China Trade: Cautious Hope

By

EIJING and Washington are poised on a trade precipice.

Either way Beijing steps, it has the rapt attention of its No. 1 trading partner. So which way is it leaning? International trader or isolated power with 22 percent of the world's population?

The answer vacillates between two poles representing China's disparate interests: Is China more fearful about damage to its most significant trade relationship - which last year produced nearly $40 billion in exports to the United States? Or is China potentially so big that if one market gives out, it is confident it will find others?

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In the meantime, Washington is waiting for Beijing's response to its invitation to resume talks to resolve US copyright, trademark, and patent issues.

US businesses estimate they are losing upward of $1 billion annually in bootlegged goods sold within China and to Chinese markets. If negotiations are not resolved, US Trade Representative Mickey Kantor vows to bring sanctions against up to $2.8 billion in Chinese goods. His own deadline is Saturday, unless talks resume. The United States Trade Representative (USTR) has barked, and now he says he intends to bite.

While time is short, a plausible case can be made for cautious optimism. The ``wild card'' is the apparently declining health of Deng Xiaoping and the possibility of a succession.

Three reasons support a position of cautious optimism.

First, the USTR's deadline is this Saturday - but nearly a four-week grace period follows before sanctions kick in. That gives Beijing flexibility.

Second, United States administration officials are reporting progress in the talks, which, up until last month, had produced little if anything fruitful. Beijing is indicating a willingness to deal with its customs operation, its market access for music and software, and its implementation of existing antipiracy laws.

Finally, there is a general feeling in Beijing that China now has its best shot in 300 years at becoming a major power. Significant differences separate the old guard and the new, but they agree on China becoming strong, rich and powerful, says David M. Lampton, president of the New York-based National Committee on US-China Relations.

If China is to be rich, and powerful, it must embrace fair- trade principles and the rule of law. Then the issue becomes one of timetables, Beijing's or Washington's, especially when it comes to enforcing its own copyright law.

The carrot here may be that China wants to be a founding member of the World Trade Organization (WTO), the successor to the General Agreement on Tariffs and Trade.

Although the WTO talks and the trade negotiations are not linked, similar intellectual property issues inform both. That means Washington would be hard-pressed to stand in China's way if the bilateral talks succeed.

The issues are clear-cut for the Clinton administration. US businesses are losing substantial sums because of illegitimate sales of the popular Microsoft for Windows, CDs, and films.

Likewise, this is one area where the administration can take heart that Republican critics will be hard-put to find fault. It also offers the chance to breathe new life into the strategy of uncoupling trade policy and human rights in China. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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