Sat, Sep 11, 2004 - Page 11 News List

US officials to pressure China on trade at summit

TURNING THE SCREWS With the Bush administration keen to score points ahead of the fall election, analysts expect a press for concessions on textiles and piracy

BLOOMBERG

US officials visiting Beijing this weekend will press China to limit textile exports and crack down harder on piracy, reflecting pressure for trade concessions ahead of US elections in November, economists and trade lawyers said.

The World Economic Forum's China Business Summit, with more than 450 attendees including US Commerce Undersecretary Grant Aldonas, Treasury Department emissary Paul Speltz and White House economist Kristin Forbes, will focus attention on an economy that tripled its share of world trade to 7 percent in the past decade.

"They will definitely make some noise," said Henry Gao, a law professor at the City University of Hong Kong who previously worked at the WTO Secretariat.

The Bush administration "will play up the favorable deals they've gotten from the Chinese."

The US has raised a series of complaints against its third-biggest and fastest-growing trade partner, from China's pegged currency to violations of intellectual property rights and barriers on overseas companies in the world's seventh-largest economy.

Aldonas said last week that he will ask China to accept voluntary caps on textile and clothing exports to head off dozens of threatened trade petitions from US textile makers. National Spinning Co. and other companies say the US industry will lose as many as 600,000 out of 700,000 jobs next year when four-decade-old quotas on Chinese imports expire.

The US already has imposed tariffs and special quotas on Chinese products including color televisions, brassieres and bedroom furniture since last year. Voluntary textile limits would provide "greater certainty" to Chinese and US retailers, Aldonas said.

China may be unwilling to negotiate. Any attempt to extend the textile quotas will be a breach of the WTO and is unacceptable, the New York Times reported on Thursday, citing Liu Haiyun, an official at the Chinese embassy in Washington.

"If you talk to US government officials, they'll tell you [trade relations with China] have never been better," said Patrick Horgan, Beijing-based chief representative for APCO Worldwide, a US lobbying firm. "But if you scratch beneath the surface, the successive actions in recent months brought on by US interest groups suggest things aren't quite as rosy."

US manufacturers blame China's fixed currency for holding down the value of the country's exports, stoking the trade deficit and job losses. The Bush administration has pressed China to give up the peg.

Still, discussion on the peg may be muted at the two-day World Economic Forum starting tomorrow, some economists said. The Bush administration yesterday rejected a petition from a coalition of US labor and manufacturing groups to seek sanctions from the WTO over China's currency policy.

"The US is becoming more understanding of the difficulties related to floating the currency," said Lois Dougan Tretiak, a vice president for China at the Economist Corporate Network. "There's been less beating of that drum lately."

US officials will push for tougher action against piracy. Chinese companies copy US products from Gillette Co's Duracell batteries to Pfizer Inc's Viagra, according to US officials. Pirate discs of latest Hollywood films are sold openly on the streets of Beijing and Shanghai for as little as 8 yuan (US$0.97) each.

"Counterfeiting and software piracy will be the top issue that US officials will drive for at the World Economic Forum," said Lawrence Sussman, a Beijing-based US trade and tax lawyer. "There is no other issue that is more important."

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