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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (29734)	11/15/1999 11:45:00 AM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

China, U.S. Reach Breakthrough WTO Pact Updated 8:24 AM ET November 15, 1999 full image Charlene Barshefsky Shakes Hands with Jiang Zemin after Signing WTO Agreement in Beijing (Reuters) more photos By Andrew Browne BEIJING (Reuters) - China and the United States reached a breakthrough deal on Monday, paving the way to Beijing's entry into the World Trade Organization and throwing open a vast market of 1.2 billion consumers. President Clinton said the deal created "unprecedented opportunities for American farmers, workers and companies to compete successfully in China's market." Now he faces a tough battle to steer the agreement through a Republican-led Congress deeply suspicious of China. After six days of grueling talks -- and critical intervention by Premier Zhu Rongji -- the final document was signed by U.S. Trade Representative Charlene Barshefsky and Chinese Trade Minister Shi Guangsheng. Shi hailed what he called a "win-win" agreement and said he hoped China could join the WTO this year, a goal that has eluded Beijing for 13 years. "If there's a will there's a way," state radio quoted President Jiang Zemin as telling Barshefsky after the signing of an agreement that offers a badly needed boost to fragile China-U.S. relations. WTO-driven liberalization will constitute China's most radical reform since then paramount leader Deng Xiaoping launched his "open door" economic policies in 1978. Negotiators raced the clock to hammer out a deal to secure China's entry before a November 30 deadline, when ministers of the WTO's 134 members meet in Seattle to launch a new trade round. Although China still needs separate agreements with the European Union and other key trading partners -- and significant differences remain to be bridged in those talks -- diplomats in Beijing said they were confident others would fall into line behind the Americans fairly quickly. CLINTON VOWS "ALL-OUT" EFFORT WITH CONGRESS According to WTO rules, the U.S. Congress must grant Beijing permanent "Normal Trade Relations" before Washington can gain the benefits of China's more open markets within the WTO. Clinton pledged an all-out effort to secure congressional support. "Today China embraces principles of economic openness, innovation and competition that will bolster China's economic reforms and advance the rule of law," he said during a visit to Turkey. The agreement appeared to offer many of the generous concessions Zhu took to Washington in April but rejected as inadequate by Clinton, a move the U.S. president came to recognize as a grave blunder. The United States said China agreed to reduce average import duties to 17 percent from 22.1 percent after WTO entry. Export subsidies will be eliminated and tariffs on farm goods and automobiles and auto parts will come down. China will allow 49 percent foreign ownership in telecommunications firms immediately, rising to 50 percent after two years, Barshefsky said. She said investment would be allowed in the booming Internet industry, including online content providers. In September, Minister for Information Industry Wu Jichuan said all foreign Internet investment was banned. U.S. firms will be granted access to China's distribution networks, and auto companies will be permitted to offer vehicle financing. Banks will be allowed to offer local currency loans to Chinese enterprises two years after China's WTO entry and get into retail banking in five years. Insurers would also benefit, although there were no details. TOO EARLY TO CELEBRATE U.S. companies welcomed the deal, although some said it was too early to celebrate and they first needed to examine the fine print. "Getting China into the WTO is a fantastic step for everybody. It's a WTO pact and that is moving in the right direction," said Peter Alexander, chief representative for U.S. insurance company Nationwide Global Holdings Ltd. "But let's see what it means for everybody. I think we'll have to wait and see how it's going to be implemented," he added. WTO membership will force fundamental changes to China's state-run economy by introducing fiercer competition from abroad. But it will also run the risk of rising social turmoil as indebted state factories go to the wall, throwing millions out of work. If the deal can be steered through the U.S. Congress, it would be a major victory for Clinton, who was eager for a trade pact with China to help secure his legacy. Failure almost certainly would have been a devastating blow to China-U.S. relations, now in a fragile recovery following the bombing by U.S. aircraft of the Chinese embassy in Belgrade in May. Clinton said the agreement was a "profoundly important step in the relationship between the United States and China." HIGH STAKES FOR ZHU Barshefsky and top White House economic aide Gene Sperling arrived on Tuesday and were originally scheduled to stay for just two days. The talks had seemed to be faltering on Friday before the personal intervention of Zhu, who sees WTO entry as key to his efforts to overhaul crumbling state industry. Much was at stake for Zhu, humiliated in April after Clinton rebuffed his trade offers. His reforms have since lost momentum, and Zhu has lost ground to protectionist ministries. "WTO entry is an important political victory for Mr. Zhu because he has been the most ardent supporter of WTO," said Chi Lo, senior Asia economist at HSBC Securities. "It definitely helps, both politically and psychologically, the reform process to go forward."