EU-China WTO Talks End in Failure
DAVID HAFFENREFFER, CNN ANCHOR: The European Union and China have failed to come to an agreement regarding China's entry into the World Trade Organization. For a closer look now at why the talks broke down and the prospects for future deal, we go to Hugh Carnegy, world news editor of the "Financial Times" in London. Thanks for joining us, Hugh. What do you think of the situation?</s>HUGH CARNEGY, WORLD NEWS EDITOR, "FINANCIAL TIMES": It's a pleasure. Well it's interesting isn't it? Pascal Lamy, the EU trade commissioner, is flying back to Brussels without a deal. He says he needs more time to consult with his commissioners and with, presumably, the EU governments about a deal. And so, for the time being, there is a bit of a holdup on China's road back into the WTO on the European side, as well as, of course, the continuing debate there is in the Congress on your side of the pond.</s>HAFFENREFFER: Is there any indication as to what issues were at the center of the breakdown?</s>CARNEGY: Yes. We understand that it's over EU demands that majority-control should be allowed for joint ventures for foreign companies investing into, for example, telecoms and insurance and other areas in China, which the Chinese are very sensitive about. The other area is duty levied on imports of motor vehicles. And the interesting thing here is that the Europeans seem to be pushing for more than the Americans settled for, and the Chinese are very reluctant to go down that route. The Americans settled for a transitional period in which duty on motor vehicles imported into China would go down 25 percent over time. It looks like the Europeans are pushing for a greater concession than that. Of course, levels at the moment of duties are over the 80-percent mark, and the Chinese are digging their heels in on this, so we have a bit of an impasse, at least for the time being.</s>HAFFENREFFER: Well, that impasse, can it get last forever? Or -- obviously, China wants in. Are they likely to be the first ones to bend?</s>CARNEGY: Good question. The Europeans are signaling on their side that this is not a complete breakdown in the talks, it's more like a pause. There had been a lot of optimism earlier in the week, which has led people to take this fairly hard, this breakdown now. But the signals on both sides are that they do want a deal. I think that what was interesting at the end of the round of talks that got the breakthrough agreement with America -- with the U.S. side in November, was that the Chinese Prime Minister Zhu Rongji got involved, and then the final deals were hammered out. And it could be that this has to step up a level on the Chinese side, too, to get the final deal hammered.</s>HAFFENREFFER: OK, thanks for your insights. Hugh Carnegy from the "Financial Times" on this Friday morning. Have a good weekend. Search CNN.com CNNSI.com CNNmoney.com The Web