Commentary

Politics and Trade

This essay was distributed nationally by Copley News Service.
The changing of the political guard will soon be under way in Washington. Despite disquiet in many foreign capitals, few dramatic changes in U.S. policy are likely.

One area where a new direction is desirable is China. Not necessarily policy toward the People’s Republic of China, which is better treated as friend than enemy. Although future developments in the PRC remain uncertain, engagement is more likely than isolation to encourage China to be a responsible international player.

The incoming Bush administration should, however, suggest dropping the implicit veto granted the PRC over Taiwan’s admission to the World Trade Organization. With China lagging behind, there is no justification for holding up Taipei’s membership application.

Beijing applied to the old General Agreement on Trade and Tariffs in 1986. Negotiations were suspended between 1989 and 1991, in the aftermath of the Tiananmen Square killings. The application was then transferred to the WTO in 1995.

Also passed along was Taiwan’s application, pending since 1990. Taipei’s problem stems from not human rights abuses, but an uncertain legal status.

When Mao Zedong triumphed on the mainland in 1949, the vanquished Chiang Kai-shek fled to the island of Taiwan, raising the banner of the Republic of China. Both states claimed to be the sole legitimate Chinese government; the PRC eventually won the diplomatic struggle, gaining official recognition from the United States and other leading Western states.

Taiwan remains the true international economic powerhouse, however. In 1999, the island nation of 23 million was the world’s 14th largest exporter and 15th largest importer. China ranked higher ninth and 10th, respectively but only because it possessed 60 times the population.

Equally important, Taipei already sports a market economy. Indeed, it was Taiwan’s dramatic economic progress that reportedly caused PRC supreme leader Deng Xiaoping to push reform on the Chinese mainland. Beijing has moved far, but still has far to go.

However, the PRC contends that there is only one China, of which Taiwan is properly part of. It, therefore, opposes Taiwanese membership in organizations that require statehood, a stance formally backed by the United States.

To leave Taipei out of the WTO, however, would make a mockery of the organization. So, a modus vivendi was arranged: Taiwan applied as the customs territory of Taipei and China would join first. Then, Beijing would not object to Taiwan’s entry.

Taipei has concluded negotiations with individual WTO members and adopted many of the organization’s rules. Moreover, the WTO staff has finished most of the accession documents. But, still, Taiwan waits because still China tarries.

The PRC passed what seemed to be its most important barrier to joining the WTO with congressional approval of permanent normal trading relations. Beijing has also been negotiating with other countries and the WTO staff to satisfy the organization’s entry requirements.

Yet, points out Greg Mastel of the New America Foundation, recently ”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.” Whether that reflects factional infighting, reconsideration of the costs of liberalization or a negotiating tactic is unclear.

But, the unfairness to Taiwan is clear. The incoming Bush administration should suggest that the WTO inform China that it is time to expeditiously wrap up its work by, say, June or Taiwan comes in first.

As Mastel points out, America would benefit from Taiwan’s accession. The United States exports more to Taipei than to China; the reduced trade barriers promised by the WTO would likely increase U.S. exports of food, semiconductors and other goods.

There is even more at stake, however. The WTO will work best if it operates based on objective rules rather than political favoritism, especially involving a country not yet a member.

Moreover, the PRC needs experience with the rule of law to establish a freer economy and society. The WTO provides the international community with an opportunity to apply that lesson to China.

Finally, Taipei deserves a diplomatic boost. There is a dangerous undercurrent to the occasionally bitter contest between Beijing and Taiwan.

Over the last century, the latter has established a separate identity, which the PRC could recognize with no loss. But, nationalism drives even Chinese expatriates to justify the use of force to establish Beijing’s sovereignty over the island.

The United States and other nations should avoid the confrontation that would inevitably result from a formal Taiwanese declaration of independence. Nevertheless, they should signal their support for the status quo the most important aspect of which is Taiwan’s separate existence, even if not formally recognized as an independent country.

The WTO’s official purpose is economic, not geopolitical. Both China and Taiwan should become members. But, if one lags, there is no reason to delay the other.

Doug Bandow is a senior fellow at the Cato Institute.