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Issue #592

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2014 Media Kit

China actively seeking WTO deal, wary of farm cuts

By: | at 08:00 PM | International Trade  

The head of the WTO rejected suggestions that China is not doing enough to help global free-trade talks but said Beijing is wary of agreeing to more farm tariff cuts so soon after joining the world trade body.

Pascal Lamy, director-general of the World Trade Organization, said Chinese negotiators were energetic behind the scenes in trying to advance the WTO’s Doha round of market-opening talks.

“China is engaged like hell in the negotiations, but their involvement does not take the same shape as the others,” Lamy told reporters during a regular visit to Beijing.

“They don’t do a press conference every other week to say what they want or what they don’t want, but, still, they are very active. It’s hugely important for them,” he added.

US and European officials have periodically urged Beijing to use its muscle as the world’s fourth-largest economy to try to narrow differences in the long-running negotiations, launched in 2001 in the Qatari capital.

“I totally disagree with the notion that they are hands off in this round,” Lamy said. “The Chinese are not satisfied with the actual status quo.”

For instance, China was very involved in negotiating the products on which developing countries would be spared deep tariff cuts.

“Their negotiating stance is Chinese, not Brazilian. They don’t advertise their negotiating role. They don’t make big speeches about what they want or don’t want,” he said.

Lamy said China was comfortable with the vast majority of issues on the table in the Doha Round. But it was unhappy with proposals for lowering agricultural tariffs and capping fishing subsidies.

INSURANCE POLICY

As much as it wanted deep cuts in US agricultural subsidies and in EU and Japanese agricultural tariffs, China faced political constraints in offering in return to lower its own barriers to imports of farm goods, Lamy said.

Political memories were long in China, and some critics had not forgotten that the terms of China’s WTO accession—in late 2001, at the meeting to launch the Doha round—were ambitious.

According to the finance ministry, China’s average farm tariff has fallen to 15 percent from 54 percent in 2001, compared with a global average of 62 percent. The EU average is around 25 percent, Lamy said.

The fate of China’s rural areas, home to 60 percent of the population, is especially sensitive in the run-up to a five-yearly congress of the ruling Communist party in the autumn.

“They have difficulty to accept a second bite of this magnitude this soon,” Lamy said. “I think that they know they will have to accept greater market access, but they want the developing countries’ tariff reduction to be as low as possible.”

Among the officials Lamy has met in Beijing, Finance Minister Jin Renqing reaffirmed China’s desire for a successful outcome to the Doha round. But he stressed China had not only slashed farm tariffs but also kept domestic subsidies to farmers very low.

“Our deficit in agricultural commodity trade is striking, so there should be reduced pressure on China in the agricultural negotiations,” the official Xinhua news agency quoted Jin as telling Lamy.

The WTO chief agreed that China’s subsidies were microscopic and said Jin’s interest in securing a breakthrough reflected the broader view that finance ministers take of trade negotiations.

“They see the value of an insurance policy against protectionism. For them, protectionism is a big risk,” he said. (Reuters)