China’s entry into the WTO, as expected, did not leave the terrain unchanged. Four years ago, a senior fellow in the Foreign Policy Studies Programme at the Brookings Institutions in Washington discussed the implications of China’s entry into the WTO. His emphatic opinion was that China would force the WTO to be more transparent, which means that according to him, the WTO was relatively less transparent.

On the 10^th of November 2001, China became a member of the WTO, 15 years after they first applied for membership. Being the third largest trading nation in the world and with the seventh biggest economy, strong enough to compete in the world market on its own rules, China often unveils key economic policies without giving early warning. According to the senior fellow in the Foreign Policy Studies Programme at the Brookings Institutions in Washington, China’s position in the WTO was not clear enough. In his own words:

“We should not necessarily expect that China will step forward as a big representative of developing countries.” Then he continues, “ It (China) signed up to a standard for entry into the WTO that is far beyond what other developing country members have signed up to”.

This statement, besides implying that the WTO comprises of member countries signed up to different standards, occupying different hierarchies, also suggests that the class to which China subscribes is higher than the rest of the developing countries, or probably even higher that some developed countries.  If there is inequality in the WTO membership, it is clear that China, with its strong economy at the time of its entry, took advantage of the hierarchies to place itself in a relatively high position, a feat they would not have achieved had they entered the organization with a weak economy, like the rest of the developing countries.

Since the beginning of the year 2005, the very principles of free-market economy have been tested, thanks to the Chinese aggressive economy, right inside the countries that propose and dictate to others these same principles. In April 2005, U.S. consumers of imported textiles have been rejoicing over the lower priced high quality textiles from China, including shirts, pants and underwear. The U.S. domestic textile and apparel industry, through the president of the National Council of Textile Organization raised complaints about the loss of thousands of jobs in the textile industry and demanded that the U.S. administration move quickly to limit the number of shipments from China to prevent further loss of jobs.

In May 2005, the U.S. implemented a move to re-impose quotas on Chinese textiles, to protect the U.S. domestic textile industry. Why didn’t they allow the free market rules to work? The west, led by the U.S. have been preaching to the rest of the world the gospel of free-marketeering which says that if the domestic industries can not compete and stay afloat under the rules laid down by the theory and practice of free-market economics, then the domestic industries do not deserve to exist! Reason? Because they are inefficient and require to be wound up instead of operating at a loss! Then why, by these same rules, should the U.S. textile and apparel industries continue to be?

A Washington  “expert” on U.S.-Africa trade tried to rationalize that the U.S. move to re-impose quotas on China’s textiles should provide some temporary protection for AGOA jobs in Kenya. This, although pleasant sounding to Kenyans, is contradictory to the principles of free-market, and were not carried out with the Kenyan jobs in mind. They would not have been carried out if the U.S. textile industry had not been affected. Why should protectionism be applied to favour some countries and not others? If the economic structure, theory and practice under which AGOA operates is too weak to keep its share of the market safe from the Chinese onslaught, why should a protective measure be implemented against China and still stick to the claim that the American market is a free-market? Can someone at this point define and explain what a free-market economy is? What is protectionism?  And how can protectionism be applied in a free-market economy without changing their definitions?  Is there really anything like a free-market economy completely without protectionism? 

China has doubtlessly proven to be a much more efficient and low-cost producer of textiles. And for their goods to be in such great demand by the users in Europe and the U.S., they must also be of quality that is either higher or comparable to the rest. Taking a greater share in the European and U.S. market poses a danger to developing countries like Kenya, Bangladesh, Pakistan, Laos, Cambodia, Sri Lanka, Turkey and India whose exports of textiles comprise a large percentage of their exports, and who have a very large number of people employed in the textile industry. Unlike these developing countries, China is in a different class because it opened its market to the outside world after internally developing a strong market economy that evolved slowly to the level where it could compete favourably in the world market. Before that, they applied selective protectionism to allow their industries to grow to maturity, a good example being its textile industry that is causing great disruption in the world textile market by a simple flex of muscles. It is quite paradoxical that as the poor developing countries tell their textile workers to “compete with China or die”, the U.S. who have always preached the gospel of competition in a free-market globalized economy have unashamedly made a complete U-turn back into the safe protective quota system!

When asked to explain the U.S. action towards China in a recent interview, the U.S. Commerce Secretary explained that the recently imposed U.S. restrictions on Chinese textiles was simply a response to “market disruption” and are permitted by the WTO. And that the American decision to place constraints on Chinese textile imports had been taken with \"a data-driven and process-driven approach.\"

Why wouldn’t the WTO and the U.S allow the market forces to decide the end of the disruption the same way they have done for many other countries, of course with disastrous results? Does this mean that different member states have different rules applied to them, and that some states are not supposed to experience any “market disruptions” while others may be allowed to even collapse due to the effects of the  same disruptions? Is this so called “data-driven and process-driven approach” exclusively applicable to and by the U.S.? What kind of a referee is the WTO?

And all this is happening with the knowledge clear in mind that in the WTO Ministerial Meeting in Doha, there were suggestions from the developed countries that ending trade regulation in textiles and clothing would harm developing economies. These suggestions were greeted with the scorn they deserved by representatives of the developing countries attending the same meeting. Nearly every developing country delegation in Doha decried the textiles and clothing quota system as symptomatic and symbolic of the unfairness of world trade. The U.S. did away with the quota system in January 2005, but five months later, in May 2005, the quota system was back!  So, what kind of a world trade referee is this WTO?

For two decades now, and especially towards the end of the last millennium, protectionism in developing countries carried as much stigma as genocide. Heads of state could very easily be overthrown in externally orchestrated coups d’état for applying protectionism in their country’s market. 

If it is now that the west is realizing that this Chinese upheaval will place the textiles and clothing industries in the hands of China with millions of workers elsewhere facing a dire future, they should realize that they have done just the same to so many countries through other non-textile industries. But if the U.S and Europe want to continue preaching the free-market economy gospel, the choice is clear. They must allow unregulated export, giving the jackpot to China.