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Pacific Bloc Stalled Over US-China Rift


A DEEPENING dispute over China and its partially controlled economy fully rejoining the world trade mainstream is pushing relations between Beijing and Washington once again to a crossroads.

Just six months after President Clinton backed off from human rights demands to preserve China's low-tariff access to the United States market, trade differences are turning next month's Asia Pacific Economic Cooperation summit into a new commercial battleground between the two rivals. The APEC meetings begin in Indonesia on Nov. 8 and culminate in a summit on Nov. 15 of heads of state, including Mr. Clinton.

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China opposes efforts to create a free-trade zone among the economies of APEC's 18 members by the year 2020 because, in the world's fastest-growing region, Beijing says the Chinese economy is still developing and poorer countries should not suffer if tariff barriers drop. ``We believe the development of APEC should ... reflect the rich varieties of the Asian-Pacific region while giving proper preference to members of developing countries,'' Dai Bingguo, vice foreign minister, said in a news briefing.

But China has also signaled its readiness to stymie APEC if the US continues to block its membership in the General Agreement on Tariffs and Trade (GATT), which evolves into the new World Trade Organization in 1995.

Despite a US policy switch to sideline human rights demands and seek closer commercial and military tries with China, GATT clouds the recently warming Sino-US relations.

US officials, though, say China has to build on recent progress and speed up efforts to lower tariffs, tighten enforcement of copyright and trademark infringement, open up trade in services and agriculture, and make its legal system more transparent.

Beijing says it won't stand for the tougher US stance toward China while other countries have been let off the hook with only vague promises to comply with GATT requirements in agriculture and other sectors. Increasingly angry over the GATT obstacles, Chinese officials charge privately that the US is blocking their GATT admission to counterbalance domestic political damage from the most-favored-nation (MFN) decision last May.

``The question is: Do you want to put China outside or inside [the world trade regime]? To put too high a requirement ... is not realistic,'' Long Yongtu, a senior trade official said after a speech this week. ``America should show some political flexibility.''

Asian and Western analysts predict that defusing mounting trade tensions over GATT will be more difficult than resolving the MFN frictions. Although the Clinton administration could justify its retreat on human rights by citing trade benefits, the GATT standoff involves issues that are crucial to the future of US business in China, Western diplomats say.

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Although China says it will not buckle to US pressure and warns that Washington's tough posture will hurt US businesses competitively, US officials do not discount possible concessions as the GATT deadline nears. ``I have not been told that China has made all the concessions that it can,'' Deputy US trade negotiator Charlene Barshefsky said during a visit here this month.

With some APEC members pushing to move up the 2020 timetable by 10 years, China is urging a looser schedule that would give signatory countries the latitude to make their own changes as needed. Due to China's opposition, a more vague accord is likely, Asian diplomats in Beijing say.

``The speed of cooperation of APEC should proceed accordingly, but a speedy success should be avoided,'' says Mr. Dai, the vice foreign minister. ``China attaches great attention to the function of APEC and wishes APEC could play a more active role in promoting cooperation in the Asian-Pacific region.''

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