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China to make new bid to join global procurement pact in 2014

An usher and a hostess prepare a table for a signing ceremony after a meeting of the 24th China-U.S. Joint Commission on Commerce and Trade at the Diaoyutai State Guesthouse in Beijing, December 20, 2013. REUTERS/Alexander F. Yuan/Pool

By Sui-Lee Wee

BEIJING (Reuters) - China has agreed to make a revised offer to join a global agreement aimed at creating a level playing field for foreign companies competing for government contracts, senior U.S. and Chinese officials said on Friday.

Lack of access has been a sticking point with trade partners since China joined the World Trade Organisation (WTO) 12 years ago.

If China were to join the Agreement on Government Procurement (GPA), it would potentially open $100 billion of government contracts to foreign competition every year, and offer opportunities ranging from building highways to running data networks.

The United States and European Union have found China's past offers of terms for access unacceptable, with Beijing disappointing existing members of the GPA over the amount of business it was ready to throw open.

Michael Froman, the U.S. trade representative, speaking after two days of talks known as the United States-China Joint Commission on Commerce and Trade, said China has "agreed to submit a revised offer in 2014 that would be commensurate on the whole with those other GPA members".

"We are looking forward to seeing the offer and seeing whether it's a system that would consider accession to the GPA," Froman told reporters.

Chinese Vice Finance Minister Zhu Guangyao said that China's bid for the GPA "should be based on mutual respect and equality".

The discussions on Thursday and Friday were the first high-level trade talks between the United States and China since Xi Jinping became China's president in March.

Bringing the world's second largest economy into the GPA would be a huge boost to the agreement. So far only 42 of the WTO's 157 members have joined.

Hitherto, China has resisted calls to include procurement by local governments, which account for 93 percent of total procurement spending, saying it was up to those local governments to decide.

Most public procurement in China is carried out at sub-provincial level and through projects implemented by state-controlled enterprises and financed with public money.

China also agreed to enhance the protection of trade secrets through a high-level action plan and ease market entry barriers by removing regulatory hurdles in the country's product testing rules, Froman said.

"We also had concerted discussions on services and investment liberalization that will benefit foreign companies as new markets are open," he said.

The United States and China agreed in July to restart stalled negotiations on an investment treaty, with Beijing dropping previous efforts to protect certain sectors of its economy from the start.

The United States is engaging in more detailed discussions with China about the requirements of the bilateral investment treaty, Froman said, adding that he could not give a timetable.

But he added: "It's certainly something that is high on their agenda, which they see as an important part of the overall reform effort in terms of opening up their economy to further foreign investment."

China and the United States began negotiations on a pact to govern bilateral investment in 2008, but discussions were put on hold after President Barack Obama took office the following year.

The lack of market access for American firms in China is a major sticking point in trade relations with the United States.

The United States has a massive trade deficit with China, which maintains a tight grip on state-owned businesses. It totaled $315.1 billion in 2012, up $19.6 billion from 2011, according to the U.S. Trade Representative's website.

(Editing by Simon Cameron-Moore)