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CREEPING TRADE TALKS China's re-entry to GATT in doubt


BEIJING -- Two days of talks between U.S. and Chinese trade negotiators left the prospects for China's re-entry into the General Agreement on Tariffs and Trade (GATT) more remote than they were three years ago, a senior American trade official said here last night.

"I'm going to be retiring in seven years, and I'm not sure that I'm going to be able to wrap it up at the current pace," said W. Douglas Newkirk, assistant U.S. trade representative.

China, the world's 11th-largest trading nation, has been predicting it would become a GATT member this year.

And the Chinese press this winter has been trumpeting the changes GATT membership might mean for the Chinese economy -- among them, further moves toward a market economy, cheaper foreign goods and more foreign competition for China's long-protected industries.

But Mr. Newkirk said that the Chinese-U.S. talks over China's GATT application were now behind where they were almost three years ago, when the two nations last held negotiation sessions on the same issue.

GATT is an agreement regulating much of the world's trade. In general, its 106 member nations agree to trade on the basis of nondiscrimination, reciprocity, fully published regulations and the most favorable tariffs.

China was one of the earliest signatories to GATT before the communist revolution in 1949. Afterward, China was suspended and has been seeking to rejoin only since 1986.

As a result of a Chinese-U.S. agreement last fall to open further China's markets to U.S. products, the United States promised to "staunchly support" China's entry into GATT if an agreement can be reached on terms of membership.

But the United States, which is serving as the examiner of China's GATT application, insists that China agree to adopt five measures:

* A single national trading policy.

* Publication of all its trade rules.

* Elimination of nontariff trade barriers.

* A commitment to a "market-price" economy more compatible with the world's free economies.

* "Safeguards" to protect other nations from surges in Chinese exports.

Mr. Newkirk called these terms "a boutique protocol," specifically designed for China's hybrid "socialist market economy" and to insure that China would fulfill its obligations as a GATT member.

However, China has not agreed to any of the five conditions and is specifically rejecting "safeguards" allowing other nations to protect themselves in the event of sudden increases in specific Chinese exports, Mr. Newkirk said.

China's desire to join GATT is driven by several factors: Taiwan's parallel application for membership; the international acceptance that GATT membership might carry for a nation long cast as an international pariah; and the desire by some Chinese trade officials to reform the nation's trading system.

Chinese officials also might believe that GATT membership would make moot the annual U.S. human-rights debate over granting China "most-favored-nation" trading status. That status, which GATT members must grant each other, allows Chinese imports to enter the United States under the same low tariffs as most other nations.

But Mr. Newkirk said that U.S. legislation makes it illegal for the United States to grant China unconditional most-favored-nation status. When China joins GATT, he said, the United States would use a GATT clause allowing it effectively to ignore China's membership -- thereby keeping alive the annual U.S. debate on China's human rights record.

"It's human rights, stupid," Mr. Newkirk quipped, in stressing that China's most-favored-nation trading status with the United States still hinges on improving its treatment of its own citizens and not on its possible GATT membership.

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