Talks on China's entering trade group resume

November 14, 1999|By KNIGHT RIDDER/TRIBUNE

BEIJING -- The high-stakes trade negotiations here pulled out of a steep dip yesterday, as the U.S. team once again canceled its departure and resumed talks on China's possible admission to the World Trade Organization.

Both sides were tight-lipped about progress.

John Sullivan, chairman of the American Chamber of Commerce here, said the situation remained hopeful as long as, after 13 years of negotiations, the two sides kept talking about China's becoming a member of the rule-making body for global trade.

Xue Rongjiu, director of the quasi-official WTO Research Institute here, said that the broad issue in contention is whether China would be treated in the WTO as a developed or developing country.

As a developing country, China could open its markets more slowly to foreign competitors, to protect weak domestic industries. Of particular concern, Xue said in an interview, are telecommunications and financial services.

The U.S. team had planned to leave Beijing yesterday after three unsuccessful days of trying to persuade the Chinese to open their country's markets.

But after an early-morning telephone call from the Chinese side, U.S. Trade Representative Charlene Barshefsky and her team instead went to Zhongnanhai, the tightly sealed compound in central Beijing where China's ruling elite live and work.

After an hour and a half talking with Premier Zhu Rongji and other top leaders, according to a U.S. diplomat, they returned to the bargaining table.

"Although progress has been slow in the talks so far, because of the importance of the issue, both sides thought it would be useful," a spokesman for the U.S. team said.

Xue said the difficulties lay not in whether to open China's markets, but "in how much to open, and China just wants to open what it is capable of."

The stakes are huge. China is the world's fastest-growing telecom market, adding about 30,000 mobile telephone customers a day. The mobile telephone industry grew an average of 150 percent a year from 1992 to 1997, and there's no end in sight.

China severely restricts sales of telecommunications services and bars foreign investment.

But when Premier Zhu traveled to the United States in April in hopes of closing a WTO deal, he allegedly offered to open China's market to 49 percent foreign ownership of all telecom services and 51 percent of added-value and paging services in four years.

That, at least, was the offer described at the time by Barshefsky's office. After President Clinton rejected China's WTO bid, Chinese officials accused the United States of misrepresenting what China had put on the table.

Whether Chinese officials didn't make the offer or are back-pedaling, they now seem determined to keep that market closed.

Long Yongtu, vice minister of foreign trade and economic cooperation, said in a Chinese news report Friday that China wants to limit foreign investment to 25 percent in telecommunications overall and to 30 percent in the added-value services.

He said China and the United States disagree on banking, securities, insurance, high technology, the auto industry and textiles.

The United States is making the demands in most of those markets. But China wants U.S. quotas on textile imports from China ended upon China's entry to the WTO, while the United States would like to phase those out, to protect U.S. producers from a surge of cheap imports.

Many of those disagreements might be difficult to resolve.

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