By Paul Eckert
BEIJING (Reuters) - China and the European Union ended their first day of trade talks Monday with the EU saying it needed more time to hammer out a deal that would help pave the way for China's entry to the World Trade Organization (WTO).
The absence of a deal with the EU is the biggest remaining obstacle to China's membership.
The United States, Japan, Canada and a number of other countries have already reached bilateral deals with China, leaving the 15-nation EU as the biggest of about 10 members yet to do so.
"The technical team is working right now and we are resuming tomorrow morning," EU Trade Commissioner Pascal Lamy told reporters after two hours of talks with Foreign Trade Minister Shi Guangsheng.
Lamy's spokesman, Anthony Gooch, told reporters it was too early to say whether China had shown more flexibility but said technical talks over the past few days were conducted in a "positive and constructive spirit."
"We don't have any pre-ordained timetable," Gooch said when asked how long Lamy intended to stay.
"Our principle will be to stay for as long as it is constructive and useful and necessary and hopefully that will be culminating with a deal at the end of it," he said.
Chinese negotiators were not available to comment on the fourth set of negotiations between the two sides this year and the second Lamy has attended.
Lamy, in comments on arriving Monday morning, was not forthcoming on the prospects for success in the EU's bid to improve on a deal China signed with the United States in November.
The stakes in the negotiations are high and involve not only an accession deal with the EU.
The outcome of Lamy's talks might also influence a crucial vote looming in the U.S. Congress on a bill to normalize U.S. trading relations with China following the November deal.
Eu Eyes Topping U.S. Deal
All WTO members have the right to seek market-opening concessions from applicants in exchange for agreeing to them joining the body which sets global trade rules. Any concessions China makes to one WTO member must be offered to all.
The EU has said the U.S.-China deal covers 80 percent of its trade concerns but is pressing China for further concessions in areas where European industry is strong -- telecommunications, life insurance, banking, vehicles and distribution.
It also wants China to cut import duties on some products, such as spirits.
But China is extremely reluctant to go further than the concessions it made to the United States, which were opposed by some powerful ministries.
European businesses say they are looking not only for greater export opportunities but also the chance to hold majority stakes in joint ventures in China and greater transparency in Chinese regulation on trade and investment.
At a Brussels news conference last week, Lamy singled out the fast-growing mobile telephone sector as a key point for the EU in the talks.
Lamy said he aimed for European firms to be able to take stakes of around 50 percent in Chinese mobile phone ventures.
U.S. Vote Looms
Lamy's leverage over China may never be greater than this week as Beijing could influence a key vote in the U.S. Congress by reaching agreement with the EU, business sources say.
To lock in the benefits of the U.S.-China deal, the Clinton administration says the United States must give up its annual review of China's trade status and permanently normalize trade.
In the week of May 22, the U.S. House of Representatives is scheduled to vote on legislation granting permanent normal trade relations to China.
Despite intense lobbying by the Clinton administration, a Reuters poll late last week showed the bill was in serious peril in the House.
President Clinton has said a rejection would hurt U.S. business but would not lead him to block China's WTO entry.:
