CHINA - On threshold of joining World Trade Organization

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After 15 years, China is on the threshold of joining the World Trade Organization

By Naomi Koppel, Associated Press, 9/5/2001 19:23

GENEVA (AP) China could be cleared to join the World Trade Organization next week if the United States and the European Union can settle their differences over the future of an American insurance company, an expert said Wednesday.

The WTO group handling China's application will meet Sept. 11-13 to try to settle the final details of the agreement establishing the terms for China to join the organization, which sets rules on international trade. China has been trying to join the WTO for 15 years.

''I don't think even the insiders know for sure whether they are going to resolve every detail,'' said Nicholas Lardy, a senior fellow at the Brookings Institution in Washington.

In Brussels, Belgium, Chinese Premier Zhu Rongji joined European Union leaders in predicting China would soon iron out the last obstacles to get approval in November for entry in the World Trade Organization.

Speaking after the annual EU-China summit, Zhu said the Europeans had assured him they would try to work out a dispute with the United States over access to the Chinese insurance market which has stalled finalization of China's entry terms.

Diplomats in Geneva said WTO members want to hash out the details next week to ensure they can formally approve China's membership in a splash of publicity at a meeting of trade ministers in Doha, Qatar, in November.

If China is approved next week, the WTO members plan to work on clearing Taiwan for membership. The working party on Taiwan will meet Sept. 14.

Even if China and Taiwan are cleared next week and formally approved in Doha, they would not be able to join the WTO before mid-December, and would more likely enter early next year.

The chief remaining obstacle to Chinese membership is a spat between the United States and the EU over interpretation of a provision in the proposed agreement between China and the 142 WTO members a single paragraph in a document with more than 1,000 pages.

Under the agreement, new life insurance businesses entering the Chinese market must be at least 50 percent Chinese-owned. Existing businesses, however, are unaffected.

New York-based American International Group has been operating in China since 1992 and is 100 percent U.S.-owned. The disagreement is over what would happen if the company wanted to open a new branch in China.

The United States says the branch would be part of the existing company, but the EU insists it would be a new business subject to the 50 percent Chinese ownership rule.

Several European insurance companies operate in China, but they are already partly Chinese-owned.

EU officials were hopeful the problem could be resolved in talks next week at WTO headquarters in Geneva.

''They assured us the terms of the accords with the Americans and with us will be respected fully,'' said EU trade spokesman Anthony Gooch.

In a statement, AIG said it had met with China Insurance Regulatory Commission officials and received assurances it will not be required to reduce ownership of any of its existing 100 percent-owned insurance operations.

The statement was in response to a report in Wednesday's Wall Street Journal that raised the question that Beijing may force AIG to sell off some assets.

As for the ongoing dispute, AIG said ''it is confident that its expansion rights will be satisfactorily resolved in the course of China's final accession to the WTO.''

Another problem facing negotiators is the lack of a bilateral trade agreement between China and Mexico, trade officials said. A nation is usually required to have bilateral accords with other members that request them before it can join the WTO.

Mexico maintains duties on Chinese imports to protect its domestic industry, in some cases violating WTO rules. That did not matter with China outside the WTO, but now Mexico is being forced to phase out the duties and has asked for up to 12 years to do so a request China has rejected.

Mexico has indicated it does not want to block China from joining the WTO. Lardy said one solution would be for Mexico to invoke a little-used rule and declare that it does not consider China's agreement with the WTO to apply to its own trade with China. It would have to make the declaration before or during the November meeting in Qatar.

-- Anonymous, September 05, 2001


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