US presses China to take Doha role

Original Publication Date: 
29 August, 2006

China would damage its robust economy and hinder its own policy objectives if it embraced economic nationalism, Susan Schwab, the US trade representative, said in Beijing yesterday.

Ms Schwab also urged China to play a greater role, commensurate with its new economic power, in resuscitating the cause of global trade liberalisation following the collapse of the Doha round.

She expressed surprise that China was willing to allow other developing countries to represent its interest in the Doha talks through the "Group of Six" negotiating group, made up of the EU, US, India, Brazil, Japan and Australia.

"If you were China, with arguably the greatest stake in the world trading system, would you want India and Brazil to be articulating your position in this small [group]?" she asked.

Although she said it was a "little early" to say whether there was a fully fledged backlash against foreign involvement in the Chinese economy, such a movement would run counter to the Beijing government's own policies.

She cited as evidence delays in approvals for foreign companies wanting to expand their businesses in the financial services sector, saying they could undermine Beijing's aim of promoting domestic demand over exports.

"If there was one sector where you would be cutting off your nose to spite your face, this would be it," she said. "If your aim is to promote domestic demand and support local entrepreneurs, then you need a financial system that works."

Ms Schwab's visit comes a little more than three months before the December 11 deadline for Beijing to implement fully the commitments it made in 2001 on its entry into the World Trade Organisation.

Some of Beijing's most substantive and detailed commitments to open its market were made in its banking and insurance sectors.

Many, although not all, have been implemented, but foreign companies say new obstacles have been thrown in their path in the draftsof regulations drawn up to codify the post-WPO framework.

On the Doha trade round, Ms Schwab indicated that the US would like to see new alliances formed between global trading powers to advance the stalled negotiations, including a more active role for China.

She said that getting the Doha round back on track would be difficult, and that, as a result, "perhaps we need to look at other processes and players" outside the G6.

China has resisted taking a high profile in the Doha round, arguing privately that the concessions it made as part of its entry into the WTO made it difficult for it to take a stand on a new round of market-opening measures.

Ms Schwab's low-key visit, her first since being appointed as trade representative, coincides with a relative improvement in bilateral trade relations.

Although the US still has a long list of market access complaints, Washington has acknowledged progress in some areas, including on government procurement and intellectual property rights.

Ms Schwab said the US was still committed to resolving disputes through negotiations and did not want to adopt a confrontational approach.