SLOW BOAT TO CHINA

SLOW BOAT TO CHINA

hina's 14-year effort to join the World Trade Organization hit another snag last week: an inconclusive end to talks with the European Union on the terms of its membership.

After four days, EU negotiators left Beijing with no firm plan to continue discussions. The Chinese, who despite their hard bargaining want the market access and global acceptance that go along with WTO membership, put out word that a ''basic agreement'' had been reached. Not so, said the EU. Issues that previously seemed settled had been reopened, and EU delegates saw no point in sticking around.All this is a normal part of the theatrics of trade negotiations. There's every chance an agreement will be reached at the 11th hour, just as it was last November, when the Chinese made final concessions as the U.S. trade team was heading to the airport.

But last week's snag in the EU-China talks shows just how much is at stake for all concerned, and suggests the EU has a significant contribution to make in opening China's potentially vast market.

Before the EU-China talks began in January, analysts made a great deal of the fact that 80 percent of the EU's trade interests had already been satisfied by the Sino-U.S. deal. Quite so: The U.S. team gained access for exporters to a wide range of Chinese markets, as well as significant equity sharing rights for foreign participants in joint ventures.

But that left the 20 percent of trade issues of specific interest to European companies, and the catalog is far from trivial. The EU came in with a long tariff-reduction wish list involving products of which it exports more than the United States, including ceramics, glassware, cosmetics, leather goods, cheese and spirits, among others.

The EU also wanted greater access for its insurance and banking industries and wider opportunities for its cellular telephone companies. Specifically, it wanted China to allow foreign operators of cellular networks to own 51 percent of joint ventures, while Washington was satisfied with 49 percent ownership rights.

Under the WTO's most-favored-nation principles, concessions granted to one partner will be granted to all, once a country is admitted. Thus, the EU was free to take China's concessions to Washington as a given, and push for more.

Yet in some ways the EU talks are simpler, because Brussels approaches them with considerably less political baggage than Washington. The EU's interest in these talks is straightforwardly and properly commercial. It is focused on industries in which the EU would benefit from market opening; it is not tangled up in debates over whether WTO accession should be linked to political change.

The Clinton administration, in contrast, has been forced to carry out its China trade policy with a loud noise of political axe-grinding in the background. Human rights activists push for Chinese commitments to civic reforms. Environmentalists and labor advocates demand that China agree to meet their standards.

More recently, special-interest defenders of Taiwan are trying to block the November trade agreement because China threatened to attack its island neighbor unless there is faster progress toward unification.

In the face of these pressures, President Clinton has promised an all-out effort to win congressional approval of the China deal. He is going ahead despite tepid support from his own vice president, who is busily playing both sides of the issue to win votes.

As Clinton pointed out last week, the groups trying to block normal trade relations with China miss a fundamental point: Trade deals help to open closed societies as well as closed markets. Closer engagement in global trade would encourage Beijing to follow a path of political liberalization to match its economic reforms.

Moreover, Chinese membership in the WTO would open valuable markets for foreign exporters and investors, just as most Western markets are now open to Chinese goods. That is advantageous for Western companies and their workers, as well as for China, which would be forced to modernize its economy and would benefit from an infusion of new technology and capital.

China, for all its human-rights failings and its threats against Taiwan, has been transforming its economy toward a market-based model for the past 20 years. But its liberalization is woefully incomplete. Chinese authorities, particularly at the local level, have a disturbing tendency to renege on agreements, including in some cases forcing foreign companies to withdraw from joint ventures and delaying repatriation of the proceeds.

This is as good a reason as any to push for further liberalization, backed by membership in a rules-based organization with enforcement mechanisms in place.

Europe is on the right track to bargain hard with China but remain focused on commerce. The United States, which reached a landmark deal with China last November, should keep up the fight on its end, to avoid losing its hard-won China deal to election-year politicking by special-interest groups.