by Chakravarthi Raghavan

Geneva, 20 March 2000 -- The process of China's accession to the WTO is in some final stages, but how quickly China can become a member seems dependent on the EC-China bilateral talks later this month, as also (irrespective of the outcome) action by the US Congress to grant China permanent most-favoured-nation treatment and approve of the US-China bilateral agreement.

This picture emerged Tuesday as the Working Party met to hear progress on the bilateral and multilateral process of negotiations, and decided to hold the next meeting in the week of 8-15 May.

The last meeting of the working party had been in 1998.

The Chairman of the Working Party, Amb Giraud of Switzerland, in a final summing up Tuesday noted the progress in bilateral talks and said there had been very major progress and "we are now entering the final phase of our work."

In the light of discussions at the informals Monday, the chairman added, the time was now ripe to resume substantive discussions on the text and annexes.

An issue that was raised by a number of members, including those who have completed negotiations with China, related to how the bilateral agreements of China would be 'multilaterlalised' at the time of Chinese accession. While it is easy to 'multilateralise' tariff concessions, trade diplomats and officials see some problems that might arise in terms of the Chinese agreements for deviations or derogations from various rights and obligations under the agreements.

A number of members wanted updated material from China on a number of its laws and regulations on the issues covered by WTO agreements including action plans on SPS, TBT, TRIMs and TRIPS agreements, a revised notification on SPS, and revised tables of domestic agricultural support and export subsidies, and state trading operations.

The Chinese agreement with the US, the details of which have been sent to Congress, clearly involves some special arrangements relating to transitionary safeguards, in the kind of assessments to be made on questions relating to complaints or investigations of 'dumping', and/or concessions made by China on some 'autonomous' measures it would take in the area of market access in services, ahead of the time when its WTO commitments would kick in.

These are tricky questions, particularly when unlike the US, several of the countries do not have special legislations to discriminate against China or other countries similarly placed.

The pending US Congressional action on the US-China bilateral agreement for WTO that President Clinton sent to Congress earlier this month, involves agreement of Congress to provide permanent MFN treatment, which the US prefer to call "Normal Trade Relations" (NTR) status, to Chiina.

Presently, the US Congress extends this to China on an annual basis.

Organised US labour, as well as several US human rights groups, have joined to lobby Congress against grant of permanent 'NTR status' to China, preferring an annual debate in Congress and a vote.

Ironically, the US administration's hands might be strengthened, if it gets support for its effort to get a resolution against China over human rights in the Human Rights Commission now under way. The administration could tell Congress that it was dealing with human rights issues in a different forum, while trade issues in the WTO was separate.

However, it is a political issue going far beyond any advantage in trade terms for China, and the Chinese side is vigorously lobbying to defeat the US resolution.

But if the US Congress declines to give permanent NTR status to China, but other bilaterals are concluded, including in particular with the EC, the Chinese accession process could still go ahead - unless the US administration chooses to say 'No' and thus withhold consensus at the working party itself.

But the US could remain silent and not block a consensus, while exercising its option under Art.XIII of the WTO, and stipulate that the WTO and its multilateral agreements would not apply between the two.

But it would mean that China need not abide by the large concessions that US has secured for its corporations, and China could simultaneous to its own entry invoke the same provision of the WTO, and not extend MFN status to the United States..

While pressing all other members, who have expressed a desire for bilateral market access talks, to complete it, the Chinese in private have indicted that while they would be ready to go ahead with WTO accession, irrespective of the vote in the US Congress, pending that vote they would proceed softly and not force the pace at the WTO.

Parallel to awaiting the US Congressional action, the EU which is among the major trading partners of China that is yet to complete negotiations with Beijing, is sending a delegation, led by the EC Commissioner, Mr. Pascal Lamy to Beijing next week.

While the EC is seeking concessions for itself too (that go beyond what the US has secured for itself), the Chinese are reluctant to do more. Any concessions to the EC would benefit the US too, while the Chinese would be stuck with the special concessions (as in transitionary safeguards or special 'treatment' in anti-dumping actions.) EC sources admit that by delaying their own talks, the EC's hands have been weakened.

In a final summing up, the chair of the working party, Amb.Giraud of Switzerland, said that China had completed bilaterals with 27 Members, and only ten remained to be completed: the EU, Costa Rica, Ecuador, Guatemala, the Kyrgyz Republic, Latvia, Malaysia, Mexico, Poland and Switzerland -- several of whom were close to technical completion.

The working party was advised by the Chinese vice-minister, Mr Long Yongtu, that of the 37 WTO members who had conducted bilateral consultations on market access with China, 27 had concluded their negotiations - Hungary, New Zealand, South Korea, Czech Republic, Slovak Republic, Turkey, Singapore, Pakistan, Indonesia, Japan, Australia, Chile, the US, Canada, Venezuela, Cuba, Brazil, Sri Lanka, Uruguay, Peru, Iceland, Norway, the Philippines, India, Colombia, Argentina and Thailand. Several others, including Malaysia had basically concluded the negotiations, but the countries would officially sign the agreements once the outcome of the negotiations is approved by their governments.

Long approvingly noted Tuesday that 98 WTO members had chosen not to engage in bilateral negotiations with China, and he thanked this "silent majority" for their strong support to China's accession.

At the meeting Tuesday, Mauritius which (according to the Chinese and their supporters) had not indicated all this time of its desire for bilateral market access talks, indicated at the Working Party that it wanted China to negotiate with it on this. The Chinese were clearly surprised. But the nature of the WTO process is such that it is open to any member to raise such questions right until the last moment.

Several of the members who have concluded privately have indicated that this was subject to agreements with others, that relate to the rules, rather than market access concessions.

A number of countries raised issues, and sought information, relating to the Chinese regimes and laws in terms of the Sanitary and Phytosanitary Agreements, the Agriculture Agreement and concessions, including issues relating to tariff quotas and how they would be administered (there are some concerns surfacing that the quotas might get allocated to the US and other majors, leaving little for others), questions relating to the Technical Barriers to Trade and a number of other agreements.

Long told the working party that the Chinese government fully understood, that as required by the WTO's MFN principle, the results of all bilateral negotiations would be reflected in the final outcome of the multilateral negotiations which would develop the legal documents defining China's accession to the WTO -- the Protocol of accession and the Working Party report.

Trade officials said while this was a complex problem, once the agreements are in, the drafting of the protocol, its approval and Chinese accession could be completed by the time of the summer vacation or early autumn.

However they said this process might need two or three meets of the working party that could be held at short intervals.

The Chinese provided to the working party documents relating to several of its laws and regulations including those relating to customs administration, imports and exports, foreign investment regulations and administration, economic issues affecting trade, and laws and regulations relating to trade in services.

Also provided to the working party was an updated memorandum on China's Foreign Trade Regime -- changes in its traditional system of mandatory import and export plans; establishment of a market price mechanism, an economic mechanism under which enterprises of different ownership could co-exist and compete; elimination of export subsidies; convertibility of RMB, the Chinese currency, under the current account well in advance of the IMF time-frame,; successive deep cuts in tariff levels; unification of the taxation system; application of national treatment to imported products; elimination of non-tariff barriers; liberalizing market for trade in services gradually; and enhancing transparency of the trade regime.

A number of countries took the floor to formally record their situations, and concerns, and their desire to have more details of some Chinese rules and regulations. (SUNS4631)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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