MNI POLICY: China Advisors Float WTO Developing Status Revamp

     BEIJING (MNI) - The World Trade Organization should revamp its

categorization of member countries into developing and developed nations, two

trade experts advising the Chinese government have said, suggesting that Beijing

could surrender some benefits for manufacturing while keeping others for areas

such as agriculture.

     WTO members should be able to request special treatment on the basis of

their development level in specific areas, said Tu Xinquan, a foreign trade

expert at the Advisory Committee for Economic and Trade Policy of the Ministry

of Commerce, at a discussion on WTO reform at the Center for China and

Globalization on Monday.

     The current system grants easier treatment to all countries classified as

developing, prompting tension between Beijing and Washington, which argues that

China is now too wealthy to be considered a developing nation.

     With WTO reform on the agenda for June's G20 meeting in Japan, China is

willing to reduce subsidies for some industries and assume more responsibility

as a developing country within the WTO framework, MNI understands.

     "In future negotiations members should forget the definitions of developing

and developed countries," Tu said.

     Cui Fan, also an expert advisor for the same MOFCOM advisory committee,

agreed: "We don't need to focus on whether you are a developing country or not,

but rather on negotiating differentiated treatment for specific industries."

     "Maybe in manufacturing industry, China doesn't need specific and

differentiated treatment any more," Cui said. "But in agriculture, China has a

case for maintaining it."

     The same approach could be applied to defining a market economy under the

WTO framework, Cui said.

     "A clever way would be to negotiate on specific trade-related issues, such

as subsidies, focus on subsidies, to introduce more subsidy rules," Cui said,

contrasting this to a mechanism being discussed by the U.S., European Union and

Japan, under which all countries would be judged according to seven indicators

including accounting principles, bankruptcy rules and labour market conditions.

     Cui said China could compromise in some subsidy categories. "China should

improve transparency standards for subsidies. There's much room for China to

negotiate with the U.S. and other countries on this issue."

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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