AT & T gains right to mainland access

US telecommunications giant AT & T has entered into a co-operative agreement with China's State Planning Commission to develop the mainland's telecommunications industry.

The memorandum of understanding, formally signed in Beijing yesterday, was described by AT & T vice-chairman Randall Tobias as the corporation's largest co-operative agreement outside the United States.

The agreement, coming just weeks into the new US administration and a few days before Sino-US talks on resumption of China's General Agreement on Tariffs and Trade membership, is being seen by many analysts as a demonstration of China's goodwill in allowing US companies greater access to its markets.

The signing of the understanding will also give a boost to China's chances of maintaining its unconditional Most Favoured Nation (MFN) trading status this year.

As Mr Tobias specifically pointed out at yesterday's signing ceremony, ''unconditional MFN is the critical foundation of two-way business relations and this agreement would not be possible without it''.

The US Ambassador to Beijing, Mr J. Stapleton Roy, agreed that the deal was clearly beneficial to overall bilateral trade relations.

''We strongly believe that the opening of China's markets to highly competitive businesses such as AT & T is the way to get our trading relationship moving in the right direction,'' Mr Stapleton Roy said.

The agreement makes null and void a Chinese State Council document, issued on August 22, 1989, which effectively banned US companies such as AT & T from China's telephone market.

The vice-chairman of the State Planning Commission, Mr Ye Qing, said Article 56, which limits contracts for telephone switching equipment to companies from Japan, Germany and France, was no longer operative.

The document was made null and void as part of the overall agreement on market access concluded between the US and China in October last year, Mr Ye said.

One of the first joint ventures created under the terms of the memorandum of understanding will be a switch-manufacturing enterprise which will involve the transfer of micro-electronic technology to China.

Mr Tobias could not give an exact figure for the overall value of the agreement, saying future co-operation would be worked out on a project-by-project basis.

He stressed, however, that China represented a huge and rapidly developing market for telecommunications equipment.

As an example of the size of the China market, Mr Tobias pointed out that a one per cent increase in China's telephone density represented an increase of 12 million lines, or nearly double the total sales in the US on an annual basis.

Mr Tobias said he had not had any official discussions on the possibility of China establishing a second telephone network, but stressed: ''AT & T is interested in any and all telecommunications opportunities that might emerge in China.'' He admitted that the ability of AT & T to exploit the China market might be limited by US government restrictions on the export of certain high technologies.

However, Mr Tobias said the US Government was dedicated first and foremost to the growth of the domestic economy and he hoped the administration would not put any unnecessary obstacles in AT & T's path.

The lack of export credits and soft loans from the US Government might also hamper AT & T's export drive, but it would also force it to become even more competitive in the world market, he added.