China Expected to Honor Insurance Commitments for WTO Entry

As far as the United States is concerned, any final agreement to admit China into the World Trade Organization depends on whether the country honors its bilateral market access commitments on insurance. According to Reuters, the U.S. not only expects China to honor its commitments, but it believes the pledges China made to the U.S. will apply to all WTO members.

Chinese Premier Zhu Rongiig has identified insurance as the last hurdle to clear in order for China to be admitted to the WTO. One remaining issue is whether the U.S.-based American International Group Inc. (AIG) would be able to retain 100 percent ownership of any new China insurance operations.

Reuters said China negotiated an earlier agreement with both the European Union and the U.S. that established a general 50 percent limit on foreign ownership of insurance firms in China. However, since AIG has a long operational history in China, the U.S. negotiated a “grandfather clause” in a 1999 bilateral agreement that allows AIG to keep its existing wholly owned branches in the China.

EU officials said Beijing had assured them at a recent EU-China summit that American insurance firms opening new operations in China would not be treated any better than European companies after China is allowed into the WTO. The Europeans insisted that the best terms negotiated by any foreign entity in China should apply to all foreign operators in the country.

U.S. negotiators said commitments on insurance made by China as part of its bilateral accession agreement with the U.S. should be incorporated into China’s WTO accession and would apply to all WTO members.

China could fulfill a 15-year ambition and become a WTO member during the first quarter of 2002. A final session of talks on Chinese membership is to be held in Geneva this month and ministers from all WTO countries could formally approve the terms of China’s ambition.