An Entity Sui Generis in the WTO: Taiwan’s WTO Membership and Its Trade Law Regime

Abstract

As one of the founding members of the General Agreement on Tariffs and Trade (GATT), Taiwan (the Republic of China or ROC) – the 17th largest economy, was granted accession to the World Trade Organization (WTO) in November 2001 after its observer status of eleven years. Taiwan, classified by most commentators as an “unrecognized state” or an “entity sui generis”, has been excluded from most of the major international organizations. Taiwan’s accession to the WTO, therefore, is considered to be an important breakthrough in diplomacy for the past decades. Notwithstanding its WTO membership, the Taiwanese Government has employed numerous trade barriers vis-à-vis imports from Mainland China due to cross-strait tension. Some of these barriers have been criticized and may be disputed under WTO’s dispute settlement mechanism. In addition, given the diplomatic considerations, Taiwan is the only major trade partner within East Asia being excluded from the negotiations of the formation of ASEAN Plus 3 (China, Japan and South Korea) for years. While the issues of trade diversion and trade creation of preferential trade agreements (PTAs) remain hotly debated, the envisaged trade diversion effects resulting from being excluded from East Asian economic integration may become one of the striking examples demonstrating the negative impact of PTAs. The trade diversion would not only conceivably seriously undermines Taiwan's economy, but renders Taiwan’s WTO membership much less useful.

In the light of Taiwan’s special bilateral relation with China and its significant impact on the East Asia region, Taiwan’s trade policy and relevant legislation present a special case under the WTO affairs. Most existing literature, however, focuses on the implications of Taiwan’s WTO membership under public international law. This article address an important pragmatic issue- what are Taiwan’s main trade law instruments and how does WTO law effective in Taiwan’s municipal courts. While the cross-strait dialogue has been resumed since President Ma Ying-jeou took office in May 2008, the measures that deviate from the WTO rules may nevertheless remain in place due to political reality. Yet the issues of whether and to what extent those measures may be disputed within the WTO regime are far from clear. Taiwan’s trade law framework this article has sought to explore thus far presents a starting point for future examination of cross-strait interaction under the WTO.

Keywords: Taiwan, China, WTO, Entity Sui Generis, Unrecognized state, ASEAN

JEL Classification: K33