U.S. blocks China's WTO move

Friday, 4 May 2001 0:06 (ET)

U.S. blocks China's WTO move

By JOHN ZAROCOSTAS

GENEVA, Switzerland, May 3 (UPI) -- The United States, backed by the European Union, blocked Thursday a request by China for a new round of World Trade Organization entry talks in late May, a move triggered partly by the deterioration in Sino-U.S. relations.

Beijing's reluctance to come forward and close a final trade package with Washington also influenced the U.S. decision, senior diplomats said. China has been trying to enter the WTO for the last 14 years and had asked for another meeting to reconsider its request. Observers said the Chinese also wanted to create an impression that Washington had resumed normal dealings with Beijing despite the spy plane crisis.

A Western diplomat familiar with the issue said the United States was not willing to go through with another round of WTO-China talks, unless Beijing moves to close its differences with Washington over bilateral trade differences.

An Asian ambassador close to China said the Chinese wanted to join the WTO but were reluctant to make the decisions necessary to facilitate their entry.

However, the U.S. tried to hold-up a new WTO session because of the recent crisis, the ambassador said. He reckons that by the end of the month China would be in a better position to negotiate its membership. A number of other envoys are less optimistic.

"The Chinese don't seem to be in any hurry," suggested a senior European envoy. The political elements, including strategic differences over ballistic missile defense and the question of Taiwan, do not help relations between China and the U.S. and institutions like the WTO suffer, said a senior Latin American diplomat.

In an informal WTO session Friday, called at the request of China, the United States said it did not want a meeting, though China continued to push for a late-May meeting.

In view of their differing opinions, the Swiss chairman of the China-WTO talks, ambassador Pierre Louis Girard, proposed a compromise saying that he will convene another confidential informal session on May 11 to review the situation.

During the deadlock session, the Chinese delegation disputed the U.S. assessment that the bilateral talks were going well, diplomats said. The Chinese admitted, however, that they were considering proposals put forth by the United States and the European Union, but have yet to come up with any answers.

One of the most contentious sticking points is the demand that China must be granted a developing country status for its agricultural sector which supports 800 million people.

Under global trade rules, developing countries are allowed to provide assistance each year up to 10 percent of the value of annual farm production not subject to global disciplines, whereas developed countries must cap similar subsidies at a maximum of 5 percent of production. However, this is considered anathema by the influential U.S. farm sector that is concerned that China's size will make it a distorting player on global markets.

"We still believe China should not be granted developing country status because they are competitive in a number of agricultural commodities including cotton, rice, peanuts, tobacco, apples (concentrate) and honey," said Audrae Erickson, senior director for international trade policy with the American Farm Bureau Federation.

In a bid to strike a deal the Bush administration proposed to China a couple of moths ago that they could cap their assistance at 7 percent. But when this was rejected after the United States came back and increased the amount to 7.5 percent which was also turned down by China, diplomats said.

"Our preference is 5 percent ... but whether or not we are willing to consider a compromise remains to be seen," said the Bureau's director.

China's Prime Minister has given firm orders to China's trade minister and chief WTO negotiator Long Yongtu, that he secure the 10 percent cap, say officials familiar with China. But Erickon, whose organization represents over 4.9 million farming families, cautions: "We (United States) will have to live with the disciplines we agree upon today (with China) for decades to come."

Trade experts point out that China also has problems in meeting the U.S. and EU demands in trade in services, distribution issues, and trading rights for foreign entities. Seasoned China trade hands also point out that even if China mustered the political will to cut a final deal with the U.S. and the EU, it would still take at least six months, if not longer, to complete the process related to China's entry to the 140-member body. China has still to reach an initial bilateral WTO market access deal with Mexico and also with five other central and Latin American countries including Panama, Dominican Republic and Bolivia. -- Copyright 2001 by United Press International. All rights reserved.

-- Anonymous, May 04, 2001