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CHINA’S STUBBORNNESS BRINGS GATT TALKS TO HALT

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In the wake of the collapse of China's bid to join the World Trade Organization, some economists are wondering whether China's top Communist Party leaders gave their trade negotiators the kind of authority and latitude necessary to make tough compromises.

Those compromises might have had an important effect on some of China's most powerful ministries, state-owned enterprises and military industries."The issue is whether President Jiang Zemin was involved," said a Western economist, who spoke on condition of anonymity. "Basically, a negotiation like that requires that kind of political clout, someone who will say this is in the best interest of the country in the long run even though there are going to be winners and losers."

After eight months of negotiations with China, the governing body of the General Agreement on Tariffs and Trade, which will soon be reborn as the World Trade Organization, decided last week that negotiations for China's acceptance as a member nation could not be concluded this year.

The governing body made an offer to resume the talks in February, but China has not yet responded. GATT delegates estimated it could take another six months to negotiate China's application.

Some Western diplomats here said they saw a strong resemblance between China's approach to GATT and the country's successful strategy last spring to persuade President Clinton to put trade relations with China ahead of American concerns about human rights.

In both cases, China put minimal concessions on the table, then dug in its heels, demanding that the international community recognize its strategic and economic importance in the world as the most important criterion for acceding to its demands.

In the case of GATT, Chinese officials may have believed incorrectly that European Union leaders, and perhaps even American officials, would make a purely political decision to let China enter the new trade organization despite a highly discriminatory tariff and trade structure.

A World Bank study on trade reform earlier this year said that "China's tariffs remain higher, more numerous and more dispersed than those of most other large developing countries."

One international banker here noted that the Communist Party laid out a strong agenda for economic reforms in November 1993 - including trade reform and the convertibility of China's currency. But Chinese negotiators might have been instructed to first measure the resolve of their negotiating partners in GATT before top Chinese leaders gave approval for major new concessions.

Western experts say a substantial reassessment of China's negotiating position by its top leaders will be needed before Beijing's negotiating team can return to Geneva with concessions.

And such a reassessment is likely to take months because of the approaching Chinese New Year and, more importantly, because of the crisis with the health of Deng Xiaoping, China's senior leader, whose condition has deteriorated through the fall.