Mr. Chairman and Members of the Committee:
It is a pleasure to appear before you this morning to discuss issues relating to the proposed accession of the Peoples Republic of China (“PRC”) and the Republic of China on Taiwan (“ROC” or “Taiwan”) to the World Trade Organization (“WTO”). I have a prepared statement that I will summarize, and submit for the record, and I would be happy to answer any questions that Members of the Committee might have.
On February 21 of this year, just a month before Taiwan’s presidential election the PRC released an 11,000 word white paper reiterating Beijing’s position that it reserved the right to use military force in order to reunify Taiwan with the Mainland. Indeed, the white paper announced that Beijing would consider military force permissible merely if Taiwan, in the PRC’s view, unjustifiably delayed talks on reunification, a major escalation of the threat level against the ROC. (Previously, Beijing had said that invasion would be justified if Taiwan explicitly declared independence from the PRC, or if Taiwan was occupied by a foreign power.) Although the United States rejected this PRC assertion, and although many believed that it backfired on Beijing in the ROC election, the white paper unquestionable represented a major escalation of international pressure by the PRC against Taiwan.
Accordingly, since at least early this year, many have worried that the PRC would not adhere to the terms of the initial agreement under which both PRC and ROC applications to the General Agreement on Trade and Tariffs (“GATT”) (and now in GATT’s successor organization, the WTO) would be treated effectively in tandem. When criticisms of the white paper were raised in the United States, just a few days after its release, the PRC reacted angrily to any suggestion that its military threats against Taiwan should be considered in connection with Congressional deliberations over Permanent Normal Trade Relations (“PNTR”) status for China. PRC Foreign Ministry Spokesman Zhu Bangzao said: “Taiwan is purely an internal matter of China. Taiwan is an indivisible part of Chinese territory…….. Zhu said: “we view the white paper and the issue of normal trade relations as two entirely separate issues,” and that China “firmly opposes any attempt to link these issues.” The March 18, 2000, election of Chen Shui-bian as Taiwan’s President, and the effective demise of the “one China” policy reflected in the broad popular consensus on the island, have only exacerbated those fears.
Until the successful conclusion of the requisite bilateral negotiations between the PRC and the United States, the European Union, and other major trading partners, the issue of Taiwan’s accession pursuant to the original “understanding” had not received prominent attention in Washington. Just recently, however, Beijing has explicitly introduced the explosive political issue of Taiwan’s political status into the WTO’s consideration of the pending membership applications for China and Taiwan. Although apparently not directly challenging Taiwan’s application, the PRC is 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, both in the United States and in the world as a whole.
The WTO is intended to be purely a trade organization, divorced from political questions that should be handled bilaterally or in other international organizations. 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 GATT, requires members to be “states” in international terms, but only “customs territories” that have effective control over customs policies within their geographical territories. Under this approach, Hong Kong, for example, is a WTO member, even though it is indisputably part of the PRC. This is an entirely salutary approach (and was long followed in the GATT context), one that is it in the long-term interests of the United States, and one that we should work hard to preserve. It clearly differentiates questions of WTO membership from membership in the United Nations, or the UN’s specialized and technical agencies, which almost invariably limit membership to “states” as understood under “customary international law.”
Taiwan is also currently on track for WTO admission as a “customs territory,” thus avoiding, for WTO purposes, the flammable 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, once all of the requisite bilateral and multilateral negotiations were successfully completed, the PRC was to enter GATT (and, subsequently, the WTO) slightly ahead of Taiwan, which would in turn become a member under the name “Chinese Taipei.” At that point, the PRC, Hong Kong and Taiwan would all be full WTO members as “customs territories,” with the still- unresolved political issues to be fought out elsewhere.
The PRC’s interjection of the disruptive political status issue into the WTO admissions process now was obviously carefully calculated in Beijing. Washington’s first reaction was that the PRC might have endangered the PRC’s quest for PNTR with the United States, which the Senate is still considering. To avoid unrest in Congress, the Clinton Administration correctly 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 that 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 well be the practical consequence). Because the trade negotiators, business interests and lawyers who inhabit the ATTO world are relatively isolated from larger international political issues, the stakes will not appear to them as high as they really are. Mere questions of name cards” seem insignificant compared to “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 (“PLO”), which for years attempted to enhance its international status by campaigning for membership in such bodies as the World Health Organization (“WHO”), which requires that members must be “states” in international parlance. By so doing, the PLO hoped to enhance its international status (or at least the perception of that status, which may be nearly the same thing), and thereby create “facts on the ground” in its negotiations with Israel, thus bolstering its bargaining position.
The PLO began this effort in 1988, by declaring its “statehood,” and changing the name card in front of its desk at the UN from “Palestine Liberation Organization” to “Palestine…… Palestine,” of course, sounds much more like a “state” or at least a geographical entity than something with the word “organization” in its name. This name change the PLO could accomplish unilaterally, but membership in UN specialized agencies required affirmative votes of the existing memberships. Accordingly, in late 1988 and early 1989, the PLO began a massive diplomatic campaign to secure both diplomatic recognition, as well as the necessary majorities in international organizations. Although the PLO was blocked in its campaign to join the WHO in 1989, for example, its efforts at least briefly created chaos within the UN system, from whose members the PLO hoped to extract political or other concessions, even if it did not achieve the ultimate objective of full membership. (I have attached a brief description of the WHO controversy as an Appendix to this testimony.)
Even after its unsuccessful efforts in the WHO, the PLO tried similar, and ultimately unsuccessful approaches in a number of other international organizations. One of its last efforts to enhance its status was in the UN General Assembly. There, the PLO proposed that its desk on the floor of the UN General Assembly be physically moved closer to the location of the desks of the observer states (Switzerland and the Holy See), hoping thereby to pretend that it too was an observer state rather than an observer national liberation movement. One might say, correctly, that such apparent trivialities should not impinge on truly important policy issues, but, sadly, in international diplomacy almost nothing is too trivial.
The lesson of the PLO experience for the United States is that maintaining the non-political nature of specialized and technical international agencies is highly worthwhile, but that it is even more beneficial to strive to prevent them from becoming venues of political conflict in the first place. Even successfully opposing efforts to use such agencies for political purposes, such as in the PLO case, can impose significant costs on the organizations by diverting them from their underlying missions, and by setting adverse precedents that are often not easily overcome later. Moreover, the PLO example also demonstrates how seemingly arcane points of argument can assume enormous significance if not handled properly when they arise. Finally, had it not been for the leading role played by the United States in opposing the PLO, it almost surely would have succeeded in its quest for UN membership, with untold adverse consequences for the Middle East peace process and the UN system itself. The fact remains that, absent concerted American leadership and diplomacy, disruptive political agendas have a far higher chance of success in technical organizations, a point we cannot ignore in the present discussion.
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 political 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 predictably hail the PRC “concessions,” and pressure Taiwan to accept what would otherwise be flatly unacceptable. This is the PRC’s real strategy, and Deputy USTR Hayes’ enthusiastic embrace of the Chinese view shows that 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, in effect, defending the WTO’s integrity by resisting. The people being intransigent and uncooperative 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 labor standards and the environment, to name just two. Certainly the past few years have shown us just how vulnerable the WTO is to such pressures, and it would be irresponsible not to take the implications of Beijing’s ploy seriously.
Here is where Congress must declare unequivocally that the PRC’s maneuver is unacceptable, and that there is no possible 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, and specifically that is should not attempt to derail Taiwan’s accession, or attempt to extract political leverage from the process. It should also insist, in the Clinton Administration’s waning days, 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.
Senator Kyl’s proposed amendment would go a long way toward achieving this objective. Because of the Administration’s weak defense of the original WTO understanding” on PRC and ROC accession, Congress has little maneuvering room if it wishes to take up the slack. The Kyl amendment attempts to overcome that problem, not by undercutting the granting of PNTR status to China, or by introducing extraneous non- trade issues, but simply by calling on China to adhere to its original agreement on the sequence of accession to the VY70 for both the PRC and “Chinese Taipei.”
The amendment is a limited and prudent step, and one that should not derail or unduly delay the PNTR process. There is no inconsistency between the Kyl amendment and a position fully supportive of free trade and the WTO. To the contrary, in order to preserve the WTO as a non-political body, Congress would do well to consider the long- term benefits for the WTO that would accrue by supporting what could be an important and precedent- setting declaration of Congressional intention to insulate the WTO from extraneous political debates. Whatever one’s position on PNTR, or on other amendments concerning PNTR that have been proposed, the Kyl amendment should be considered on its own merits as a genuine effort to expand the legitimate membership of the WTO, enhance trade opportunities for Americans, Chinese and Taiwanese alike.
Mr. Chairman, thank you again for the opportunity to testify today, and I would be pleased to answer any questions the Committee may have.