U.S. Commerce Secretary William Daley says "serious disagreements" will slow a China trade deal, despite expectations that a pact would be reached next week.
Daley is in the middle of a trade mission helping telecommunications companies and other firms establish a foothold in China. U.S. Trade Representative Charlene Barshefsky is also present for what officials earlier called "final negotiations" for China's entry into the multinational World Trade Organization (WTO).
Some U.S. officials had hoped to have a trade deal signed by next week, when Chinese Premier Zhu Rongji visits for a summit meeting with President Bill Clinton. But Daley warned that there might have been too much "hype" surrounding that artificial deadline.
"We have made great progress," Daley said of the WTO negotiations. "But I think expectations that a deal will be done before the Premier's visit might have been too high. These are difficult issues, we have serious disagreements in a whole host of areas."
Technology and telecommunications companies are watching the talks closely. Many U.S.-based firms have long seen the rapidly growing Chinese market as a huge source of potential profits, but government regulations have made entering the lucrative markets all but impossible.
China's market is currently closed to telecommunications service providers, and companies like Sprint and Bell Canada have set up complicated joint ventures with Chinese firms to skirt these rules. But last year China officials declared these ventures "irregular," casting the future of the deals in doubt.
Tomorrow, Daley will hold a telecommunications-focused mini-summit with Chinese leaders and representatives of telecommunications companies.
Daley said earlier in the week he is optimistic that the WTO negotiations would give U.S. companies the right to own between 30 percent and 40 percent of Chinese telecommunications firms directly, ending the uncertainty over the foreign ventures.
The Commerce Secretary's visit also has been a boon for equipment manufacturers. Chinese officials said Monday that they would expand trials of the U.S.-backed CDMA wireless technology, good news for companies like Lucent and Motorola.
The Secretary said he hoped to have more announcements on mobile phone technology following tomorrow's summit, and said he would be discussing e-commerce and market access issues with the telecommunications officials.
Meanwhile, Daley said that Chinese trade officials are worried about the growing criticism of their country in the United States.
"Officials are concerned that there is a growing anti-China mood," Daley told reporters today. "There is a concern [in China] that there is a certain group of media and political people who would like to see us go back to a cold war situation."
Daley said he told the officials, as he has reporters, that the United States is committed to a policy of engagement with China on trade and other issues.
"We hope that [talks] move forward with the WTO," he said. "If it doesn't we will have to move on with China discussing some of our bilateral disagreements."