WORLD / Wall Street Journal Exclusive

US pressures China over role in trade game
(THE WALL STREET JOURNAL)
Updated: 2006-04-06 11:47

With a new confrontational approach, the Bush administration is pushing China to act as a more "mature trading partner," as U.S. Trade Representative Rob Portman puts it. That goal -- to make sure China plays fair by international trading rules -- will be tested next week when U.S. and Chinese officials convene a senior-level dialogue aimed at easing economic tensions between the two powers.

The April 11 meeting, to be held in Washington, will set the stage for Chinese President Hu Jintao's visit to the U.S. one week later. Next week's session could produce an agreement that would pave the way for U.S. companies to take part in Chinese trade exhibitions. In the days that follow, Chinese officials are expected to go on a multibillion-dollar buying spree of American goods, from soybeans to computer-networking gear to transportation equipment.

But progress on resolving substantive issues has been elusive. U.S. officials have begun to damp expectations for any breakthrough on their priority objectives, such as widening access to China's domestic market and stiffening China's enforcement of intellectual-property rights -- when the Joint Commission on Commerce and Trade formally convenes next week.

"Both sides recognize the stakes," said Myron Brilliant, vice president for Asia at the U.S. Chamber of Commerce, who has consulted with U.S. and Chinese officials in recent days. "But there aren't going to be any home runs."

More likely is a modest package of commitments providing for closer coordination on combating piracy of intellectual property, including an agreement among Chinese computer makers to ship their products loaded with legitimate copies of Microsoft Corp.'s Windows operating system. Also under discussion is a proposal to ease rules in China that limit domestic access for international express-delivery carriers, such as FedEx Corp. and United Parcel Service Inc.

Next week's meeting and the visit by Mr. Hu come at a time of rising tensions between China and the U.S. Washington's hope is for China to become "a fully accountable stakeholder in the international trading system," Assistant U.S. Trade Representative Tim Stratford said on Capitol Hill this week.

To accomplish the goal, the Bush administration, while still supportive of economic diplomacy, has taken steps this year to toughen economic policy toward Beijing. Last week, the U.S. filed a protest at the World Trade Organization aimed at cracking open China's auto-parts market to foreign suppliers. And consideration is being given to additional WTO action to address concerns that China provides unfair subsidies to business to promote exports.

In China, some officials say they have been surprised by the surge in protectionist sentiment in the U.S. In the past, it has been Washington that has urged Beijing to embrace free trade. But in recognition of the uncertain political environment, Mr. Hu and other Chinese officials plan to extol the virtues of free trade and benefits of globalization in a bid to forestall the erection of new trade barriers.

One hope among Chinese officials is to begin to defuse tensions over the U.S. trade deficit with China, which topped $200 billion in 2005 by U.S. estimates. A senior Chinese official said yesterday that the agreements to buy U.S. goods expected from next week's delegation aren't meant to be one-time transactions. Rather, they are intended to be continuing contracts that will smooth out trade imbalances between the two countries.

"China does not intentionally pursue a large trade surplus with the U.S. We are willing to increase our imports," said the senior Chinese official.

Mr. Hu is scheduled to arrive April 18 in Seattle, where he will visit officials from Microsoft. He also plans to tour Boeing Co., which is in talks to sell as many as 80 planes to China, people close to the situation said.

Ahead of Mr. Hu's visit, a delegation of Chinese politicians and business executives led by Vice Premier Wu Yi will parcel out purchase agreements across 13 states and 14 cities, in an attempt to show Americans the benefits of Sino-U.S. trade, the Chinese official said. Ms. Wu is scheduled to appear in Los Angeles today to begin the signing of what officials have described as "over $4 billion" in deals.

On April 20, Mr. Hu is scheduled to meet with President Bush in Washington, his first official visit to the U.S. since taking office in 2003. Geopolitical concerns, from human rights to Taiwan to North Korea, will inevitably make their way onto the agenda. Chinese officials say that enlisting U.S. support in opposing any moves by Taiwan to seek formal independence is its highest priority. But economic issues, by far, are causing the greatest friction at the moment in U.S.-Sino relations. "This is a very important opportunity for both the United States and China," said Montana Sen. Max Baucus, the top-ranking Democrat on the Senate Finance Committee.


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