Strings attached to China deal

By Greg Ansley

CANBERRA - China has agreed to sweeping reductions in import barriers for key New Zealand export commodities in exchange for membership of the World Trade Organisation.

Under a deal brokered in Beijing by the Australian Trade Minister, Tim Fischer, China will lift import volumes and cut tariffs on a wide range of goods, including wool, wool tops, animal products, sheepskins, processed food and seafood. China has already agreed not to pay agricultural export subsidies.

If it is admitted, the agreement signed with Australia will be extended to all other members of the WTO, including New Zealand.

"These are bilateral accession negotiations, but under the deal we've entered into, China then has to offer all members of the WTO the same conditions upon accession," Mr Fischer said.

But the agreement, worth hundreds of millions of dollars a year to Australia in extra sales, will come into force only when China is admitted to the WTO - a prospect increasingly in doubt as Sino-US relations plunge in the wake of the Belgrade Embassy bombing and espionage claims.

"I just hope that the substantive trade negotiations between the US and China will resume quickly enough and that the geopolitical intrusion will evaporate ... and will be separated out so that we are focused on the WTO membership," Mr Fischer said.

"I'm quietly confident that China will enter into the WTO ... in time for the millennium round of trade negotiations.

"At the end of the day we're talking trade and trade deals and [the US position of Chinese WTO membership] is run by the business establishment of the US, notwithstanding the other difficulties intruding.

"Chinese Premier Zhu Rongji's [American] visit clicked with the US commercial interests and at the end of that visit US business was calling on the White House to sign, to accept the agreement Zhu offered.

"So I think there is a degree of momentum which will be reflected in the Congress in respect of this - but there is a way to go."

The in-principle agreement signed by Mr Fischer included significantly higher import quotas for crops such as wheat, sugar, rice, cotton and barley, with lower tariffs to be cut further over a five-year period.

No quotas will apply to imports of meat, dairy products and other foods, but they will be subject to tariffs of 12 to 15 per cent.

Global import quotas were set at 242,000 tonnes for wool and 65,000 tonnes for wool tops for 2000, with in-quota tariffs of 1 per cent for wool and 3 per cent for wool tops. Higher tariffs, of between 20 and 50 per cent, will apply to imports of commodities above quota levels.