Comment by iiiggglll | Hacker News Reader

Comment by iiiggglll | Hacker News Reader

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> China has effectively been waging a trade war with the US for the past 20 years. ... America just hasn’t responded—which I find baffling.

"Hasn't responded"? It was America's idea in the first place!

It started 24 years ago with the Clinton administration granting China "most favored nation" status.[0] A controversial move at the time, and one that broke a one of Clinton's campaign promises.

Lest anyone think I'm being partisan about this, it's worth noting that the previous administration (George H.W. Bush) had also been supportive of the idea of opening up trade with China, so it was not limited to any one political party. The idea of opening trade with China had been brewing for a long time, and accelerated once the end of the Cold War occurred. 1994 was when it finally came to pass, thus setting up the events we've seen play out between China and the US for the next two and a half decades. Who knows where it will go from here?

It's particularly sad to go back and read statements from past US presidents expressing optimism that there would be "long-term sustainable progress on human rights" in China as a result of expanding trade, especially given what's happening today with China's "social credit" system.[1]

[0] http://tech.mit.edu/V114/N27/china.27w.html

[1] https://www.reuters.com/article/us-china-credit/china-to-bar...

> It started 24 years ago with the Clinton administration granting China "most favored nation" status.[0] A controversial move at the time, and one that broke a one of Clinton's campaign promises.

I think there is more information than in the article on most favoured nation status that might give useful context. The article discusses a relatively narrow set of tariffs on certain items produced in China, largely tied to human rights violations in China; MFN predates this by quite some time.

Most favoured nation (MFN) and its counterpart national treatment (NT) are cornerstones of the General Agreement on Tariffs and Trade (GATT)[0], which was a product of the World War 2 era treaties designed in large part to prevent the sort of interstate acrimony that could lead to World War 3.

The GATT mandates that signatories — including the USA — adhere to MFN and NT, which respectively oblige states to not apply tariffs to one country and not another, and to not favour domestic industry over foreign by way of subsidy or tariff or other market-distorting unfairness by the state. When a state violates MFN or NT, any harmed state has standing to apply a sort of reciprocal treatment, namely they have the colour of right to apply market distorting tariffs and subsidies of their own.

A recent example is the USA application of a tariff on imported steel from Europe, which entitles the European Union to apply a reciprocal tariffs on imports from the USA, such as bourbon.

The GATT evolved into the World Trade Organization (WTO), which routinely determines the merits and quantum of damages associated with often complex accusations of violations of MFN and NT.

The origin China-USA MFN and NT goes back in principle at least to the GATT, which in turn is based on the failures of the inter-war period that lead to WW2.

Which is all to say, it's not accurate to state that the Clinton administration granted MFN status to China (broadly speaking, anyway), and I'm not certain that in the broader context of the complex history of trade relations that any start of the trade disputes we see today can be so precisely pinpointed.

[0] https://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_a...

MFN only obligates countries to not discriminate. It does not obligate them to set tariffs at a particular level (presumably to protect domestic industries). The particular tariff levels are negotiated separately, most recently at the Uruguay round. Since then tariff reduction effort at the WTO is basically stalled.

It is a fact that the growing economic pie in the last 30 odd years has not only increased the wellbeing of people but allowed for a climate of political loosening around the world but particularly in China. This is not a myth. On average, everyone benefited. Conversely it is the threat of a return to the traditional zero-sum rapacity of the capital-rich against the capital-poor since 2008 that has led to the retreat we see in political and economic freedom almost everywhere. You're sadly drawing the wrong lessons from this. Growing the pie isn't your problem. But having the growth go to a small number of people and to wars does not work. Would you still be complaining if the money gained from trade with China were spent on modernizing America instead of wars and stuffing the offshore accounts of a few?

>It started 24 years ago with the Clinton administration granting China "most favored nation" status.

This is wholly inaccurate. China has had MFN status continuously since 1980.[0] Clinton renewed China's MFN waiver in 1994, as did every president each year until trade relations were permanently normalized under Bush in 2002 after China acceded to the WTO.[1]

"Most favored nation" itself is a bit of a misnomer — now known as "(permanent) normal trade relations," it's a status granted to every trading partner. Only two countries (Cuba & North Korea) are denied NTR, with an additional six (Belarus, Turkmenistan, Azerbaijan, Kazakhstan, Tajikistan, Uzbekistan) granted temporary NTR under periodically renewed waivers.[2] Those denials and waivers are based on the Jackson–Vanik amendment to the Trade Act of 1974, punishing countries for violating human rights under communism, not as a trade negotiation tactic.[3]

MFN/PNTR is a core tenet of the world trade agreements (and liberal international order generally) that the United States has been pushing for decades. The very first article of the 1947 General Agreement on Tariffs and Trade (GATT) established unconditional MFN treatment among members.[4] It remains the guiding principle of the modern WTO.

The denial of MFN/PNTR status to China was an anomaly, not the norm — a bet that allowing China into the global community would accomplish more for human rights and well-being than isolating China and preventing the economic rise that's propelled half a billion people out of extreme poverty in three decades.

[0] http://www.cnn.com/ALLPOLITICS/1998/06/03/china.trade/

[1] https://georgewbush-whitehouse.archives.gov/news/releases/20...

[2] http://www.au.af.mil/au/awc/awcgate/crs/96-463.pdf (n.b. Slightly outdated - Vietnam and Ukraine got PNTR in 2006 along with Russia and Moldova in 2012 in the sanctions law known as the Magnitsky Act.)

[3] https://en.wikipedia.org/wiki/Jackson–Vanik_amendment

[4] https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#a...

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