China working party all but completes its work

by Chakravarthi Raghavan

Geneva, 21 July 2001 - The working party on China’s accession to the WTO has all but completed its work, excepting for one issue in the services area (insurance sector) where there is a major difference between th United States which wants to ensure ‘grand-fathering’ of the rights of existing suppliers to open wholly owned branches, while the EC insists that the ‘non-discrimination’ provisions require everyone to be treated alike.

Under the Chinese market access commitments in services, China has agreed to allow in the insurance services sector, establishment of foreign insurance companies as joint ventures with domestic partners (50-50 share).

The US American Insurance Group (AIG) has however already wholly- owned enterprise established, and the US has been pushing for the AIG to be able to open branches elsewhere in China as wholly owned subsidiary.

The EC (and any others entering the Chinese market for the first time) however, as per the schedule of market access commitments would only be able to establish joint ventures.

The EC insists that the WTO/GATS, in terms of the Chinese protocol, provide for equality of treatment for everyone.

The chairman of the WTO working party, Amb. P.L.Girard of Switzerland that excepting for one issue in the services area, the working party had completed its work, and the secretariat was in the process of preparing a revised draft protocol of accession and draft working party report (in the light of changes made at this session) and this would soon be in the hands of members.

There were still some bilateral market access negotiations to be completed, like that with Mexico, but none of these are expected to result in blocking the adoption of the report and its being sent to capitals for action at the Doha ministerial.

Chinese Vice-Minister Long Yongtu for his part was confident that the remaining issues would be resolved.

On the AIG issue and whether the interests of this one company could result in blocking the access process, Long was hopeful a solution would be fund. The AIG, he said, was working for its business interests. While he was hopeful of a solution, he did not believe that one enterprise could stop the WTO from agreeing to the accession. Long underlined that the AIG was a company friendly to China and with good relations, and its chairman was a long-standing friend.  “But since we are entering the WTO, we have to play according to the rules...  and if from the beginning itself, we do not play according to the rules, how would others trust us?” he asked and hoped the AIG would show understanding and help to resolve the issue.

Earlier, in a statement to the working party, Long noted that protracted and painstaking negotiations for 14 years and 4 months had resulted in completion of the legal documents for accession, and agreement has been reached on all sides in a “conscientious and cooperative approach.” At this final stage, what was most needed was “the spirit of cooperation and mutual trust” and he was hopeful that on the individual remaining issues, it would not be too difficult to find solutions in line with WTO principles and practices.

In summing up, Girard said that except for the one point in the area of services, agreement had been reached on the draft working party report and the draft protocol of accession. China’s goods and services schedules were in the process of being prepared by the secretariat in cooperation with the Chinese delegation, and all the documents could be distributed by the end of the month.

He hoped these documents could be verified by delegations in August to enable its being cleared in the September meeting of the working party and enable WTO members to adopt it at the Doha Ministerial meeting. – SUNS4942

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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