Balance of power shifts to China at global trade talks
As seven years of global trade talks approach another nervy climax, China is emerging as a central player - and coming under heavy criticism from the United States and others for its tough tactics.
But no one should be surprised to find the Chinese trade minister, Chen Deming, playing hardball. In 2004 Chen studied at the Kennedy School of Government at Harvard University, and he has said privately that he learned all his negotiating skills in the United States.
Now, with the latest trade talks dragging into their second full week, China is fighting hard for last-minute concessions, including the right to shield important farm products from competition and to delay implementing some of its tariff cuts for years.
"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. "It is finally being felt at the WTO. They have begun to throw their weight around - and this is a glimpse of the future."
Such a development has, Guinan added "been coming a long time - and it is not going away."
On Monday in Geneva, David Shark, a senior U.S. trade official, accused China and India of throwing the round of talks "into the gravest jeopardy of its nearly seven-year life." U.S. and EU diplomats warned again that the talks could collapse.
But that criticism was rejected by Beijing's ambassador to the WTO, Sun Zhenyu, who said his country had "tried very hard to contribute to the success of the round."
Inside the negotiating rooms, Chen is regarded by counterparts from other countries as a pragmatic, no-nonsense politician, whose style is tough, direct and relatively free of rhetoric.
At a dinner with the European trade commissioner, Peter Mandelson, Chen once described how, as the son of an intellectual he was banished to the countryside during China's Cultural Revolution. He began work on a tractor and, in time, began organizing the work of all the tractors before assuming leadership roles, first in his village, then in the region.
In some ways his journey from humble origins mirrors that of China in international groupings like the World Trade Organization. Beijing joined in December 2001 and, inside the organization, seems to keep a low profile. As of March 2007 it had five officials in the WTO bureaucracy as opposed to 29 for the United States and 178 for France.
But that seems to be changing.
China now has an impressive new, purpose-built embassy half a kilometer from the main WTO building.
In one of his regular blogs, Mandelson describes a meeting with Chen at "the gleaming Chinese Mission overlooking Lake Geneva," a building which, he added, was "a testament to China's arrival on the WTO scene and its growing status as a trade power."
Last week the director general of the WTO, Pascal Lamy, invited China into a new Group of 7 comprised also of the United States, the European Union, India, Brazil, Australia and Japan.
Not so long ago global trade talks were steered largely by the so-called "quad" made up of the United States, 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 ongoing discussions in Geneva have confirmed that the balance of power in global trade has shifted irrevocably with the rise of China.
"When we meet China," said one European official not authorized to speak to the media, there are more than a billion people "represented in the room."
"China weighs," he added, "not just because of their size but because they are the source both of the benefits of this trade round and its threats."
Because of its massive population and growing middle class, even a small market opening in goods and services offers U.S and European exporters potentially large rewards.
But, by the same token, Beijing's ultracompetitive export performance is the main reason that other emerging economies like India and Brazil are reluctant to open up their markets.
This is one reason why China has failed to assume the leadership of the developing world that some had predicted.
"A lot of the reticence we have seen from Brazil or Argentina in nonagricultural market access is driven not by fear of the U.S. and the EU but by fear of being swamped by China," Guinan said.
"It is very difficult to play a leadership role with the developing countries when what is good for China is not good for them," he added. "But, like India, they can resist EU and U.S. bullying."
Another reason why China's role is ambivalent is that it still has a large, poor, rural population.
Lu Xiankun, counselor and head of division in the Chinese mission, says that there are 800 million farmers - almost double the whole population of the EU - earning around $2 a day.
That, he says, explains Chinese efforts to shield cotton, sugar and rice from imports.
From a U.S perspective, Beijing, having helped shape the deal that won broad agreement on Friday, is now trying to reopen it with the help of India.
Shark, the U.S. trade official, argued that 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 farm subsidy reductions to the U.S. Congress, particularly for cotton.
In addition, China wants special allowances to be made to reflect its relatively recent entry into the WTO. But one European official said that this could mean implementation of some Chinese tariff reductions being delayed beyond 2025, perhaps to 2027.
Meanwhile, Chen also asked for compensation for the fact that some EU tariffs may be reduced more slowly than planned to protect the poorest countries. These already have preferential deals and stand to be squeezed by the greater competition.
And, along with India, China objects to proposals designed to encourage countries to cut tariffs as close to zero as possible in a range of industries.
But, with its huge exports, China also has a stake in the success of the so-called Doha development round and more broadly, of the WTO, which underscores global trade. That, officials said, leads them to hope that Chen will eventually decide to make a deal.
