WASHINGTON-As President Clinton was signing the China trade bill into law last Tuesday on the south lawn of the White House, events were unfolding overseas that threaten wireless investment and export opportunities in China as well as China’s entry into the World Trade Organization this year.
The impasse in multilateral WTO negotiations last month in Geneva, characterized as China’s refusal to live up to trade commitments and to pursue legal reforms, was serious enough for Clinton to send U.S. Trade Representative Charlene Barshefsky to Beijing for two days of talks with Chinese Premier Zhu Rongji late last week.
“They [China] need to show they will live up to commitments they have made,” said Brendan Daly, a USTR spokesman.
Daly said the landmark trade agreement reached between the U.S. and China, which further opens China’s wireless equipment market and allows U.S. investment in Chinese paging and mobile-phone carriers up to 49 percent and 50 percent, respectively, is indirectly impacted by the breakdown of talks on China’s WTO membership application. Those talks involve the implementation of various bilateral trade agreements-including the one between the U.S. and China-by the WTO.
Clinton made a veiled reference to the U.S.-Sino trade spat during the White House signing ceremony. “But what we do today is only the first step. China must now measure up to its responsibilities to meet the requirements to enter the WTO. And only then will this historic legislation become a reality,” said Clinton.
China refutes claims that it is reneging on WTO trade commitments.
“Certainly, it is not accurate,” said Zhang Yuan, press spokesman for the Chinese Embassy. Zhang said multilateral talks are not dead, despite the high-profile disagreements that have surfaced.
“We’re finding some countries were even asking for more, even beyond what they asked for in bilateral negotiations,” said Zhang.
Zhang, when asked to elaborate, said the United States and some European countries fall into that category. He said the U.S. and Europe “want WTO-plus-something that is beyond what has been agreed upon. It’s their last chance to squeeze a little bit more from China. That is something we cannot agree to.”
By late last week, China and the U.S. had toned down the rhetoric. The Associated Press quoted Barshefsky in Beijing as saying Zhu gave her “emphatic, absolute emphatic” assurances that China intends to follow through with its trade commitments. “The premier was very animated, very emphatic on this point.”
A communique released at the end of a three-day meeting of the Communist Party’s Central Committee, according to The Washington Post, reiterated China’s desire to join the WTO and to pursue free market economic reforms.
U.S. industry, anxious to tap into a market with 1.3 billion people and lackluster telecom infrastructure, is monitoring the situation.
“Of course, we would be concerned if there was any backsliding by China,” said Grant Seiffert, vice president of government relations for the Telecommunications Industry Association.
TIA, which represents wireless vendors and other telecom equipment manufacturers, has a representative in Geneva for WTO multilateral talks.
“We’ve taken a lot of baby steps. We don’t want to take a giant step backward,” said Seiffert.
Beneath the surface of the much- ballyhooed vote to give China permanent normal trade relations status, marking an end to annual China trade debate in Congress, is the unsettling reality of how a nation without a history of the rule of law will adjust to a new trade system that puts state-run industries in jeopardy.
“I think it’s predictable. It’s typical Chinese behavior. Even within WTO, you’ll see China backsliding,” said Greg Mastel, director of the global economic policy project at the New America Foundation.
The wireless industry has experienced first hand the capricious nature of the Chinese government. Two years ago, the Chinese government dissolved a number of U.S. investment stakes in Chinese wireless carriers under an arrangement-called China-China-Foreign-that previously had the blessing of Beijing.
More recently, the U.S. has received mixed signals from China about which third-generation CDMA standards it plans to deploy.
Mastel said it is not unusual to see China testing the limits of the U.S. and others on previously agreed-upon trade accords.
“In China, the debate is more lively than we think,” said Mastel, referring to the internal struggle pitting reformers, like Zhu, against entrenched interests, like those that control the top mobile-phone carriers.
Michael Siegel, a spokesman for Sen. Max Baucus (D-Mont.), said the pro-China trade senator is watching developments closely.
“This is one of those moments when the reality of what’s on paper meets with the reality of day-to-day practices in China,” said Siegel. “This is very much in China’s court right now.”
Both presidential candidates-Vice President Al Gore and Texas Gov. George W. Bush-support the China trade legislation that was enacted into law last week.
