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Tuesday, 5 December, 2000, 14:27 GMT
WTO China talks enter home stretch
Chinese military parade
China wants to throw off its traditional communist image
Chinese officials are meeting with their counterparts from the World Trade Organisation (WTO) in Geneva this week to try to thrash out a solution to the final hurdles barring their country's membership.

I think the momentum is there

Long Yongtu, China's chief negotiator

Key stumbling blocks include the licensing process which foreign companies have to go through to operate in China - Western countries are concerned that it is not up to international standards.

And there is also disagreement on China's wish to be treated as a developing country.

Some Western members are concerned that if Beijing is given that status, then China will get more favourable treatment, for example longer time periods for implementing agreements.

Stop and start

It would be a surprise if this is the breakthrough meeting

Keith Rockwell, WTO spokesman

Talks in November brought progress on a number of issues, including agreement on a transitional mechanism to make sure China complies with its WTO obligations and a system to standardise the administration of import duties.

But several other key agreements are still needed, including pacts on agriculture, services, textiles and trading rights.

China still has to sign a bilateral pact with Mexico, too, although Mexico has said that it supports China's bid to join in principle.

The reality of membership

The path to membership
Formal meeting of WTO working party Friday
If satisfied, WTO general council ratifies deal
Chinese ratify agreement
Ratification reported to WTO
After 30 days China becomes member

China has been knocking on the WTO's door for more than 10 years.

It is keen to join to speed up the country's path to economic development, by opening up lucrative Western markets for its products.

In turn, the rest of the world will gain access to the Chinese market, potentially one of the world's largest, with 1.3bn consumers.

Some of China's southeast Asian neighbours have expressed concerns that trade and investment in the region would be diverted to China, once it joins the WTO.

China itself has been keen to downplay these worries, pointing out that as foreign investors pile into China's slowly liberalising economy, largescale joint venture projects will in their turn suck in imports from the country's neighbours.


Ahead of China joining the WTO, some Western companies are already benefitting from increased opportunities in the now liberalised climate for trade.

US telecoms giant AT&T on Tuesday signed a landmark deal, launching the first telecommunications joint venture in China.

It agreed to buy a 25% stake in Shanghai Symphony Telecom Company, a broadband service provider to be launched in the business district of Shanghai next year.

shanghai radio tower
Shanghai; the modern commercial face of China

"We hope later on as our business grows that we'll have an opportunity to expand," said Art Kobler, president of AT&T, China.

Another area that is expected to see significant liberalisation once China joins the WTO is that of financial services, especially insurance.

So far foreign insurers have spent millions of dollars trying to tap into this market, with mixed success.

But with a huge potential market, which is said to be poorly served by domestic insurance companies like the People's Insurance Company of China, there are big profits waiting to be made for those who play their cards right.

American insurance giant AIG has already got in on the act. It first opened its doors in China in 1992. Last year it reported profits of close to $200m.

What happens next

Time has run out for China to succeed in its aim of joining the WTO by the end of the year. Next spring seems a more realistic prospect.

After this week's informal discussions, a formal meeting of the WTO working party will be held on Friday to wrap up any progress.

The WTO general council, which holds its final meeting of the year this week, also has to give its approval.

The agreement then has to be ratified by the Chinese.

After ratification, China would not become a member for 30 days.

But this will only happen if the discussions this week run smoothly and there are many potential stumbling blocks.

"Things will never be the same again once the world's most populous nation is in the WTO," said one European official, "so we have to get it right."

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See also:

27 Oct 00 | Europe
China and Europe reach WTO deal
12 Oct 00 | Business
China tries to clear WTO hurdles
11 Oct 00 | Business
Why US-China trade matters
29 Nov 00 | UK Politics
MPs damn UK-China 'dialogue'
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