From 1997 to 2001, Charlene Barshefsky served as the nation’s chief trade negotiator, leading negotiations on China’s landmark agreement to join the World Trade Organization. Now senior international partner at the law firm, WilmerHale, Barshefsky advises companies on international commercial strategies, market access, and government relations. She recently spoke with Globe reporter Erin Ailworth about free trade, globalization, and China, and their impact on state and local economies.
How has free trade benefited the average American?
The statistics are overwhelming that open trade adds to [economic] growth - there’s no question. As Ben Franklin used to say, I’ve never seen a nation ruined by trade. The issue, and I think the hostility toward trade, is a reflection of wage stagnation and uneven income distribution in the US.
What I mean is that top earners in the US are massively wealthy - the infamous 1 percent - and the rest, particularly the two lowest quintiles of the income distribution, are just stuck. And people blame trade.
Given the recent recession and the movement of jobs overseas, how are people thinking about free trade?
There is a great anxiety and concern at the pace of globalization, the competitive pressures that result, and the question of whether the US is falling behind - and a concern, therefore, about jobs.
Can we keep up?
I’d love to say there’s no question but that we will keep up. But if there is congressional reluctance to support research and development to keep us in the front; if there’s a reluctance to admit to the failing of education, K-12, and begin to work on that issue; if there isn’t an appreciation that our visa policies have become irrational [and that we are] sending brilliant kids who earned their PhDs here back home when we should do everything we can to keep them - then I’m not so sure we’ll keep up.
Many fear China as a competitor, but, as the third-largest export market for the nation, as well as Massachusetts, it is also an important partner. How can officials here help local firms to succeed in China?
There’s extraordinary opportunity, and there’s also extraordinary challenge. On the challenge side, the Chinese market is becoming a tougher place in which to operate. You have favored domestic firms in China that are wholly or partly state-owned, or have cheap access to capital [or] benefit from government subsidies.
In the technology space generally [there are also] government policies toward what they call indigenous innovation. One of the things that I tell governors is that you need to really take a hard look at the two or three things that you believe are problematic with respect to China and work with the US government to help provide solutions.
What of China’s currency, which many here feel is undervalued?
The currency is definitely undervalued. If China were to appreciate its currency too quickly that could potentially be destabilizing economically in China, which would be in no one’s interest, including the US. Certainly moderate appreciation will be important. But let me just say this: For those who think that appreciation of the currency will somehow reverse the trade deficit, nothing could be further from the truth.
It took seven years to negotiate China’s WTO agreement. How did that come about?
It took a great leap of faith on their part, given the concern they have always had about any actions that would destabilize their own internal economy. Negotiations were very difficult. But we persuaded them by the end that this was in their interest. The result is as we would have expected - an economy that by virtue of market liberalization has grown by leaps and bounds. It is now the second-largest economy in the world. And there’s no question that standards of living have improved and the incidence of poverty has been massively reduced.