Fran O'Sullivan: China starting to step into US trade shoes

Chinese Commerce Minister Bo Xilai finally broke into English as he lightly pounded the arms of his chair and emphasised the big tariff cuts China had made since entering the WTO were "comprehensive" and "high-quality".

The patriotic delight he takes in pointing out how his "developing country" is living up to the tough conditions imposed on it by the "developed world" when agreeing to China's accession to the WTO five years ago is palpable.

So too, the understated way in which he urges the European Union and the United States to wipe their trade-distorting agriculture subsidies so that the Doha development agenda can be realised.

The contrast between our initial formal interview (the "first" Bo has given with a Western journalist since his appointment as Commerce Minister) and our fourth meeting in Auckland this week is marked.

Bo's polish is again evident as is his easy command of a brief which aides suggest is the result of well-honed "workaholic" habits. Habits which Chinese officials suggest will stand him in good stead if he emerges as a candidate for one of China's vice-premierships next year.

This time, the interview is conducted almost entirely through an interpreter (unlike our first discussion which ran well over time and was frequently punctuated by enthusiastic bursts of English), a marker of the sensitive stage reached after the request by WTO director-general Pascal Lamy for China to take a more direct role in getting the global talks revived; the negotiations on a free-trade deal between New Zealand and China, now in the technical stage; and increased domestic sensitivity within his homeland about the impact of speeding up agriculture liberalisation than what was provided for within WTO accession protocols.

Bo said while it was "regretful" to see the suspension of WTO talks in July, China could understand Lamy's tactic. "Various parties can be urged to look at what they might lose if the round does fail."

Bo, one of several high-profile trade ministers on Lamy's calling card in recent weeks, is confident Doha will be relaunched "with a final result".

He emphasises that President Hu Jintao and Premier Wen Jiabao have called for an early resumption of talks and have instructed the Commerce Ministry to play a constructive role. But he said China could never be "the leader" in bringing talks to an end. "I think the Chinese Government has been positive - though not frequently talking about what we have done - we have been supporting very well.

"On the focal issue of agricultural export subsidies, we do not have such a problem at all and we don't have domestic support."

He points out China's agricultural tariff rates are well below developed country averages, the tariffs for industrial goods have been lowered and the country has already opened trade in 104 of the 160 services sectors within the WTO compared with the 108 (on average) opened by developed nations - "we have cut our tariffs by a large amount in an earnest and tangible manner".

He says: "I not only appreciate but also feel proud of the performance and courage demonstrated by opening up. During the course of the DDA negotiations, China seldom debated with anyone but we are making our tangible and realistic push.

"If we can have more countries like China willing to act, I believe we have a promising future for the global trading system.

"The DDA can be achieving its success early on if the United States and European Union can copy and reach comparison with us."

Paradoxically, it is China - still a communist giant but increasingly playing by capitalism's rules - that is beginning to occupy the shoes the US wears as the world's global economic integrator. It is China, which Bo says embraces "a determined and firm courage in embracing free trade as a general policy", that is taking such matters further while protectionism rears its ugly head in the US.

Bo related how it took courage on China's part to jump into the "river of free trade" by joining the WTO. Former premier Deng Xiaoping had advised to just "close our eyes and jump into the river" and confront the risks.

The China-New Zealand free trade talks have not attracted as much controversy as parallel negotiations in Australia. Much of the detail has been kept secret as the New Zealand side, at times, appears "more opaque" over its negotiating position than the "China side".

There is clearly still some distance between both sides at the technical level as officials prepare for the ninth round. Bo - flanked by his trade officials - was careful not to disclose too much of China's stance on some tricky issues.

But he did say China has concerns over New Zealand's request for a "most favoured nation" clause to be inserted in the free trade agreement. The "MFN" in essence would protect the preferential position New Zealand's negotiators might achieve in trade in goods and services with China from being trumped by other developed countries in future negotiations.

Bo says while New Zealand has outlined its position, China has "some discrepancies and differences on this".

Neither side is supposed to elaborate on those differences through news media. "Too early coverage may be detrimental to negotiation process because, once made public, it may be difficult to change the wording."

Chinese officials had earlier suggested New Zealand should be happy with a "trust me" type arrangement. If China grants New Zealand an MFN clause, bigger countries will want them. It will be easier for China to cut small New Zealand a preferential deal if it can be contained.

China's request for a "movement of natural persons" clause so that its skilled labour can compete for project work in New Zealand has caused sensitivities here.

Bo suggests issues around trade in goods and services have to be worked through but remains confident the goal set by Wen and Prime Minister Helen Clark in April to complete talks within one to two years can be achieved.

He notes agriculture products are "pretty sensitive to a lot of countries across the world" - even including those well- known developed countries - while New Zealand is "jolly competitive" (even globally) - "a big farming country and an ancient one of its kind".

China's problem is that it has 714 million farmers who are "no match for your country" in agriculture-related infrastructure, production skills and processing capacity.

"Despite that it is still our willingness and happiness to try and get some positive results in the field of agriculture and trade in services to interest of New Zealand and to give the New Zealand side more favourable policy entry."