WASHINGTON - An off-again, on-again trade deal between the United States and China promises major concessions for American automakers who see big growth opportunities in the planet's largest potential market.
In return for the concessions, China would gain support for its bid to join the world economic club.
The deal was in jeopardy after President Clinton met Chinese Premier Zhu Rongji in Washington April 8, but, with vigorous lobbying by U.S. businesses, negotiations were put back on track last week. Talks are to resume in Beijing late this month with a goal of concluding an agreement in June.
China's concessions for the auto industry would include sharp reductions in tariffs on imported cars, trucks and parts; elimination of quotas on imports; freedom to control product distribution; and an end to local content requirements.
'Obviously it's a big part of the world. Obviously it's an area where we can do a lot better,' said Lisa Maher, trade policy director for DaimlerChrysler's Washington office.
Unlike many others in the business community, Maher thinks the Clinton administration was correct not to accept the agreement during Zhu's visit because it was incomplete.
Some of the unresolved issues are ones that are important to the auto industry.
Maher said provisions are needed to allow Chinese consumers to finance vehicle purchases and to allow overseas companies to own controlling interests in joint ventures.
DaimlerChrysler has a 42 percent stake in Beijing Jeep and is not allowed to own more than 50 percent, she said.
Keith Davey, director of Asia-Pacific business strategy and China affairs for Ford Motor Co., said Chinese officials were upset not only by Clinton's refusal to accept the deal April 8, but also by the administration's public announcement of China's concessions while more talks were still possible.
Davey applauded the plan to resume negotiations and said he is hopeful concessions made so far will be in the final agreement. He said they would allow company decisions 'to be made for the good of the business instead of for some artificial mandates.'
China has a national auto policy that spells out nearly every detail of what a company can and cannot do, industry officials said.
Ford is in five vehicle-component joint ventures and has a 30 percent stake in Jiangling Motors, which began producing a small bus and commercial van in December 1997.
China, with nearly five times as many people as the United States but vehicle sales of just 1.5 million a year, remains a market with great potential, Davey said.
CHINA WANTS IN
General Motors officials closest to the China talks were traveling last week and could not be reached, but company spokesmen said GM, which has two Chinese automotive joint ventures, supports getting China into the World Trade Organization 'on a commercially viable basis.'
China wants the trade deal so the United States will back its admission to the 134-nation-member trade organization, a move that would signal China's arrival as a modern economic power.
Such a deal would need approval by Congress, where members from various parts of the political spectrum are upset about Chinese spying and human rights abuses or are concerned that trade agreements cost Americans jobs.
At a White House dinner for Zhu, guests included GM Chairman Jack Smith and Ford Chairman William Clay Ford Jr.