WTO Sets China Entry Date Without Resolving AIG/EU Dispute

If all goes according to plan in Geneva China’s bid to join the World Trade Organization will be officially accepted next Thursday, September 13th, after 14 years of negotiations. Taiwan is scheduled for admission the following day.

The next step in the process would be a formal acceptance of China’s application by the 142 WTO members at their next scheduled meeting in Qatar in November. China’s parliament also needs to ratify the deal. Once that’s accomplished China would formally join the WTO 30 days later.

The Chinese must be confident that everything will go well, they’ve already set up their trade mission in a new modern office building on Lake Geneva. Once China’s markets are open many companies, including insurers, see increased business opportunities in the world’s most populous country.

The sole remaining obstacle continues to be the dispute between the U.S. and the EU over American International Group’s China operations (See IJ Website, Sept. 5). AIG issued a statement on Wednesday stating that it “had firm assurances from China that AIG will not be required to reduce ownership of any of AIG’s existing 100 percent-owned insurance operations in China.” The U.S. government has also backed its position.

While Europeans seem convinced that any future expansion by AIG in China will be subject to the 50 percent ownership limitations imposed as part of the WTO negotiations, AIG seems equally confident that its existing ownership rights will be respected. It concluded its statement by saying that it was “confident that its expansion rights will be satisfactorily resolved in the course of China’s final accession to the WTO.”

It seems likely, however, that, barring a truly Solomonic decision, the dispute will continue to cause problems even after China becomes a member of the WTO.

Topics Europe China AIG