Commerce Secretary Juanita Kreps said today that a trade agreement between the United States and China might be delayed because of Chinese difficulty in grappling with several complex clauses requested by Washington.
She indicated that the trade treaty, which would be the first between the two countries since the Communists took control of China, might not be ready for initialing before she leaves Peking Friday.
After meeting for two hours with her Chinese counterpart on an agreement to solidify trade between the world's richest power and the most populous, Kreps said the Chinese made it clear they will "have far greater difficulty in signing a trade agreement with us than anybody else."
Kreps said her meeting with Chinese Foreign Trade Minister Li Qiang (Li Chiang) convinced her, however, that Peking had not lost interest in advanced U.S. technology and still wanted a formal trade pact despite its moves to delay some large construction projects and slow its modernization plans.
At one time, U.S. policymakers had predicted Chinese purchases of $75 billion to $85 billion in American capital equipment and technology by 1985, but that estimate has been reduced to about $40 billion. Trade between the two countries was about $1 billion last year and is expected to be about $2 billion this year, Kreps told reporters before her meeting with Li.
The last major obstacle to a trade pact appeared to have been overcome in March when Treasury Secretary W. Michael Blumenthal, on a visit here, initialed an agreement by which China would pay the U.S. government $80.5 million to liquidate $197 million in claims going back to 1949.
Before leaving China, Blumenthal said that a trade treaty would be the next step. The treaty, in turn, was to have led to the granting of most-favored-nation trade status to China. This would lower tariffs to a level imposed on goods from most other U.S. trading partners and could allow China to increase its exports to the United States and have more money to buy U.S. goods.
The complications in the proposed trade agreement that have slowed Chinese consideration include safeguards for the American domestic market, such as a clause that could cut off the tariff benfits of most-favored-nation status to China for reasons of national security. The proposed U.S. draft also outlines visa provisions for American businessmen, working conditions in the two countries and protection for trademarks, copyrights and patents.
C. L. Haslam, general counsel to the Commerce Department, said, "These are all novel concepts to the Chinese, so it takes awhile for both sides to understand each other."
Although there were no major points in conflict on an agreement, Kreps said, "there were so many details that have to be included . . . . The chinese are frankly puzzled by the need for such a complicated agreement."
Kreps said. "I don't think it would be a catastrophe if we do not initial an agreement this week. I am hoping we can move as quickly as possible. It's important that we continue the momentum toward economic normalization."
Kreps is scheduled to leave here Friday for brief stops in Shanghai, Guilin (Kweilin) and Canton before leaving China. Her remarks suggests that final work on a trade agreement might have to wait for an expected visit here in June by U.S. special trade representative Robert Strauss.
China's decision announced last week to concentrate on its export industries at the expense of its steel industry would actually favor trade with the United States, Kreps said.
At least for the moment, however, China's new financial caution, a cash shortage and a bad harvest in some parts of the country have slowed the inititative taken in foreign trade last year and earlier this year.
Businessmen at the Canton trade fair, which Kreps is scheduled to visit, said they anticipated a drop in the dollar value of Sino-American deals there compared to the last fair. They added that this was caused in large part by an unusual number of Chinese trade missions making deals in the United States.