Jan 12, 1990

TAIWAN'S APPLICATION FOR GATT MEMBERSHIP BEING CIRCULATED.

GENEVA, JANUARY 11 (BY CHAKRAVARTHI RAGHAVAN)ó The GATT Director-General, Arthur Dunkel, is expected to circulate to the Contracting Parties over the next few days the application from Taipeh to accede to the General Agreement.

The application from Taipeh has been submitted on behalf of the "Customs Territory" of the four islands of Taiwan, Penghu, Kinman and Matsu. Taipeh has also sent in a memorandum of its trade regime.

Though the application has sought quick actions to enable Taiwan to join GATT before the conclusion of the Uruguay Round, the issue bristles with such political and other problems that no early action or solution can be expected, particularly since it is clear that the People's Republic of China will be opposed to this.

The PRC's own application to "resume" its Status as GATT contracting party is pending before a GATT working party, and action on this has been slowed down after the 1989 Tiananmen Square Suppression of the "pro-democracy" movement.

GATT delegations say that the PRC, in anticipation of the application from Taipeh, has been quite active in lobbying the membership against any separate status for Taipeh.

Very few countries recognise the Taipeh regime, whether as the "government of Taiwan" or as the "Republic of China" which Taipeh still claims to be, but in recent periods has been abandoning in practice.

Taiwan's application has been made under Article XXXIII which provides that "A government not party to this Agreement, or a government acting on behalf of a separate customs territory possessing full autonomy in the conduct of its external commercial relations and of other matters provided for in this Agreement, may accede to this Agreement, on its own behalf or on behalf of that territory, on terms to be agreed between such government and the Contracting Parties. Decisions of the Contracting Parties under this paragraph shall be taken by two thirds majority".

Under normal GATT procedures, any application is brought before the GATT Council, which acts for the Contracting Parties in between their annual sessions, and is referred to a working party to examine the application and the trade policy regime and recommend the terms and conditions an which accession is to be granted.

The Council itself functions on the basis of consensus. The PRC is not a member, but only an observer. But it has enough friends in the Third World who are council members, who will take a political view.

In the past, in relation to the China question (though posed in terms of which government can represent China - the People's Republic of China based on the mainland or the Republic of China based on Taipeh), on two occasions the Contracting Parties have specifically affirmed that the issue is a political question, and hence to be resolved or decided by the UN General Assembly, and that GATT should abide by these decisions.

On 21 December, at his year-end press conference, GATT Director-General Arthur Dunkel had noted that as far as the United Nations was concerned, Taiwan was a province of China and any application from Taiwan was "a legal problem that had to be solved or conceded".

Dunkel's remarks were made before GATT received the formal application on January 1. But Taiwan's intention to apply for accession had been widely known and reported.

The cleverly-drafted application, dated 1 January and addressed to the GATT Director-General, has been sent on the letter-head of the "Ministry of Economic Affairs" in Taipeh and signed by the "Minister of Economic Affairs", Chen Li-an.

But it does not mention anywhere the "government" (Taiwan? Republic of China?) which is seeking the accession on behalf of the separate customs territory of the four islands, though Chen talks of "my government" having full autonomy in the external commercial relations of this "territory".

The latest application raises such political issues that it is not likely to be on the agenda of the next meeting of the GATT Council, which is set for January 25.

The "Republic of China" under Chiang Kai-Shek was an original signatory of the General Agreement and a contracting party. After it fled to Taiwan, following the revolution on the mainland, the ROC remained a CP, until it withdrew in 1951 (at U.S. instance) in order to deny the PRC any privileges of GATT in export of goods.

In 1965, the Taipeh regime applied to become an "observer" and was granted such status, at which time the Contracting Parties (while acceding to the request) agreed to "follow decisions of the United Nations on essentially political matters".

In 1971, when the UN General Assembly seated the People's Republic of China as the legitimate representative of China at the UN, the GATT CPs acted in November of that year to withdraw the "observer" Status of the ROC and expelled the KMT delegation.

On that occasion too, the CPs reiterated the position that the problem was essentially a political one and the CPs should follow the decision of the General Assembly.

In 1965, the friends and supporters of the PRC protested at this; and in 1971, the KMT delegation and Supporters of the Taipeh regime including the U.S. and seven others either disassociated themselves from the "consensus" or protested.

Since then, the U.S. has established diplomatic links with the PRC, and many of the others have close political and economic ties with Beijing, which in terms of medium to long-term perspectives is a market with large potential.

The status of Taiwan and the Taipeh regime are undoubtedly "essentially political matters".

Both the PRC and the Taipeh regime have long resisted the idea of both being recognised and seated. This has been done in the Asian Development Bank only on the condition that Taiwan uses the name "Taipeh-China".

In a paper presented at a seminar in West Berlin last September, Prof. Arthur K. Yeh Vice-President of the Institute for National Policy Research in Taipeh has noted that Taiwan's negotiations for acceding to GATT and the conclusion of bilateral agreements with the CPs in accordance with GATT practice "would be tantamount to recognising each otherís sovereignty", and GATT membership would provide "a legal basis" for Taiwan and other CPs "to have official relations with each other and therefore help enhance their diplomatic ties".

The letter from Taipeh (with a memorandum on the nature of the Trade regime), signed by Minister Chen, states that "my government" has decided to apply for accession to GATT on behalf of the customs territory of Taiwan, Penghu, Kinmen and Matsu. It affirms that the government is fully autonomous in the conduct of external commercial relations of the separate customs territory of the four islands, and is now prepared to take up further obligations and responsibilities under the Multilateral trading system of which GATT is the cornerstone. The letter also affirms the Taipeh government's willingness "to follow normal procedures" on basis of which the Contracting Parties consider and establish the terms of accession.

In this perspective the letter has asked the Contracting Parties to take steps to "integrate the territory which is the 13th trading partner in the world" and to initiate the relevant procedures under Article XXXIII as soon as convenient to permit their completion before the end of the Uruguay Round.

The letter has also asked that the memorandum on the trade regime should also be circulated to all the contracting parties. But this is not expected to be done until a decision is taken on the handling of the application. Even normally, such memoranda are circulated only after a decision referring the application to a working party.