6:51 AM Jul 4, 1994


Geneva 1 July (Chakravarthi Raghavan) -- The GATT working party on China's 'resumption of GATT status' ended its 17th session Friday, with Third World countries expressing strong support for accelerating the pace of negotiations to enable China becoming a founder-member of the World Trade Organization.

The United States and its principal supporters though were "concerned" (and opposed) to rushing things -- with the European Union and Japan not very different in substance in terms of demands on China, but willing for accelerated negotiations if that could enable Chinese entry. The United States, and to some extent the EC and Japan, do not want to give China the status of a developing country in the GATT and future WTO.

If China were treated as a developing country, it would get a longer time span to comply with the requirements of the WTO annexed agreements like TRIPs. In agreements like agriculture, it will have to do less by way of cutting domestic subsidies or providing market access, greater leeway in domestic support for rural development and providing some classes of subsidies for exports. It will have similar leeway in services.

At the final plenary Friday evening, Indonesia on behalf of the Asean nations, Egypt, Brazil, Pakistan, Myanmar, India, Cuba and Uruguay spoke in support of speeding up the negotiations and finalising the accession protocol to enable China to become a GATT contracting party before end of the year, and thus an original member of the WTO when it comes into being on 1 January 1995 or soon thereafter.

The number of Third World countries that took the floor to support China appears to have surprised some of the majors who had not planned to speak but then took the floor to express their positions.

Among these, Canada, Australia, New Zealand and US expressed concern over rushing things, with the US saying that the pace of progress would depend on China.

Japan hoped China could become a founding member but was described by a GATT official as not as adamant as the developing countries nor as reticent as other Industrialized Countries.

The EC felt that progress had been made and that negotiations were taking place on many details. They were more complicated now since they also had to cover services. The question of chinese economic reforms, the new trade law that has gone into effect on 1 July, what exactly China is going to do and what China would offer others were all involved.

China's accession to GATT presented GATT members with a unique set of challenges, in the US view. Collectively GATT members had to work to preserve the integrity of the system which they had all striven so hard to establish through the Uruguay Round.

It was apparent that the United States and its supporters (Australia, Canada and New Zealand), and with some nuances the European Community and Japan, were taking the position that China would have to make some major concessions. Agriculture, Services, in particular the financial services, were some of the areas where these countries appear to be wanting more concessions from China.

The EC perhaps is more willing, or at least has given that impression to China and its supporters, to speed up work and negotiate such major concessions with China to enable it to become a founding member of WTO.

An idea that has been floating around is to speed up the process for China's entry, but then start a process of review of the protocol and with a final determination to be made after 5-10 years to see whether China has fully complied and thus continue to be a member entitled to the balance of rights and obligations.

The United States and its supporters on the other hand are anxious to ensure major changes in Chinese policies, and entry terms defined strictly to force China to quickly adhere to all the WTO obligations and not get a longer-time period, like developing countries, to comply with various WTO obligations.

Discussions, formal and informal this week, was on the basis of a Chairman's "non-paper", in a protocol format, setting out elements that members wished to see covered in a draft protocol on China -- a maximalist position of the US and EU and others.

In the light of the discussions, and consultations to be continued, the Chairman is to produce a "revised version" of his non-paper -- several participants said it will be "more balanced" -- continue informal consultations and report to a one-day meeting of the working party on 29 July.

All GATT contracting parties intending to enter into bilateral negotiations with China on goods and services schedules have been invited to notify the secretariat of such action before 31 August.

In a summing up on Friday, the Chairman said the non-paper had been a useful negotiating instrument and a first step towards negotiating a draft protocol on China. There had been positive discussions and willingness of participants to narrow points of difference. While there was agreement in some areas, and some others where there was agreement to elaborate the terms, there were other areas where there were wide divergence of views. Without elaborating on points of convergence and divergence, the Chair would reflect them in a revised version of the non-paper, he said.

China for its part, emphasized the urgency of the negotiations and for speeding up the pace of negotiations and said that in the light of the multilateral and bilateral negotiations this week it will put forward a "comprehensive package proposal" in the quickest manner which would include protocol clauses acceptable to China and an improved schedule of concessions on tariffs, agricultural products and trade in services.

The Chinese delegate, Vice-Minister Gu Yongjiang, reiterated two "fundamental principles" concerning China's request:

Firstly, China is not to be deprived of any right that GATT and WTO provide to their members, including rights accorded to developing countries.

Secondly, it must ensure a balance between rights and obligations concerning China's GATT status, and the obligations to be assumed by China, in principle, should not exceed those that are required of developing countries.

Side by side with the consultations on the accession, China has been having this week bilateral market access negotiations, principally with the United States and the European Community.

The US opened market access negotiations with China only after the 'understanding' of the GATT CPs in January 1994 relating to the non-application clause, enabling contracting parties and a new applicant to have face-to-face negotiations, without prejudicing the right to exercise non-application at the time of entry.