EU to restart WTO talks with China

EU to restart WTO talks with China

BEIJING (AFP): European Union Trade Commissioner Pascal Lamy
will fly into Beijing on Tuesday for a new round of World Trade
Organization (WTO) talks that may end China's 14-year quest to
join the trade body.

The EU is by far the largest remaining trading partner with
which China has to work out a WTO deal.

Apart from the EU, China still has to agree to bilateral trade
deals with Costa Rica, Ecuador, Guatemala, Latvia, Malaysia,
Mexico and Switzerland.

Chinese officials have signaled their optimism for a deal
during this round of talks after inking agreements with Thailand,
India, Argentina, Colombia, Poland and Kyrgyzstan in recent
weeks.

After signing a deal in Thailand earlier this month, China's
Foreign Trade Minister Shi Guangsheng talked confidently about
the EU.

"Now the differences are narrowing through negotiations and I
am full of confidence that when Mr Lamy comes to Beijing we can
find a way that both sides can accept," Shi said.

However, officials at the European Commission have remained
tight-lipped since February's negotiations ended in stalemate.

Lamy's presence will fuel hopes for a China-EU deal, but EU
negotiators are likely to fight hard for concessions in a wide
variety of areas.

"We want to arrive at a bilateral EU-China accord that is
satisfactory for both parties," Lamy's spokesman Anthony Gooch
said in Brussels. "For the Chinese it will be one of the most
important deals towards joining the WTO."

The last round of talks ground to a halt before Lamy, whose
presence is needed to sign and seal an agreement, got on a plane
for the Chinese capital.

Lamy holds the same status in the EU as Trade Representative
Charlene Barshevsky does in the United States.

EU negotiators have said that the Sino-US agreement on China's
WTO entry signed in Beijing in November covered 80 percent of
their concerns, but have pledged to bargain hard for the
remaining 20 percent.

Among the thorny issues that must be resolved are market
access to the telecommunications sector -- especially the mobile
telephone industry -- insurance and the financial sector.

In the telecommunications sector, EU concerns revolve around
protecting foreign manufacturer access to China's burgeoning
mobile phone market as domestic telecoms firms gain ground.

There are worries that the implicit or explicit use of quotas
will block foreign firms access to the growing telecoms service
sector.

"The EU is probably looking to remove the increasingly
preferential treatment domestic manufactures are given of
procurement of telecoms infrastructure," said Ross O'Brien,
research director at Pyramid Research, a telecoms consultancy
affiliated with the Economist Group.

"They want a more realistic timetable for access to the
service market and to make sure they are not squeezed out of the
market once China Inc. gets going," he added.

The European side has also been pushing for more than 51
percent foreign ownership rights for European telecom companies
in joint ventures.

In the landmark Sino-US trade deal agreed to in November, US
telecoms companies were only given the right to gradually take 50
percent stakes.

Meanwhile, EU insurers are hoping to win permission to take 51
percent stakes in mainland life insurance joint ventures, while
insurance brokers are also clamoring for a slice of the Chinese
market.

"If we are compelled to have a joint-venture then we want to
have management control and can only guarantee (that) if you have
majority ownership," said Hans-Jorg Prost, chief representative
of German insurer Allianz, which has a 51 percent stake in a
Shanghai joint insurance venture.

The Allianz deal with Shanghai Dazhong Insurance formally went
into operation a year ago, before Chinese regulators began
lowering the ceiling on foreign participation.

Sources say some hard bargaining also remains to be done over
up to 100 tariff reductions on goods such as food, wine, glass,
ceramics and pharmaceuticals.