Chp 3-B-4 A Quesiton Raised: Litigation within WTO?

It is still too early to predict that under what situation Taiwan will resort to special Chinese-specific SGM (Safeguard Measures) mechanism. To increase the amount of importable mainland product-items from 5,868[86] to 7,698[87] will bring in more imports from mainland. Also mentioned is that at least some new imports are different from prior imports in that new items are not driven by investment activities in China, but more because of comparative advantage of these products themselves. Advantage of Chinese products mainly comes from the low production cost in China. If not taking consideration of factors other than price, Chinese products are likely to occupy a large market share in Taiwan. On the other hand, importable mainland goods are those attributed as under Type A[88] ("for immediate open") and it is hard to imagine that Taiwanese Government did not contemplate on domestic impact effect when it was preparing the classification. Officials also indicated that newly importable mainland goods are those not currently produced in Taiwan[89]. The WTO Plan grounds its policy adjustment on "stability and safety" and "gradual progress". To what extent and at what time mainland product is importable, is also an issue determined by relevant governmental authorities "in light of situation of development"[90] rather than being treated full-heartedly as honoring WTO obligation.

If Taiwan is to take SGM against China, Taiwan needs to request consultation with China and such request should be notified to WTO Committee on Safeguards[91]. If China agrees to hold bilateral consultation, it will bring the trade dispute within arena of WTO.

Whether or not an SGM dispute arises, China may also request Taiwan lifting its importation ban and abandoning "gradually progressive" examination procedures altogether, honoring its promise under Schedule of Commitments on Services, and rescinding all provisions in various statutes and regulations which are contrary to MFN spirit. However, whether China wishes to use WTO consultation and dispute settlement mechanism is a remaining issue.

[86] As of the end of October 2001. Table of Recommendation to and Implementation Situation of Measures Adopted by National Economy Conference (by November 2001), No.922100-2, Ministry of Economic Affairs.

[87] Note 73, supra.

[88] See, texts between notes 67 and 69, supra.

[89] Note 76, supra.

[90] This is stated in WTO Plan, Part IV-I-(I)-2-(3)-B. Also, in Article 8(3) of Trade Regulations, agencies-in-charge are required to re-examine importation list "at regular intervals". For every six months, all relevant agencies-in-charge are required to conduct a re-examination, see, Ministry of Economic Affairs Order, Jing-shou Mao-tse No.0912002018-0 (February 15, 2002). For every two months, Bureau of Foreign Trade will examine recommendations and comments submitted by domestic producers, see, Press Release: Examination on Mainland Imports, Bureau of Foreign Trade of Ministry of Economic Affairs (February 19,2002).

[91] Article 16(2), WT/L/432, p.9. See, note 83, supra.