China's trade minister has reassured European Union officials that American insurance companies will not get preferential treatment in China.

The pledge could remove the last obstacle to agreement on the final draft of documents detailing the terms of China's entry to the World Trade Organisation (WTO).

Trade minister Shi Guangsheng gave the pledge to EU trade commissioner Pascal Lamy at a meeting on the fringes of the EU-China summit in Brussels.

Their talks centred on a dispute over the terms granted to American insurance giant AIG.

Early advantage

As an early entrant to the Chinese market, AIG has long had 100% ownership of some of its branches there.

Under WTO entry terms, foreign insurers will only be allowed to own 50% of their China branches, with the balance held by a joint venture partner.

Mr Shi said China will apply the agreement equally to all overseas insurers.

He said AIG has agreed to abide by WTO entry terms "and it is China's intention to fully apply them", said Mr Shi.

Escalation or solution?

He did not spell out what this mean for AIG, so it remains possible his remarks could inflame the row rather than ease it.

United States trade negotiators have pressed hard for AIG to be allowed to keep its existing ownership arrangements but EU officials view this as unfair.

Mr Lamy raised the EU's concerns in a meeting with Mr Shi on the sidelines the Brussels summit between Chinese Prime Minister Zhu Rongji and European Union leaders.

The WTO hopes to endorse China's accession at its ministerial meeting in Doha, Qatar, in November, bringing the gavel down on 15 years of talks.