Friday, September 14, 2001

WTO Group Agrees on Chinese Membership

Reuters reports:

World Trade Organization (WTO) officials said on Friday they had agreed terms for China's entry to the body -- clearing the way for Beijing to come in by the end of the year.

Agreement was sealed at a meeting of the WTO's special working party, which has been negotiating with China for the last 15 years.

"It has been done. The big breakthrough has been achieved," said spokesman Keith Rockwell.

The accord will be rubber-stamped by a formal meeting of the working party on Monday. It will then go through the formality of confirmation by the WTO's ruling General Council, essentially the same negotiators who form the working party, or by ministers of all 142 member countries set to meet in Qatar in November.

China's entry will bring the world's fifth largest trading power -- after the United States, the European Union, Japan and Canada -- into the WTO, and, analysts say, change the balance of forces in the body forever.

"It is only the end of the beginning. It is a long process for China to implement and enforce the agreement and to a good WTO member," chief Chinese negotiator Long Yongtu told reporters after the meeting.


As a developing country, Beijing would be expected to add huge weight to the position of the poorer nations -- who already make up well over two thirds of the membership but complain that the current big four dictate the agenda to their own advantage.

"It was long and painful but in the end we have an agreement that will ensure the integration of China into the world trading system," said the European Union's chief negotiator, Karl Falkenberg.

For the big four, known in trade parlance as "The Quad," the lure of a market of one billion people -- one sixth of the world's population -- for goods and services outweighed concerns over the stance China might take in the trade body.

Western leaders also argue that bringing China into the WTO and opening up its economy to the outside world will also bring domestic political liberalization and make the long feared "Communist Dragon" a more predictable partner.

"All countries -- China and its partners -- would benefit. This should become a win-win game," said Falkenberg.

But many developing economies fear that Chinese goods will capture markets for items like clothing, textiles and footwear as well as for agricultural produce that they had hoped to win themselves in the richer countries of the North.

On Thursday, Mexico completed a side agreement with China allowing it to maintain restrictions on many Chinese consumer goods for six years in order to give its industries time to adjust.


Right up to the last, however, the deal had also been threatened by a dispute between the EU and the United States over terms for foreign insurance companies opening new offices in China once it has come under the umbrella of WTO rules.

The two powers, with China in the middle, had been at odds over insistence by the United States that the huge American International Group Inc (AIG) conglomerate would be able to hold 100 per cent ownership of any new Chinese operations.

The EU argued that this would mean the AIG getting better terms than insurers from its 15 member states -- which would be bound by Chinese rules giving newcomers onto its market the right to only 50 percent ownership.

Such an outcome, Brussels said, would violate the WTO's basic principle of most-favored-nation, or no discrimination between trading partners who are members of the trade body.

There were no immediate details on how the differences had been resolved.

"The last page in this process reflected close cooperation between the United States and the European Union," said Washington's top negotiator Jeffrey Bader.