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Who will miss the bus, China or the WTO?

by Chakravarthi Raghavan

Geneva, 28 Sep 2000 - The Working Party on China’s accession to the WTO ended Thursday morning two weeks of current series of talks on a sour note that the usual diplomatic courtesies could not hide, and that not only seemed to put into question Chinese accession by December, but much wider questions about the system and the complications that would ensue on all sides.

There is a view growing that if the Chinese accession issue is not resolved before the US elections, then it might well stretch into many more years - and thus jeopardising the WTO processes and its viability, negotiations, and a whole lot of new issues.

And if the US, the EC or anyone who has reached bilateral accords, believe that they would still be able to get something out of them, some of the Chinese remarks in these talks this week, and even at the final meeting, should make them think.

The US Trade Representative Mrs. Charlene Barshefsky, anxious perhaps (after the Seattle debacle) to preserve at least one achievement of hers, namely, negotiating the accession accord with China, is set to rush to Beijing - proclaiming that China is going back. But whether she can repeat the style of negotiations and success during her last visit remains to be seen.

Closely following her will be the EC Commissioner, Mr. Pascal Lamy.

At the WTO working party Thursday morning, the Chairman, Mr. Pierre-Louis Girard of Switzerland, in ending the meeting, and envisaging another session in late October or early November, made clear that the target of concluding the accession process by December was now thrown into doubt, and unlikely to be resolved without high-lever intervention and “political guidance” from capitals to negotiators in Geneva.

Pakistan, a close friend and ally of China, in its intervention in the debate (with a written text that was made available outside to the media) insisted that if China’s entry into the WTO by end of the year was not achieved, it could “complicate” the work in the organization, “complicate our aspirations” for further liberalization and opening of new negotiations at the WTO.

Earlier, for his part, the Chinese Vice-Minister Mr. Long Yongtu, in his statement to the formal plenary meeting left little doubt that China views the completion of the accession process this year, not as something that would benefit it, but also as one that would bring benefits to business communities of WTO members.

In the original ‘check against delivery text’ of his speech, Long was to have said: “If China’s accession process is further delayed, the party to be harmed most is the business community of the WTO members.”

While delivering his speech, he changed this into: “If China’s accession process is completed, the parties to benefit most are the business communities of the WTO members.”

The words actually used in delivery, while changing the emphasis from the negative to the positive, in fact would appear to be not too different, some trade diplomats said.

According to them, the schedule of concessions that China has filed in the goods sector, appears to have a footnote or qualification that the time-periods (agreed in bilateral talks) and sketched out in the schedules, are dependent on China’s entry into the WTO by December.

Exchanges and comments involving the US and China, at some informal meetings earlier this week, the diplomats said, seemed to indicate such a position by China, with the US insisting that this was not their understanding of the bilateral talks and accords.

At one informal session, the tempers were so frayed that Long accused Girard of not being impartial, whereupon Girard, who has chaired these negotiations for 12 years, offered to step down as chairman. Sometime later, Long expressed his confidence in Girard.

Through these last two weeks of meetings, and more this week when there were informal plurilateral and multilateral sessions to draft the protocol, the trade diplomat said, the issues that came to the forefront showed that on the one side, the major trading partners were trying to extract as much as possible as a price before the Chinese entry—ranging from opening up China’s government procurement to ensuring the right of foreign trading companies to distribute their goods and services inside China, but without ‘establishing’ themselves on Chinese soil.

While the major trading partners like the US and EC viewed this as a necessary corollary to the market access granted for goods, it is not difficult to envisage these rights being seen or depicted by opponents inside China as a throwback to the 19th and 20th century period when foreigners enjoyed special rights (including extra-territorial rights) on Chinese soil.

Some trade diplomats viewed these issues of how China would implement its commitments, and how long it would take to do it, as probably part of the bargaining game on both sides, but others saw it in terms of what Long said in his speech: “In the final analysis, the issue of implementation is a question of mutual trust. If there is a lack of mutual confidence, the provisions are of no use, no matter how detailed they are.”

In his summing up, Girard said that the discussions and meetings over the past two weeks marked yet another important step in China’s accession process to the WTO. After the September meetings (that have just ended), it was even clearer that China’s accession process was in its final stage. The good news, he said, was that in past sessions, some progress had been achieved in specific areas of the draft report.

The working party had now clearly identified the “remaining sensitive and difficult” issues where breakthroughs were urgently required.

In this, the progress made, positive as it might be, fell short. “Indeed the limited nature of the progress achieved on these vital issues tends to put into question our target of concluding this accession process this year,” Girard added.

There was another important lesson to be drawn from the September meetings. “The required breakthroughs... are only possible through fundamental re-examination of negotiating positions in capitals and with the necessary political guidance being given to the Geneva negotiators to move our process to conclusion.”

In other words, “we are not dealing here with drafting problems... we are not even dealing any more - other than on a limited number of issues - with the range of commitments for the draft protocol or the draft report. Beyond these commitments themselves, a large part of the open issues before us has to do with reaching multilateral agreement on how and when these commitments will be implemented in line with WTO requirements.” The members knew the specific issues, he was referring to, and he was not listing them.

The September meetings, the chairman said, had permitted them to draw the conclusion that all negotiators need to urgently report back to political authorities and hold further talks amongst and between themselves as necessary.  He would be in touch with a view to receiving positive signals of progress on the required breakthroughs.

Giving the very tight schedules under which everyone was working, and the major work that remained to be done on all fronts, Girard said he would hold the next session either late October or early November.

Long said that with the signing of the bilateral agreement between China and Switzerland, the bilateral negotiations had largely come to an end. Since the legal instrument drafted by the Working Party will summarise the process of China’s GATT assumption and WTO accession in the past 14 years and would make a comprehensive record of China’s rights and obligations in the WTO, the Chinese delegation attached great importance to it and would work conscientiously with other members to accomplish this important work in the spirit of consultations on equal basis. During the session, China had submitted the consolidated tariff schedule. China hoped that the parties concerned would begin the verification as soon as possible and China was ready to conduct technical clarifications that Members required.

Expressing his own agreement with the Chairman’s summary and assessment, Long said he too wanted to share with the members, China’s position on some important issues.

Firstly, in regard to the relations between multilateral negotiations and implementation of bilateral accords, and the commitments in these last, “China will strictly abide by and implement in a faithful manner.”

At the same time, China requested the parties concerned “to respect the results of the bilateral negotiations in the same spirit.”

The bilateral agreements already contained detailed provisions on implementation - for instance on the implementation of tariff rate quotas (TRQs). The relevant WTO agreements, such as that on import licensing, also contained provisions on administration procedures.

“It is inappropriate and unnecessary to invent a new set of rules specifically for China,” Long said, in a reference to some specific agreements or provisions that have been sought about ‘transparency’ of administration and grant of TRQs that some of those who have signed bilateral accords are reported to be seeking to ‘clarify’ matters.

“We would find it difficult to accept new requests on the excuse of ensuring the implementation of the agreements. We believe that this is in fact an attempt for reopening negotiations on the bilateral agreements already signed. China has made its utmost efforts in the bilateral negotiations in the past. Many negotiations were painstaking and the agreements reached are complicated and were the reflection of interests of various parties in a balanced manner. It is impossible now for China to make commitments on market access beyond those contained in the bilateral agreements.

“In the final analysis,” added Long, “the issue of implementation is a question of mutual trust. If there is lack of mutual confidence, the provisions are of no use, no matter how detailed they are.”

As for the contents of the multilateral legal instruments, the draft working party report was the collection and outline of the negotiations in the past 14 years. There would be “reasonable and necessary” clarifications and explanations on the relevant issues in the negotiations. Every party however should not pose new requests at this stage, or attempt to include contents which had never been negotiated in the past 14 years. “This could only make things complicated.” Every party had the right to express its viewpoints in the draft working party report, but “should not impose its views on others and should not insert discriminatory and inappropriate language to the acceding parties. The contents and language of the report should be “fair, balanced and accurate”.

As for the timing of concluding the negotiations, Long said, during the last session members had expressed their support on China’s accession this year. “We support this time-frame and are willing to make positive efforts to achieve that goal,” Long said, adding: “Of course we care not only the specific timing of the accession, but also the terms of the accession. What is important is that the results of the negotiations shall on the whole ensure China’s accession is based on the balance between rights and obligations. We cannot accept provisions which are detrimental to China’s legitimate rights under WTO. Judging from the current situation, China’s accession is only a matter of time. If China’s accession process is completed, the parties to benefit most are the business communities of the WTO Members. We have been requested to grant immediate market access opportunities in the bilateral negotiations. Now the market access opportunities are close within reach, the early accession of China is conductive to Chinese and foreign enterprises to operate in a stable and predictable environment, and enjoy a similar commercial benefit to be brought about by the market access commitments of China.”

Despite the complexly phrased, even though changed at the last minute in delivery, of the last two sentences, it seemed apparent that if the delay and the rush to Beijing for talks were merely aimed at extracting some more last minute concessions, China may have some cards to play still.

Long concluded: “At this final stage of negotiations, the mutual understanding and coordination between various parties are of vital importance. China is willing to strengthen its cooperation with various parties, including members from developing countries, and will make concerted efforts for the realization of China’s accession to the WTO this year.”

In other intervention, Pakistan’s Amb. Munir Akram, also in a prepared text made available to the media outside, warned that delaying China’s accession beyond this year would complicate the WTO process and negotiations for further liberalization.

In a reference perhaps to the fraying of tempers and some exchanges between Long and Girard at the informals this week, Akram noted that it had taken China 20 years to be admitted to the UN and it had already taken 14 years for it to reach this stage of admission to the WTO. It was not surprising that after this marathon there should be a sense of fatigue in the Chinese delegation, and the Chairman too, despite his great stamina, had shown manifestations of this fatigue.”

Pakistan was strongly committed to the early admission of China into the WTO and therefore disappointed that, despite the widely publicised progress registered, largely due to flexibility and accommodation shown by the People’s Republic of China, the process had not reached the conclusion. Pakistan was disappointed that the working party had been unable to reach the conclusive stage. At this stage what was needed was that the commitments undertaken by China should be reflected in the protocol and the report. Unfortunately, they were witnessing a phenomenon, “not unusual in this organization,” in which additional and onerous demands, quite often beyond the requirements of the WTO agreements were being put forward on the PRC prior to its admission to the WTO.

This, Akram said, was doubly regrettable because this sort of “last minute horse trading” gave the impression “of the WTO being something of a Bazaar, rather than an instrument of the multilateral rule based trading system.”

It gave substance to the slogans seen in Seattle and more recently in Prague.  This outcome was not in the interest of any of the Members of the WTO and Pakistan hoped that this approach would not result in frustrating the objectives to which all members were committed.

There were three clear parameters of what should not be pressed upon the PRC at this stage:

Firstly, demands cannot not be pressed beyond and inconsistent with the WTO agreements. Secondly, demands cannot be pressed amounting to an infringement of the sovereignty of China. Thirdly, demands cannot be pressed requiring that China not be recognised to be what it is, a developing country.

By all statistics, China was a developing country and should not be expected to accept commitments and obligations inconsistent with that status as a developing country and not required of other developing countries.

These three parameters should guide the membership in the work. If this was done, they could make fast progress and reach conclusions sought—admission of China by the deadline everyone had agreed to.

“If we are unable to achieve the objective of China’s entry into the WTO by the end of the year, it could complicate the work in the organisation itself,” Akram warned.

“It could complicate our aspirations for further liberalisation and the opening of new negotiations in this body.And I am sure that none would want to have this result that all of us would want that China should be a participant in the ‘new’ negotiations to which we are all looking forward.”-SUNS4751

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