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China Threatens WTO's Manufacturing Compromise

Beijing says it deserves a longer grace period for cutting tariffs and opening up its manufacturing markets than the two years proposed.

GENEVA (AP) — China said it would veto a World Trade Organization compromise for liberalizing global commerce in manufactured goods if it failed to shield Chinese industries from foreign competition — a threat that brought a stern response from the European Union.
 
The exchange occurred Wednesday at one of what has become a torturous stretch of WTO meetings, producing little or no progress toward a new global pact to free up trade in industrial goods, farm produce and commercial services.
 
Beijing said it deserved, as one of the trade body's newest members, a longer grace period for cutting tariffs and opening up its manufacturing markets than the two years that has been proposed by the WTO's lead industrial negotiator, Don Stephenson of Canada.
 
The Asian country did not explicitly state its demands, according to officials present in the closed-doors meeting. But it has previously sought a decade-long delay on implementing a complicated formula that would make it easier for foreign-made cars, jets and television sets to compete in the Chinese market.
 
In principle, any of the WTO's 151 members can wield a veto as all decisions must be made by consensus. In practice, however, only a handful of countries have the economic clout to stand in the way of a deal.
 
The EU, according to officials, rebuked China for its threatening language, warning that it could cause political repercussions. Brussels, citing the importance of China to world trade, said current WTO compromise proposals had already reached the outer limits of what the 27-nation bloc could accept.
 
Trade officials demanded anonymity because of WTO confidentiality rules.
 
The negotiations to cut tariffs on manufactured products — the vast majority of goods traded internationally — have been highly contentious in recent weeks, with the United States and the 27-nation EU accusing emerging economic powers such as Brazil, India and South Africa of intransigence that risks ending six years of WTO negotiations.
 
The global trade talks known as the Doha round have repeatedly stalled since their inception in Qatar's capital in 2001, largely because of wrangling between rich and poor nations over eliminating farm subsidies and, more recently, barriers to manufacturing trade.
 
China's export growth has become a major issue for both rich and poor WTO members fearful that new industrial tariff cuts will unleash a flood of cheap Chinese goods onto their markets. In the U.S., the Bush administration is trying to deal with rising political anger over its trade deficit with China that grew last year to US$232.5 billion, the highest ever with a single country.
 
Washington, at the meeting, criticized unnamed countries for seeking exceptions as ''recently acceded'' WTO members, even as they would benefit significantly from a final Doha agreement, officials said. China joined the WTO in 2001.
 
Stephenson, the WTO industrial talks chairman, announced earlier this week that he would delay the new compromise proposal he was planning to deliver on Nov. 15.
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