U.S. and China Working to Get Beijing Into WTO

The Clinton administration and the Chinese leadership have launched a quiet but intensive drive to conclude a far-reaching deal that would bring Beijing into the world trading system and pave the way for China to get a permanent renewal of its trade benefits in the United States.

According to U.S. Trade Representative Charlene Barshefsky and other administration officials, the goal is to reach an agreement for China’s entry into the World Trade Organization by the time Chinese Premier Zhu Rongji visits Washington on April 8. U.S. trade negotiators are already in Beijing, and Barshefsky will travel there next week.

Time pressures have made both Washington and Beijing more eager to reach a deal than they have ever been in the past. A new round of global trade talks starts at the end of this year, and if China is not a member of the WTO by then, it may be left out for a long time.

“China has indicated a desire to continue the negotiations [over the WTO] in earnest,” Barshefsky said in an interview with The Times. “I’m willing to take every opportunity to work with the Chinese. But the final deal’s got to be a commercially strong deal, there’s no way around that.”

A WTO deal with China “is being explored very intensely,” said another administration official. “There’s a better chance of an agreement by far than three months ago.”

Under a WTO agreement, China would have to phase out a number of protectionist restrictions on access to its huge domestic market of 1.2 billion people in a way that would, over the long run, benefit American companies. But by joining the world trading regime, China would also eventually win more assured access to the American market, which is the largest single outlet for its exports.

For the last 20 years, China has been obliged to get annual renewal of its most-favored-nation trade privileges (which amount to normal trade benefits) in the United States. But if a deal is reached for WTO membership, the administration would ask Congress to end the requirement for annual renewal, which over the last decade has led to controversy each spring.

The WTO sets rules for world trade and a mechanism for settling trade disputes. Although China’s trade has increased dramatically over the last two decades, it has never been part of the global trading system. China is the only case since World War II in which one of the world’s 10 leading trading nations has not been part of either the WTO or the global trade organization that preceded it.

China’s entry into the WTO “is very important,” Barshefsky said. “It is no less important to the 21st century than was the re-integration of Japan and Germany into the global trading system after World War II.”

It remains unclear whether the Clinton administration will be able to work out a China deal that can satisfy Congress. Although a WTO agreement itself does not have to be submitted to Capitol Hill, House Minority Leader Dick Gephardt (D-Mo.) recently announced plans to resubmit legislation that would require congressional approval of any such deal with China.

Moreover, putting an end to the existing requirement for annual renewal of China’s trade privileges does require congressional approval. As a result, one administration official said, even if Gephardt’s bill doesn’t pass, Congress will still have what amounts to “de facto ratification” power over any deal.

U.S. and Chinese negotiators discussed a possible WTO deal before Chinese President Jiang Zemin’s 1997 visit to Washington, and again in the weeks before President Clinton’s trip to Beijing last summer. On both occasions, the talks fell apart when China failed to make enough commitments to open its markets, U.S. officials say.

Over the last few months, the prevailing view in Washington was that China was losing interest in joining the world trading system because it would open the nation up to greater foreign competition at a time when its economic growth was slowing and unemployment was rising.

However, China has served notice that it may be ready for a deal.

Last month, China’s chief trade negotiator, Long Yongtu, visited Washington to say China was interested in a WTO agreement and that Zhu, the premier, would personally oversee the talks, according to an administration source.

Administration officials admit they are not sure whether these signals mean that China has decided it is ready to make the market-opening steps and other economic changes that would be necessary--or whether it is merely testing the Clinton administration’s willingness to make concessions.

“There’s a certain consistency to the message [China wants a WTO deal],” said Barshefsky. “The question is, is that merely for our consumption, or does that suggest a willingness to change course by China?”