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To: Alex who wrote (40163)	9/9/1999 7:13:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116796

China's long march to WTO ends in triumph By Brendan Pearson, Auckland The United States and China are expected to clinch a deal in Auckland this weekend on China's long-awaited entry to the World Trade Organisation. Negotiations on the controversial deal resumed in earnest in the margins of the APEC Ministerial Meeting in Auckland yesterday, with a round of bilateral meetings last night between US Trade Representative Ms Charlene Barshefsky, US Commerce Secretary Mr William Daley and China's Minister for Foreign Economic Co-operation, Mr Shi Guangsheng. The efforts are aimed at resolving a handful of outstanding issues to enable US President Bill Clinton and President Jiang Zemin to announce in-principle agreement on the terms of China's entry to the global trade body when they meet in Auckland on Sunday. China first applied for entry to the WTO's predecessor, the GATT, in 1986. New Zealand's Minister for Trade, Dr Lockwood Smith, said yesterday that the APEC ministerial communique to be issued later today would include strong and unanimous endorsement for China and Taiwan's entry to the WTO as soon as possible. Negotiations on China's accession restarted in Beijing with a "technical review" earlier this week, after being suspended in May after the bombing of the Chinese Embassy in Belgrade. A renewed sense of urgency surrounds the negotiations, with less than two months remaining before the launch of global trade negotiations in Seattle in late November. Trade experts have indicated that early conclusion of China's negotiations with the US and the European Union is necessary to ensure there is sufficient time to conclude remaining protocols before the Seattle WTO summit. In addition to the ministerial-level talks, negotiations also resumed at the detailed working level yesterday between US negotiator Mr Robert Cassidy and his Chinese counterpart, Mr Long Yongtu. While Ms Barshefsky and Mr Daley stressed that a number of issues remained outstanding, sources suggested the US was unlikely to insist on major improvements to the Chinese offer tabled in April during Chinese Premier's Zhu Ronghi's visit to the US. After more than three hours of talks with Mr Shi yesterday, Ms Barshefsky said the US reiterated its hope of bringing China into the 134-member trade body on "commercially meaningful terms". "Minister Shi and I agreed to work jointly to resolve outstanding issues as soon as possible, recognising, however, that these issues that are outstanding must be resolved on a mutually satisfactory basis," Ms Barshefsky said. A recent study by the US International Trade Commission found that, if implemented, the concessions in China's current offer would see growth of 14 per cent in China's imports, 12 per cent growth in exports and provide a 4 per cent boost to China's GDP. Australia's Trade Minister, Mr Mark Vaile, who met his Chinese counterpart on Wednesday, said yesterday the Chinese were "desperately keen" to complete the negotiations as soon as possible. This follows the recent release of figures that show foreign investment in China dropped by 10 per cent in the first seven months of this year. Contracted foreign investment, seen as a key indicator of future inflows, fell 20.5 per cent in the first seven months of 1999. Canberra sources have been privately critical of the failure of the US to accept China's offer in April. Canberra agreed to terms with China during former trade minister Mr Tim Fischer's visit to Beijing in mid-May. Washington-based trade experts have blamed domestic political considerations, rather than the quality of the proposal, for President Clinton's rejection of the offer. In a recent study, Mr Daniel Rosen of the Institute of International Economics, said implementation of China's concessions would spur an increase in exports of $US 21.3 billion, including more than $3 billion from the US alone. "The US must recognise its own clear interest in Chinese accession. In light of these interests, the three remaining demands indefinite protection for US textiles and apparel producers, indefinite extension of non-market economy status for dumping actions, and indefinite application of a less liberal import surge protection mechanism look particularly foolish," Mr Rosen said. Mr Daley said yesterday some improvements to the April package would be necessary in order to appease US lawmakers. "In order for it to pass Congress, it has to be the right deal," he said. Congress will not formally ratify China's WTO entry, but will need to amend the 1974 Trade Act to grant Beijing permanent most-favoured-nation status, which it now enjoys only after an annual presidential waiver. afr.com.au

To: Alex who wrote (40163)	9/9/1999 8:53:00 PM
From: goldsnow	Respond to of 116796

Disarray over yen in Japan The yen has come back into fashion since last year when it fell to 144 The Japanese government and the Bank of Japan are deeply split over whether to intervene in currency markets to curb the rising yen. The government fears that the more expensive currency will hurt Japanese exporters who are the driving force pulling the country out of recession. But the Bank of Japan believes that currency intervention is pointless, and that government proposals would be inflationary. It sees the dispute as a test case for its recently granted independence. The dispute is surprising in Japan, where economic policy-makers usually operate in harmony, following the dictates of the powerful Finance Ministry. Policy split While the dispute simmers, the currency markets continue to push up the yen, as money flows into the Japanese stock market. On Thursday, after strong Japanese growth figures, the yen reached an eight month high against the US dollar. One dollar now buys just ¾108.54 - nearly 13% less since the summer. The markets believe that with Japan emerging from recession and the US economy slowing down, the fundamentals are all on the side of the yen. While the uncertainty about both US and Japanese policy persists, the markets will continue to test the limits of intervention. "The real problem is that the bank does not seem to have a clear policy framework right now - people do not understand what it is trying to do," says Jesper Kroll of Merrill Lynch. The Japanese government has said it would like to keep the yen at around ¾120 to the dollar - a level its export firms would feel comfortable with. But repeated interventions by the Bank of Japan in June and July failed to stop the currency's rise. Now the bank is digging in its heels at proposals for further loosening of monetary policy which could weaken the currency. "The bank and the ministry appear to be following different policies" says Brian Rose of Warburg Dillon Read. But the bank is adamant that it will not give in to Ministry pressure. "Our policies might make us unpopular in the short-term, but in the long term they will give us credibility because they show we are independent", said an official. No Funding of Public Debt The Bank of Japan is even more opposed to suggestions that it buys up more Japanese government bonds, which it calls "monetarisation" of the debt. The bank would then effectively be bankrolling the government's growing budget deficit. Masaru Hayami, the central bank governor, has threatened to resign if the government tries to force that proposal through. Observers of Japan insist that even with interest rates at nearly zero, not enough is being done to stimulate the economy. And, they say, a bout of inflation could be useful for an economy which is experiencing deflation. Hubert Neiss, the IMF Asia director, says the next time the Bank of Japan buys yen, it should use the move to expand the money supply. The government, though, seems determined to borrow even more money in an attempt to boost the economy, with another aid package scheduled for the autumn. Yen roller coaster The rise of the yen is also of concern in Washington, where the strong dollar policy has been reaffirmed by the new Treasury Secretary Lawrence Summers. But many observers believe that a strong yen would not be unwelcome to the Clinton Administration. As the dollar weakens, it would price some Japanese imports out of the US market and help to contain the US trade deficit, which is approaching a record $200bn this year. And even if the US wanted to strengthen the dollar, it would find it difficult to buck the markets at this stage - far more difficult than when it last intervened, in June 1998, to prevent the yen falling too far. 'The fundamentals do not line up for the dollar they way they did before,' says Allen Sinai of Primark Decision Economics. 'The question for (Treasury Secretary) Summers, from a market point of view, is whether what he says about the dollar, if he says anything at all, is credible against the reality of the changed situation.' As the yen surges towards ¾100 to the dollar, the credibility of the new Japanese and US policy-makers could be put to its first real test. news.bbc.co.uk