Taiwan's WTO hopes hemmed in as China balks

Taiwan's WTO hopes hemmed in as China balks

TAIPEI (Reuters): With the prize finally within reach, Taiwan's nine-year-old quest to enter the World Trade Organization now faces its biggest hurdle -- rival China's estrangement from the world trade club.

Taiwan negotiators have hammered out bilateral trade pacts with 24 of the 26 WTO signatories that sought such deals, which are key to any applicant's membership, including the United States, Europe and Japan -- the WTO's powerful gatekeepers.

Two remain: Canada and Hong Kong. Taiwan officials say there should be no problem inking a deal with Canada in the near term as Ottawa generally follows Washington's trade cues.

They are less sanguine about signing with Hong Kong, whose 1997 transition from British to Chinese sovereignty gave Beijing an ideal tool with which to stall Taiwan's WTO accession.

"We have reached agreement with Hong Kong, but so far the pact has been left unsigned, and you know why," said a senior Taiwan economic official who declined to be identified.

"It's sad to say that political rather than economic factors get in the way," he said.

China has regarded Taiwan as a renegade province since 1949, when the Chinese Nationalist government, defeated by communist forces on the mainland, fled into exile on the island.

Significantly, a diplomatic embargo by Beijing that has prompted much of the world to sever ties with Taiwan does not extend to WTO membership. But Beijing opposes Taiwan's accession before China's own, presumably because this would afford Taipei a measure of leverage to keep China out.

"If Hong Kong stalls the signing we will be unable to obtain a green light from the WTO working party even if we have signed pacts with all other WTO members," the official said.

Taipei has said it is unfair to force Taiwan to defer to China, as Taipei has worked hard to comply with WTO open-market standards accepted by most developed nations, although some key concessions won't take effect until Taiwan actually enters.

"We think any applicant must be given accession once it complies with all WTO membership requirements," Economics Minister Wang Chih-kang said in February. "There shouldn't be any exceptions or other considerations."

Taiwan applied to the WTO's predecessor, the General Agreement on Tariffs and Trade, in 1990 and won observer status in 1992.

Now Taiwan faces of the prospect of more waiting as China digs in its heels in its own difficult bilateral accession talks, chiefly with the United States.

Since late 1980s, China has sought WTO entry on the lenient terms offered to developing countries, but Western members say its economy and exports are too big to merit concessions.

Recent days have brought talk of a possible Sino-U.S. trade breakthrough that might enable Premier Zhu Rongji to sign a WTO deal during a planned April visit to Washington.

U.S. Commerce Secretary William Daley said on Saturday he was hopeful for a deal, but U.S. Trade Representative Charlene Barshefsky has cooled expectations, calling progress very slow and seeing "no discernible change" Beijing's position.

Taiwan has had some success in efforts to change the widely accepted understanding that China must come first.

In July, U.S. deputy trade representative Richard Fischer told Beijing Taiwan's bid would not be tied to China's entry.

WTO director-general Renato Ruggiero, too, has said Taiwan's bid did not hinge on China's. "At the WTO we are not, fortunately, ruled by political principles," he said in May.

Analysts nonetheless say politics is key to who comes first and that senior Washington diplomats surely would cite Taiwan's advanced state of readiness to squeeze Beijing for concessions.

"Obviously, politics has a main role in the issue," said Tu Chaw-hsia of the Chung Hwa Institution for Economic Research.

U.S. Deputy Treasury Secretary Lawrence Summers told Beijing on Tuesday that accession would only get more difficult if China waits too long. Secretary of State Madeleine Albright and trade chief Barshefsky were expected to give similar messages in talks this week with senior officials in Beijing.