December 5, 2001	Wednesday	Ramazan 19, 1422

BEIJING, Dec 4: The European Union’s top trade official said on Tuesday China’s WTO membership should not produce a stampede to the global body to resolve an expected rash of “frustrations and difficulties” against China.

EU Trade Commissioner Pascal Lamy rounded off a whirlwind two-day trip to Shanghai and Beijing by calling for closer cooperation with Chinese authorities and EU businesses to ensure full compliance with China’s terms of entry to the WTO.

This contribution, which is so important on your side, would not mean systematically, in my view, dragging China into the WTO dispute settlement procedure at every hint of a problem, Lamy said in a speech to the EU chamber of commerce.

Yes, this might happen, but we should reserve this only to those cases where other courses of action have produced no results, he said.

I believe that it’s much better to take a constructive approach which recognises that given the size of the challenge there are bound to be short-term frustrations and difficulties.

Lamy met Chinese Minister of Foreign Trade Shi Guangsheng and Premier Zhu Rongji earlier on Tuesday to discuss China’s entry to the World Trade Organization on December 11, and the launch of a new global trade round.

Lamy gave no details of his talks with Chinese officials and did not mention a dispute over preferential terms granted to US insurer American International Group, the only foreign insurer allowed 100 per cent ownership of life joint ventures.

But his visit coincided with the issue of a EU chamber of commerce “position paper” outlining problems facing European businesses in China and recommendations for opening China’s market further.

The paper urged the Chinese government to remove all restrictions on EU banks, to let EU automakers set up their own distribution networks and financing companies, and to improve transparency in the information technology sector.

On insurance, it said some foreign insurers still operated under provisional rules drafted in 1992, which allowed AIG 100 per cent ownership of its life business.

AIG argues it should be allowed full ownership of future and existing ventures under the grandfather clause of a deal on China’s WTO entry terms negotiated by the United States.

European insurance firms argue that gives AIG an unfair advantage and violates WTO rules, under which all members enjoy the most favourable terms negotiated by another member.

Lamy said on Monday EU insurers would compete on a level playing field with other foreign firms after China’s WTO entry, including those whose business was grandfathered.

But insurance industry sources said Lamy was simply restating the EU’s position and the dispute had been shelved to make way for China’s accession to the WTO.

Lamy later headed for Moscow where he and EU External Relations Commissioner Chris Patten were due to meet Russian leaders to discuss Russia’s bid to join the WTO and other issues.—Reuters