China talks to focus on WTO bid

Date: 01/10/1998

By Chris Johnstone

EUROPEAN officials will launch preparatory talks with Chinese counterparts next week aimed at injecting fresh impetus into stalled trade discussions with Beijing.

The immediate aim of the discussions next Monday (5 October) is to prepare the way for a top-level visit by European Commission President Jacques Santer, Trade Commissioner Sir Leon Brittan, and Economics Commissioner Yves-Thibault de Silguy at the end of this month.

The main focus of the visit will be on China's sluggish moves to join the World Trade Organisation, although De Silguy will be taking part in a tour to promote the euro.

EU officials have detected a marked cooling in China's attempts to push forward its application for membership of the organisation which polices world trade since the Asian economic crisis.

“The Chinese seem to be much more domestically orientated and are focused on reform of their housing market and state enterprises,” said one source. “We are trying to pursued them that WTO membership and internal reform are not alternatives but complementary processes.”

Early signs of China's increasing reticence came in the spring when Beijing tabled a new offer on opening up its financial services market. China described the offer as “comprehensive and positive”, but European negotiators said it was “full of holes”.

Those flaws included continued restrictions on accountancy and securities firms operating in China, including the rather bizarre demand that the latter only engage in non-profit activities.

Since then, talks have been described as “slow speed ahead”, with some EU sources suggesting that even that is over-optimistic.

The Union has, however, been keen to address China's wider trade concerns and in particular its claim that it was being discriminated against by Europe's anti-dumping procedures.

The EU has offered a fundamental reshaping of its trade protection rules, allowing some Chinese products to be assessed on the assumption that the country has a market rather than a closed economy. This makes a big difference when dumping complaints are being judged.

De Silguy is likely to have more success in his efforts to increase Chinese interest in the euro.

Beijing is already said to be keen on switching 20&percent; of its foreign currency reserves (around 30 billion ecu) into euro, thereby diluting its reliance on the US dollar.

“The launch of the euro is being seen in China as the most significant event since the invention of paper money,” said one EU official.