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Chinese Try To Ward Off US Trade Reprisals

FINDING words insufficient, United States officials hope to move China toward fair trade by relying more on the clock: the threat of imminent sanctions.US negotiators left China Friday having failed to convince it to open its market to foreign goods and protect the fruits of US creativity with well-enforced copyright laws. "We urgently need to make a positive resolution of the outstanding issues," says Assistant US Trade Representative Joseph Massey. "They [Chinese officials] understand the fact that this is an acute issue now. We are coming up against an urgent deadline," Mr. Massey said at a press conference after three days of talks. Massey reminded his Chinese counterparts that they will face high tariffs if by Nov. 26 they fail to enact measures to protect US "intellectual property" with copyrights and patents. The US negotiator also pointed to a later but no less momentous date for Sino-US trade. The Bush administration began an investigation into China's trade practices on Oct. 10 and will impose tariffs in a year if China fails to dismantle import barriers. The threats arose in part from a US trade deficit with China that is expected this year to far exceed the $10.4 billion 1990 total. China has sought to head off the investigation with a pledge to publish secretive import regulations, reduce tariffs, cut the number of goods requiring import licenses, and take other market-opening steps.

US not satisfied US officials say China came a bit closer to putting the promises into action during the talks with Massey - but not close enough. Beijing is probably finding the countdown to sanctions increasingly worrisome, say Western diplomats concerned with trade issues. China's trade officials probably need all the time available to convince China's leadership and bureaucracies to reform the highly centralized trading system according to world standards. Until the consensus-building is complete, China is likely to continue using propaganda and high-profile trade gestures in an attempt to avert US reprisals. For example, prior to Massey's current visit to Beijing, China announced major deals with US aerospace companies. China has signed a $500 million contract for 13 Boeing 737-300 airliners, officials at the Civil Aviation Administration of China (CAAC) said Saturday. The Shanghai Aviation Industrial Corporation also plans to produce 150 airliners with the McDonnell Douglas Corporation, according to official press reports.

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Aircraft deals with US "Increasing purchases of big American airliners from Boeing and McDonnell Douglas are seen as an indication that China wants to improve trade relations with the United States," the official China Daily said. However, the two recently-announced deals will do no more than briefly brighten the dark tone in Sino-US trade relations, the Western diplomats say. China has previously sought to undercut threats to its trade privileges with the United States by making striking, top-dollar deals with US jetliner manufacturers, say the diplomats. In May 1990, China announced a $4 billion order of Boeing airliners in an apparent effort to ease the renewal of its preferential tariff treatment by the US Congress. Boeing has been one of the most outspoken corporate advocates for sustaining China's most-favored-nation (MFN) trade status. In April, CAAC signed an order for three 737-300s valued at $110 million as debate among US legislators over whether to renew MFN for another year neared a peak. Beijing still retains its MFN status, although several US lawmakers have threatened to link the privilege to improvement in its human rights record. Reports in the China's official press imply that the recently announced deal in which China would co-produce 150 McDonnell Douglas aircraft is either sealed or on the verge of complete agreement. However, ministry officials and executives acknowledge that the two sides must still negotiate over payment and price, two of the most divisive issues. Moreover, China is only willing to commit itself to the assembly of 40 McDonnell Douglas airplanes by the year 2000.

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