China informed the United States yesterday that it is ready to resume talks on its bid to join the World Trade Organization, ending a negotiating freeze that Beijing initiated in May when NATO planes bombed its embassy in Belgrade.
The move, announced by Clinton administration officials, sets the stage for a flurry of negotiations this fall aimed at producing what the administration hopes will be a sweeping agreement to open Chinese markets and usher Beijing into the WTO by late this year.
The Geneva-based WTO sets the rules for trade among its member countries, and the administration--along with the U.S. business community--is eager to see China join as a way of furthering Beijing's integration into the global economy and increasing export opportunities for American companies. China wants WTO membership both to enhance its international prestige and to spur its development toward becoming a market-oriented economy that is attractive to foreign investors.
But China's entry into the WTO faces steep hurdles in Congress, which must approve legislation granting Beijing permanent access to U.S. markets under the terms of what is called normal trading relations--or, as it used to be known, "most favored nation" status. That status is subject to annual review by Washington, and many of China's critics--human rights activists in particular--are loath to make the status permanent.
Given the prospects for a spirited battle on Capitol Hill, administration officials have been worrying for months that time could run out before China's target date for entering the WTO in late November.
Beijing wants to participate as a full member in a WTO meeting scheduled to open Nov. 30 in Seattle that will launch a new round of global trade talks--and if it misses that deadline, the administration fears that election-year pressures could doom chances for congressional approval. Besides striking an agreement with Washington on the market-opening measures it will adopt, China must reach similar accords with the European Union and other major trading partners and finalize other terms of its entry with the WTO.
"There's a window that's closing," said White House spokesman Jake Siewert, who told reporters that "the Chinese have indicated that they would like to get back to the table."
Richard Fisher, the deputy trade representative, told reporters that China has "indicated that a technical-level review [of the negotiations] might be in order." The two sides agreed to send "expert-level" officials to a meeting early next week, he said, "most likely in Beijing and possibly in Auckland," the New Zealand city where Asia-Pacific leaders will hold a summit on Sept. 12-13. President Clinton and Chinese President Jiang Zemin are scheduled to meet on the sidelines of the summit, and the two sides have been suggesting in recent weeks that that meeting will jump-start the WTO talks.
Much of the groundwork for a deal was laid in April when Chinese Prime Minister Zhu Rongji, in a visit to Washington, offered an extensive proposal to lower trade barriers in a host of areas, including deep tariff cuts on agricultural and manufactured products and the phasing out of obstacles to foreign firms establishing their own wholesale and retail distribution systems in China.
But Clinton angered the Chinese by insisting on a few more concessions, and Beijing cut off talks after the embassy bombing.
Separately, the U.S. International Trade Commission, an independent agency, released the executive summary of a report on the impact of China's WTO entry. Although the report concludes that exports to China will increase, in some cases significantly, it may provide some fodder for Beijing's critics. That's because it says Chinese membership in the WTO could increase the already-massive U.S. trade deficit with China "as trade liberalization helps make China's export sectors more competitive."
According to the summary--the administration hasn't released the full report--the study found that the impact on the U.S. economy would be "positive, but minor" if China cut its tariffs as proposed by Beijing in April.
"This result is consistent with the fact that U.S. trade with China accounts for less than 1 percent" of U.S. gross domestic product, the summary said.
Critics of China's WTO bid may cite those words to attack claims by the administration and the business community about the benefits of admitting Beijing to the trade body.
But aside from tariff cuts, China has also tentatively agreed to lower other informal trade barriers, and if those actions are taken, the impact on the U.S. economy would be greater, the summary said.