08.24.2001
WTO looming

• Taiwan’s entry into the WTO will bring down tariff and non-tariff trade barriers, leading to an initial adverse impact on the economy. The three cross strait “exchanges” will continue to strengthen informally. However, the negotiation of certain bilateral WTO agreements between the PRC and Taiwan would be facilitated by the opening of “official” communications.

• China’s top WTO negotiator has indicated that the PRC should be ready to join the WTO in November and that Taiwan’s accession will follow immediately. According to a China Daily report, an agreement with Mexico is still pending, although this shouldn’t be a major roadblock as Mexico already backs China’s bid. We expect the WTO to put pressure on both the mainland and Taiwan to open up official communications that have been on ice since mid-1999 when Lee Teng-hui defined the nature of China - Taiwan relations as “state-to-state”. The PRC expects Taiwan to recognize the “one-country” principal. The Taiwan government has recently called for a reassessment of the “consensus of 1992” under which both the mainland and Taiwan agreed that there is only one China, while differing on the definition of “one China”.

• Under the terms of Taiwan’s WTO negotiations, import tariffs will fall from an average of 8.2% to 5% and non-tariff barriers, estimated to be the equivalent of a 20% tariff, will come down by around 50%. The sectors likely to suffer the most include autos, agriculture, and consumer electronics products.