Why China will have to wait longer for GATT

TOMORROW'S meeting in Beijing between China's chief trade negotiator Mr Tong Zhiguang and US trade representative Mr Douglas Newkirk is expected to have a positive effect on China's application to join the General Agreement on Tariffs and Trade (GATT).

According to Mr Long Yongtu, director-general of the Department of International Trade and Economic Relations, part of China's Ministry of Foreign Economic Relations and Trade (MOFERT), China is concerned about securing permanent Most Favoured Nation trade status with the US, removing trade discrimination and protecting its insolvent industries, while the US wants to remove trade barriers preventing US goods entering the Chinese market.

''As Washington has pledged strong support for China's entry to GATT, it's illogical for the US not to grant permanent MFN status to China,'' Mr Long said.

China was a founding member of GATT in 1948 but withdrew in 1950 following the Communist takeover. In 1986, it applied to re-join as an ''old member'' because this would give it permanent MFN status under the terms agreed with the US in 1948.

However, the US wants China to join as a new member because the trading environment is very different and the conditions of admittance should be reviewed.

A Chinese source in Beijing said US negotiators had recently adopted a more cautious attitude on China's re-entry to GATT.


''Washington is keen that China and Taiwan should simultaneously join the agreement,'' the source said.

Although Beijing has repeatedly stated it will be admitted to GATT this year, this seems unlikely.

All applications to join GATT have to go through three procedures: examining, drafting and voting.

China's admittance is being drafted, while the examination of Taiwan's application only took place last October.


''It will take at least a year for Taiwan to complete the first procedure,'' the source said. ''If China has to wait for Taiwan do you think China can be admitted this year?'' According to Mr Woo Tun-oy, a senior lecturer at the Hongkong Baptist College, ''Washington sees through Beijing's desperation to join GATT and US negotiators will take as much advantage as they can.'' ''Beijing should be more rational in its approach and shouldn't be so desperate,'' he said. ''In fact, the Chinese market is so promising that the US will be very happy to have China in GATT. Beijing shouldn't be too soft.'' He said it would be hard to complete the negotiations this year: ''It's a complicated issue, the Chinese trade officials are facing heavy pressures internally as well as externally.

''More departments have recently expressed their objections [to join GATT at this stage].'' Despite a number of unresolved problems between Beijing and Washington, Mr Long said ''some negotiations'' were ''better than no negotiation''.


A Western source in Beijing said China was one of the largest trading nations in the world and its entry to GATT would have a significant impact on world trade, but there were still aspects in its application that needed to be resolved.

''Although Beijing says it is establishing amarket economy, the concept is too vague,'' the source said. ''What does it mean, a capitalistic market with Chinese characteristics? ''MFN is a trade status retained for nations with a market economy. It's a separate matter from China's application to enter GATT.

''As far as I know . . . China's MFN status will have to be renewed every year even after China becomes a GATT member.'' Also related to China's application to re-enter GATT is its relationship with Europe.


Mr Long said more than 300 products from China were restricted from the European Community.

''We hope that EC can remove all these barriers,'' he said, adding the EC would like to impose a selected safeguard clause, which meant if China was found dumping goods the EC could take unilateral action against China.

Mr Long argued that this was an unfair condition.


Mr Tong will also send a negotiating team to Geneva on March 11 and hold a two-day meeting on March 15 and 16.