`Progress' in US-China WTO talks

After two days of talks with Chinese leaders, US Trade Representative Ms Charlene Barshefsky told reporters in Beijing yesterday that the US had made "important progress in overall negotiations" on China's entry to the World Trade Organisation. A team of US negotiators would remain in Beijing to continue negotiations before the visit by the Prime Minister, Mr Zhu Rongji, to the United States next month, she said.

At the same time the top US trade envoy indirectly acknowledged a warning from the European Union not to negotiate China's entry to the WTO on terms that granted special favours to Washington. She insisted that the US would not strike any special deal with Beijing and that entry by China to the WTO must be on commercially meaningful terms. "We have worked very closely with the European Union at every step of the way," she told reporters. "There is no mini-package. There is no quick fix. There is no special deal. There is no sweetheart deal. There are terms for accession into the WTO. They are clear. They are well known."

European Trade Commissioner Sir Leon Brittan said, as Ms Barshefsky conferred with Chinese leaders, that WTO accession negotiations were a multilateral process, not just a US-China affair.

"No one party to the talks can determine the outcome on its own," he said in Brussels. "No bilateral agreement between China and a third country can be imposed on other members of the WTO as a basis for a final accession deal. It is fundamental to the success of the talks that all bilateral concessions made by China to individual countries should be extended on a non-discriminatory basis to all other parties to the talks. The central purpose of the WTO accession talks is to remove trade discrimination, not introduce new preferential distortions."

The new momentum in China's push for accession to the WTO comes after 13 years of stalled negotiations, during which Beijing argued that it should be granted membership of the WTO on special terms granted to developing nations. The US and the EU maintain that it is too potent an economic power to join on the same terms as the world's poorest countries. However, both want the world's most populous nation inside the WTO, to force it to open its markets further.

Ms Barshefsky said China signalled two months ago that it wished to make a serious drive for WTO membership, and had invited her to come to Beijing. One of the reasons emerged in a two and a half hour meeting with Mr Zhu, whom she found candid and well-briefed. This was that membership of WTO, with its need for lower trade barriers and transparency, would help his reform drive.

"I believe China feels WTO accession is in the best interests of China and that it should not remain outside the system," she said. Observers in Beijing said that it was also in China's interests to join the WTO before a new round of world trade talks begins in Seattle later this year, when the entry qualifications would be raised.

"We have made important progress in overall negotiations," Ms Barshefsky said of her talks with Mr Zhu and Foreign Trade Minister Mr Shi Guangsheng. Gaps still remained, however, and a number of issues had yet to be addressed but negotiations continued. The three main sticking points were industrial goods, services and agricultural products, she said. Chinese Foreign Ministry spokesman Mr Zhu Bangzao said yesterday that China's campaign to join the WTO "needs co-operation and necessary flexibility on certain issues".

Ms Barshefsky said she would consult Sir Leon Brittan upon her return to the US today. Tensions between the US and the EU have been rising over two issues - Washington's go-it-alone WTO talks with China, and bananas. The EU's banana regime involves quotas and market arrangements that Europe says protects small producer countries, but which the US maintains favour EUbased marketing companies. Ms Barshefsky defended a move by Washington to enforce customs measures against a range of European imports in the escalating row. "Bananas is a case where Europe has four times lost on the question of whether its banana regime is legal under global rules," she said.

The rulings included two by the WTO and two by its predecessor, the General Agreement on Tariffs and Trade. "Europe refuses to comply with those rules. The result is that the United States will enforce its rights under the WTO to take appropriate action against Europe's or any other country's non-compliance."