Sep 22, 1990


GENEVA, SEPTEMBER 20 (BY CHAKRAVARTHI RAGHAVAN) - China’s hopes of negotiating early entry into GATT appear to have received a further setback this week - with the next meeting of the GATT working party looking into the application being set for the spring of 1991.

This means that China will not be a full CP in GATT before the conclusion of the Uruguay Round, and perhaps not even when GATT begins work on details of implementation.

The working party last met in December 1989.

While the procedures and negotiations are no different from that involving a new applicant, the Chinese for political reasons have preferred to characterise it as an application for "resumption of status as a contracting party to GATT".The "Republic of China", under Chiang Kai Shek was a founding member of the GATT. But the Chiang Kai Shek regime which fled to Taiwan after the revolution on the mainland, withdrew from GATT in the early ‘50’s. While protesting this as "illegal", Beijing showed no interest until the 80’s, when it first sought observer status and then sought to "resume" its status as a GATT CP and this was referred to a working party.

Taiwan is also now seeking to join GATT, but the issue has not even been brought before any GATT body - the issue of Taiwan and its status and relations vis-a-vis the People's Republic of China being treated, at least for the present, as a political matter to be resolved by the United Nations.China is a full participant in the Uruguay Round and, for quite a while, it took a low profile in the negotiations - hoping perhaps to quickly get the nod for the resumption of its status as a GATT contracting party, and paying a relatively low price.

The U.S. and others who were initially enthusiastic have been dragging their feet since Tiananmen incidents in 1989. The changes sweeing over East Europe and the Soviet Union has also perhaps reduced China’s usefulness to the West in the global politico-strategic configuration.

What effect the "negativeness" of the ICs to the Chinese attempts to "resume" will have on Chinese positions in the Uruguay Round negotiations remains to be seen.The working party has been meeting this week, and is due to end friday. The Chinese delegation has been pressing for resumption of work by the working party on drafting a protocol for its "resumption of status as a CP", but the U.S., EEC, Japan and other ICs have shown no interest in doing so.

A GATT official told newsmen thursday that there was "no feeling of urgency in the group and it is a continuing process".The official had been asked whether the GATT now expected the entry of China and the Soviet Union into GATT to take place more or less at the same time in some distant future.

The official said that the same set of people in Geneva negotiating on this, Uruguay Round and others, and they did not feel they had any new information to change their positions.

"The ball is now in the Chinese court. They have to provide detailed and reliable information. Otherwise they feel there is no reason for them to change their positions at this time. Showing goodwill is not enough. The comparability of the (Chinese) trade regime with GATT has to be examined".At the working party this week, the Chinese delegate, Amb. Fan Guoxiang explained the various economic reforms that had been put in place and the success they had achieved, but added that China "still faced outstanding problems of structural irrationality and low economic efficiency" and that "only by further deepening reforms could these deep-seated problems be resolved"."The economic readjustment will not only put China’s national economy on the right track towards sustainable, stable and coordinated development, but also create favourable conditions for continuous economic reforms and opening to the world".Fan said China was confident that "the economic readjustment will not only put China’s national economy on the right track towards sustainable, stable and coordinated development, but also create favourable conditions for continuous economic reforms and opening to the outside world".The delegations of U.S., EEC, Australia, New Zealand, Canada and Sweden reportedly intervened to question the official claims, preferring to rely on their own diplomatic and other assessments from Beijing on the direction of Chinese reforms.

They sought more precise and detailed information on the measures taken by China to move towards market economy, and more transparency on Chinese trade regime. The delegates reportedly said that according to their own information the reforms had not gone far in the sense of liberalisation of the economy.

The U.S. demanded tariff-line information about imports and reportedly said that according to its information the government control over the economy was increasing, as also on enterprise level importation. Measures had also been taken to slow down imports and China was using foreign currency and exchange rates, not in favour of opening the market, but in the contrary direction.

The European Community, whose interventions in the previous eight sessions of the working party have reportedly been oral, read out from a written statement strongly questioning the Chinese statements and talks of "economic reforms", and arguing that Brussels had been struck by "subtleties" in Chinese official statements "making the difference between ‘economic reforms’ which are indispensable to the country and ‘market oriented reforms’ which may not be necessary ... either now or in the long run".The EC written speech also referred to the "39 points" in the decisions of the Fifth Plenary Session of the Central Committee of the Chinese Communist Party last November which had been made public in January and which in the EC view emphasised public ownership and role of State-run enterprises and, the reform of the foreign trade system however justified in some cases, placed emphasis on centralised control.

Though the repeated emphasis on the 39 points had recently ceased, the decisions of the Central Committee were still valid and the "hard line" in the public statements of the past still determined public policy.

The EC conceded that effective implementation of centralised planning-oriented policies might have been tempered by need to avoid severe recession, that fears of recollectivisation of agriculture had not materialised, and that ten years of reforms had not been volatilised, though they might have been seriously damaged.On the prospects of "genuine reform" towards market-oriented economy on which GATT was based, in the EC view "confusion and uncertainty" were the dominant notes in China. The EC welcomed that further reform plans would come out in October and would study these and the new Chinese eighth five year plan. Substantial progress in the working party, the EC implied, would depend on increased transparency and growing market role in China.

The current meetings of the working party are due to end friday afternoon.