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THE PRESIDENT IN CHINA

Clinton Upbeat on Chances of China's Trade Aspirations

Commerce: President differs from U.S. negotiators, saying Beijing is entitled to concessions from global group.

July 01, 1998|JIM MANN and JONATHAN PETERSON | TIMES STAFF WRITERS

SHANGHAI — President Clinton voiced the hope Tuesday that there will be a deal soon to bring China into the world's trading system, and he made clear that the United States will be flexible in setting terms for its entry.

"I think we'll reach an agreement before long," he told a Chinese questioner on a radio call-in show here. Moreover, Clinton said he thinks that "China is still an emerging economy," which is entitled to a longer time before it must meet free trade requirements of the World Trade Organization.

His description of China as an emerging economy is new and potentially significant, some trade experts say. There has been a debate over whether China should be considered a developed, industrialized country to which the strictest trade rules apply or whether it is a developing nation entitled to more lenient treatment.

Developing countries get more time to protect their industries before they phase out tariffs and other trade barriers. In his remarks Tuesday, Clinton told a Chinese audience that because the nation is an emerging economy, it is "entitled to have certain longer timetables and certain procedural help" in entering the global trading regime.

The upbeat remarks, made in a public forum, sounded a different tone from that of his own trade negotiators. They have been relatively negative in their recent comments on China's chances to gain entry to the global trade system. U.S. Trade Representative Charlene Barshefsky, seeking a breakthrough on China's entry into the World Trade Organization, visited Beijing on the eve of Clinton's trip. But she concluded that the Beijing regime was unprepared to make necessary economic changes.

"There's a lot of talk, but China is not yet ready to walk the walk," she said 10 days ago.

Today, in a speech to a group of American business leaders in Shanghai, Clinton once again sounded a more optimistic note. The president said he was "disappointed that we didn't make more progress" on China's entry into the world trading system during the recent talks in Beijing. "We will keep working at it until we reach a commercially viable agreement," he pledged.

In recent years, Barshefsky and other U.S. trade officials have avoided being pinned down on the question of whether China should be considered a developed, industrialized country or a developing one.

China can call itself whatever it wants, Barshefsky said, but the reality is that it is one of the world's exporting powerhouses and yet has some of the world's most restrictive trade barriers.

Jay Ziegler, her spokesman, told The Times on Tuesday night: "There's nothing in what the president said that isn't consistent with our long-term negotiating position. We've said we are going to be flexible [about China's entry in the WTO]. We are going to be pragmatic."

China's economy is the largest in the world not already subject to WTO requirements. The United States and other Western governments have sought to ensure that China opens its markets as much as possible before its admission. They fear that once China belongs to the WTO, it will lack incentives to open its markets further. U.S. trade officials also worry that if China gets lenient entry terms, other nations awaiting WTO membership--such as Russia--may seek the same.

Clinton emphasized, as lower-level officials have said in the past, the need for "commercially reasonable" terms for China to enter the trading system. That means China won't be admitted simply for political or diplomatic reasons. He then continued: "And yet we owe you [China] the right to a reasonable period of transition as you change your economy."

Over the past year, China has sought two primary concessions from the Clinton administration in trade talks.

First, the Chinese want the pledge that when they enter the WTO, they will get from the U.S. permanent most-favored-nation trade benefits. These benefits, amounting to normal trade status, let a country export its goods to the U.S. under the same low tariff rates enjoyed by most other nations. China now must obtain annual congressional renewals of its trade benefits, opening the way for a yearly debate among lawmakers on U.S.-China policy. Clinton said in a recent interview that he wants to end this annual debate and make China's trade benefits permanent.

But in his speech this morning, Clinton cautioned that China needs to open its markets and meet the commercial conditions required to get into the world trading system before its privileges in the United States are made permanent.

"We cannot build support for permanent MFN for China in the Congress on the basis of anything else," he said.

China's second priority has been to obtain a date from the administration for its WTO entry. The administration has never set such a date, but Clinton's remarks Tuesday seemed to encourage China to believe it could enter the trading regime relatively quickly.

On his Shanghai visit, Clinton is emphasizing China's commercial importance to America.

Before the president left Washington, more than 150 Republicans in Congress signed a letter to the White House, arguing that Clinton shouldn't go to China. They said he should stay home and clear up questions about political contributions to the Democrats in the 1996 campaign, and about American help for China's satellite industry.

In his speech today, Clinton took a jab at his Republican critics. "There are some people who actually question whether I ought to have come on this trip, and who had, I thought, prescriptive advice which would have completely undermined the effectiveness of the trip," he said.

Those remarks underscored the fact that Clinton and his aides believe that his visit to China has been a big success and that they are preparing to emphasize that argument after they return home.

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