TRADE: Multilateral System Maintains Bar on China

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Mar 3 1997 (IPS) - China, home to a quarter of the world’s population, the world’s eleventh leading exporter and twelfth importer is suffering the frustration of remaining firmly outside the WTO.

However, Beijing is now hot on the trail of a place in the World Trade Organisation (WTO) – something it had been campaigning for with the General Agreement on Tariffs and Trade (GATT), the WTO predecessor, for the last 10 years.

This week in Geneva, where the WTO is based, an important step is being marked in the Chinese economy’s long march to incorporation in the multilateral system.

The work group established by the WTO to examine the Chinese entry application, will meet from Tuesday for the next three days.

This organism, which held its last meeting in November, is assessing a new document wherein Beijing explained its trade and economic policies related to the WTO agreements.

At the same time, the Chinese delegation – in Geneva since last week – has maintained bilateral negotiations with the key members of the WTO, like the United States, the European Union and Japan, on the concessions Beijing is prepared to grant on goods and services.

The normal procedure of the WTO will include an informative session, next Thursday, to announce the advances made in negotiations.

The trade media were, however, not expecting any spectacular news, as the negotiations are merely trundling gently along.

The dominant economies of the WTO are hoping China will speed the opening of its markets, especially in the services sector – with the US keen on access to the financial area.

Meanwhile, countries like Australia and Canada are calling for a freer agricultural market in China.

China, in turn, wants to protect the most fragile sectors of its economy – those aimed at covering internal demand.

For example, the Beijing officials are proposing the automobile industry be protected for 15 years, with a blockade on vehicle imports. This benefit will favour the foreign capital-based factories already installed in China.

Trade officials said that China’s eventual admission to the WTO will largely depend on the understanding established in the negotiations between Washington and Beijing.

For China has become a privileged supplier of the US economy, with a favourable trade balance which rose to nearly 40 billion dollars in 1996, pushing Japan out of first place.

As a counterweight, China is the only market which could possibly absorb the production of strategic US companies like the aircraft manufacturer Boeing.

High level meetings are planned for the near future between Washington and Beijing, with sessions foreseen between Bill Clinton and Jiang Zemin.

Commercial sources also stated China would only be incorporated into the WTO once the two governments have smoothed down their political and trade differences.

WTO Director-General, Renato Ruggiero, will travel to China in April to add his support to moves for Beijing to be incorporated into the organisation.

The WTO, with a total of 130 member States, is also considering applications from other nations, such as Russia, the Ukraine, Taiwan and Saudi Arabia.