to the WTO but said she was more focused on what she called China's stalling changes and "mercantilist" policies that she said began under former Chinese President Hu Jintao and accelerated under Mr. Xi.

"China has stopped the process of economic reform and opening," Ms. Barshefsky said. She said Mr. Xi is trying to "Sinicize the Chinese economy" with what she called an "import-substitution strategy"--replacing U.S. goods and services with Chinese versions.

Long Yongtu, China's former vice minister of commerce, who was Ms. Barshefsky's counterpart during the WTO negotiations, disputed the idea that Chinese reforms had stalled, saying that Beijing had grown more careful about how rule changes would be received by its growing middle class.

"Chinese reform is still going on, but it may be slowed down a little bit," said Mr. Long, who added that China's economy had grown eightfold since China joined the WTO and that the economy had fundamentally changed. "There are 200 million Chinese middle class, and there are a lot of things we have to consider."

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Mr. Long also put the blame on U.S. companies, saying that many of them arrived in China after its accession to the WTO unprepared for the vagaries of the market.

"Foreign companies...are facing very, very strong competition from their Chinese counterparts, and they have to face up to it not only now and in the past, but in the future as well," Mr. Long said.

The reassessment of the landmark trade agreement comes amid disappointment in the U.S. from both Republicans and Democrats in the China trade deal, which has been brought to the fore by the election of Mr. Trump. Mr. Trump struck a deal last week with China that he said improved access for some industries to China's market.

In addition to seeking a narrower trade deficit with China, Mr. Trump is also seeking Beijing's help in reining in North Korea's nuclear ambitions and has said he is willing to make concessions on trade with China to facilitate his goals on North Korea.

Mr. Long said Beijing's goal in joining the WTO wasn't so much to increase exports, but to accelerate internal domestic changes.

For the U.S.'s part, Ms. Barshefsky argued that the election of Mr. Trump underscored the need to ensure that the government would take care of American workers who lose out because of trade deals. "That was the most important issue out of the election," she said, attributing most U.S. job losses in recent years to automation and innovation, not trade.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

(END) Dow Jones Newswires

May 15, 2017 21:51 ET (01:51 GMT)