WSJ: EU May Push for Break-Up Of Chinese Tobacco Distribution Monopoly

[Robert Weissman <rob@essential.org>]

Note the following excerpt:

The EU will also have its own agenda on tariff reductions, for example, on
cosmetics and agricultural machinery, which loom large in EU-China trade.
An EU official familiar with negotiations said the EU might also push
harder than the U.S. to break up China's tobacco-distribution monopoly, an
area where the U.S. has been reluctant to exert pressure because of
domestic political opposition to tobacco.

Robert Weissman
Essential Information			|   Internet:	rob@essential.org


November 16, 1999
China Trade Breakthrough
U.S.-China Trade Deal Sets Stage
For Similar Agreement With EU
By GEOFF WINESTOCK
Staff Reporter of THE WALL STREET JOURNAL


BRUSSELS -- The European Union welcomed the U.S. deal with China on the
terms of China's entry into the World Trade Organization, saying the
agreement was a major step toward a future deal with the EU.

The EU said it has a common position with the U.S. on "80%" of its
negotiating agenda with China and it now wants to talk to China about the
other 20%, in order to solve disputes on issues including increased access
in the insurance sector and tariff cuts on cosmetics and agricultural
machinery.

Anthony Gooch, spokesman for European Trade Commissioner Pascal Lamy, said
the U.S. and the EU had closely coordinated their positions for the past
two years. "Given that 80% of the deal is common to both sides, it's
logical that we work together," Mr. Gooch said.

Mr. Gooch says the European Commission, which runs EU trade negotiations,
wants China to join the WTO "as soon as possible" and is waiting for
details of the U.S.-China deal before restarting bilateral talks on the
conditions for China's entry into the 134-member trading organization.

Mr. Gooch said that China was unlikely to formally join the WTO before the
start of the next round of talks on world trade liberalization at a
meeting in Seattle on Nov. 30. "It will take a number of months," he said.

The EU's special trade concerns with China include liberalization of
service sectors such as banking, insurance, distribution and
telecommunications. Some of these issues are also part of the U.S.
package, but it isn't clear whether Europe will be satisfied with the
details worked out by the U.S.

The EU will also have its own agenda on tariff reductions, for example, on
cosmetics and agricultural machinery, which loom large in EU-China trade.
An EU official familiar with negotiations said the EU might also push
harder than the U.S. to break up China's tobacco-distribution monopoly, an
area where the U.S. has been reluctant to exert pressure because of
domestic political opposition to tobacco.

However, one sector where the EU and the U.S. are bitter rivals is
insurance, where EU companies resent the dominant position that they say
China has handed to U.S.-based American International Group Inc.

Jacques Leglu, assistant secretary general of the European Insurance
Council, an industry lobby group, said that AIG used its negotiating power
with the Chinese leadership to secure a wide franchise while European
companies faced limits on geographical spread and the number of offices.
Mr. Leglu said EU insurers wanted equal national treatment before China
joined the multilateral trading system.

The EU official who took part in talks said the U.S. and the EU cooperated
closely, especially during the past year. He said China tried but failed
to investigate gaps between the U.S. and the EU in such sectors as
telecommunication and banking.

Although the U.S. now has concluded a separate deal, the EU official said
this wasn't a problem for the EU. "It was always understood that at some
stage or other, one of the parties would break away to cut a bilateral
deal," he said.