U.S., China Avert Clash Over Trade : Diplomacy: Agreement ‘in principle’ after a year of talks is aimed at giving American firms more market access, avoiding retaliatory tariff hikes.

U.S. and Chinese officials reached tentative agreement Friday on measures aimed at guaranteeing American companies greater access to China’s huge market, apparently settling a dispute that had threatened to set off a multibillion-dollar trade war between the two countries.

A spokesman for U.S. Trade Representative Carla Anderson Hills said the Bush Administration has agreed “in principle” with Chinese negotiators on a deal that will resolve more than a year of trade talks. But this accord must still be approved by higher-level Chinese authorities in Beijing.

Details of the agreement were not made public Friday. U.S. officials said they will be released today if the Chinese regime approves the deal.

In August, the Bush Administration had threatened to impose retaliatory duties of up to 100% on about $3.9 billion in Chinese exports to the United States, including footwear, silks, luggage and electronics, if Beijing did not agree to ease its restrictions on American goods by today’s deadline.

In effect, these duties would have doubled prices in the United States for many Chinese-made products.

“If China is to continue to enjoy full access to U.S. markets, then it must play by the rules of the international community and allow access to its market,” Hills said at the time.

China then warned that if the United States took such action, Beijing would respond with its own series of tit-for-tat tariffs, raising the levies on about $4 billion worth of American aircraft, computers, cars and equipment sold in China.

“China is not afraid of a trade war, especially if the opposite side is using trade retaliation as a threat,” Tong Zhiguang, China’s vice minister of foreign economic relations and trade, declared last month.

At the center of the trade dispute are measures that have, for years, restricted the ability of American companies to sell their products in China.

For example, officials in China have often told foreign companies that their ability to do business was governed by regulations that were termed neibu --that is, internal or classified.

The firms had to obey the laws, but were never allowed to see them. The Bush Administration has been demanding that China publish all its laws and regulations affecting international trade.

American negotiators also were asking the Chinese regime to eliminate a series of import quotas, bans and licensing requirements that effectively restricted the sales of American goods in China.

These restrictions have contributed to a large and growing trade imbalance between the two countries, as China’s exports to this country have increased dramatically while its imports of American goods have remained relatively stable.

The U.S. trade imbalance with China was about $13 billion in 1991--greater than the American deficit with any other nation besides Japan. And the figure has continued to increase so quickly that it may be close to $20 billion this year.

Over the past few months, relations between the United States and China have become increasingly strained. The trade dispute was one factor, but there are several others. China is particularly irked by President Bush’s decision to permit the sale of American-made F-16 jet fighters to Taiwan.

The United States was eager to resolve the trade talks because it hoped to pave the way for American companies to increase their exports to China.

China has had a strong interest in reaching an agreement, too. Chinese officials hope that, if they can satisfy the United States that their market is generally open to foreign competition, they will be able to win entry to the General Agreement on Tariffs and Trade (GATT), the main organization governing world trade.

A year ago, the Administration and China reached agreement on another, separate trade dispute in which Beijing agreed to abide by international agreements governing intellectual property (copyrights, patents and trademarks).

In that dispute, too, the Administration had threatened to impose retaliatory tariffs on Chinese goods, and Chinese and American officials haggled over the terms of an agreement right up until the negotiating deadline.

The Bush Administration elected to press these two specific, targeted trade disputes over market access and over intellectual property rights as an alternative to imposing much broader restrictions on China’s most-favored-nation (MFN) trade benefits--the privileges that allow Chinese goods to be imported into this country under the same low tariff rates other nations enjoy.

Critics of the Administration, including Democratic presidential candidate Bill Clinton, want to make the annual renewal of China’s MFN benefits conditional on improvements in its trade, human rights and arms-export policies. Legislation that would have imposed such restrictions has failed twice in the past year when Congress was unable to override Bush vetoes.