The 1990s have been a time of change and achievement for Taiwan (a.k.a. the Republic of China). Politically, Taiwan has undergone a dramatic transition from an authoritarian government to a true democracy. On the economic front, Taiwan has continued to grow and prosper. With a 258 billion dollar economy, Taiwan has established itself as the world’s twelfth largest trading power. Taiwan has a multi-billion dollar annual trading relationship with the United States, Japan, Germany, Korea, France and a number of other countries. Taiwan is a producer of advanced manufactured products from semiconductors to computers to steel.
Taiwan has also tried to establish its own "international space" in its complex relationship with mainland China. The decades long dispute over the status of Taiwan in relation to the People’s Republic of China (PRC) has impaired international recognition and participation in international organizations for Taiwan. Without taking provocative steps, however, Taiwan has tried to establish an increased presence in international organizations, such as the Asia Pacific Economic Council (APEC) and the World Health Organization (WHO). Through most of the decade, one of Taiwan’s most important objectives in this regard has been to secure membership in the world trading system, now represented by the World Trade Organization (WTO).
In many ways, WTO membership is a logical step for Taiwan. First, membership in the WTO does not necessarily require recognition of the party joining as an independent state. For example, Hong Kong joined the world trading system in 1986, though it was at the time under the control of Great Britain on territory leased from China.1 Second, given its trading success, Taiwan is already recognized as a responsible trading partner by most countries and extended most of the benefits of WTO membership. After some negotiations, there is now wide consensus that Taiwan is qualified for WTO membership.
As is the case with so many international issues involving Taiwan, the PRC complicates matters. For more than thirteen years,2 the PRC has itself been trying to join the WTO, but there have been numerous problems. Ongoing disputes with many important WTO members and a trading regime that did not meet WTO standards, has kept the PRC outside the WTO. There has been significant progress in recent talks between the United States and the PRC which may lay the groundwork for PRC WTO membership in the not too distant future. Still, PRC accession remains less than certain. Unfortunately, the PRC has attempted to link its WTO membership to that of Taiwan. There is no precedent for such a linkage under the WTO and most major countries have, at least publicly, repudiated the linkage. Still the PRC insists that it should be allowed to join the WTO before Taiwan. Even though it is not a member of the WTO, the PRC may be able to convince some of its close allies in the WTO to act on its behalf to slow Taiwan’s membership.
Despite these hurdles, Taiwan has succeeded in having a WTO working party formed to consider its application and completing bilateral negotiations with all members of the working group. Shortly, the working group could close its work and send the package for Taiwan’s membership to the larger WTO General Council for a final vote on membership.3 To provide some perspective on these upcoming events, this monograph seeks to trace the history of the issue, examine the results of the WTO accession negotiations with Taiwan, and estimate the likely economic impact of Taiwan’s membership on the economies of Taiwan’s trading partners.
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