The Magazine

Beijing's WTO Double-cross

Surprise! China is trying to keep Taiwan out of the World Trade Organization

Aug 14, 2000, Vol. 5, No. 45 • By JOHN R. BOLTON
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THE World Trade Organization, inaugurated in 1995, has had a much rockier beginning than anything experienced by its less-structured predecessor, the General Agreement on Tariffs and Trade. A bitter early leadership struggle between developed-country and less-developed-country members of the WTO resulted in an uneasy compromise that satisfied neither side. Then, in Seattle last year, protectionists, environmentalists, and left-wing crazies turned a WTO ministerial meeting into a circus reminiscent of the 1960s.

More seriously, environmental and labor groups are attempting to hijack the free trade mission of the WTO and turn it into another all-purpose international regulatory body, imposing rules and standards on member governments. Not only has this threat not receded, it is on the verge of becoming orthodoxy within the Democratic party, as part of the price Vice President Al Gore may have to pay to consolidate his political base in the fall presidential campaign.

As if all of this weren't bad enough for free trade generally and the WTO in particular, Beijing has turned the question of Taiwan's admission into an explosive political issue. Both China and Taiwan have applied for membership in the trade body. Beijing, though it has not directly challenged Taiwan's entry, is attempting to condition it on Taiwan's accepting what has long been the position of the People's Republic of China: that Taiwan is part of "China." Were Beijing to prevail, it could claim a significant victory in its campaign to assert sovereignty over Taiwan, and would gravely damage the already shaky WTO.

As a trade organization, the WTO is intended to be divorced from political questions. Thus, neither the WTO nor before it GATT required its members to be "states," but only "customs territories." Hong Kong, for example, is a WTO member, even though it is indisputably part of the People's Republic of China. Similarly, Taiwan is on track for admission as a "customs territory," avoiding the flammable issue of its international political status. This was agreed when the accession process for Taiwan and the People's Republic began in late 1992. Under that arrangement, the People's Republic of China was to enter the WTO slightly ahead of Taiwan, which would become a member under the name Chinese Taipei -- a full member alongside the PRC and Hong Kong, all of them "customs territories," with the political issues to be fought out in other arenas.

Officials of the Clinton administration (which opposes Beijing's ploy out of concern for the Senate vote coming up in September on permanent normal trade relations status for China) profess to believe that "China is going to live up to its commitments" under the 1992 arrangement. Ominously, however, when deputy U.S. trade representative Rita Hayes made this assertion, China's vice minister of foreign trade, Long Yongtu, responded: "The one China policy is a matter of principle for us."

In fact, Beijing is trying to advance its overtly political agenda in a nonpolitical forum. This is a familiar tactic in multilateral organizations. The Palestine Liberation Organization has for years attempted to enhance its international status by campaigning for membership in such bodies as the World Health Organization, whose members must be "states." By so doing, the PLO has hoped to create "facts on the ground" in its negotiations with Israel, and so enhance its bargaining position. Although the PLO has not succeeded (so far), its efforts have disrupted the U.N. system, from whose members the PLO extracted political or other concessions.

Just as there is nothing so unedifying as the sight of health ministers attempting to resolve international political questions, the notion of trade officials negotiating the status of Taiwan is thoroughly unappetizing. Yet it's easy to see how it can happen. Questions of "nameplates" seem insignificant to trade negotiators, compared with serious matters like agricultural export subsidies (on which, unsurprisingly, the PRC is also now backsliding). Beijing will doubtless offer to "compromise" from its initial political demand, then insist that Taiwan's unwillingness to give way is the real source of the "problem." Trade officials will hail the PRC's "concession" and pressure Taiwan to accept what would otherwise be flatly unacceptable. This is Beijing's real strategy, and Deputy U.S. Trade Representative Hayes's enthusiastic embrace of the Chinese view shows that Beijing has carefully measured its marks in the Clinton administration.