A Comparison of American and Canadian Trade and Human Rights Policies: A China Case Study
By Ellen Javor
The Objective
This paper compares and contrasts American and Canadian trade policy towards China with the objective of describing the unresolved tension in each nation’s trade and human rights policies.
Human Rights Norms
Prior to World War II, human rights were not a concern of international law. International law regulated relations exclusively between and among states. It was thought that the scope of an individual’s rights was defined by the policies of a state’s government and that violations of individual rights were exclusively a state and not an international concern. In contrast, today there is an ever growing body of international human rights law that is chipping away at the prerogatives of the sovereign state to regulate the rights and obligations as between individuals and their governments -- a circumstance that is affecting nations such as China that have been criticized for human rights abuses.
Contemporary human rights norms have their origin in the United Nations Charter, the Universal Declaration of Human Rights, and the Covenants on Civil and Political Rights and Economic Social and Cultural Rights. Additional human rights conventions have been concluded in the last 30 years, creating a growing body of human rights norms. China’s accession to the United Nations Charter in 1971 has arguably subjected that nation to an ever evolving body of rights and obligations, notwithstanding the principle articulated in Article II (7) of the UN Charter. That provision precludes the United Nations from intervening in matters that are essentially within the domestic jurisdiction of a state. Whether human rights norms of law impose obligations on China to provide redress and to reform abusive institutions are issues that are hotly debated, not least within China itself, where there has arisen, in recent years, a budding movement for democratic change.
At the same time, there is wide spread sympathy among many developing nations for China’s resistance to outside pressure asserted on the pretext of improving human rights conditions. For example, certain Asian countries like Malaysia and Singapore have espoused an Asian Values doctrine that has criticized international human rights standards for being too Western oriented. According to this view, international human rights should leave room for the development of alternatives to Western democratic and capitalist models. Indeed, China’s conception of human rights has been shaped by the goals of an authoritarian system with an ideology that affords collective rights a higher priority than individual rights. Adhering to the view that the world system and international law should recognize state interests as paramount, China has resisted calls by certain members of the international community to radically change its domestic priorities and alter its political institutions.
Due to China’s regional economic and military strength and its prospects as an important international market, with an enormous population of potential consumers, its resistance to internalizing human rights norms has confronted nations like Canada and the United States with difficult choices relating to their trade and human rights policies.
Canadian Trade and Human Rights Policy
Traditionally, Canada’s foreign policy has emphasized that nation’s important role as an active member in international organizations. The Anti-Personnel Land Mines Convention, as well as the conclusion of the Rome Treaty, establishing an international criminal court, could not have been achieved without aggressive Canadian leadership. This activist spirit, however, is notably absent from Canada’s trade policy, especially from its trade policy towards China.
China is Canada’s third largest trading partner after the United States and Japan. Over the past five years, the two countries have increased trade with each other by 35%, with nearly $10 billion in two-way trade. Tapping China’s huge market and potential economic growth has motivated Canada to support China’s admission to the World Trade Organization (WTO). It is thought that admission will compel China to abide by the rights and obligations afforded and assumed by all other WTO members and that China’s participation in the WTO will inevitably make it more susceptible to international pressure at least in the area of global trade.
In 1997, Canadian International Trade Minister Art Eggleton noted that China’s membership in the WTO should not be conditioned on non-commercial issues such as human rights. This view is said to reflect long-standing government policy that shies away from reducing international trade relationships to a trade versus human rights debate.
Canadian policy makers have openly promoted the idea that an increase of trade will reduce China’s isolationism and at the same time subject China increasingly to international standards of conduct. Trade would also promote the economic growth necessary to sustain social change and development that could improve human rights conditions. On May 11, 1995, Canada’s Foreign Affairs Minister Andre Ouellet announced that Canada would no longer pursue a policy of automatically withholding trade from countries with poor human rights records. He contended that trade represents the best avenue to promoting democratic development in other countries, regardless of the style of government in those countries, or whether those countries share Canada’s approach to human rights. The view articulated by Ouellet represented a shift in Canada’s long held position of using trade sanctions to combat human rights violations as exemplified by the sanctions imposed on South Africa and on China following the Tiananmen Square massacre in 1989. According to this new view, sanctions are, generally, counterproductive by isolating populations and thereby enhancing the control of repressive regimes.
In the post cold war era, the trade-first policy articulated above has been described as "value added" or "niche" diplomacy. "Value added" diplomacy is essentially dual track. On one hand, Canada pursues bilateral commercial relations aggressively. On the other hand, it promotes through international organizations and international treaty conferences, a more organized effort to promote legal regimes supporting human rights and international stability. The Government has stated that this dual-track approach allows Canada to play a tangible role in world affairs despite its readily acknowledged limits as a mid-sized power in the international system.
To date, many have considered "value added diplomacy" a failure. For many critics, especially in the human rights community, the dual track approach has, in effect, constituted the abandonment of Canada’s traditional emphasis on human rights. With respect to current Canadian Prime Minister John Chretien’s much publicized meeting with Li Peng during his trip to China in 1998, one Canadian columnist observed, "Mr. Chretien does not seem to care much about human rights."
In response to this kind of criticism, the Chretien Government has stressed that "quiet diplomacy" in matters of trade in the end result will be the best way of improving human rights conditions. Chretien has long acknowledged that Canada does not always agree with China on policy matters, but is reluctant to impose its values on that nation. Critics have cited the Government’s fear that criticizing China’s poor human rights record could negatively impact upon Canadian trade and influence. This fear has been manifest in public statements emphasizing Canada’s limited potential influence on shaping China’s human rights policies. In a report about his China trip, Chretien is said to have cautioned listeners that he would not lecture the Chinese about human rights because Canada is too small a country to have any unilateral impact. Indeed, Chretien has stated that it would be presumptuous of Canada, a nation of 28 million, to preach to China, the most populous nation on earth with 1.2 billion citizens.
One of the Government’s severest critics has been the well-known Chinese dissident, Wei Jingshen, who has commented that the Canadian policy of engaging China through closer trade has been ineffective, and that Chretien’s view that Canada lacks leverage is "foolish". Advocating strong public diplomacy, he has commented that China will never bow to logic, only pressure.
Critics of the Government’s "value added" diplomacy have, moreover, pointed out that Canada’s abandonment of its human rights agenda can also be perceived in its policy towards Indonesia. It has been noted, for example, that the Chretien Government failed to raise human rights concerns to Indonesian officials during high-level foreign trade missions, prior to the fall of the Suharto regime in 1998.
Significantly, however, because of China’s growing dependence on international trade it is entirely unclear whether it would react negatively to criticism in such a way as to actually rupture trade relations. In 1997, for example, Denmark sponsored a resolution in the United Nations Commission on Human Rights specifically criticizing China’s human rights record. In reaction to Denmark’s activism, China is said to have threatened to repudiate Danish contracts with Chinese state companies, but never, in fact, carried out the threat. Indeed, during the following year, Denmark’s trade with China actually increased. Criticizing China on human rights abuses, therefore, does not necessarily translate into that nation’s restricting bilateral trade.
Observers have commented that not only has Canada abandoned a human rights agenda as part of its bilateral relations, but appears to have abandoned public diplomacy through international organizations where Canada has had influence. In 1997, Canada broke ranks with the U.S., Britain, Denmark and several other nations, by failing to endorse their resolution submitted to the UN Commission on Human Rights, condemning China’s human rights practices. Critics have also observed the Canadian Government’s reluctance to meet with Wei Jingshen to discuss the plight of other Chinese dissidents. Canadian trade missions, likewise, have been criticized for failing to raise China’s human rights record to Chinese officials. Missions aimed at improving trade and investment relationships in recent years have not been used as vehicles to press Canada’s human rights concerns.
For his part, Chretien has emphasized that he would not make human rights a priority in Canada’s relations with China because Canada is simply not in the position either to make threats or to carry them out.
United States’ Trade and Human Rights Policy
With regard to the American policy of engagement with China, there are two distinct camps. On one side, there are those who favor "active" or "constructive engagement." Proponents of this policy believe that the integration of the People’s Republic of China into the world economy and international institutions will cause Beijing, in it’s own self interest, to pursue more predictable and human rights based policies.
On the other side are the proponents of containment. They argue that China’s new leadership will continue to shun democracy at home while pursuing large-scale economic ambitions in Asia. They also believe that China needs the U.S. market more than the reverse. In support of this theory they point to China’s significant and increasing trade surplus with the United States, which is approaching $60 billion per year.
United States Policy and Most Favored Nation Status
Since 1980, China has enjoyed the benefits of Most Favored Nation (MFN) trading status with the United States. Preferential trade status for China managed to escape serious controversy until the June 1989 Tiananmen Square massacre. Since that time, the renewal of China’s MFN status has been an annual and much debated issue within the United States.
MFN trade status had its origin in an effort by U.S. policy makers to emulate the European preferential trade system. Under conditional MFN, one country’s extension of tariff concessions guarantees the same concessions to all nations associated with it through commercial treaties.
MFN status was first granted to China in 1980 by the Administration of President Jimmy Carter, following the efforts of the Nixon Administration to restore American-Chinese business and diplomatic relations. Under the terms of the Trade Act of 1974, MFN status could only be granted to China through a Sino-American bilateral commercial agreement and satisfaction of the Jackson-Vanik Amendment requirements. The Jackson-Vanik Amendment provides that the President may grant a communist country MFN status in conjunction with a trade agreement and upon verification that the country in question permits emigration or is making a concerted effort to improve its emigration policy. The conclusion of the US-PRC commercial accords in July 1979 and the initial waiving of the Jackson-Vanik requirements established MFN status with China that proved a significant step toward normalizing relations between the United States and China.
In the United States, a Generalized System of Preferences was established under the 1974 Trade Act. In 1984 it was amended to give the President the power to withhold MFN trading privileges from any country that was not taking steps to afford its workers internationally recognized labor rights.
From 1989 on, a debate has raged in the United States concerning the trade status of China in relation to its policy on human rights. Economists have contended that to deny MFN status to China, the U.S. ultimately would be hurting itself because of the large market China is making available to the international investment and trade community. According to this view, emphasis on pursuing unrealistic human rights goals has the potential of costing both countries concrete economic and diplomatic opportunities. Denying China MFN status would severely impair the price competitiveness of its exports because the U.S. tariff would rise an estimated 50% or higher. On the other side, the human rights community, including many politicians, has argued that to permit China to maintain MFN status could be a "political, diplomatic and moral error," depriving the U.S. of the principal leverage that it has over China.
The Clinton Administration has often been criticized for its failure to use the power of MFN status to influence China domestically. One year after promulgating an executive order linking China’s trade status to human rights, the Clinton Administration abandoned it. Then, in 1998, the Administration abandoned its pledge to support a resolution of censure in the UN Commission on Human Rights, thus foregoing the previous pledge of linking trade and human rights. Embarrassing the Clinton Administation was that no sooner had China secured MFN status, under the less controversial title of "standard trade relations," than the Chinese authorities began a substantial crackdown on dissident organizations including the organizers of the independent Chinese Democracy Party.
Proponents of a more aggressive approach to China in matters of trade have suggested that the situation is not unlike that confronted by the U.S. in the Cold War period, in which improved political relations with the Soviet Union was linked to improvements in human rights conditions in that country. It has been suggested, therefore, that the U.S. use the same Helsinki Accord "basket" approach with China that it used with the former Soviet Union, i.e. linking admission to multilateral economic institutions with improved human rights practices. The Helsinki Accords, in effect, internationalized what had been up to that time an essentially domestic concern, bringing human rights into the forum of international negotiation.
In this regard, the United States experience with the former Soviet Union on the subject of human rights is instructive. During the 1970’s and 1980’s, the United States employed a variety of punitive measures against the Soviets, including economic sanctions, in an attempt to force compliance with human rights norms. According to the State Department, human rights conditions in the Soviet Union actually worsened between 1979 and 1984. Not until Mikhail Gorbachev assumed power in 1985 did the Soviet Union begin to respond to the Reagan Administration’s call for domestic reform.
Thus, the eventual success of U.S. pressure on the Soviet Union was largely the result of specific events rather than through the Helsinki process. The USSR was experiencing economic collapse at the same time Gorbachev embraced Glasnost (openness) with the objective of attracting foreign investment and promoting economic reform. With Gorbachev’s efforts to curb political oppression, and expand the degree of public participation in the political process, not only did the Soviet-Communist body politic dissolve, but the regime itself was fundamentally transformed. Certainly, international public criticism and trade sanctions were helpful catalysts to reform within the USSR, but domestic pressures were overwhelmingly significant.
As an analysis of U.S.-Soviet policy suggests, the problem with relying solely on punitive measures to enforce human rights norms is that it does little to redress the underlying systematic causes of abuse. Ultimately, human rights reform must be promoted by domestic institutions.
As made quite evident from the foregoing discussion, unlike Canada, the United States has been more willing to forge bilateral relationships shaped in part by a carrot and stick approach. This approach has had a long history. United States law, for example, has frequently conditioned trade privileges on the meeting of international human rights standards by its trading partners. In the past, the United States has suspended or threatened to suspend trade relations with countries that suppress trade union organization; exploit forced labor, or otherwise deny international worker rights. At the bottom of this carrot and stick approach to bilateral relations, however, are interest groups that appear, in general, to have more influence over U.S. trade and human rights policies than do their counterparts in Canada.
Interest groups in the United States, for example, have actively lobbied for restrictions on the import of manufactured goods from China that are produced by forced labor on moral as well as on economic grounds, i.e. goods made by forced labor are naturally inexpensive and compete unfairly with domestically produced products. Interest groups have also sought to link trade relations with improved labor conditions, a linkage that became critical to the Clinton Administration’s ability to pass the North American Free Trade Act through Congress. As exemplified by the divestment movement in connection with the abolition of Apartheid in South Africa and contemporary efforts to boycott on the local level companies doing business in Burma, the U.S. Government may be more affected than the Canadian Government by grass roots efforts to link trade and human rights policies.
At the same time, the U.S. bilateral approach, using the threat of sanctions to enforce improvements in human rights has, itself, been criticized for being counterproductive. Recent studies have shown that unilateral sanctions, even when employed by a superpower like United States, have had a poor record of curbing unwanted behavior. A sanctions policy is further complicated by the fact that China maintains a top 5 position with both Canada and the United States as a trading partner, putting at risk the interests of businesses engaged in the lucrative Chinese market. One study has shown, for example, that only 24% of sanctions imposed worldwide have achieved their desired results. Even proponents of sanctions, however, have noted that successful trade sanctions must, generally, be multilateral in character and broad based, pointing to the success of trade sanctions in promoting the end of white-minority rule in South Africa.
In an effort to escape the conundrum presented by lobbying pressures on the U.S. Government to become more adversarial with the China on one hand, and the, generally, costly sanctions based policies that have been pursued on the other, the Clinton Administration has turned to the policy of "domestic enlargement." Domestic enlargement focuses on promoting the development within China of democratic and judicial institutions that can effect long-term improvements in China’s human rights record. The basis for the new policy was the idea that democracies not only co-exist peacefully, but also make human rights a higher priority. By promoting China’s transition to democracy, the U.S. would be accelerating the movement to a more human rights based political and legal system.
Domestic enlargement, however, has had limited success so far and has been criticized not least by China, itself, which has considered the U.S. obsession with institution building an invasion of China’s sovereignty. On his initial visit to China, for example, the Clinton Administration’s first Secretary of State, Warren Christopher, was confronted with lectures by Chinese officials regarding human rights abuses in the United States.
As a practical matter, however, the policy of domestic enlargement is hardly new. Since the early 1980’s, a policy favoring democracy building has been evolving. The international community has followed suit, supporting programs aimed at promoting the development of democratic institutions and values.
In the early 1980’s, the Carter Administration linked positive bilateral relations with human rights reforms. The Reagan Administration significantly scaled back the policy by focusing on creating conditions for reform specifically within the Soviet Union and Soviet Bloc countries. Central to the Reagan Doctrine was promoting insurgency movements, many of which had a low regard for democratic reform and human rights, against Soviet backed governments. Although the Reagan doctrine was highly criticized at the time for, in effect, supporting anti-democratic, authoritarian regimes that happened to be anti-Communist, apologists for the policy have emphasized that the long term goal of promoting democratic change within Russia and the collapse of the Eastern Bloc was successful.
Domestic enlargement thus does not present a radical departure from previous policies, but a modification intended to resolve the tension between the Clinton Administration’s trade and human rights agendas without creating undue tension in its bilateral relations with China. Human Rights activists have criticized domestic enlargement as being a façade for subordinating human rights to trade interests. It should be noted in this regard that no sooner did President Clinton conclude his trip to China in 1998 than the Chinese government began a serious crackdown on pro-democracy activists, leading some to receive lengthy criminal sentences, and the banning of their pro-democracy parties. The Administration‘s failure to criticize the Chinese government’s crackdown has cast doubt on the effectiveness of the domestic enlargement policy to promote the development of effective democratic institutions.
At the same time, American policy has failed, at least publicly, to encourage a multilateral effort to link human rights conditions in China with trade. Canada and Europe have observed that this tendency to rely on bilateralism has caused the United States to pursue inconsistent policies, undermining America’s espoused commitment to human rights universally. In particular, criticism has been leveled at America’s trade embargo against Cuba and such pieces of legislation as the Helms-Burton Act as denoting a marked failure of will with respect to China, which provides potentially a far greater threat to the stability of the international system than does Cuba. Constructive engagement policy and its successor policies have thus created a dissonance within the
Administration that on one hand notes China’s abysmal human rights record and on the other hand looks forward to continuing improvement in trade relations and, indeed, enhancing cooperation in the area of international security.
American Business Influence on the American/Chinese Trade Policy
American businesses have been naturally eager to take part in the budding Chinese market. Since 1978, China has experienced a steady growth in both its population and industrial output, and has, in recent years, showed itself to be remarkably stable in the wake of the Asian economic crisis. In the process, it has opened itself to the world economy and reaped the rewards.
One approach that the United States has uniquely pursued to promote an improvement in international labor conditions is supporting voluntary codes of conduct among corporations doing business in emerging markets. For example, the Apparel Industry Partnership and the Workplace Code of Conduct are two such pacts.
It has been suggested that United States multinational corporations can also play a positive human rights role by subjecting to public scrutiny the labor and human rights practices of their foreign subcontractors. When local producers exploit their work force, few hear about it in the consuming market, especially if the products are not exported to the markets of the most developed democracies. When those same producers become suppliers to Reebok, Levi Strauss and Disney, however, their activities can become the subject of public comment in the United States, creating economic incentives for the large western oriented distributors to address local human rights problems.
The advantages to privatizing U.S. human rights policy in this area is that it may enable the U.S. to avoid potentially escalating inter-state conflict and may be more effective over the long-run in disciplining emerging markets like the Chinese market at the grass roots level, where enterprises are making money. As with the other policies discussed so far, whether promoting voluntary codes will be successful may ultimately depend on their being multinational in character. It should also be noted that providing incentives for improving labor conditions might not directly translate into more political freedom.
A related approach is to capitalize on China’s desire to become a member of the World Trade Organization (WTO). The Clinton Administration’s Trade Representative, Charlene Barshefsky, has stated that China’s admission to the WTO will be based on meaningful market access commitments as well as adhering to the WTO rules.
With respect to WTO membership, the United States’ influence is substantial. One aim with respect to China may be to reinvent in the trade context, the Helsinki Accords in the political realm – with the objective of enmeshing China in a multilateral trade system that may promote more substantive domestic reforms. Of critical importance to the success of this strategy, however, will be to make the WTO into a gatekeeper for expanding international trade that will make becoming a member of the organization fundamental to China’s commercial interests.
Conclusion
Both the United States and Canada appear to accept that reform in China may be more a function of time than outside pressure. At the same time, the American and Canadian governments are, themselves, under continuous pressure from interest groups to pursue a more aggressive policy toward China. Both the U.S. and Canada have pursued trade first approaches with the idea that improved economic relations would in the long run promote human rights. Canada has been more reluctant than the United States in considering sanctions as an option due to its perception that it would have a relatively insignificant impact on China’s domestic policy. At the same time, however, Canada clearly has not exploited its leadership role in international organizations and experience in multilateral diplomacy to create stronger linkages between international trade and human rights.
In contrast, the U.S. has more comfortably pursued a bilateral engagement policy involving sticks and carrots. Domestic enlargement, however, has come under increasing attack from constituencies that view China as an antagonist to the United States on international security issues. A shift in emphasis to promoting rule under law and the development of democratic institutions has not been successful in appreciably improving political conditions. At the same time, the U.S. is promoting the development of voluntary codes of conduct which one day may have an appreciable affect on emerging markets such as China that evidence the use of forced labor and poor working conditions.
Clearly, the problem as exemplified by both U.S. and Canadian policy is that neither is multilateral and, therefore, neither can leverage whatever support for a stronger response to China’s abuses may exist in the international community. It cannot be overlooked that the passage of time, itself, may provide opportunities for domestic forces within China to re-shape that nation’s future. In the meantime, nations like the United States and Canada should adjust their policies to enhance international pressure on China by way of intensifying the link between providing that nation enhanced opportunities to engage in international trade and improvements in its human rights record.
NOTES
The opinion set for above is that of the author and does not represent the official position of ICLTD, Inc. If any reader would like the footnoted version of this work, please e:mail ICLTD, Inc./Attention Executive Director at icltd@icltd.org.