Friday 19 March 1993




Geneva 17 Mar (Chakravarthi Raghavan) -- The working part on China's resumption of status as a contracting party to the General Agreement is to meet again in May, from 24-28.

The working party ended three days of meetings this week with no real progress.

This week's discussions were focussed on four points of a list of some 22 points formulated in a consolidated list of issues for discussion by the Chairman of the working party.

GATT sources said that the GATT secretariat is to be notified by April 25 on questions to be addressed to China and clarifications sought so that the Chinese side would be able to answer them at the next round of meetings.

A major point of difference between China and the major trading partners, and even several of the Third World contracting parties who support Chinese entry, centres around the kind of 'special safeguards' (emergency protective actions that an importing country could take) in relation to Chinese exports after it resumes its GATT membership and acquires all rights of the General Agreement.

The major industrial entities want China to agree to the application of 'selective safeguards' against its exports i.e. agree to the importing markets applying restrictions solely directed against China to meet what the importing countries consider to be threat to their domestic producers by subsidised exports from China.

The European Community for example has sought to introduce concepts like 'surge in imports', 'market disruption' etc -- terms used in the Multifibre Arrangement but which will become GATT illegal under the Uruguay Round agreements.

The Chinese in their private conversations and some bilateral discussions appear to have indicated their awareness of some genuine concerns, particularly from many of the other developing countries, and desire to meet these concerns through other modalities than the 'selective safeguards' concepts.

While they agree that full market mechanisms are not operating in price formations of products on the domestic or export markets, they argue that considerable amount of changes and reforms are being brought in and these would soon become effective.

They note for example some recent decisions as a result of which a distinction is being made between State enterprises and State- owned enterprises involved in foreign trade but which have to function in terms of the market mechanisms and price formations.

The complaints over same export prices for some exports (textiles, footwear and toys are frequently mentioned by US sources), the Chinese explain is in terms of the foreign dollar price and largely due to the considerably depreciation of the Chinese currency as a result of freeing it from administered exchange control prices.

The Chinese national assembly, currently in progress in Beijing, is also undertaking considerable revisions in the Chinese constitution to reflect what the Chinese call "social market" philosophies.

But GATT sources say that while the working party will meet again in May, the outlook is still uncertain.

Both the United States and the European Community clearly appear to favour the question being considered only after the Uruguay Round is concluded and its institutional arrangements settled. These last, whether it is the Multilateral Trade Organization or the US proposal for a GATT-II would strengthen their hands in being able to deny benefits to China more easily.