(C) WTO AFFAIRS DG ON AUSTRALIA FTA, DOHA ROUND,

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 005079

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SIPDIS

STATE PASS USTR
USTR FOR STRATFORD, WINTER, MCCARTIN, DWOSKIN, KLEIN
GENEVA PASS USTR
STATE PASS ELECTRONICALLY TO USDA FAS WASHDC
FAS FOR ITP/SHEIKH

E.O. 12958: DECL: 03/17/2016
TAGS: ETRD WTRO EAGR PGOV EINV CH AS
SUBJECT: (C) WTO AFFAIRS DG ON AUSTRALIA FTA, DOHA ROUND,
AGRICULTURE, MOFCOM REORGANIZATION

Classified By: Minister-Counselor for Economic Affairs Robert S. Luke,
Reasons 1.4 B and D.


1. (C) Ministry of Commerce (MOFCOM) World Trade
Organization (WTO) Department Director-General ZHANG
Xiangchen will travel with Premier Wen Jiabao to Australia on
April 1, and then to Geneva for a WTO Trade Policy Review
meeting on China. He described domestic pressures which
could limit China's flexibility on agricultural issues in the
WTO Doha round. Leadership of FTA negotiations with
Australia are an important but heavy responsibility on top of
his WTO-related work. He briefly discussed further
reorganization of his Ministry and personnel matters therein,
including changes afoot in MOFCOM's Department of Foreign
Investment Administration. Emboffs exchanged views with
Zhang at a recent dinner hosted by a Chinese law firm in
honor of Georgetown University international trade law
scholar Professor John Jackson, the 1973-74 General Counsel
at USTR. End summary.

(U) Minister Bo,s April Travels


2. (SBU) MOFCOM Minister BO Xilai will depart Beijing on
April 1 for Australia, New Zealand, Fiji and possibly other
South Pacific destinations as part of Premier Wen Jiabao's
delegation. DG Zhang will travel with the delegation at
least as far as Australia; Zhang will go to Geneva later in
the month (see para 9). After Minister Bo returns to Beijing
from the South Pacific very briefly, he will depart for the
United States for President Hu,s visit there, and will
continue with his President to any other destinations.
Essentially, Minister Bo will be out of Beijing almost
continuously from April 1 to 28, Zhang said.

(U) FTA Negotiations with Australia


3. (C) On top of his WTO-related work, DG Zhang said the
responsibilities he accepted by leading the Chinese
delegation in Free Trade Area (FTA) negotiations with
Australia had created much additional work. The
responsibility for these FTA negotiations had been shifted
over to him from DDG ZHANG Shaogang of MOFCOM,s Department
of International Trade and Economic Affairs. According to
Zhang Xiangchen, the Australian Government had encountered
domestic criticism of its Free Trade Agreement with the
United States, generating pressure on Australian negotiators
to get right a far-reaching, detailed FTA with China. He
appeared to speak with envy when he told us that Australia
has a dedicated team of fourteen officials working on the FTA
negotiations with China. (Comment: United Kingdom Embassy
officials in Beijing have previously told ECON that DG Zhang
told EU Trade Commissioner Mandelson's delegation that 30 of
the 48 filled positions in his WTO Affairs Department (of a
total of 50 authorized positions) are working on the FTA
negotiations with Australia. That so much of MOFCOM's
resources may be committed to FTA negotiations, whether
full-time or part-time, and not to WTO Doha Development
Agenda issues and negotiations, undercuts higher-level
professions of commitment to a speedy and successful end to
the Doha round, or at a minimum shows that China is willing
to let others carry much of the negotiating load. End
comment.)


4. (C) DG Zhang said that Australia has asked that China
open its market to Australian wheat, sugar and another
agricultural commodity under the terms of the potential
Sino-Australia FTA. Zhang claimed to Emboff that he told the
Australian negotiators he could do this if/if Australia
accepted one hundred thousand Chinese peasants as workers.
He cited the complementarity between labor-rich China and
land-rich but empty Australia and said that movement of
natural persons is an appropriate topic for trade
negotiations. He joked that China would not even ask for
Australian citizenship for the one hundred thousand peasants.

(U) Agricultural Sensitivities


5. (C) At the December 2005 WTO Ministerial Conference in
Hong Kong, the Chinese delegation had been contacted by Oxfam
leaders about the possibility of allowing a popular singer in
Hong Kong entry into China to give one or more free
performances at which Oxfam concerns about the international
cotton trade might be shared. Zhang said the request had
been refused after brief consideration, principally because

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the intended destination for Oxfam and the singer was in
China,s restive northwestern Xinjiang Autonomous Region.
Zhang with some irony said that U.S. cotton subsidies may
have been an underlying cause for Oxfam,s interest in this
issue. We inferred from Zhang's comments some concerns at
the central level about possible organization of farmers on
international trade or any contentious issue. (Other dinner
guests said they thought the referenced singer may in fact
hail from Taiwan, though the singer had made his or her name
in the Hong Kong market; Zhang dismissed possible Taiwan
origins as being any part of the decision criteria on the
Oxfam request.)


6. (C) Zhang further commented that Beijing had taken note
that farmers from many countries had traveled to Hong Kong to
protest globalization, subsidies or other issues on which the
WTO Minister Conference might touch. Beijing had also
recognized that Chinese farmers were not among those
organized for such protests. Following the Hong Kong WTO
Ministerial, Zhang added, "others" in China had criticized
and added pressure on China,s trade negotiators for having
not sufficiently taken into account farmers, interests
(exemplified in part by other nations, protesting farmers)
and having been too casual in making agricultural market
access commitments in past negotiations. (Comment: Does DG
Zhang inform us or attempt to influence us or both? Despite
oft-repeated identification by the USG of common interests
with China in the area of agricultural trade liberalization,
Zhang,s comments suggest that any further China progress on
U.S. agricultural interests will be slow, at best. End
comment.)

(U) Interest in Chinese Participation in Informal WTO
Meetings


7. (C) Zhang referenced informal six-party talks about the
WTO Doha negotiations, which he said are convened in London
and involve the United States, the European Union, India,
Brazil, Australia and sometimes Japan. China has not been
invited to such talks but remains very interested in them.

(U) Vice Minister Ma Xiuhong and Doha


8. (SBU) Emboff recounted a preliminary readout from a
March 9 preparatory meeting in Washington for the April
meeting of the Joint Commission on Commerce and Trade. He
told Zhang his understanding that MOFCOM Vice Minister MA
XiuHong (to whom the Department of American and Oceanian
Affairs reports, but not the WTO Affairs Department) had
bluntly rejected a U.S. suggestion that China and the United
States make a strong statement endorsing a successful and
timely conclusion to the WTO Doha Development Agenda round of
trade talks. Zhang affirmed that Vice Minister Ma is not the
Vice Minister to discuss WTO issues and emphasized Ma,s
strong desire to keep multilateral affairs separate from
bilateral issues. Emboff rejoined that the JCCT presents an
opportunity for both countries to make a strong statement
about Doha when a goodly portion of the world's business and
trade press will be watching for statements, and that the
United States is not asking Vice Minister Ma, MOFCOM or China
to make a new WTO-related commitment in asking for a
statement of support about Doha at the JCCT. Zhang did not
address this rejoinder.

(U) China Trade Policy Review at WTO in Geneva in April


9. (SBU) DG Zhang said his mid-April travel to Geneva is
for the purpose of participating in a WTO Trade Policy Review
examination of China,s trade regime. Mr. HU YingZhi,
formerly with China's Permanent Mission in Geneva and now
back in MOFCOM's WTO Affairs Department, is leading
preparations for China's participation in the Trade Policy
Review. Zhang noted that China,s delegation in Geneva will
likely include officials from the Chinese Embassy in
Washington, and asked whether the American Embassy in Beijing
would be sending officers to the Trade Policy Review meetings.

(U) MOFCOM Reorganization and Personnel Issues


10. (C) Zhang told us that a new Trade in Services
Department is now being established in MOFCOM. The
Department of Machinery and Electronic Products Import and
Export and two other departments are being merged into one.
Mr. HU JingYan, until recently the DG of MOFCOM's Foreign

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Investment Administration, is the new DG of the new merged
department. Mr. YU JianHua, a Deputy Director-General in the
WTO Affairs Department, is widely rumored within MOFCOM to be
taking over as the Foreign Investment Administration DG,
Zhang said on March 11. (Note: Yu had also served as Acting
DG of the WTO Affairs Department during the period of more
than one year in which Minister Bo Xilai did not have a
formal WTO Affairs DG, such as when the usual Acting DG, then
DDG Zhang, was in Geneva or on the road elsewhere. Other
MOFCOM officials have suggested that Assistant Minister YI
XiaoZhun (to whom the WTO Affairs Department reports) had
advocated Zhang Xiangchen's elevation to be DG, while Vice
Minister GAO HuCheng had supported selection of Yu Jianhua.
End note.)


11. (SBU) Zhang and other Chinese guests at the dinner said
it is not uncommon for 400 applications to be received by
central government agencies per vacancy. With such a high
ratio of applicants to available positions, examination and
interview questions have become increasingly difficult or
even strange, and include questions on history. One
question, which often separates those who advance in the
screening process from those who are winnowed out, is, What
would you do if at a meeting your boss makes a big mistake?
The most common -- and wrong -- answer is, I don't think my
boss in a government agency would make a big mistake. The
correct answer on this multiple-choice question is, Pass
him/her a note about the misstep, Zhang said.
RANDT