Mexico Wants Team Spirit From China on WTO Tequila Pact

Deadly dull disputes on trade usually waste away behind closed doors in Geneva--not Margaritaville. Then again, in the arcane world of trade talks, tequila is not your everyday issue.

Certainly, no one expected Mexico’s proprietary claim to tequila to emerge as one more complication in China’s long-planned debut in the global trading system.

“We’re asking [China] that tequila be recognized as a Mexican drink,” Gerardo Traslosheros, a senior Mexican trade official, said in an interview. “Tequila is a drink that is--and must be--made in Mexico only.”

Virtually unnoticed, Mexico remains the last major member of the World Trade Organization that has not made its own deal with Beijing. The unfinished business matters, because China must have bilateral accords with all the WTO nations before it can complete its 14-year quest to join the club.

Mexican officials say the signals from China have been positive, but they await clear confirmation that Beijing will agree to their demands on tequila and several other matters.

“What we’re seeking from the Chinese is an explicit recognition and a memorandum of understanding regarding tequila, but this is just one part among many others,” Traslosheros said.

The legal question surrounding a mystique-shrouded liquor made from a lily-like plant in arid Mexican highlands symbolizes the winding path that has slowed China’s entry to the WTO, a process that has frustrated U.S. officials who still hope for a happy ending while President Clinton is still in office.

It is a path strewn with issues of concern to many nations that are still wondering just how China plans to deliver on the many pledges it made to open its long-protected economy.

Talks on these broad questions broke up last month in Geneva amid widespread dissatisfaction with China’s posture on various matters, including how it will protect the rights of foreign firms that could face hostile Chinese bureaucrats and entrenched local interests.

“All the members said, ‘What’s this? This isn’t going to work,’ ” recalled Keith Rockwell, WTO spokesman. “They all said [to China], ‘You’re going to have to show us some rough idea of your legislative program’ ” to conform to the global trade rules.

The next session remains unscheduled, although U.S. Trade Rep. Charlene Barshefsky has said it might take place this month. Far-reaching questions remain on China’s lack of patent laws, discrimination against foreigners in product inspections and how it will provide business licenses. Yet to end its WTO odyssey, China must also resolve some little-noticed questions of intense interest to individual nations.

New Zealand, for example, made its overall deal with China three years ago but still wants to clarify how China’s quota system will affect its wool exports. The European Union, which in May announced its own accord with Beijing, is demanding more details on the rights of financial firms to operate there.

Meanwhile, China has not completed individual trade accords with several small Latin American countries, including El Salvador, Honduras and Nicaragua, although these deals are not expected to be difficult.

But Mexico is unique; it is the only remaining big trader that has no deal of its own with Beijing.

Mostly, the issues are technical, dealing with China’s pledges of access for Mexican goods to its market. Mexican officials want greater clarity on how China intends to limit its imports of such Mexican products as sugar. “We would like to get the details as to how that is going to be administered,” said Traslosheros, who is overseeing the talks with Beijing.

In the context of the global economy, none of this is a very big deal. Mexico-China trade last year totaled just $2 billion, and the vast majority of that reflected Chinese exports to Mexico, according to Mexican government data. Tequila accounts for just a tiny portion of Mexico’s $126 million in exports to China, a figure that is dominated by computer parts and electrical equipment.

But as a matter of principle, the issue of protecting a product’s national identity is large indeed, with potentially major financial significance over the long haul. Within the WTO, negotiations on the rights of regions to claim exclusive ownership of particular drink names is a matter of current debate. In the negotiations for the North American Free Trade Agreement, Mexican officials demanded--and received--assurances that only their own indigenous product could be called “tequila.”

More recently, they complained to the European Union about copycat liquors being made in Spain and elsewhere, and EU officials affirmed Mexico’s exclusive right to make tequila.

Even inside Mexico, the government authorizes tequila only from a particular region--Jalisco and neighboring states.

Mexican officials “are right to be concerned,” said Gary C. Hufbauer, senior fellow at the Institute for International Economics in Washington. “You can imagine the name ‘tequila’ being appropriated by the Chinese” to make an imitation product.

At the same time, Beijing may have good reason to wrap up the issues with Mexico. “Presumably, a lot of aspects of the Mexican market are important to China,” not the least of which is Mexico’s long border with the United States and its vast market, Hufbauer said.

Chinese officials announced this week that they plan to resume bilateral talks in Geneva at the end of this month.

For their part, Mexican officials remain optimistic that a full-blown tequila tiff with Beijing is not in their future: “I’m very hopeful,” Traslosheros said.