August 1, 2000

Trade and politics don't mix

China is trying to use the WTO to score political points against Taiwan

John R. Bolton, National Post, Canada

Beijing has introduced an explosive political issue into the World Trade Organization's consideration of the pending membership applications for China and Taiwan. Although not directly challenging Taiwan's application, the People's Republic of China (PRC) is now attempting to condition Taiwan's WTO entry on accepting the long-standing PRC position that Taiwan is part of "China." If the PRC's insistence on this seemingly innocuous bit of nomenclature were to prevail, it would mark a significant victory in its campaign to assert sovereignty over Taiwan. Moreover, such a politicization of the WTO could gravely damage this already shaky new organization.

The WTO is intended to be purely a trade organization, divorced from political questions that should be handled elsewhere. Trade issues themselves are often intractable, and introducing political or other non-trade issues might bring the entire WTO process to a halt. Thus, neither the WTO nor its predecessor (the General Agreement on Tariffs and Trade, or GATT) require members to be "states" in international terms, but only "customs territories." Under this approach, Hong Kong, for example, is a WTO member, even though it is indisputably part of the PRC.

Taiwan is also on track for admissions as a "customs territory," thus avoiding, for WTO purposes, the issue of Taiwan's international political status. When the accession process for Taiwan and the PRC was launched in late 1992, all agreed that the underlying political disputes would be put aside, consistent with GATT's limited focus on trade. Under that arrangement, the PRC was to enter WTO slightly ahead of Taiwan, which would become a member under the name "Chinese Taipei." At that point, the PRC, Hong Kong and Taiwan would all be full members as "customs territories," with the political issues to be fought out elsewhere.

The PRC's interjection of the political status issue into the WTO admissions process now was obviously calculated in Beijing. Washington's first reaction was that the PRC might have endangered the PRC's quest for Permanent Normal Trade Relations (PNTR) with the United States, which is still pending before Congress, awaiting a Senate vote in September, and the Clinton administration, to avoid unrest in Congress, stated that it opposed the PRC effort. Significantly, however, Deputy U.S. Trade Representative Rita Hayes also said publicly that the 1992 arrangement was still in place, and that "China is going to live up to its commitments," something the PRC itself has not yet acknowledged. To the contrary, China's Deputy Trade Minister, Long Yongtu, responded ominously: "the One China policy is a matter of principle for us."

In fact, the PRC is trying to advance its political agenda in a non-political forum, rather than directly trying to keep Taiwan out of the WTO (although that might be the practical consequence). Because the trade negotiators, business interests and lawyers who inhabit the WTO world are relatively isolated from the larger political issues, the stakes will not appear to them as high as they really are. Mere questions of "nameplates" seem insignificant compared with "important" questions like PRC agricultural export subsidies (on which, not coincidentally, the PRC is also now backtracking).

This is a familiar tactic in international organizations. The undisputed master is the Palestine Liberation Organization, which for years attempted to enhance its international status by campaigning for membership in such bodies as the World Health Organization, which requires that members must be "states" in international parlance. By so doing, the PLO hoped to create "facts on the ground" in its negotiations with Israel, and enhance its bargaining position. Although the PLO was blocked in its campaign to join the WHO in 1989, its efforts at least briefly created chaos within the UN, from whose members the PLO hoped to extract political or other concessions, even if it did not achieve the ultimate objective of full membership.

Just as there is nothing so unedifying as the sight of health ministers attempting to resolve international political questions, also unappetizing is the notion of trade officials negotiating the status of Taiwan. The PRC will doubtless offer "compromises" on its initial demand, and insist that Taiwan's subsequent unwillingness to give way is the real source of the "problem." Trade officials, like their health ministry counterparts faced with PLO intransigence, will hail the PRC "concession," and pressure Taiwan to accept what would otherwise be flatly unacceptable. This is the PRC's real strategy, and Ms. Hayes' enthusiastic embrace of the Chinese view shows Beijing has carefully measured its marks in the Clinton administration.

But the fundamental point is that, as with the PLO, it is the PRC's approach that is illegitimate, not Taiwan's. It is China that is breaching the non-political nature of the WTO by inserting this entirely political question, and Taiwan that is defending the WTO's integrity by resisting. The people being intransigent here are from Beijing, not Taipei. If the United States and others succumb to the PRC's ploy, not only will Beijing likely succeed against Taipei, but it will also have severely damaged the WTO's ability to withstand pressures to consider other extraneous, non-trade issues, such as labour standards and the environment, to name just two.

Here is where Congress must declare the PRC's manoeuvre is unacceptable, and that there is no compromise on this point. This is a real trade issue, not one of human rights or weapons proliferation, and one that therefore is directly related to PNTR status. Congress should insist, before granting PNTR, that the PRC drop all political objectives in the WTO. It should also insist that the President himself ensure that U.S. diplomats are not seduced by Chinese "reasonableness," and not allow the 1992 accession agreement to be subverted.

John R. Bolton is the senior vice-president of the American Enterprise Institute. During the Bush administration, he served as the assistant secretary of state for International Organization Affairs.