Violating the W.T.O.

World Trade Organization (WTO)

World Trade Organization (WTO)

In January 1, 2002 after years of debate, discussion and persuasion lasting 12 years, Taiwan has finally been accepted into the WTO and carefully crafted its application by joining under the name “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei).”  The name was often shortened to “Chinese Taipei” or “Republic of China (R.O.C.) – both names resulting from continuous influence and argument from China’s stance as member in the WTO.

Director-General Mr. Mike Moore welcomes Mr. Ching-Chang Yen, Permanent Representative of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu to the WTO. Mr. Yen said that he was looking forward to working with the WTO Secretariat and other WTO Members.

Director-General Mr. Mike Moore welcomes Mr. Ching-Chang Yen, Permanent Representative of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu to the WTO. Mr. Yen said that he was looking forward to working with the WTO Secretariat and other WTO Members.

The Taiwanese government made it a priority to join as a member by taking number of steps prior to accession to remove a variety of tariff and non-tariff barriers.  The government as well agreed to be treated as a developed economy upon attaining membership, a designation that required it to adopt a stricter standard on trade than required of developing economies.  Having negotiated bilateral trade agreements with 26 other WTO members, providing immediate market access and phased-in commitments for goods, services, and agricultural products.

The issues of Membership with U.S. Relations:

It became a major issue during a debate iin the 106th Congress in the U.S.: members expressed concern that China may exert political influence over other WTO members to block the accession or would insert language into China’s WTO accession agreement which expressively stated that “Taiwan was part of China.”  At this time, members urged the Clinton Administration to restate its position on Taiwan’s WTO membership.

Hear No Evil, Speak No Evil, See No Evil, Laugh About Evil

The Clinton Administration Foreign Policy: Hear No Evil, Speak No Evil, See No Evil, Laugh About Evil

How Clinton bashed Taiwan and Why, Fall 1995

In a “low-key” meeting with Shanghai intellectuals on June 30, 1998, President Clinton said the following:

I had a chance to reiterate our Taiwan policy, which is that we don’t support independence for Taiwan, or two Chinas, or one Taiwan-one China. And we don’t believe that Taiwan should be a member of any organization for which statehood is a requirement.

Being a Member of the WTO:

Lets review what being a member of the World Trade Organization signifies for Taiwan.  The international organization that sets rules for most international trade, expects one’s membership to: accelerate trade and economic reforms, boost economic growth, and expand trade with investment links with other WTO members including the United States.

Taiwan is a major economic and trade power as well as a significant U.S. trading partner; a census in 2002 states Taiwan’s GDP as being $289 billion, its total trade: $2432.2 billion; U.S.-Taiwan trade: $50.6 billion – marking Taiwan’s stance as U.S.’s eigth largest trading partner.

Quoting from wiki.nus.edu:

“Since its accession to the WTO, Taiwan’s government has adopted the slogan ‘Variety, Quality and Brand’ to represent a policy under which agriculture is no longer just farming but a combination of technology with corporate management systems.  Today, Taiwan’s agricultural products are known for their diversity and high-end quality.  ‘Made-in-Taiwan’ is now synonymous with ‘world-class.’ “

World Trade Organization and Globalization Help Facilitate Growth in Agricultural Trade

World Trade Organization and Globalization Help Facilitate Growth in Agricultural Trade

Terms of Membershing in WTO:

Taiwan agrees to cut tariffs and remove non-tariff barriers on a wide range of goods over specified time periods – this is how:

  1. Tariffs: Simple average tariffs on agriculture products from pre-WTO level of 20% dropped down to 14% in 2002 and continues to fall down to 12.9% in 2007 when tariff cuts were fully implemented.
  2. Automotive Products: Taiwan agreed to cut tariffs on imported automobiles originally from 30% to 10%, decreased the commodity tax on vehicle imports which eliminated 9% subsidy on those designed in Taiwan, and finally removing a 50% local content requirement for auto parts.
  3. Government Procurement: Taiwan agreed to join WTO’s Government Procurement Agreement (GPA), openning its procurement markets to U.S. products.  Taiwan as well agreed to implement a fairer, transparent contract and dispute resolution system on government contracts.
  4. Services: Taiwan agrees to: open completely a number of service sectors; allow foreign companies to hold controlling interest in Taiwan communications companies, removing barriers for telecommunication services in Taiwan; and provide substantially full market access and national treatment in all ranges of financial services.
  5. Agriculture: Taiwan immediately liberalizes previously closed markets for rice, expands market access for meats, make significant tariff reductions on agricultural products, and eliminate restrictive sanitary and phytosanitary (SPS) regulations.
  6. Intellectual Property Rights (IPR): Taiwan adjusts its IPR protection regime to WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).  (updated version here)

Tariffs on agricultural products remain significantly higher, on average, than tariffs on manufactured goods.

Tariffs on agricultural products remain significantly higher, on average, than tariffs on manufactured goods.

WTO and China-Taiwan Commercial Ties: From 1991 – 2002, total bilateral trade rose from $8.1 billion to $39.6 billion; however in 2002, Taiwan’s exports to China ($32 billion) grew by 35.4% compared to the previous year as its imports from China ($7.6 billion) grew by 30.7%.  Most trade between the two countries are via Hong Kong (free port), however recently, China is a relatively small source of its imports due to Taiwan’s restrictions on imports from China (such as recent tainted milk and lead toxins).

U.S. – China – Taiwan: U.S. policymakers expressed concern over China’s expansion of economic power and Taiwan’s growing economic dependence to the PRC (see also Taiwan’s President, Ma Yin-Jeou), to undermine Taiwan’s autonomy.  A number of Members in Congress voiced support for a U.S.-Taiwan Free Trade Agreement (FTA; visit here for discussion), reducing trade barriers for either parties, thus boosting U.S.-Taiwanese economic relations.  The officials of the Bush Administration indicated support for the FTA, but only once after Taiwan agrees to resolve trade disputes with the U.S., such as Taiwan’s
inadequate enforcement of IPR.  In result, U.S. officials have come to conclusion that a step into the FTAmay take several years to confirm.

Minister of Foreign Affairs Eugene Chien, left, answers questions from legislators as Taiwans representative to the WTO Yen Ching-chang looks on during a meeting of the legislatures Foreign Relations Committee in May 28, 2003.

Minister of Foreign Affairs Eugene Chien, left, answers questions from legislators as Taiwan's representative to the WTO Yen Ching-chang looks on during a meeting of the legislature's Foreign Relations Committee in May 28, 2003.

Cross-Straight Relations Jeopardizes WTO Membership: On January 11, 2009, in an academic conference (organized by the Ministry of Foreign Affairs (MOFA) and the Ministry of Economic Affairs (MOEA)) to discuss Taiwan’s WTO experience, Taiwan’s former permanent representative to the WTO, Yen Ching-chang, said that of in signing of Comprehensive Economic Cooperation Agreement (CECA) between Taiwan and China may not be consistent with WTO principles.

“Despite the current improvement in cross-Taiwan Strait economic relations, the Taiwan government should fulfill its commitment and responsibility as a WTO member before considering a CECA with China,” Yen suggested.

The design of a CECA with China seems to be feasible for two reasons:

  1. The CECA would be increasingly practical compared to a FTA, in light of that the FTAs are signed, limited to only between nations, and China would not likely choose an option that would imply Taiwan’s statehood.
  2. A CECA differs from a Closer Economic Partnership Arrangement (CEPA) in that it would not degrade Taiwan to the level of a local government, following the Hong Kong and Macao model; though the [two] agreements are called by different names, their contents are equally similar.

According to Yen, if under possibility that China offers Taiwan preferential treatment under the CECA, excluding other WTO members, it would ensure a result of anger and alienation in the WTO.  As Taiwan (unlike Hong Kong and Macao), accounts for 1.65 percent of the global trade volume, and as of 2008, stands as the world’s 17th largest economy.  If a recent proposal for China and Taiwan to sign a Memorandum of Understanding (MOU) occurs, an effect would pave the way for financial services firms from either parties to operate in the other’s markets; saying this would greatly impact on Taiwan and China’s responsibilities and commitments to the WTO.

The United States, European Union (EU), Japan, Canada, just to name a few among many WTO members whom have long complained on lack of openness in the Chinese financial market.

I do not think such a memorandum would materialize, as it is unlikely that China would betray its commitment and responsibilities to the WTO by offering Taiwan preferential treatment and open access to its financial market,” Yen said.

It is of significant importance that the economic cooperation in the parties of the Taiwan Straight be consistent with regulations and principles of the WTO; he stressed that both sides seeking mutual economic benefits through agreements that are inconsistent with WTO regulations would result in dire consequences for Taiwan.

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~ by Lan on 2008 MonUTC2009-01-12T12:49:28+00:00. 15.

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