Slow Boat To A Trade Deal

Beijing's hard line has sunk its WTO hopes-for now

When Chinese Prime Minister Zhu Rongji travels to Washington on Apr. 8, he may get the usual fancy dinners and military salutes that crowd agendas when influential premiers make official visits. But he is unlikely to get the ceremony he wants most: the signing of an agreement with Bill Clinton to speed China's entry into the 134-member World Trade Organization.

He can't blame the Clinton Administration, which badly wants a pact with Beijing and pushed hard to get it. U.S. Trade Representative Charlene Barshefsky even made an eleventh-hour trip to Beijing to meet with Zhu. On Mar. 30, however, those talks broke down. "We have serious disagreements--a whole host of them," says Commerce Secretary William M. Daley, also in China to discuss trade. "The expectation that this would have been done before Zhu's visit--the hype around that may have been a little high."

The basic disagreement: China refuses to give a specific timetable for adhering to all of the group's rules, such as ending protective tariffs and eliminating quotas. China also wants to dole out concessions as it sees fit to a few select U.S. companies--such as Motorola, Boeing, and two U.S. insurance companies to be named later.

The administration, with backing from most of the U.S. business community, is standing firm. Barshefsky has asked for a specific timetable with written guarantees that China will lower tariffs, eliminate quotas, and allow the sale of exports without requirements for going through Chinese intermediaries.

NO DEAL. The lack of progress on WTO could place further strain on China-U.S. relations. But many U.S. business interests--formerly China's biggest boosters in Washington--now object to rewarding China for rank protectionism. Financial services and farm groups, in particular, are against allowing Beijing into the WTO on its own terms. "We are not looking for a deal at any price," says Calman J. Cohen, president of the Emergency Committee for American Trade, a coalition of exporters.

Given the rancor in Congress toward China, the Administration feels it needs a unified front by business to give any deal a chance. "If the Administration signed a weak deal without business support, any complaining industry would be used by Congress as an example of insufficient progress," says Robert Vastine, chief of the Coalition of Service Industries, which represents financial-services, telecom, and computer companies.

In fact, while Zhu is offering to reduce a few tariffs and raise a few quotas, business lobbies say that Beijing has actually moved backward. The powerful farm lobby points out that China, which has been the fastest-growing market for U.S. soybeans, is proposing to impose a new quota on soybeans. "If we do not resolve these issues now while we have leverage, we're not likely to do it in the future," says Audrae Erickson, a lobbyist for the American Farm Bureau Federation.

The Administration hasn't ruled out a deal later this year, perhaps before the December meeting of the WTO in Seattle. But meanwhile, Zhu will have to be content with a White House dinner or two.

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