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China considers FTA with H.K., Macao.

HONG KONG, Nov. 28 Kyodo


China is seriously considering establishing a free trade agreement (FTA) with Hong Kong, and also possibly with Macao, to strengthen their economic cooperation and mutual benefits, a senior Chinese trade official said Wednesday.

Taiwan, which Beijing sees a part of China and an important trading partner, will not be included in the plan at present because of a political stalemate between the two sides and of no commitment for direct trade and transportation links from the island authorities, said Long Yongtu, China's chief representative for trade negotiations.

Long said that Hong Kong Chief Executive Tung Chee-hwa has made a proposal to Beijing on forming an FTA between the territory and the mainland.

''Since China has already been admitted to the World Trade Organization (WTO), we should now actively study a new model that will be consistent with WTO rules and help strengthen the mutual economic cooperation between the Chinese mainland and Hong Kong,'' Long told reporters here.

''We are actively considering such a proposal. We feel that such a proposal will bring closer economic ties between the two sides and produce positive results,'' the Chinese official said.

Long made the remarks as a Beijing-backed Hong Kong newspaper, Wen Wei Po, reported Wednesday that China is mulling an FTA with Taiwan, Hong Kong and Macao.

''From the viewpoint of the Taiwan authorities, they would think of the political obstacle. On the matter of three direct links (with China), they don't give any commitment. Thus it is difficult to discuss (with Taiwan) such an issue,'' Long said.

He saw no problem for Macao to be included in such an FTA between Hong Kong and the Chinese mainland as the former Portuguese enclave was returned to Chinese rule in 1999 under the principle of ''one country, two systems.''

Hong Kong, a former British colony, rejoined China in 1997.

Earlier Wednesday, at a session of the 14th general meeting of the Pacific Economic Cooperation Council (PECC) held here, Long also told participants that China should take a ''very positive attitude'' toward the proposal of a new kind of economic and trade relationship between China, Hong Kong and Macao.

''I am very open-minded to that,'' Long said.

He cited the North American Free Trade Agreement between the United States, Canada and Mexico, and the European Union as examples when asked how China will carry out Chinese Premier Zhu Rongji's proposal to establish an FTA between China and the 10-member Association of Southeast Asian Nations, while implementing its WTO commitments.

''If China becomes part of the WTO, why could China not follow the examples of other WTO members and get involved in negotiations on a free trade agreement?...If you can do an FTA, why not China?'' Long said.

''We still believe that a multilateral system represented by the WTO is the best choice. But if other WTO members take some other options, China will follow, because if China becomes part of you, we should behave like everybody else,'' he said.

China will formally join the WTO in December, and Taiwan in January.

Separately, WTO Director General Mike Moore told reporters on the sidelines of the PECC meeting that bilateral trade negotiations can be good and can be stepping stones toward a multilateral system.

But Moore also warned of the dangers of substituting the multilateral arrangement with bilateral and regional agreements as the latter systems could exclude most marginalized and poorest WTO members.

''Everybody wants to do a deal with North America, Japan, China or Europe. Who wants to do a deal with some more vulnerable members?'' Moore said. ''I believe the multilateral system will be successful.''
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Publication:Asian Political News
Date:Dec 3, 2001
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