Hard Line on China's WTO Entry Risky for U.S.

As Chinese premier Zhu Rongji leaves the United States Wednesday without a signed deal on the terms for China's entry into the World Trade Organization, the Clinton administration finds itself in a tight spot. The two sides issued a communiqu pledging to continue intensive negotiations to bridge their remaining 5 percent of differences in the days ahead. "But," says TIME senior economics reporter Bernard Baumohl, "you don't normally let an agreement die if you're almost there." And with the Chinese premier here on an official visit, presumably a way could have been found to simply declare an agreement, unless what's remaining is really troublesome. What's bothering the White House is Congress and the textile industry. "The administration does not want to do anything that could fan congressional passions, already aroused over human rights and allegations of Chinese nuclear spying," says Baumohl, "and it is feeling the heat from the U.S. textile industry, which wants to secure more protections from cheap Chinese imports than WTO rules would allow," says Baumohl.

The risks created by these impasses, however, are formidable. On the economic front, "the U.S. business community in general is very excited about the concessions that China has already offered," says Baumohl. "They go beyond what most people had expected." The Chinese have promised to lower a wide range of tariffs and trade barriers, and to permit U.S. companies to invest heavily in a number of Chinese industries. There is fear that if Zhu goes home empty-handed, what has been already been agreed to will be lost. On the political front, says Baumohl, "the U.S. risks losing a Chinese reformer at the helm." Zhu's power base in China is fragile. "If the perception takes hold that Zhu blundered badly by showing nearly all his concession cards in the negotiations without closing a deal," says Baumohl, "he could be sidelined." All of which explains why both sides felt it necessary to issue a parting communiqu that says, Let's just call it a break and talk again real soon.