2000 Trade Agreement with China and the Damage it has caused to the United States - Research Paper Example

? History and Political Science   2000 Trade Agreement with China and the Damage it has caused to the United s Introduction The United States and China trade agreement was reached back in 1999. This agreement came as a result to the current conceding to China of permanent ordinary trade relations position by the United States Congress, paving the way for China’s entrance into the World Trade Organization. Given that the United States has long complained in relation to the huge trade shortage with China, this agreement should develop the bilateral trade balance in support of the United States. All the same, many long-standing trade concerns between China and the United States remain unsettled to the present. This paper critically presents a critical discussion concerning the United States 2000 trade agreement with China and the damage it has caused to the United States from a broad point of view. Identification and description: Historical Event The identification of the event concerning trade between the two nations stems for several years of long-term business. It is worth to mention that the two nations have been doing business transactions before the implementation of the trade agreements in the year 2000. Notably, these two nations have been benefiting from each other through various ways while doing business (Jialin, 2003). However, with reference to different statistics of the two nations, there is some understanding that China has had various benefits while causing some damages on the economy of the United States in the end. The understanding of this concern is well demonstrated throughout the entire discussion thoroughly. The main issue of concern is the different measures of the bilateral trade inequity by the two nations. With reference to the United States data, the United States operates an astounding merchandise insufficiency with China; while China puts this numeral much lower (Busch & Reinhardt, 2002). The main major motive for the big inconsistency is how to take care of Chinese exports going to the U.S and the exports from the U.S. to China through Hong Kong. Several Chinese and American economists argue that the estimates of the United States grossly devalue the real value of U.S. exports to China. In that case, distorting the bilateral trade equilibrium, and puff up the U.S. trade shortage with China (Ransom, 2001). A comparable aspect is the weight of capital flow. The majority of Chinese export goods to the United States are manufactured by outward-processing organizations. Nearly all returns accumulate to the United States and other foreign owners of such firms, whilst China gets only an insignificant manufacturing fee. Taking into consideration such aspects, the United States trade imbalance with China is considerably smaller compared to the official data suggestions (Horn & Mavroidis, 2001). In its implication, there is no reason to make the whole issue a captive in the United States domestic partisan effort and consequently poison U.S. and China political connections. One of the international trade agreements is the General Agreement on Tariffs and Trade (GATT) and is also the foundation through which other trade agreements and frameworks have been formed for instance, the “General Agreement on Trade in Services” abbreviated as GATS. The agreement established major principles to monitor business and trade operations among the member countries. The important principle is that of non-discrimination for foreign goods within the member countries. GATT also reduced trade barriers and tariffs to international trade including importation quotas and bringing equality (Jialin, 2003). The other principle harmonized the standards of goods and services internationally thus establishing a regulatory ceiling for trade operations. Very soon, the global economy was closely integrated thanks to technological changes and the invention of the internet (Murray & Raynolds, 2007). Later in 1995 the World Trade Organization (WTO) was established by the member countries thus defining new rules and agreements for international trade. Analyzing the Historical and Contemporary Causes of the Event Given the importance of ensuring equality when doing trade and other business transactions, the need to come up with the trade agreements was one of the most important decisions made between the two nations. In one way or the other, several factors triggered the need set up the trade agreements. For instance, the need to ensure that both the two nations were gaining equally activated the need to establish the trade agreements accordingly (Ransom, 2001). What is more, the need to make sure that labor costs were well adhered to between these nations was a comparable cause of the event and its implementation. A comparable cause of the event concerning international trade agreement was the General Agreement on Trade in Services (GATS). The General Agreement on Trade in Services was enforced in 1995 by the WTO following the Uruguay Round negotiations (Horn & Mavroidis, 2001). The treaty was enforced as a way of extending the trading system applied at the time to the service sector. Overall, this would operate in a comparable way as the GATT provides the system to merchandise trade. All the WTO members are signatories to this General Agreement on Trade in Services. The basic principles of WTO also applied to GATS as they apply to GATT including the principle of the MFN, or the ‘Most Favored Nation’. GATS today allow the WTO nations to choose the best service sectors for trade and competition. The agreement covers issues to do with health services, food materials, and other banking sectors (Busch & Reinhardt, 2002). There are several things addressed by the trade agreements such as foreign ownership, market access, and security issues. The agreement covers four important modes in services all of which have a great reference to issues of health and education. The four modes of supply are consumption abroad, cross-border supply, movement of personal (not companies), and foreign commercial presence. These modes make it possible to access appropriate and standard health services in the member countries (Jackson, 2000). However, the extent to which the agreement will impact on services such as education and health have remained significantly controversial. The international agreement has made sure proper services and healthcare are provided within the member countries. It should be observed that these above two international trade agreements are similar in their principles but differ significantly in terms of the commodities exchanged among the member states (Murray & Raynolds, 2007). As well, GATT stresses much on quotas and tariffs while GATS goes further to deal with the nature and standard of the services provided within the member states. Analyzing Different Historical Interpretations of the Event With reference to different statistics, there are different historical interpretations of the event that have been analyzed deeply with the intention to prove the need of the trade agreement. To the large part, such interpretations have been critically analyzed by both supporters and critics, and in that manner developing an issue of debate and controversy (Henry & Stiglitz, 2007). Essentially, the need to ensure a continued run of business between the two countries was to be defined by the trade agreements. In that case, such agreements would shape the approach through which future damages between the nations involved would be minimized in due course (Murray & Raynolds, 2007). That is been the case the historical interpretations of the event is clearly depicted through different statistics, explaining the factors that triggered the cause for the trade agreement. Overall, the historical interpretation can be clearly understood through the following discussion. Subsequent to thirteen years of hard negotiates and dashed anticipations, the United States and China as a final point reached a trade agreement before the start of the year 2000. Most importantly, American corporations would not acquire the full benefits, nonetheless, until the U.S. Congress decided to make China’s common trade relations permanent. Within duration of six months later, the United States House of Representatives accepted historic legislation conceding China permanent usual trade relations, which is a precondition for employing the U.S.-China trade agreement of last November (James, 2002). Such measures would create the way for China’s admission into the World Trade Organization (WTO) (Ransom, 2001). That is been the case the new U.S.-China trade contract, defined by government officials of both nations as commonly beneficial, should determine many of China’s market entrance and other bilateral trade and industry concerns from the past in a positive approach (Jackson, 2000). Noteworthy, this would define the approach through which China would benefit from the trade agreements, and in that way developing its economy to support its large population as well as the global economy. Every international trade agreement should also define a mechanism for dealing with disputes and conflicts among member states. This is because some nations might decide not to honor the agreement and trade expectations thus leading to disputes. A conflict resolution mechanism is therefore essential to make sure that one country does not take advantage over the others. As one of the international trade agreements, GATT has a way or mechanism through which disputes and disagreements are settled. The dispute settlement mechanism for GATT was defined after the formation of the WTO. The World Trade Organization mediates all disputes among the member nations over any issues to do with trade (Jackson, 2000). For example, if a nation’s government accuses another government of dishonoring or violating international trade rules, the WTO panel hears the matter and states its ruling on the issue. Similar to the GATT mechanisms, GATS requires every member state to improve its services and offer them at the required values as done in the other member states. Sanctions can also be imposed if the country’s does not conform to the stated requirements. The WTO has a huge influence when it comes to the conflict resolution mechanism and as a result determines the future amendments and changes that can be put in place to promote international trade (Shoyer, 1998). As a point of note, international trade agreements and covenants establish the best role for governments to ensure the best conditions for economic development and human wellbeing (Henry & Stiglitz, 2007). Since most nations tend to priorities their gains without considering the issues of others and health concerns, conflicts become very common and the reason the WTO oversees all international trade agreements to certify that there exist no favoritism in due course. This is why the conflict settlement mechanisms explained above are very important towards successful international trade. Evaluation: Positive and Negative Outcomes of the Event Indeed, any form of agreement done between two parties or nations comes with different outcomes, which in one way or the other must favor one side more than the other. Given the significance of trade agreements, several positive changes were expected to occur between these nations (Murray & Raynolds, 2007). Such changes would pave the way for enhanced profits from the event and in that manner promoting developing and growth of the economy at large. However, both the negative and positive outcomes were experienced in the two nations. In its implication, the negative outcomes were more to the government of the United States, since it is noted to have had several damages following the time when the agreement was signed officially. From a broad point of view, it is understandable that this agreement did not resolve all problems. Base don the differences occurring between the two countries in terms of ideology, social system, culture, and, principally, deteriorating bilateral political relations, China-U.S. trade relations have been burdened with frictions and disagreements in the past decade (Ransom, 2001). Regardless of China’s formal entry into WTO and the United States’ surrendering PNTR position to China, such outcomes remain. From the Chinese standpoint, there are four main concerns: disagreement over the trade inequity derived from dissimilar techniques of calculating trade statistics; U.S. trade and industry sanctions in opposition to China and United States technology export management; supposed “currency exploitation”; and human rights connected to trade relations (Henry & Stiglitz, 2007). Consequently, China-U.S. trade remains been a hot political concern in the United States and prolong to damage bilateral relations. The main profits for the United States engross market admission and tariff lessening as the positive outcome. In general, the Chinese tariff intensity will turn down from an average of twenty four percent to nine percent. Consequently, it is observed that the exports of United States to China are expected to grow faster, in terms of percentage as compared to the imports (Jackson, 2000). The United States International Trade Commission projected that minimizing the Chinese tariff would heighten U.S. exports by approximately ten percent and its imports from China by approximately six percent. Most outstandingly, it would as well develop more U.S. high-paying export-linked jobs in other fields as automobile industry and the aerospace. Conclusion Notably through this discussion, it is understandable that trade agreements are the best approaches through which international business can be improved accordingly. This is through reducing tariffs and barriers. With reference to different studies, it is clear that the United States and China trade agreement was reached in 1999. This was due to the move by US of granting China a permanent trade relations status. In one way or the other, this paved a way for entry of China into the World Trade Organization. Given that the United States has long complained in relation to the huge trade shortage with China, this agreement would develop the bilateral trade balance in support of the United States. Annotated Bibliography Busch, M. & Reinhardt, E. (2002). Transatlantic Trade Conflicts and GATT/WTO Dispute Settlement. Conference on Dispute Prevention and Dispute Settlement in the Transatlantic, 2(4), 6-32. This source will be used to cite the subject matter in relation to the some known organizations such as GATT AND WTO. Henry, A. & Stiglitz, J. (2007). Fair Trade for all: how trade can promote development. New York: Longman. This source will be used to show how trade has been used to promote development in the global perspective. Horn, H. & Mavroidis, P. (2001). Economic and Legal Aspects of the Most Favored-Nation Clause. European Journal of Political Economy, 17(2), 233-279. This journal article will be used towards exploring the economic and legal factors concerning trade through the use of relevant examples. Jackson, H. (2000). ‘Dispute Settlement and the WTO: Emerging Problems.’ In The Jurisprudence of GATT and the WTO: Insights on Treaty Law and Economic Relations. New York: Cambridge University Press. This source will be used to cite the information concerning the settlement of disputes by the major organizations. James, P. (2002). International Business outlook, Oxford: Oxford University Press. This source will be used to cite the major ideas concerning international business in the long run. Jialin, Z. (2003). U.S.-China Trade Issues after the WTO and the PNTR Deal: A Chinese Perspective, Oxford: Oxford University Press This source will be used to show the existing relationship between U.S and China with relation to the agreement. Mavroidis, C. (2000). Remedies in the WTO Legal System: In a Difficult Situation. European Journal of International Law, 11(4), 763-813. This journal will be used to illustrate the remedies in the WTO through citing the relevant materials accordingly. Murray, D. & Raynolds, L. (2007). Fair trade: the challenges of transforming globalization. New York: Oxford University Press. This source will be used to cite how fair trade has resulted to some agreements between different nations. Ransom, D. (2001). The no nonsense guide to fair trade. New Jersey: Prentice Hall. This source will be used to cite all the necessary information pertaining to fair trade in the global viewpoint. Shoyer, A. W. (2002). The First Three Years of WTO Dispute Settlement: Observations and Suggestions. Journal of International Economic Law, 1(1), 277-302. This journal will be used to cite the information concerning disputes and the manner through which they will be solved by the WTO. Read More