Taiwan's accession to the WTO and its economic relations with the United States and China.

Summary

After several years of negotiations, Taiwan joined the World Trade Organization (WTO), the international organization that sets rules for most international trade, on January 1, 2002. Taiwan's WTO membership is expected to accelerate trade and economic reforms, boost economic growth, and expand trade and investment links with other WTO members, including the United States. WTO accession by both Taiwan and China (which joined in December 2001) could expand their bilateral commercial ties as well. In an effort to further boost U.S.-Taiwan economic ties (and to lessen Taiwan's growing economic dependency on the mainland), some Members of Congress have indicated support and proposed legislation (H.Con.Res. 98) for a U.S.-Taiwan free trade agreement (FTA). This report will be updated as events warrant.

Taiwan's Economy and WTO Application

Taiwan is a major economic and trade power and a significant U.S. trading partner. Taiwan's 2002 GDP was $289 billion, and its total trade (exports plus imports) was $243.2 billion. Total U.S.-Taiwan trade in 2002 was $50.6 billion, making Taiwan the 8th largest U.S. trading partner (the U.S. was Taiwan's largest trading partner). U.S. exports to Taiwan in 2002 were $18.4 billion (making Taiwan the 9th largest U.S. export market), while U.S. imports from Taiwan were $32.2 billion (the 8th largest source for U.S. imports). U.S.-Taiwan trade has stagnated in recent years. U.S. exports to Taiwan fell by 25.7% in 2001 (over 2000 levels), and grew by only 1.5% in 2002. U.S. imports from Taiwan fell by 17.6% in 2001 and by 3.5% in 2002.

Taiwan's attempt to join the General Agreement on Tariffs and Trade (GATT) and its successor organization, the World Trade Organization (WTO), dates back to 1990. In September 1992, a GATT Working Party was established to handle Taiwan's application to the GATT as "the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu," or "Chinese Taipei" (a designation similar to that of Hong Kong and Macau, both of which, while not independent countries, are WTO members). At that time it appears that several GATT signatories indicated support for allowing Taiwan to join the GATT only after China did--a position that continued to be supported by most members when the WTO was established in 1995. (1)

The Taiwanese government made accession to the WTO a top priority and took a number of steps prior to accession to remove a wide variety of tariff and non-tariff barriers. In addition, Taiwan agreed to be treated as a developed economy in the WTO upon its accession, a designation that required it to adopt stricter standards on trade than is required of developing economies. Taiwan negotiated bilateral trade agreements with 26 WTO members, including the United States (February 1998), providing immediate market access and phased-in commitments for goods, services, and agricultural products. …