DATE=11/15/1999 TYPE=BACKGROUND REPORT TITLE=CHINA W-T-O NUMBER=5-44760 BYLINE=AMY BICKERS DATELINE=HONG KONG INTERNET=YES CONTENT= VOICED AT: INTRO: After more than a decade of fruitless talks, Washington and Beijing have broken the deadlock and agreed to a landmark trade pact. As Amy Bickers reports from V-O-A's Asia News Center in Hong Kong, the deal represents a major step towards integrating China into the global economy. TEXT: With the Sino-U-S trade accord now signed, a major hurdle in China's long-time bid to join the World Trade Organization is removed. While China still needs an agreement with the European Union, the accord with the Washington has far reaching implications for China. Frank Gong, a Hong Kong based-economist for the Bank of America, says the market-opening steps and legal changes required to become a W-T-O member will transform much of the country's economy. /// GONG ACT /// I think this is a very positive long-term development. It shows the commitment to reform is still there from the highest leadership because opening markets is a very painful process and China may suffer on a lot of fronts for the short term. /// END ACT /// Mr. Gong says Chinese companies will be forced to adopt international standards for business practices, which will ultimately energize the nation's industry. But he warns in the short term, the tremendous changes will take their toll on unprofitable firms -- especially in the state-run sector. As a result, the economy will suffer. /// GONG ACT /// First of all China's trade balance will go down because imports will go up and tariffs will drop. Foreign goods will come in to compete with domestic goods, and China still has deflation going on. That will put even more pressure on China's domestic producers, and you may see deflation get worse next year and unemployment rise. /// END ACT /// Monday's deal, which came after six days of grueling talks, will force China to allow American companies and products into the country on a scale not seen since the Communist system was put in place half a century ago. At the same time, China will have improved access to the U-S market, the wealthiest in the world, worth billions of dollars annually. While the nature of the deal is economic, some analysts are already wondering how it will effect other aspects of bilateral relations and China's overall foreign policy. Martin Lee, an outspoken pro-democracy leader in Hong Kong, is hopeful that the opening of markets will lead to an increase in other kinds of freedoms as well. /// LEE ACT /// I think China's economic reform is on its way towards a fully developed market and economy. And I think one naturally looks at political and legal reform as well. Many years ago Deng Xiaoping said you cannot have economic reform without the corresponding political reform, and I think in some way he must be right. /// END ACT /// Mr. Lee and other experts also say the rule of law in China will also be greatly improved by the trade pact, which will oblige Beijing to follow international laws in areas such as commerce. But the transformations on many levels that will result from the agreement will not be easy or painless, since they will open the door to greater foreign competition and international scrutiny. (SIGNED) NEB/AB/FC/JO 15-Nov-1999 06:04 AM EDT (15-Nov-1999 1104 UTC) NNNN Source: Voice of America .
