ECONOMICS: by News WeeklyNews Weekly
China's slow progress on WTO entry
, March 24, 2001
Despite a widely-held view that China will shortly enter the World Trade Organisation (WTO), the European Union's Trade Commissioner, Pascal Lamy, has declared that China will only be allowed into the World Trade Organisation once it can offer an "explicit commitment" to opening up its service sector, but it does not seem to be in any hurry to do so.
China had been expected to join the WTO early this year, but a series of differences with the European Union, Mexico and the United States are delaying approval.
The EU wants assurances that China would be consistent in issuing licences in the service industry, particularly in the telecommunications, banking, insurance and broking sectors, Mr Lamy said. This will allow European banks, telecommunications companies and others to operate freely in China.
"The problem is what sort of explicit commitment will we get from the Chinese authorities ... what sort of guarantees are there to ensure that procedures will be predictable, stable and transparent?" Mr Lamy told Hong Kong's Business Post.
Disagreement between China and the US over agricultural subsidies was another main hurdle to be resolved before China could join the WTO.
"China will still have to solve the services problem, but my own feeling is that the people in Beijing are not in a hurry to solve this so long as the rest is not solved."
Mr Lamy said China was making progress in some areas that had been sticking points in earlier negotiations.
The WTO is insisting China ends its dual system of certification with one laboratory used for testing domestic products, and another for imports. "China has got the message that you cannot have one world and two certification systems," he said.
In a separate development, Mexican Economy Minister Luis Ernesto Derbez expects talks with China on entry to the World Trade Organisation to resume in the coming months.
Mexico is the only WTO country that has declined to endorse China's accession. China needs membership endorsement from all WTO countries.
Mexico has compensatory duties on about 1,400 Chinese products that it said were being dumped in Mexico below cost.
The latest round of talks in China's 14-year bid to join the WTO culminated in a wrangle over agricultural issues and market access to the services industry.
Analysts said divergence over the two issues could put China's expected admission later this year behind schedule.
WTO Deputy Secretary-General, Paul-Henri Ravier, said recently that talks in Geneva had tried to reach a "package deal" that involves a compromise in five remaining contentious areas.
Agriculture and services were "the most important remaining sectors", Mr Ravier said.
The other three disputed issues were technical barriers to trade, industrial policy and China's trading rights.
China insists its agriculture sector be allowed to adopt the same level of domestic support given to developing countries, which is 10 per cent of total output value. Beijing currently subsidises about two per cent.
However, the WTO's agriculture producers says China should be treated as a developed country, which would allow it subsidies of up to five per cent.
Long Yongtu - China's deputy trade minister, who led the delegation in the talks - said China needed to be able to support its millions of farmers, describing demands by some WTO members as "too much".
"If you bind our hands not to support our poor farmers in the countryside, that's too much, nobody would agree with that," said Mr Long.
China had made concessions in agricultural negotiations on market access, including a commitment to cutting tariffs on agricultural products and agreeing not to introduce export subsidies that would distort trade, Mr Long said.
On the services sector, the US and other WTO members were also in dispute over how freely foreign insurance companies could operate in China.
However, Mr Ravier said members saw "very clearly the shape of the final package".
"I feel that none of the outstanding problems are insurmountable," he said. A new round of talks is expected shortly.
Stuart Harbinson, newly elected as the chairman of the World Trade Organisation's ruling General Council, said, "I think China, being such a large and influential country, is bound to have an impact on the way [of working] of the WTO. They will have a voice on many issues no doubt, and that voice will have to be taken into account. And it does not have to be taken into account now. So that will be a big change."
Mr Harbinson has been Hong Kong's permanent representative in Geneva since 1994.
"They want to preserve the ability to subsidise to a certain extent poorer farmers, because that is important to contribute to social stability. They might also have some export interests in agriculture," he said.