WASHINGTON-The Clinton administration says China’s telecommunications services market remains off limits to foreigners, a situation that could complicate the president’s visit to Beijing this June, undermine the Asian giant’s prospects for membership in the World Trade Organization and foreclose to U.S. wireless firms the largest emerging market in the world.
“U.S. companies continue to be closed out of the market,” states the Office of the U.S. trade representative in its annual report on foreign trade barriers.
China, the most populous nation on earth, is not a signatory to landmark free trade agreements covering telecom services and equipment.
“There is much work that must be accomplished to ensure that rules for fair and open trade are applied around the world,” said Charlene Barshefsky, U.S. trade representative.
Major U.S. wireless equipment suppliers, like Motorola Inc. and Lucent Technologies Inc., have managed to at least make inroads into China’s equipment market.
But telecom service providers in the United States and elsewhere still are locked out.
American firms, according to USTR, have attempted to get around restrictions by entering into joint ventures with local Chinese firms that as legal Chinese entities can contract with China’s second carrier, Unicom.
The same is not true with respect to China’s Ministry of Post and Telecommunications, the mainstay telecom carrier and owner the largest customer base and network in the country.
Chinese trade barriers identified by the United States include restrictive investment laws, lack of transparency in administrative procedures and arbitrary application of regulations and laws.
Because of the potential that Clinton’s meeting with Chinese President Jiang Zemin could go sour over trade, human rights, military sales, campaign fund raising and other issues, David Aaron, U.S. undersecretary for trade, attempted last week to resolve market access to China in a trip with an 18-member American business delegation that included Dale L. Fadley of Motorola (China) Electronics Inc. and Kailash Kapur of Hughes Space & Communications.
“We have been trying to make the point to our hosts that we want to create a positive environment for the (Clinton-Jiang) summit,” said Aaron.
The United States wants a strong relationship with China for economic and geopolitical reasons in the next millennium, but it faces politically explosive obstacles along the way.
The U.S. trade deficit with China grew to $49.7 billion last year and has increased fivefold since 1990. Yet improvements in human rights, democratic reforms, religious freedom, working conditions and environmental protection have not progressed on a parallel track with economic expansion.
As a result, the Clinton administration’s policy of constructive engagement with China-and free trade policy generally-are coming under increased attack by ultra-right-wing conservative Republicans, like Pat Buchanan, and liberal-leaning Democrats, like House Minority Leader Dick Gephardt (D-Mo.).
Moreover, some states have begun unilaterally to boycott products from some countries for many of the same reasons that have called free trade policy into question.
The only leverage the administration appears to have with China is WTO membership. The United States and major allies say they want to see more trade reform in China before they will endorse its entry into the WTO. China says the changes will come once it has WTO membership.
Not only has the White House conceded that economic engagement with China has not improved human rights there, but it now admits that job creation promised by the Clinton-endorsed North American Free Trade Agreement has fallen far short of expectations.
Given that, trade could become a wedge issue in the 2000 congressional and presidential elections and make for an uncertain global business climate for wireless in coming years.
Already, the White House is feeling the consequences. Clinton failed to get fast-track trade legislation through Congress this year and is likely to face opposition in renewing most-favored-nation trade status for China in June.
Nevertheless, Clinton continues to press for free trade in travels during his second term. He visited six African countries in March and last week traveled to Santiago, Chile, for the second Summit of the Americas to sell free trade.
In addition to the China trip in June, the president plans more trips later this year to Malaysia, Pakistan, Bangladesh, India and possibly Ireland.
