A question crucial to the worldwide oil and gas industry will receive an unusually thorough appraisal in US politics this year. Congress will address the question during the year's first half. And candidates for the US presidency will define themselves politically by the answers they offer.
The question is whether China should become part of the World Trade Organization. For many industries, oil and gas among them, the answer affects business opportunities in a developing economy with enormous potential.
But the oil and gas industry has an even more important reason to concern itself with the question: future growth of energy markets. Global economic development, the most important factor in demand for energy, depends on trade. And trade, which blossomed within the past decade's economic liberalization, now faces the twin pests of regenerate protectionism and foreign-policy abuse.
Acting confused
A vital test case is China in the US, usually a leading trade proponent but lately acting confused.
In November, US and Chinese officials signed a bilateral trade agreement central to China's 13-year effort to become part of the WTO. China still must reach similar agreements with Brazil and the European Union. Then it must formally apply for WTO membership.
At that point, probably several months from now, the administration of President Bill Clinton will ask Congress to grant China trade status, called permanent normal trade relations, equivalent to that of other WTO members. A major political battle, already in progress behind the scenes, then will erupt in public just as presidential politics enters its period of peak attention. It will be interesting.
Resistance to the trade agreement with China is strong. In fact, opposition to international trade agreements in general and the US-China deal in particular ruined the WTO ministerial meeting in Seattle last month.
The resistance comes mainly from a politically potent alliance of trade unions, which don't like competition from the cheap labor available in developing countries, and environmental groups, which don't like business activity in general. These mainly protectionist leanings find ready support from advocates of foreign-policy initiatives to punish China for its Communist mistreatment of people.
It was concern about domestic political constituencies that led Clinton to both jeopardize his hard-won China accord and scuttle the Seattle trade talks by voicing support for sanctions as ways to enforce labor and environmental standards. Vice-Pres. Al Gore, keeper of the Clinton legacy, needs labor and environmentalist support for his bid to become the Democratic Party's candidate for president. So Clinton finds himself torn between the imperatives of liberal politics and his demonstrated desire to open trade with China.
It's a ripe moment. It's a chance for some differently minded politician to define a superior vision for the US.
Gore is stuck with the liberal ideal: a US forever withholding trade to punish countries that, by its standards, misbehave. The superior alternative will assert trade as a priority step in international relations, as an essential alignment of interests without which healthy relations can't exist. In that view, to compromise trade for coercive purposes, except when relations are already doomed, is both ineffective and economically destructive.
Trade and leadership
China will probably become a WTO member regardless of how Congress votes and no matter who succeeds Clinton as president. If the US chooses to punish China by refusing to grant it normal trade status, it will act alone. And China won't change. And US companies will suffer.
There are better ways for the US to influence foreign governments, in Beijing and elsewhere. They all begin with trade. And they all see leadership as more than acting self-sacrificially as the world's ultimate scold.
