Clinton Team Begins Far-Reaching Trade Talks in Beijing

U.S. negotiators and Chinese officials met here Monday for a new round of trade talks that carry far-reaching implications for China’s economic structure and Sino-U.S. relations.

The talks mark a resumption of bilateral discussions on Beijing’s application for membership in the General Agreement on Tariffs and Trade (GATT). Earlier talks were suspended in 1989 as part of Western sanctions imposed after China’s crackdown on the Tian An Men Square pro-democracy protests.

The U.S. delegation, the first high-level Clinton Administration trade mission to China, is headed by Douglas Newkirk, an assistant U.S. trade representative.

U.S. willingness to resume discussions on China’s GATT application resulted from Beijing’s signing of a Sino-U.S. market-access agreement last October. As part of that agreement, which pledges measures to open China’s market, the United States agreed to “staunchly support” China’s entry into GATT if an “acceptable protocol” can be drafted.

During Monday’s meetings, the agency said, Tong Zhiguang, vice minister of foreign economic relations and trade, told Newkirk that “China is now able to carry out all obligations as required by GATT. . . .”

The Sino-U.S. talks in Beijing are in preparation for multilateral GATT talks in Geneva starting March 15 to discuss China’s application. Beijing initially applied in 1987. But GATT members delayed consideration of the issue after the 1989 crackdown, largely because of doubts over Beijing’s willingness to carry out further economic reforms.

Under GATT rules, members agree to deal with each other under principles of non-discrimination and reciprocity. Generally speaking, all member countries--there are currently 105--must provide most-favored-nation trading status to each other. This means that the lowest import tariffs granted by a GATT member to any trading partner also must be granted to all other GATT members.

Entry by China into GATT might put an end to the continuing debate in the United States over whether human rights conditions should be attached to the annual renewal of China’s most-favored-nation status. It is not yet clear, however, whether Beijing is willing to reform China’s economic system enough to qualify for membership.

Beijing has repeatedly stressed its desire to join GATT, which would help ensure access to markets worldwide. But it is trying to gain entry on the best terms, without needing to fully dismantle controls that give the central government direct authority over large sectors of the economy.

The United States and members of the European Community have taken the lead in demanding that China carry out major domestic reforms to free its economy before it is allowed to join GATT.

Western success or failure in this effort could have a major effect on the future structure of China’s economy. Failure to demand sufficient reforms before China joins GATT could leave it free to flood foreign markets with cheap, state-subsidized exports while maintaining high protective barriers for many of its own industries.

Also, Beijing is demanding that it be granted what it calls “re-entry” into GATT, rather than a new membership. The Nationalist Chinese government was an original signatory to GATT in 1947. But after losing to the Communists in the civil war that led to the 1949 founding of the People’s Republic of China, the Nationalists, by then based in Taiwan, withdrew their membership.