Asia Times: China: The new and 'pushy' boy on the block


	February 7, 2002	atimes.com

China

China: The new and 'pushy' boy on the block
By D Ravi Kanth

GENEVA - China began its innings with a bang at the sanctum sanctorum of the global trading system - the World Trade Organization. Less than a month after joining the WTO, China left no stone unturned in making its presence felt in key decisions that were taken last week. The trade major elephants like the United States, the European Union, Japan and Canada were taken aback by China's activist role in deciding the ground rules for the new Doha Development Agenda talks.

A powerful Western trade ambassador condescendingly said that China is a new player and has yet to master the rules of the game at the WTO. But the truth is that the Chinese trade negotiators are already behaving maturely as though they had spent long years at the WTO, a trade envoy from Africa said. "In fact, China's activist role had emboldened the African countries to oppose the demands of the Western trade masters," said a Geneva-based trade analyst.

It was not an easy task for China to get into the powerful trade body. For a full 16 years that began right at the commencement of the Uruguay Round of trade negotiations in 1986, China had to fight its way to join the WTO. In the process, Beijing had to make wide-ranging market-opening commitments. They include slashing industrial subsidies to the state enterprises, cutting government support to agriculture and banks, and modernizing the institutional infrastructure to abide by the latest intellectual property rights, and so on. Trade analysts have predicted that China will face social and economic turmoil once the WTO commitments are implemented in the requisite timeframe.

Large parts of China are still jettisoned in the development-model of Mao Zedong and his comrades. China's other regions, which are propelling its rapid penetration into the global economy, turned the country into the ninth largest exporter (3.5 percent share in the global exports in 1999) and 10th largest importer (2 percent share). The gulf between those regions cast in Mao's vision and the other parts bearing the imprint of late Deng Xiaoping is widening by the day.

WTO commitments involve a painful transition, a process that calls for transforming the domestic modes of production of the Chinese agriculture and industry according to the rules set by the global trade body. In addition, the Chinese had agreed to let the trade majors pry open its market for agriculture, industry and services. Hence, the expectation on the part of trade majors that China would behave like an obedient student and not as a mature scholar.

But events throughout last week at the WTO sufficiently revealed that the trade majors are wrong to assume that China would be a quiet pupil and some kind of a pushover. To mark its presence at the WTO, China presented a big bash on the day when its first ambassador to the WTO Sun Zhenyu presented credentials to the director-general Mike Moore at Geneva's famous President Wilson hotel. The 56-year old Sun, who was a vice trade minister before coming to Geneva, told Asia Times Online during the party that he would play a "constructive" and "truly beneficial" role for developing countries who are yet to secure meaningful results from the previous trade negotiations.

With this game plan in mind, China fired the first salvo over who should head the new trade negotiations committee (TNC) that will oversee the Doha Development Agenda trade talks. The trade majors, along with the Southeast Asian countries and India, pressed for WTO's director-general to lead the new structure on an ex-officio basis. But China threw its weight with Pakistan and African countries that said the post should go to one of the local ambassadors of the WTO.

At the end, considerable persuasion by the WTO's General Council chairman Stuart Harbison of Hong Kong made China to agree on a one-time precedent that would allow the WTO's director-general to lead the TNC until January 1, 2005. China told Harbison last Friday that it is agreeing to the proposal to let the WTO chief head the TNC only on the condition that this would not be repeated again. In a member-driven organization like the WTO, members must have the ultimate control over negotiations, China asserted.

In a similar vein, China said the chairpersons for the seven negotiating groups to oversee the Doha talks should be selected from the members and not outsiders. Consequently, the final understanding reached on chairpersons last Friday was almost on the lines of what China had demanded.

More importantly, China is also somewhat suspicious of the manner in which the chairpersons prepared what are called consensual draft texts in the Uruguay Round and recently in the run-up to the Doha meeting. Often the criticism from the developing countries has been that the chairpersons manipulated the draft's final texts in favor of the more powerful global players. Therefore, China demanded clear and transparent rules for the conduct of work in the new negotiations.

In the face of Chinese demand for clear and unambiguous ground rules, the trade majors were compelled to agree to the condition that "in their regular reporting to overseeing bodies, chairpersons should reflect consensus, or where this is not possible, different positions on issues". A senior Japanese trade diplomat commented ruefully that such a condition would leave any "latitude, leverage and maneuverability" in producing the chairmen's negotiating drafts.

China is also taking strong positions on some issues of the ongoing services trade negotiations like the emergency safeguard measures (ESMs). China underlined the need to impose ESMs to combat unforeseen trade developments in services. These measures are aimed at combating sudden surges of imports that could potentially damage the domestic industries that produce similar or like products. This is something that is allowed in the trade in goods. But in the trade in services, the emergency safeguard measures can't be slapped all that easily as in the trade in goods.

The Southeast Asian countries that were severely hit during the Asian financial contagion when the foreign service providers - particularly foreign banks who exacerbated the crisis - want these measures in services trade too. Members of the WTO had earlier agreed on a deadline to conclude an agreement on ESMs by March 15.

The United States is, however, opposed to arriving at any new agreement on the need to provide ESMs in services. China, which made far-reaching commitments to open its services sector for foreign participation during the access talks, has demanded that developing countries must have the ability to clamp on ESMs. Although China can't impose these measures for three years because of the commitments it took to join the WTO, it knows that if members agree to new rules on the ESMS it could also benefit from them immediately without having to wait for three years.

In short, China is sending jitters to the big players in the WTO who have had their way all these years in setting the trade rules for the global trading system. China thinks that the existing playing ground for international trade is uneven and wants a level-playing field.

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