By Adrian Croft
BRUSSELS, May 14 (Reuters) - European Union trade chief Pascal Lamy arrives in China on Monday hoping to negotiate a market-opening agreement that would remove the biggest remaining obstacle to China joining the World Trade Organisation (WTO).
The stakes in the negotiations, expected to last several days, are even higher because the outcome might influence a crucial vote in the U.S. Congress the following week on a bill to normalise U.S. trading relations with China.
Lamy told a Brussels news conference last Thursday that he hoped for a deal this week, but added that he was realistic rather than extremely optimistic about the chances of success.
"I go there with a goal and I consider they have the same goal as I have...which is clinching a deal next week. Maybe we'll get there -- I hope so -- maybe we won't get there," the EU's French trade commissioner said.
Lamy, who is expected to enter into immediate talks with Chinese Foreign Trade Minister Shi Guangsheng on Monday, is making his second trip to China for WTO talks after a round of negotiations in late March produced no breakthrough.
All WTO members have the right to seek market-opening concessions from applicants in exchange for agreeing to them joining the trade watchdog. 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 WTO members yet to do so.Any concessions China makes to one WTO member must be offered to all.
EU SEEKS CONCESSIONS
The EU has said that the U.S.-China deal, reached last November, covers 80 percent of its trade concerns but is pressing China for further concessions in areas where European industry is strong such as 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 has made to the United States.
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 normalise trade.
In the week of May 22, the U.S. House of Representatives is scheduled to vote on legislation granting permanent normal trade relations (PNTR) to China. Despite intense lobbying by the Clinton administration, a Reuters poll last week showed the bill is in serious peril in the House.
President Bill Clinton has said a rejection would hurt U.S. business but would not lead him to block China's WTO entry.
EU-CHINA ACCORD KEY
"From the American perspective, it is key to a positive vote in the U.S. Congress on PNTR that a deal with the EU take place before the vote," said Maja Wessels, a member of the EU Committee of the American Chamber of Commerce in Belgium, which represents U.S. businesses in Europe.
An EU-China agreement would reassure members of Congress that the EU was "on board" and further Chinese concessions to the EU might sway the vote in Congress, said Wessels, a United Technologies Corp. executive.
Lamy carries with him the hopes of European businesses for greater access to China's vast market of 1.3 billion people.
"The various items on Mr. Lamy's shopping list are carefully selected. We believe he is very much justified in giving them the importance he is giving them," Dirk Hudig, secretary general of UNICE, the EU's main business lobby, told Reuters.
European businesses say they are looking not only for greater export opportunities but also the possibility to hold majority stakes in joint ventures in China and greater transparency in Chinese regulation on trade and investment.
At his news conference, Lamy singled out the fast-growing mobile telephone sector as a key point for the EU in the talks.
He said he aimed for European firms to be able to take stakes of around 50 percent in Chinese mobile phone ventures.
The issue is important for European mobile phone manufacturers such as Nokia and Ericsson which already do extensive business in China.:
