U.S. TOUGHENS LINE ON CHINA IN WTO

Byline: Jim Ostroff

WASHINGTON--The Clinton administration apparently is hardening the line as it talks in Jakarta with China's leaders, who are intent on becoming charter members of the World Trade Organization.
With most of the agenda of the Asia Pacific Economic Cooperation forum meeting largely given over to ceremony, textile and apparel interests here are more concerned about President Clinton's parley with the Chinese officials.
The confab of 18 nations bordering on the Pacific is slated to reach a high point today when delegates attending the session in Jakarta likely will vote to set 2020 as a target date for completing negotiations creating a free trade zone in an area that now accounts for half of the world's production and 40 percent of its trade.
Plans beyond the date-setting are amorphous, and most trade observers don't expect further progress on a Pacific Free Trade Area until next year's meeting.
Of more interest to textile and apparel trade analysts is today's slated meeting between Clinton and Chinese President Jiang Zemin. Among the topics the two are said to be discussing is China's application to join the WTO as a founding member. This trade group will become operational Jan. 1 as a successor to the GATT, assuming Congress approves the necessary GATT-implementing legislation when it reconvenes Nov. 28. To date, the U.S. has balked at allowing China WTO admission, citing concerns over various trade practices. China could be admitted at some future date, but its leaders have said as a matter of national pride it wants founding member status.
Sources Monday reported, however, that top administration officials, including Trade Representative Mickey Kantor, have said that even should China join the WTO as a charter member, the U.S. will seek to deny it trade benefits such as lower apparel import duties and quotas that expand over 10 years before being eliminated.
Sources said the U.S. will cite Article 35 of the GATT protocols adopted at the end of the seven-year Uruguay Round talks last December. In essence, it permits one country to withhold liberalized trade benefits from another if the two do not have a bilateral pact covering all trade. There is no such Sino-U.S. treaty because this would mean the U.S. would have to scrap the 1974 Jackson-Vanik law that requires the president to annually renew China's Most-Favored-Nation trade status. Politically, it has been impossible for any president to consider seeking a repeal of this law.
Some U.S. textile and apparel interests have expressed grave concern about China's WTO admission, averring this would allow its apparel manufacturers in particular to swamp the U.S. market. Jennifer Hillman, the chief U.S.textile negotiator, reportedly said the U.S. would seek to invoke Article 35 to keep China out of the WTO initially, according to sources.
Hillman was on a negotiating trip in Kiev regarding wool coat imports from Ukraine and could not be reached for comment.
This position, however, was criticized by domestic manufacturing and importer interests.
Seth Bodner, president of the National Knitwear & Sportswear Association, said he would oppose the U.S. tactic.
"Now we have a textile bilateral with China [with very low quota growth rates] that would become its base position when it joins the WTO," Bodner said. "The bilateral expires at the end of 1995, and if China is kept out of the WTO at the start it's likely it will insist on a new one that will be much more generous than the current one."
An import industry adviser who requested anonymity on Monday said the administration "is using Article 35 as a pretense in order to appease the domestic apparel and textile industries by seeking to keep China out of the WTO for as long as possible."
There has been some discussion between U.S. and European Union officials about a compromise that would permit China to join the WTO as a founder but suspend its membership for an unspecified period of time. Either scenario "proves this administration is missing the point--playing games with China will not help U.S. exports there and will lessen our ability to shape policy in the region," said Laura Jones, the U.S. Association of Importers of Textiles and Apparel executive vice president.
"Asia is becoming Sino-centric and if the U.S. continues to try and beat up on China, we will end up with a lose-lose proposition," she said.
--Fairchild News Service

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