BBC News Online: Business

China and US clinch WTO deal

Agricultural subsidies have been a sticking point

The deal was agreed during talks in Shanghai, on the margins of an Apec (Asia Pacific Economic Co-operation forum) meeting.

WTO negotiators are to meet in Geneva at the end of the month to determine whether the Sino-American deal is workable.

Earlier this week, WTO chief Mike Moore said it would be a failure if November's trade talks got under way without China.

The major concern of WTO member states is the level of agricultural subsidies the Chinese say they want to give their farmers.

Discussions on this issue have been locked since January.

Consensus

China has insisted on being classified as a developing country which, under WTO rules, would allow it to subsidise up to 10% of the value of agricultural production.

But the US and other countries argue that, because of the size of its economy, China should join as a developed country, limiting subsidies to 5%.

Neither American nor Chinese officials gave any details as to how this disagreement was resolved, saying only that a consensus had been reached.

"This understanding is a win-win result for China and the United States. It should help us and other nations in WTO to try to complete China's accession this year," said US Trade Representative Robert Zoellick.

Shi Guangsheng, Chinese minister of foreign trade and economic co-operation, told the Xinhua news agency that "during the Shanghai consultations on these remaining issues, both sides reached full consensus."

With the exception of Mexico, all the members of the WTO have already signed bilateral trade agreements with China.

But Mexico has agreed not to put up obstacles to Chinese membership, even if a bilateral deal is not reached.

Trade officials and analysts have warned that Beijing might shelve economic reforms linked to WTO pledges if it did not gain admission to the trade body soon.