China's Trade Hostage

At his recent meeting with Asian leaders, President Clinton made news by meeting with China's president and once again calling for a rapid conclusion of China's long march toward membership in the World Trade Organization. But despite the presidential cheerleading, as 2000 runs out there are increasing doubts as to whether China will complete the membership process this year; in some circles, there are even questions about the level of China's interest in WTO membership.

There is no doubt, however, that the "other China"--Taiwan--is ready to join. The United States and the rest of the WTO have effectively given Beijing a veto over Taiwan's membership--a veto that increasingly works against U.S. interests.

For more than two years, Taiwan has waited patiently for membership in the organization. It has agreed to shoulder all of the trade disciplines applied to developed countries. Taiwanese officials have systematically negotiated bilateral agreements to address key concerns with interested WTO members. Early in the application process, Taiwan even headed off diplomatic tensions by applying for membership as the customs territory of Taipei rather than as the Republic of China.

Why, then, is Taiwan not already a WTO member? The delay has nothing to do with concerns over international trade policy--the ostensible focus of the WTO. All WTO members seem to agree that Taiwan is qualified for membership and has offered a significant package of trade concessions to more than earn the right to join the WTO. Beyond that, there is consensus that Taiwan maintains an impressive market economy, has a good record of keeping international commitments, and would generally be a positive addition to the organization.

The only reason Taiwan is not already a WTO member is that Beijing has opposed its membership based on its expanding interpretation of the so-called one-China policy. Obviously, this is a bold stand for a country that is not itself a WTO member, but the WTO has thus far been willing to yield to the People's Republic of China. China has reportedly agreed not to oppose Taiwan's WTO membership assuming that it--China--was allowed to join first.

Although this bargain is strange and somewhat offensive in principle, it seemed acceptable, since Beijing finally appeared ready for WTO membership a year ago. Unfortunately, as is often the case with diplomacy with the People's Republic, the deal was not as complete as it seemed. In the past year, Beijing has dragged its feet in negotiations and has seemed to back away from--or try to redefine--the agreement that seemed nearly complete in late 1999. China has even raised some concerns about Taiwan's application. The result is that membership talks with Beijing may well continue for some considerable time.

The delay of Taiwan's application has been too long. Taiwan's membership should be pursued expeditiously, regardless of Beijing's application. It is incumbent upon the United States, as the most influential member of the WTO, to take the lead in this effort. Surprisingly, the United States actually exports more to Taiwan than to the PRC. In 1999 U.S. exports to Taipei were $ 6 billion greater than exports to Beijing. In 2000, U.S. exports to Taiwan are running ahead of the 1999 pace. Once Taiwan becomes a WTO member, the resulting cuts in Taipei's trade barriers should result in dramatic increases in U.S. exports of products from agricultural produce to semiconductors.

What's more, the United States worked hard to build the WTO into an organization capable of applying trading rules and arbitrating disputes in a credible manner. Allowing the People's Republic of China to turn the WTO into yet another forum to battle over its pet political issue risks undermining the credibility of the WTO and undermining what the United States and other members of the organization have achieved.

This matter is bigger than Beijing's feelings. China should be allowed to join the WTO once it agrees to meet its requirements, but it should not be allowed to block Taiwan's membership for fear of being embarrassed. The People's Republic has already been given more than enough opportunity to join the WTO and save face on this matter. Certainly, it will be difficult to win immediate WTO membership for Taiwan, but it's time for the United States to throw its energy into the task for the sake of Taipei, the WTO and itself.