Geneva: As seven years of global trade talks approach another climax, China is emerging as a central player—and coming under heavy criticism from the US and others for its tactics.
Now, with the latest trade talks dragging into their second full week, China is fighting for last-minute concessions. Those include the right to shield important farm products from competition and delay cutting some of its tariffs for years.
Worrying signs: A 22 July photo of US trade representative Susan Schwab during the WTO ministerial summit in Geneva, Switzerland
“What we are seeing is the emergence of a new power pole,” said Joe Guinan, a trade expert with the German Marshall Fund, a public policy group. He said that was finally being felt at the World Trade Organization, or WTO. “They have begun to throw their weight around—and this is a glimpse of the future.” Such a development has, Guinan said, “been coming a long time, and it is not going away.”
On Monday in Geneva, the US accused China and India of throwing the round of talks “into the gravest jeopardy of its nearly seven-year life”. India was criticized for rejecting the package laid out by Pascal Lamy, the director general of WTO, and China was taken to task for backing out of terms it committed to last week.
“We are very much concerned about the direction that a couple of countries are taking,” US trade representative Susan C. Schwab said. “I am very concerned it will jeopardize the outcome of this round.”
Not so long ago, global trade talks were steered largely by the US, the European Union (EU), Canada and Japan. It was the new G-7 grouping that helped push forward a compromise text that won widespread—but not total—support late on Friday.
The discussions in Geneva have confirmed that the balance of power in global trade has shifted irrevocably with the rise of China. Because of China’s enormous population and its growing middle class, even a small opening in the nation’s market in goods and services offers exporters from the US and Europe potentially large rewards.
But by the same token, Beijing’s ultra-competitive export performance is the main reason that other emerging economies such as India and Brazil are reluctant to open their markets. This is one reason that China has failed to assume the leadership of the developing world as some had predicted.
“A lot of the reticence we have seen from Brazil or Argentina in non-agricultural market access is driven not by fear of the US and the EU but by fear of being swamped by China,” Guinan said.
Another reason that China’s role is ambivalent is that it has a large, poor, rural population. Lu Xiankun, counsellor and head of division in the Chinese mission, says there are hundreds of millions of farmers in China earning around $2 (Rs85) a day. That, he says, explains Chinese efforts to shield cotton, sugar and rice from competition from imports.
From an American perspective, Beijing, having helped shape the deal that won broad agreement on Friday, is now trying to reopen it with the help of India.
David Shark, a senior US trade official, said these policies “would have their most serious detrimental effects on precisely those poorer developing countries that already have such limited agricultural export capabilities”. They also make it harder for the White House to sell reductions in farm subsidies to its Congress.
In addition, China wants allowances to reflect its relatively recent entry into the WTO. But one European official said that this could mean the delay of some Chinese tariff reductions beyond 2025, perhaps to 2027. ©2008/ New York Times