U.S. says China's exemption demands jeopardise WTO technology deal

By Tom Miles

GENEVA (Reuters) - The United States accused China on Thursday of jeopardising talks on eliminating trade tariffs on billions of dollars of technology products due to its determination to claim dozens of exemptions.

The talks are aimed at expanding a 16-year-old World Trade Organization agreement and updating it for the internet era, cutting the import cost of a long list of items such as personal computers, laptops, telephones, fax machines, computer software, semi-conductors and many office machines.

"China's refusal to show more ambition in product coverage under the WTO's Information Technology Agreement is disappointing for all of the countries, companies, and workers who stand to benefit from an expansion in information technology trade," U.S. Trade Representative Michael Froman said in a comment issued from Washington.

About $4 trillion in trade is covered by the current pact, according to the Information Technology & Innovation Foundation, a Washington think tank that estimates an expanded agreement could cover $800 billion in additional trade.

Chinese officials were not immediately available to comment on Thursday. China has not publicly explained its sensitivities about the deal nor its demand for lots of exemptions, but officials have said they regret other members' decision to hold up the talks on account of China.

U.S. technology groups said in May they were optimistic about getting the deal sewn up by July. But China later weighed in with a list of 130 products that it deemed "sensitive", and hence worthy of exemption from the 256 items under discussion.

China has cut back its list of sensitive items several times since and removed another eight on Monday, during two weeks of intensive talks aimed at resolving differences in time for WTO ministers to sign off on the pact when they meet for a conference in Bali in early December.

China is still seeking exemptions on 59 items.

"Rather than heading toward a meaningful agreement at the WTO Ministerial, this puts the talks at serious risk of breaking down altogether and raises questions about China's commitment to meet the standards of negotiations in which it seeks to participate," Froman said.

China's concessions are only partial: instead of agreeing to duty-free trade in sensitive products, it has moved them to a list of tariffs that are to be phased out, often over a time frame as long as a decade, one diplomat involved in the talks said.

Ambassadors from countries involved in the negotiation will meet on Thursday in a last-ditch attempt to deal with the latest position from China, the diplomat said.

"It's really just about one country not doing what it takes to do this deal," the diplomat said. "You need to have the critical mass on board. You can't have free riders."

The agreement's original membership has grown to 78 over the years, including the 28 nations of the European Union. That is less than half of the WTO's 159 members, but still encompasses about 97 percent of global trade in the products.

(Editing by Hugh Lawson)