China's WTO bid in trouble

BEIJING -- China's entry into the World Trade Organization suffered a potentially fatal setback yesterday when the world's most populous country failed to secure European Union backing and after its threats against Taiwan soured U.S. support.

Four days of negotiations between EU and Chinese officials failed to produce an accord on opening up the Chinese market to European companies, a prerequisite to EU approval of China's WTO membership. No date has been set for future discussions.

The Boeing Co., the United States' leading exporter, said it's far too early to declare the European talks dead.

"While they still don't have a deal, we certainly hope that this is a bump in the road and that eventually the EU and the Chinese negotiate an acceptable deal," said Tim Neale, a Boeing spokesman based in Washington, D.C.

The blows to China's WTO aspirations follow threats by China on Monday to take military action against Taiwan, should the island break off reunification negotiations. U.S. Vice President Al Gore, who needs the support of labor unions in his presidential bid, further undermined support within the U.S. Congress for America's own trade pact with China by calling for tighter labor and environment standards in trade accords.

The EU is the last major trading power whose support China needs. China has already agreed on pacts with the United States, Canada and Japan, and most recently with India.

"We are obviously concerned when negotiations that would boost trade and do away with bureaucratic barriers go sour," said Tom Jenkins, executive director of the European Tour Operators Association. Industry estimates point to 50 million potential visitors to Europe from China, were the economy to open, generating 2.5 million jobs in Europe to receive them.

Although the EU still has to strike a deal, the U.S. government is anxious to push its accord through a Congress unwilling to drive through unpopular trade measures before November's presidential election. Moreover, a favorable vote will be even more difficult to carry as a result of the failed EU talks and after senior U.S. senators warned the Taiwan threat may have scuttled the deal's chances.

U.S. Agriculture Secretary Dan Glickman warned yesterday that China risks its goal of normal trade relations with the United States by its "very bellicose" comments on Taiwan, adding that a trade agreement with China "is the most important thing agriculturally in the world."

The EU, though, plans to pursue its interests regardless of U.S. developments. It wants increased market access for European companies, reduced tariffs, the abolition of quotas and a change in ownership rules governing European-Chinese joint ventures, among other demands, before it gives the thumbs up to China.

"We have gone as far as we can in this round," European Commission spokesman Anthony Gooch said. There are "outstanding objections" in the areas of tariffs, services and "horizontal issues," he added. "The talks are not dead."