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A Muscular Multilateralism to Engage China on Trade
by Arvind Subramanian, Peterson Institute for International Economics
September 21, 2011
Because China has become economically dominant, the United States must lead a collective effort to engage the nation on open trade issues. Increased global integration has a few drawbacks such as distributional costs domestically to certain relatively low-skill workers, and China's exchange rate policy, which has had adverse effects for the United States. But, in the post-World War II period, open trade has been a force for economic prosperity for the United States, China, and many other countries around the world. Creating and maintaining an open trading system has been one of the major achievements of the United States and its global leadership. Because China's economic development has also benefited enormously from an open trade system, it will have a stake in preserving it. The nations should move beyond the Doha Round to start a new round of multilateral trade negotiations—a possible "China Round"—that would focus on the issues—exchange rates, government procurement, services, technology policy, commodities, and climate change—which are particularly crucial for China's trade relations with the United States and other large trading nations.
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