China's WTO accession talks to resume autumn

GENEVA: A meeting of the working party on China's accession to the WTO will be set later this autumn, after China tables a new offer covering the services sector, and broad-based bilateral market access negotiations get under way covering both goods and services sectors.

The new services offer, Chinese Vice-Minister Mr. Long Yongtu told a news conference on 1 August, will be made by end of August or early September, covering the services sector and would be "comprehensive", but may not touch all the sub-sectors of services.

The services sector, for historical reasons was different from the goods sector and if the "expectations" of trading partners were "modest and more realistic", the Chinese response would be positive, he added.

At the working party, Long said China had translated its firm political commitment for early accession to the WTO into concrete actions in the market access negotiations and, in a spirit of flexibility and pragmatism, China had made some new efforts.

Market access talks

China, Long argued, has taken major steps on market access, both in terms of accelerating the accession talks as also its own objective of expanding the opening-up process of its economy.

Despite the progress made in the market access talks, as in any negotiations, there would always be gaps until the end. And although it was understandable that WTO members have "great expectations" on the Chinese market, the negotiations should proceed within the specific framework and scope as defined by the WTO agreements, and there were limits to both its functions and capacity.

Even after joining the WTO, China would continue to participate in multilateral trade negotiations and improve its market liberalization, and WTO members would need to adopt a long-term view.

"More haste," Long added, "sometimes results in less speed," and WTO members should make "realistic requests" in line with China's current level of economic development. "Only when the requests are realistic can there be positive response."

Long had earlier told the working party that in response to the concerns of the Cairns Group of agricultural exporters, China would commit itself not to subsidise agricultural exports, noting however, that some of the big agricultural countries were still maintaining substantial export subsidies. With the commitment not to subsidise agricultural exports, China "shall not be challenged" on implementing "green box policies" in terms of domestic support for agriculture, he said.

Non-tariff measures

As for non-tariff measures (NTMs) , China has decided to make across-the-board reduction of the phase-out period for non-tariff measures (mainly quota restrictions, QRs) and, from an original period of 12 years to 8 years for some 86 items, including automobiles and auto-parts. During the period, China had also agreed to provide annual growth rates of quota volumes ranging from 8-12% during the transition - so that foreign suppliers of automobiles, other machinery and electronic products will have a gradually expanding market access during the transition.

Currently, China maintained QRs on 385 HS-eight-digit level tariff line items. These may appear large, but covered only a few categories. Many industrial countries, he noted, maintained quota restrictions on textiles and clothing items covering some 900 tariff line products.

Chinese proposals on QRs

On accession, China would immediately phase-out QRs on 66 items. About 80 items, mostly automobile and autoparts, would be phased out over 8 years and some 30 items in less than 6 years.

The Chinese proposals on QRs he said, had been generally welcomed, but some of the trading partners have said 8 years would be too long.

"But considering that some of the countries would continue to maintain quotas on textiles and clothing for 10 years, according to the Uruguay Round agreement, I don't think it is reasonable to ask China to make proposals (for reducing the phase-out period)," Long remarked.

[Trade diplomats noted that in the negotiations on phaseout of QRs, so far maintained for BOP reasons by India, the US and other major trading partners have been insisting on a faster phase out than 6-8 year period, arguing that the phase-out they would agree to for India would be invoked by China in its accession talks.]

China, Long added, had also held tariffs with 20 WTO members, and had improved its offers on over 2,000 textiles and chemical products, and further improved its offers on auto and auto-parts, paper and paper products, some electrical home appliances and agricultural products. Once its tariff concession proposals go into effect, the overall average tariff level would be lower than 15%.

The chairman of the China working party, Pierre Louis Girard of Switzerland, in summing up the discussions at the China working party, said the next meeting of the working party will be set once broad-based bilateral market access negotiations on goods and services (based on the Chinese offers) get under way.

Girard indicated there had been some advance in the market access area, and good progress had been reported in bilaterals, albeit uneven in sectors and with countries. At the informal multilateral consultations on 31 July, participants had been encouraged by the "serious efforts" made by China in their substantially revised draft annexes to the protocol, particularly on non-tariff measures and subsidies.

Need for progress in all areas

Girard also noted the inter-dependence of market access negotiations on goods and services, and noted that many participants had underscored the need to make substantial progress in all areas for the final package for China's accession.

At the 31 July formal plenary of the working party, a number of developed countries, several of whom in fact have highly-cartelized whole-sale and retail distribution systems, asked China in its services offers to fully liberalise its whole-sale and retail distribution systems, arguing that without this, market access offers (tariff and non-tariff) would not produce results.

Long noted that China's trading partners had been arguing earlier that they need to see "the colour of the money" (concrete figures of market access offers in goods and services), and had acknowledged in the bilateral and informal multilateral talks that there was now a firm basis for serious negotiations.

While both Long and Girard seemed optimistic, trade officials said that it was clear that much depended on the US, and the dynamics of its domestic politics.

At the time of the Singapore Ministerial Conference of the WTO (in December 1996), there had been some expectation that the Chinese accession issue would be settled in time for the Clinton visit.

But the US domestic politics have become muddied over charges of funding of the Democratic and Republican parties during the last elections.

The Chinese President, Jiang Zemin, is due to visit Washington in October, and Long suggested on 1 August, that China would like a concrete outcome.

President Bill Clinton is to return the visit next year.

Calls for more "comprehensive" offers

Before October, among others the US Trade Representative, Ms. Charlene Bershevsky is due to visit Beijing. Whether the talks at that time which, the Chinese side says would be "substantial" will provide the necessary political impetus to conclude the accession talks is not clear.

Barshevsky has been quoted in the US media as saying that the Chinese have so far only offered "piecemeal" packages of concessions.

Other American and European officials have said that China has to make more "comprehensive" offers to allow foreign competitors to enter the Chinese market and compete with state enterprises, and this would require concessions on goods and services.

American and European officials have also been pressing China to agree to make commitments, even in areas where the WTO has now no jurisdiction - such as on investments and government procurement. (TWE No. 167, 16-31 August 1997)

IPS/D.Cevallos