EU-China talks stall after NATO bombing

Date: 03/06/1999

By Gareth Harding

THE stray NATO bomb which hit the Chinese embassy in Belgrade last month has not only damaged diplomatic relations between Brussels and Beijing but is threatening to delay the Communist state's entry into the World Trade Organisation.

One of the first casualties of the bombing was a high-level summit between the two sides aimed at removing the remaining obstacles to China's membership of the WTO.

A European Commission official said this week that the bloc was "waiting for the dust to settle" before restarting talks and added that hopes of the meeting taking place before the autumn were slim.

With recent trade talks proceeding at a snail's pace and Sino-US relations sullied by spy scandals, this could scupper the goal of ensuring Beijing's entry into the 136-member trade club before the next round of WTO talks start in November.

Acting Trade Commissioner Leon Brittan said last week that "if China leaves accession till later in the hope of further concessions, she will find through no fault of her own that the price of membership has risen. This would be a loss for WTO members and an enormous missed opportunity for China."

However, some experts believe that the fracas caused by the rogue missile is being used as a fig-leaf to paper over the differences between Beijing and the West over market opening.

Chinese Premier Zhu Rongji made a raft of important concessions to the US in April, but later backtracked in a number of areas under pressure from powerful vested interests inside his country.

Having made considerable progress in the first months of the year, Commission officials believe that things have "slid backwards" since Rongji's visit. Two weeks of talks between EU and Chinese officials in the second half of April only served to highlight the remaining stumbling blocks between the two sides and Brittan's visit to Beijing early last month failed to break the logjam.

The EU's major worry is that it will be forced to sign up to the same terms as the US, despite its different interests. "China must not produce a one-size-fits-all agreement with the United States and expect others to swallow it whole," warned Brittan last week.

Although China has offered tariff reductions on US priorities such as plastics and cars, the Commission argues that duties are still too high in important sectors for the EU such as cosmetics, machine tools, ceramics and glassware.

The Union is also frustrated by the lack of progress in opening up the country's services sector. Having held out the prospect of majority foreign ownership of telecoms, banking and insurance firms, Beijing has since watered down its offer to the point where a "carte blanche is being offered to treat Chinese firms more favourably than foreign ones", according to one official.

Brittan has invited Chinese negotiators to Brussels later this month but has warned that unless Beijing gives ground on a number areas of concern to Europe, the 13-year marathon to get the world's most populous country into the WTO might falter in the final lap.