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A New Landscape in the WTO: Economic Integration Among China, Taiwan, Hong Kong and Macau

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European Yearbook of International Economic Law 2012

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 3))

Abstract

At the World Trade Organisation (the WTO) Ministerial Conference held in Doha in 2001, two events were under the spotlight: the launch of Doha Round of negotiation and the People’s Republic of China’s accession.

Part of this contribution was previously published in Global Jurist,http://www.bepress.com/gj/vol7/iss3/art7.

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Notes

  1. 1.

    In this contribution, China refers to the People’s Republic of China (the PRC); while Republic of China (ROC) will be referred to as Taiwan, which is generally known.

  2. 2.

    John H. Jackson observes that Taiwan crafted its application for the GATT (and then the WTO) as a separate customs territory so as not to offend China. He also mentions that Hong Kong, China, through the sponsorship of the United Kingdom, became a Contracting Party to the GATT, and continues as an original member of the WTO. However, it seems that Jackson fails to differentiate the accession procedures employed by these two members. See Jackson, Sovereignty, the WTO, and Changing Fundamentals of International Law, 2006, p. 109.

  3. 3.

    Since this contribution focuses on the economic integration between these four WTO members and their interaction with the WTO forum, the official title of Taiwan, namely, Republic of China will not used. For the benefit of convenience and comprehension, I will use the term of “Taiwan” instead of its full title of “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu” in the WTO or its abbreviation “Chinese Taipei”.

  4. 4.

    Regarding Taiwan’s application for the GATT and WTO, see generally, Cho, Taiwan’s Application to GATT/WTO: Significance of Multilateralism for an Unrecognized State, 2002; see also Hsieh, Facing China: Taiwan’s Status as a Separate Customs Territory in the World Trade Organization, JWT 39 (2005) 6, pp. 1195 et seq. (1199–1200).

  5. 5.

    When referring to the WTO-related activities or their positions therein, I will use the official title of “Hong Kong, China” and “Macau, China”. When special reference to Chinese domestic legal status as a special administrative region [hereinafter SAR] is made, I will use the terms of Hong Kong Special Administrative Region, or the HKSAR and the Macau Special Administrative Region, the MASAR. Nevertheless, I will mostly use the term of Hong Kong and Macau for geographic indications.

  6. 6.

    For a background knowledge of China’s accession to the WTO and its relationship to the Chinese Taipei accession and to Hong Kong, China, and Macau, China, see the WTO document, available at: http://www.wto.org/english/thewto_e/acc_e/chinabknot_feb01.doc (last visited on 5th March, 2011).

  7. 7.

    The China-Hong Kong CEPA and its supplements are available at the website of the Trade and Development Department of the HKSAR, http://www.tid.gov.hk/english/cepa/ (last visited on 5th March, 2011); the China-Macau CEPA and supplements are also available at the website of the MASAR government, http://www.cepa.gov.mo/cepaweb/front/eng/index_en.htm (last visited on 5th March, 2011).

  8. 8.

    The legal text of the direct-transportation agreements between China and Taiwan is available at the website of the Strait Exchange Foundation of Taiwan [hereinafter the SEF], http://www.sef.org.tw (last visited on 5th March, 2011). See infra, fn. 54, et seq.

  9. 9.

    The legal text of the ECFA is available at: http://www.ecfa.org.tw/RelatedDoc.aspx (last visited on 5th March, 2011). This website is launched by the Taiwanese government for the promotion for the public support and understanding of the ECFA.

  10. 10.

    During the Trade Policy Reviews conducted within the WTO, both the Secretariat Reports on China and on Taiwan mention the negotiations of the ECFA. See, Trade Policy Review Report by the Secretariat on China, WT/TPR/S/230, 26th April, 2010, para. 42; Trade Policy Review Report by the Secretariat on Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/TPR/S/232, 31st May, 2010, para. 35.

  11. 11.

    Report of the Panel, Norway – Restrictions on Imports of Certain Textile Products, L/4959, adopted 18th June, 1980, BISD 27S/119, paras. 16–18.

  12. 12.

    Report of the Panel, EEC – Quantitative Restrictions Against Imports of Certain Products from Hong Kong, L/5511, adopted 12th July, 1983, BISD 30S/129, para. 34. This case is extremely interesting in that, the United Kingdom, being a member of EEC, initiated a complaint on behalf of Hong Kong, against France, also an EEC member. It turned out to be the United Kingdom, acting on behalf of Hong Kong against EEC in the panel proceedings. It is also usual in terms of the internal/external liberalisation of EEC. While the United Kingdom did not maintain a quota system, it was forced to “de-liberalise” as EEC had the exclusive competence in external trade.

  13. 13.

    WT/DS29/1, 15th February 1996. As this submission was dated on 15th February, 1996, the official name in the WTO was still “Hong Kong”, instead of “Hong Kong, China”. Nevertheless, when it intervened as third party in the complaint brought by India, the official name was switched to “Hong Kong, China”, as it was already returned to China.

  14. 14.

    Report of the Appellate Body, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19th November, 1999, DSR 1999:VI, 2345.

  15. 15.

    WTO Document, Trade Policy Review Report of Hong Kong, China by Government of Hong Kong, China, WT/TPR/G/52, 11th November, 1998, para. 46.

  16. 16.

    Sung, The Evolving Role of Hong Kong as China's Middleman, in: Ho/Ash (eds.), China, Hong Kong and the World Economy: Studies on Globalization, 2006, pp. 152 et seq. (152–169).

  17. 17.

    WT/REG162/N1, S/C/N/264, 12th January, 2004.

  18. 18.

    WT/REG162/M/1, 21st March, 2005, paras. 4, 6.

  19. 19.

    WT/REG163/N1, S/C/N/265, 12th January, 2004.

  20. 20.

    WT/REG162/M/1, 21st March, 2005, para. 6.

  21. 21.

    Gao, The Closer Economic Partnership Arrangement (CEPA) Between Mainland China and Hong Kong? Legal and Economic Analyses, in: Davidson (ed.), Trading Arrangements in the Pacific Rim: ASEAN and APEC, 2004, 10, available at: http://ssrn.com/paper=752785 (last visited on 5th March, 2011). See also, Wang, Regional Integration: Comparative Experiences: A Lawful Free Trade Agreement under “One Country, Two Customs Territories?”, Law & Business Review of the Americas 10 (2004), p. 647.

  22. 22.

    WT/REG162/M/1, 21st March, 2005, para. 9; WT/REG163/M/1, 21st March, 2005, para. 10.

  23. 23.

    WT/REG162-3/7, 30th May, 2006.

  24. 24.

    The CEPA, Art. 7, 8.

  25. 25.

    Concerns have been voiced during the process of the examination in the CRTA. It is pointed out that the safeguard provision as set out in the China – Hong Kong CEPA derogates considerably from the WTO Safeguard Agreement. However, in response to these doubts, Hong Kong, China reiterates its long-established free trade policy and states that there are no rules governing global safeguard measure in Hong Kong, China, and that it has never adopted any safeguard measures in the past. Therefore, this safeguard measure provided in the China – Hong Kong CEPA appears to design mainly for China, which is nevertheless unlikely to use it. See WT/REG162/6, 13th March, 2006, p. 3.

  26. 26.

    CEPA Questions I, submitted by the General Chamber of Commerce of Hong Kong, available at: http://www.chamber.org.hk/en/information/policy_comments.aspx?ID=119 (last visited on 5th March, 2011).

  27. 27.

    Chamber’s Question on CEPA: A Preliminary Update, available at: http://www.chamber.org.hk/FileUpload/201007081540052496/Answer_CEPA_Q.pdf (last visited on 5th March, 2011).

  28. 28.

    Report of the Appellate Body, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19th November, 1999, DSR 1999:VI, 2345.

  29. 29.

    The Report of the Appellate Body addresses this requirement in para. 58, and lays down two conditions, which should be fulfilled, so that the regional trade agreement can pass the scrutiny. In the words of the Appellate Body, “[F]irst, the party claiming the benefit of this defence must demonstrate that the measure at issue is introduced upon the formation of a customs union that fully meets the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV. And, second, that party must demonstrate that the formation of that customs union would be prevented if it were not allowed to introduce the measure at issue”. Report of the Appellate Body, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19th November, 1999, DSR 1999:VI, 2345, para. 58. Another relevant issue here is whether the rules of origin as set out in the CEPA constitute “more trade restrictive” measures.

  30. 30.

    Report of the Appellate Body, Turkey – Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 19th November, 1999, DSR 1999:VI, 2345, para. 48 (emphasis origional).

  31. 31.

    Gao, The Closer Economic Partnership Arrangement (CEPA) Between Mainland China and Hong Kong? Legal and Economic Analyses, in: Davidson (ed.), Trading Arrangements in the Pacific Rim: ASEAN and APEC, 2004, pp. 1 et seq. (4–5), available at: http://ssrn.com/paper=752785 (last visited on 28th February, 2011).

  32. 32.

    WT/REG162/M3, 15th May, 2006, para. 12.

  33. 33.

    Sung, The Emergence of Greater China: The Economic Integration of Mainland China, Taiwan and Hong Kong, 2005, pp. 199–200.

  34. 34.

    As for the case of Macau, zero-tariffs in trade in goods seem not very beneficial since its economy relies much on services trade, in particular gambling service. What is of great significance to the economy of Macau is its tourism services to Chinese visitors, which is limited in scope in the main text of the CEPA and its annexes. This exposed one of the weaknesses of mirroring the China-Macau CEPA to China-Hong Kong CEPA, in spite of the fact that the scope of tourism services was expanded in later stage.

  35. 35.

    The CEPAs, Art. 4.

  36. 36.

    This approach has proved itself very successful. According to the Trade Policy Review Report conducted in 2006, China has included the recognition of its market economy status into every regional and bilateral FTA, or economic partnership agreement. See Secretariat’s Trade Policy Report on People’s Republic of China, WT/TPR/S/161, 28th February, 2006, para. 46. See also Secretariat’s Trade Policy Review Report, WT/TPR/S/199/rev.1, 12th August, 2008, para. 53. So far, A Framework Agreement on Comprehensive Economic Cooperation between China and ASEAN, Chile-China FTA, China-Pakistan Preferential Trade Agreement, China-Australia Trade and Economic Framework Agreement (aiming to establish an FTA), China-New Zealand Trade and Economic Cooperation Framework, China and the Southern African Customs Union (SACU) Joint Declaration (with the aim to establishing an FTA), China – Gulf Cooperation Council Framework Agreement on Economic, Trade, Investment and Technology Cooperation, as well as the accompanying talks and negotiations have recognised China as a market economy. Besides, before commencing the negotiation of an FTA, Iceland and Switzerland have also recognised China as a market economy.

  37. 37.

    It is also President Lee Teng-huei who, in an interview by Deutsche Welle radio station on 7th July, 1999, defines the relation between Taiwan and China as “a special relationship between State and State”.

  38. 38.

    On Taiwan’s “Go South” policy, see Peng, Economic Relations between Taiwan and Southeast Asia: A Review of Taiwan’s “Go South” Policy, Wisconsin International Law Journal 16 (1998), p. 639.

  39. 39.

    Apart from China, which had indicated Taiwan’s violation of many WTO rules, notably non-discriminatory principle, Switzerland, Japan, EC, and among other members had questioned about Taiwan’s restrictions on the cross-strait trade. The discussant also expressed similar concerns about this issue, see WTO Document, Minute of Trade Policy Review on Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/TPR/M/165, 22nd September, 2006, paras. 33–35, 47, 53, 65.

  40. 40.

    WTO Document, Minute of Trade Policy Review on Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/TPR/M/165, 22nd September 2006, para. 138.

  41. 41.

    Department of Statistics, Ministry of Economic Affairs, available at: http://2k3dmz2.moea.gov.tw/gnweb/Indicator/wFrmIndicator.aspx (last visited on 5th March, 2010, in Chinese).

  42. 42.

    WTO document, G/ADP/N/202/CHN, 1st October 2010, p. 12; see also other previous semi-annual reports of Anti-dumping committee.

  43. 43.

    International Trade Commission, Ministry of Economic Affairs of Taiwan, available at http://portal.moeaitc.gov.tw/icweb/default.aspx (last visited on 28th February, 2011, in Chinese).

  44. 44.

    WTO Document, G/ADP/N209/TPKM/rev.1, 25th February, 2011.

  45. 45.

    An English version of the legal text is available at the Mainland Affairs Council (the MAC) website, http://www.mac.gov.tw/ct.asp?xItem=63756%26CtNode=6447%26;mp=3 (last visited on 5th March, 2011).

  46. 46.

    This trial mini-three-link was firstly applied to Kinmen and Matsu in 2001 and subsequently extended to Penhu in 2007.

  47. 47.

    The Executive Yuan of Taiwan, Impact Assessment on the Direct Transportation Between Taiwan and China, 15th August, 2003.

  48. 48.

    Cross-Strait Agreement Signed between SEF and the Association for the Relations across the Taiwan Strait [hereinafter the ARATS] Concerning Mainland Tourists Travelling to Taiwan, Beijing, 23rd June, 2008 [hereinafter the Chinese Tourists Agreement], an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  49. 49.

    SEF-ARATS Minutes of Talks on Cross-Strait Charter Flights, Beijing, 23rd June, 2008 [hereinafter the Charter Flights Minutes]; an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  50. 50.

    Special Arrangements Concerning Cross-Strait Tourism, Annex I to the Chinese Tourists Agreement, Art. 1.

  51. 51.

    Chinese Tourists Agreement, Art. 2.1

  52. 52.

    Annex to the Charter Flights Minutes, Time, Destination, and Flights of Cross-Strait Charter Flights, Art. 1.

  53. 53.

    Cross-Strait Food Safety Agreement, Taipei, 4th November, 2008 [hereinafter the Food Safety Agreement]; an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  54. 54.

    Cross-Strait Air Transport Agreement, Taipei, 4th November, 2008 [hereinafter the Air Transport Agreement]; an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  55. 55.

    Cross-Strait Sea Transport Agreement, Taipei, 4th November, 2008 [hereinafter the Sea Transport Agreement]; an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  56. 56.

    Cross-Strait Postal Service Agreement, Taipei, 4th November, 2008 [hereinafter the Postal Service Agreement]; an official English translation version is available at http://www.sef.org.tw/ (last visited on 5th March, 2011).

  57. 57.

    The Air Transport Agreement, Art. 2.

  58. 58.

    The Air Transport Agreement, Art. 1.1.

  59. 59.

    The same “prompt negotiation” provision is included in all these four agreements. While this ‘prompt negotiation’ does not necessarily prevent Taiwan or China from referring to the WTO Dispute Settlement Mechanism, it nevertheless signals their intent not to.

  60. 60.

    The Sea Transport Agreement, Art. 1.

  61. 61.

    The Sea Transport Agreement, Art. 3.

  62. 62.

    Annex to the Sea Transport Agreement, Art. 2.

  63. 63.

    Shan, “Shipping Industry Representatives are Mixed on Result of Cross-strait Talks”, Taipei News, 17th November, 2008, available at http://www.taipeitimes.com/News/taiwan/archives/2008/11/17/200342 8837 (last visited on 5th March, 2011).

  64. 64.

    Annex to the Sea Transport Agreement, Art. 1.

  65. 65.

    Annex to the Sea Transport Agreement, Art. 3.

  66. 66.

    Ko, “Gravel Shippers to Stage Protest”, Taipei News, 19th January, 2009, p. 3, available at http://www. taipeitimes.com/News/taiwan/archives/2009/01/19/2003434117 (last visited on 5th March, 2011).

  67. 67.

    “China Asked to Boost direct Flights for Lunar New Year Holiday”, China Post, 10th January, 2009, available at: http://www.chinapost.com.tw/taiwan/china-taiwan-relations/2009/01/10/191357/China-asked.htm (last visited on 5th March, 2011).

  68. 68.

    “Taiwan-China Trade Deal Passed by Taipei Legislators”, BBC News, 18th August, 2010, available at: http://www.bbc.co.uk/news/world-asia-pacific-11008076 (last visited on 5th March, 2011).

  69. 69.

    “ECFA Becomes Effective on September 12”, see http://www.chinaipr.gov.cn/newsarticle/news/governme nt/201009/947875_1.html (last visited on 5th March, 2011).

  70. 70.

    Annex I to the ECFA.

  71. 71.

    Annex II to the ECFA.

  72. 72.

    Annex III to the ECFA.

  73. 73.

    Annex IV to the ECFA.

  74. 74.

    Annex V to the ECFA.

  75. 75.

    The ECFA, Chap. 1.

  76. 76.

    The ECFA, Chap. 2

  77. 77.

    The ECFA,Chap. 3

  78. 78.

    The ECFA, Chap. 4

  79. 79.

    The ECFA, Chap. 5

  80. 80.

    The ECFA, Art. 1.1.

  81. 81.

    The ECFA, Art. 1.2.

  82. 82.

    The ECFA, Art. 1.2.

  83. 83.

    Tseng/Wu, ECFA Should Benefit Human Rights, Taipei Times, 17th July, 2010, available at: http://www.taipeitimes.com/News/editorials/archives/2010/07/17/2003478124 (last visited on 5th March, 2011).

  84. 84.

    The ECFA, Art. 2.1.

  85. 85.

    The ECFA, Art. 2.2.

  86. 86.

    The ECFA, Art. 2.3–2.4.

  87. 87.

    The ECFA, Art. 3.1, 4.1, 5.1.

  88. 88.

    The ECFA, Art. 3.2, 4.2, 5.2.

  89. 89.

    The ECFA, Art. 3.1, 4.1.

  90. 90.

    The ECFA, Art. 3.4, 4.3.

  91. 91.

    The ECFA, Art. 3.3.

  92. 92.

    The ECFA, Art. 7.

  93. 93.

    The ECFA, Art. 8.

  94. 94.

    The ECFA, Art. 8.1.

  95. 95.

    The ECFA, Art. 7.2(1).

  96. 96.

    The ECFA, Art. 7.2(2), (3).

  97. 97.

    The ECFA, Art. 7.2(2).

  98. 98.

    The ECFA, Art. 7.3.

  99. 99.

    The ECFA, Art. 8.2(1).

  100. 100.

    The ECFA, Art. 8.2(2),(3).

  101. 101.

    See infra, text to note 124, et seq.

  102. 102.

    The ECFA, Art. 11.1.

  103. 103.

    The ECFA, Art. 11.3.

  104. 104.

    The ECFA, Art. 11.2.

  105. 105.

    The ECFA, 1st preambular & Art. 1.1.

  106. 106.

    The ECFA, Art. 1.2.

  107. 107.

    The ECFA, Art. 3.1, 4.1.

  108. 108.

    Report of the Working Party on the Accession of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/ACC/TPKM/18, 5th October, 2001, para. 6.

  109. 109.

    Report of the Working Party on the Accession of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/ACC/TPKM/18, 5th October, 2001, para. 7.

  110. 110.

    The GATS, Art. V:1(a).

  111. 111.

    The GATS, Art. V:1(b)(i).

  112. 112.

    The GATS, Art. V:1(b)(ii).

  113. 113.

    The GATS, Art. V:III(a).

  114. 114.

    Lo, Can There Be an Interim Agreement for Economic Integration in GATS, Paper presented in Conference on Trade Remedy, Financial Crisis and the Challenge to the WTO, held in Taipei on 29th October, 2010, pp. 17–21.

  115. 115.

    Lo, Can There Be an Interim Agreement for Economic Integration in GATS, Paper presented in EMC² 2010–2011 Asia-Pacific Round Academic Conference on Conference on Economic Integration of the Asian-Pacific Region and Beyond, held in Taipei on 4th March, 2011, p. 6–7.

  116. 116.

    Lo, Can There Be an Interim Agreement for Economic Integration in GATS, Paper presented in EMC² 2010–2011 Asia-Pacific Round Academic Conference on Conference on Economic Integration of the Asian-Pacific Region and Beyond, held in Taipei on 4th March, 2011, p. 9.

  117. 117.

    Even in the case of Hong Kong and Macau, they also conclude FTAs which have been notified to the WTO. In addition to the CEPA, Hong Kong has also concluded an FTA with New Zealand.

  118. 118.

    Lo, Can There Be an Interim Agreement for Economic Integration in GATS, Paper presented in EMC² 2010–2011 Asia-Pacific Round Academic Conference on Conference on Economic Integration of the Asian-Pacific Region and Beyond, held in Taipei on 4th March, 2011, p. 9.

  119. 119.

    China-Hong Kong CEPA, Art. 19.5.

  120. 120.

    WT/REG/162/3, 25th January 2005, p. 5; WT/REG163/3, 28th January 2005, p. 5.

  121. 121.

    Fan et al. (eds.), Commentary on the Mainland and Macau Closer Economic Partnership Arrangement (CEPA), 2005, p. 240.

  122. 122.

    Chen/Zhao, A Study on the Dispute Resolution Mechanism in Region Trade Agreements: Article 19 of CEPA, in: Wang (ed.), A Research on the Economic Arrangement among the Cross-Strait Four Areas, 2006, p. 253 (in Chinese).

  123. 123.

    Chen/Zhao, A Study on the Dispute Resolution Mechanism in Region Trade Agreements: Article 19 of CEPA, in: Wang (ed.), A Research on the Economic Arrangement among the Cross-Strait Four Areas, 2006, pp. 253–254 (in Chinese).

  124. 124.

    The ECFA, Art. 10.1.

  125. 125.

    The ECFA, Art. 10.1.

  126. 126.

    The ECFA, Art. 10.2.

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  1. Institute of European and American Studies, Academia Sinica, Taipei, Taiwan

    Chien-Huei Wu

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  1. European Law, European and, University of Passau Chair for Constitutional and Administrat, Passau, Germany

    Christoph Herrmann

  2. Department of European Law, University of Hamburg, Hamburg, Germany

    Jörg Philipp Terhechte

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Wu, CH. (2012). A New Landscape in the WTO: Economic Integration Among China, Taiwan, Hong Kong and Macau. In: Herrmann, C., Terhechte, J. (eds) European Yearbook of International Economic Law 2012. European Yearbook of International Economic Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23309-8_7

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