Global Policy Forum

By John Pomfret & Philip P. Pan

The final round of talks over China's bid to join the World Trade Organization has stalled, with Beijing resisting demands by the United States and other countries that it undertake major legal reforms and explain in greater detail how it intends to open its markets to foreign companies, Western officials say. The eleventh-hour impasse follows a breakthrough trade agreement between Beijing and Washington last year and a vote in Congress this year to grant Chinese products entering the United States some of the lowest tariffs allowed by law. It is so serious that some Western officials fear China may be experiencing ''buyer's remorse'' and that it is trying to back away from its promises to lower trade barriers and open up its economy.

''They are just beginning to realize what this deal means to their economy,'' said a Western diplomat involved in the negotiations. ''In some areas and in some significant ways, they are trying to back away.'' Western analysts said the delay might mean that Beijing's consensus in favor of WTO membership has weakened in recent months. Various segments of China's government, including the security services and various state-owned monopolies, remain strongly opposed to entering the Geneva-based group that enforces the rules of global commerce. The deadlock also is reinforcing the concerns of many Western business leaders that China will find other creative ways to hold off the deluge of foreign investment and products waiting to roll into its markets.

The U.S. trade representative, Charlene Barshefsky, has requested an urgent meeting with Prime Minister Zhu Rongji in an attempt to push the negotiations forward, and she may be traveling to Beijing as early as this week. Ms. Barshefsky said last week that China might not enter the trade organization this year. A senior Chinese trade official, speaking on the condition of anonymity, said the Chinese government no longer expected to join the organization this year, though it still hoped to enter early next year. He predicted ''more tough talks'' when Ms. Barshefsky arrives, blaming anti-Chinese bias on the part of U.S. and European negotiators for the stalemate. ''You are holding us to a higher standard than other countries,'' he said. ''Even the United States has laws on its books that violate the WTO.''

By entering the organization next year, China could push back by a full year the carefully negotiated timetables dictating when it must remove various trade barriers. It would also take the final talks over China's membership out of the hands of the Clinton administration and leave them to the next president. ''Your president, a lame duck, must make the political decision that he wants China in the WTO,'' the Chinese trade official said. ''He must use whatever political capital he has left to make this happen. If he decides not to, our entry into the WTO could be delayed even longer. If he decides to support us, then we should in theory be ready to enter sometime next year.''

China's accession to the WTO could spark a revolution in how business is conducted in the world's most populous country. On paper, it would slash tariffs on agricultural and industrial products and open up China's markets to direct foreign competition, giving foreign companies the right to sell, distribute and market goods without going through Chinese middlemen. Proponents of the trade deal have also argued it will promote political change in the authoritarian nation by strengthening the rule of law and by helping China's fledgling private sector.

Blocking China's 14-year quest to join the group is a dispute over the final legal documents that will spell out China's commitment to abide by the organization's trade rules. More important, these documents will combine the terms of the bilateral agreements China has reached individually with the United States, the European Union and 135 other members of the WTO. The Chinese complain that the United States and some European countries are trying to pry new market concessions from Beijing in these documents. They also contend that negotiators are asking China to do more than other countries to explain how it will live up to its trade promises.

''It is inappropriate and unnecessary to invent a new set of rules specifically for China,'' said Long Yongtu, the chief Chinese negotiator, after talks in Geneva broke down late last month. ''We believe that this is in fact an attempt to reopen negotiation on the bilateral agreements already signed.'' He added that Western trade negotiators ''always think China is too big, China is developing too fast. I don't think 'WTO-plus' is fair to China.'' Western negotiators insist they are not seeking new concessions, but simply are asking China to describe how it would implement trade commitments it has already made. They acknowledge that China is being asked to do more than other nations, but only because it is so different from other nations.

''Most countries that accede to the WTO are market economies. China is not yet a market economy. They're in a period of transition, they have enormous ideological issues, and there's a large state sector that has not yet been privatized,'' a European trade official said. ''As a result, it is the WTO that is being flexible. We're saying, you can become a member of a club that only includes market economies, but we will then request that special provisions apply. And that's fair enough.'' Among other things, officials said, WTO negotiators are asking China to adopt new copyright and trademark laws, to establish clear rules on how it will issue business licenses, to set up independent judicial agencies to hear trade disputes and to guarantee the right of foreign companies to choose their own Chinese partners and distribute their own goods.

One sticking point in the talks is China's use of two agencies to inspect and certify goods, one for domestic products and one for imports. WTO negotiators say that is a violation of the organization's rules requiring that foreign and domestic goods be treated the same. But China disagrees, maintaining that the two agencies follow the same procedures. Chinese officials have acknowledged that government regulators and other officials, especially at the local level, are not prepared for WTO entry, but the senior Chinese trade official objected to attempts by negotiators to force China to revise its laws. ''We don't understand,'' he said, ''why China has to be perfect.''

The official also took issue with allegations by the European Union that China has already broken a promise to open up its insurance market. The EU says China agreed to grant seven new licenses to European insurance companies within 60 days of their May 19 trade pact. Only two have been issued. ''We said we would only give them the licenses when we got into the WTO,'' the official said. ''They want the licenses now. They must wait. We were very clear.''

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.