[Senate Hearing 106-877]
[From the U.S. Government Printing Office]





                                                        S. Hrg. 106-877

                      TAIWAN'S ACCESSION TO THE WTO

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                            SEPTEMBER 6, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate


                    U.S. GOVERNMENT PRINTING OFFICE
69-747 CC                   WASHINGTON : 2001




                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

Bolton, Hon. John R., former Assistant Secretary of State for 
  International Organization Affairs.............................    10
    Prepared statement...........................................    12
Kyl, Hon. Jon, U.S. Senator from Arizona.........................     3
    Prepared statement...........................................     7

                                 (iii)

  

 
                     TAIWAN'S ACCESSION TO THE WTO

                              ----------                              


                      WEDNESDAY, SEPTEMBER 6, 2000

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:31 a.m. in 
room SD-419, Dirksen Senate Office Building, Hon. Jesse Helms 
(chairman of the committee) presiding.
    Present: Senators Helms and Thomas.
    The Chairman. Good morning. The committee will come to 
order. This is one of those days that Senators, all of whom are 
required to be two places at one time, and we will have 
Senators coming in and out because they have other committee 
responsibilities. This is a very busy time of the day, plus 
most Senators are standing in line to speak on the WTO matter.
    In any case, we are glad to be here, and I would say that 
this committee hearing will examine what needs to be done to 
ensure that the Republic of China on Taiwan is not excluded 
from the World Trade Organization [WTO] by Communist China and/
or its allies.
    As is widely known, Communist China has sought repeatedly 
to exclude Taiwan from even minimal participation in any and 
all international organizations. For example, just this past 
May, China once again succeeded in browbeating the rest of the 
world's nations into preventing Taiwan from observing at the 
annual meeting of the World Health Organization.
    Now, for years we have been led to accept the notion that 
the World Trade Organization would be different. On repeated 
occasions the Chinese Government has made clear, as have the 
United States and Taiwan officials, that Beijing would not 
object to Taiwan's accession to the WTO as long as Communist 
China got into it first. In fact, it has been widely accepted 
that the existing so-called gentleman's agreement between 
China, Taiwan, and the United States was that Taiwan would 
affiliate with WTO immediately after China had done so.
    However, as many have learned to expect, Communist China 
began to throw a wrench into the works 2 months ago, in July to 
be precise, when it floated the notion that Taiwan would be 
allowed to join the WTO only--only as a part of mainland China.
    Now, this, of course, is unacceptable to Taiwan, and it 
should be to the United States as well. After all, in a just 
world, and if the WTO were truly a nonpolitical organization, 
Taiwan would already have been a member. Taiwan's economy is 
radically more advanced than Communist China's. Taiwan has for 
years met the major requirements of WTO, and the only 
impediment to Taiwan's membership is that the rest of the world 
insists on yielding to the wishes of the Communist government 
in Beijing to exclude Taiwan. So one would think, given that 
Taiwan each year buys billions of dollars more in U.S. goods 
than does mainland China, the U.S. Government would feel no 
compunction in laying down the law to Beijing on this issue, 
and the upcoming Senate debate over permanent normal trade 
relations [PNTR] with China gives us all the perfect 
opportunity to do so.
    I, of course, will never vote to give PNTR to China, but it 
seems to me to be entirely reasonable, even from a pro-PNTR 
perspective, to take concrete steps to ensure that as we rush 
to admit Communist China into the World Trade Organization we 
should also bring democratic Taiwan in along with them.
    Now, our first witness, the distinguished Senator from 
Arizona, Senator Kyl, has a keen interest in this issue, and we 
look forward to hearing him after we have heard from the 
distinguished Sentor who is to my right, and very few people 
are.
    Senator Thomas. Thank you, Mr. Chairman. That is a dubious 
honor, perhaps. I appreciate it.
    I want to thank you so much for holding this hearing. We 
are into this whole process of normal trading relationships and 
so on, so I think it is appropriate.
    I do have some feelings about it, and let me share them 
with you. First of all, of course, as chairman of the East 
Asian Subcommittee I have always been fully supportive of 
Taiwan's admission into the WTO and have consistently 
cosponsored legislation to that effect, most recently Senate 
Concurrent Resolution 17.
    I have also supported the concept that Taiwan's entry be 
based solely on the merits of its accession agreement. I do not 
believe that Taiwan's accession should be held up just because 
the People's Republic of China [PRC] insists that it should 
enter the WTO first before Taiwan, after all, a nation's 
sovereignty is not a prerequisite for membership in the WTO. 
For example, Hong Kong, which is part of China, is a separate 
member. Therefore, I do not see how Beijing can reasonably 
maintain that admitting Taiwan to the WTO first is somehow an 
affront to sovereignty.
    Having said that, however, I feel it necessary to address 
one of the topics which I have heard discussed before, which 
was the potential of an amendment to the China PNTR bill that 
might be offered which would ensure that PRC, once it accedes 
to the WTO, does not try to block Taiwan's accession. Were such 
an amendment offered on the floor I would oppose it, not so 
much because I disagree with what the amendment seeks to do, 
but because of other factors.
    First, any present talk of either Taiwan or China's 
accession is premature. Both countries have completed their 
bilaterals with us. Taiwan is still engaged in talks with the 
WTO working party handling its accession. The PRC still has a 
way to go before its accession is imminent.
    Second, I have seen absolutely no indication that the PRC 
intends to or considers blocking Taiwan's accession. In fact, 
their representations to me have been exactly the opposite.
    Third, regardless of the relative merits, I, like Senator 
Roth, Chairman of the Finance Committee, and many others, am 
strongly opposed to adding any amendents to the China PNTR 
bill. Any amendment will have only the effect of basically 
killing PNTR for this year. Any amendment would require return 
to the conference. Once in confernece, it is unlikely the bill 
would emerge before we adjourn.
    We only have some 20 legislative days left, a full plate of 
domestic legislation to deal with, and there would not be time 
for a conference on H.R. 4444 and to pass it back to the House 
again. It is clear the House fully supports the President's 
unamended version, passed 237 to 197, as does the Senate 
Finance Committee, as do I. Consequently, as the subcommittee 
chairman I will oppose any attempt to amend this particular 
bill and hope that we can move forward, and we need to keep in 
mind that it is not up to us to deal entirely with WTO 
accession. That is something that is done by the group.
    So Mr. Chairman, I guess that is my point of view, and I 
appreciate your having this hearing.
    The Chairman. Thank you, sir.
    Our first witness this morning is a truly remarkable United 
States Senator. Jon Kyl came to the Senate on the trot, and 
ever since he has not ceased to move rapidly in whatever he 
undertakes to do, and he does aplenty. He is one of the most 
active Senators on our side of the aisle, and probably in the 
entire Senate. In any case, I am very devoted to Jon Kyl, and I 
appreciate his coming here this morning to offer his testimony.
    Senator, you may begin.

      STATEMENT OF HON. JON KYL, U.S. SENATOR FROM ARIZONA

    Senator Kyl. Thank you, Mr. Chairman, and Senator Thomas. 
Senator Thomas and I were just looking at a recent newspaper 
column in the anteroom which described the chairman as the 
nicest guy in the U.S. Senate, or some phrase such as that, and 
I think we would all agree that it is a pleasure both to work 
with you, to serve with you and, certainly for me today, to 
testify before you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Kyl. I thank you for the opportunity to testify. I 
believe it is very important for the United States to support 
Taiwan's entry into the World Trade Organization. First, 
because of the economic benefits that its entry would bring. 
Second, because of the need to meet our commitments to our 
close and longstanding ally. And third, due to our desire to 
defend and promote democratic governments, with free markets, 
that respect the rule of law and the human rights of their 
people.
    First, let me discuss the economic importance of Taiwan's 
admission. The WTO plays an important role in promoting free 
and fair trade. Under the WTO, member countries agree on a set 
of rules and principles for trade, which in turn creates a 
stable and predictable trade environment. Second, the WTO 
provides a mechanism to enforce these rules, including the 
procedure for countries to resolve trade disputes. And finally, 
the WTO provides a forum for negoiations to reduce trade 
barriers worldwide.
    Based on its importance to the world economy, Taiwan should 
be admitted to the WTO. It has the nineteenth largest economy 
and is the fourteenth largest trading nation in the world. 
Taiwan's economy is also closely linked to the United States. 
It is America's eighth largest trading partner, and it 
purchases more American goods than many of our other major 
trading partners like Communist China, Australia, and Italy. 
U.S. trade with Taiwan should continue to grow. Over 2 years 
ago, we signed a bilateral WTO agreement with Taiwan that 
included significant reductions in tariffs and other barriers 
for exports of a variety of U.S. goods and services, including 
agricultural goods, automotive products, and pharmaceuticals. 
The admission of Taiwan to the WTO would ensure that market 
barriers to U.S. products will remain low, and American 
companies will have a means to solve disputes over intellectual 
property and other matters.
    Taiwan has been negotiating to become a member of the WTO 
since 1990 and has met the substantive conditions for 
membership. According to the Congressional Research Service, it 
has completed agreements with each of the 26 WTO members that 
requested bilateral negotiations, and has held 10 meetings with 
the WTO working party in Geneva, resolving all substantive 
issues surrounding its admission.
    China has insisted that Taiwan can get into the WTO only 
after it does, and has lobbied other countries to support this 
position. In the past, Clinton administration officials have 
assured us that Taiwan's accession would closely follow 
China's, and Mr. Chairman, at this point let me say that I will 
submit my entire statement for the record, if I might. I am 
going to skip over certain portions of the testimony that 
confirm what I just said and what you already know.
    The Chairman. Without objection, the full text will be 
included in the record.
    Senator Kyl. Thank you. What I would like to do, though, is 
to refer to at least a couple of recent press reports that get 
to the point that Senator Thomas raised. There have been some 
suggestions that China may be planning to block Taiwan's WTO 
entry, and that is frankly what I am concerned about.
    According to a Wall Street Journal report in July, for 
example, and I am quoting now: ``As WTO staff members draw up 
the so-called protocol agreements--the reams of paper that 
define exactly what concessions China will make in order to 
gain entry into the organization--China is insisting that its 
claim over Taiwan be recognized in the legal language . . . 
chief Chinese negotiator Long Yongtu said . . . such a stand 
is, a matter of principle for us.''
    That would upset a consensus within the WTO, according to 
the Wall Street Journal, ``that Taiwan should be allowed to 
enter the club as a separate economic area--that is, not an 
independent country, but also not as an explicit part of China. 
Some WTO members have argued that Taiwan has long-since 
fulfilled its requirements to join the club and its application 
has been held up only to satisfy China's demand that Taiwan 
shouldn't win entry into the organization first.''
    As I mentioned earlier, the United States should support 
Taiwan's admission to the WTO not merely for economic reasons, 
but also to honor our commitments to a close, long-standing 
ally, and to demonstrate our intention to support democracies 
that respect the rule of law.
    Skipping over some other testimony, Mr. Chairman, let me 
get right down to the bottom line and quote some words of Harry 
Truman, a President that I know we all respect for his plain 
spoken language. Here is what he said in announcing what became 
known as the Truman Doctrine.
    ``At the present moment in world history nearly every 
nation must choose between alternative ways of life. The choice 
is too often not a free one. One way of life is based upon the 
will of the majority, and is distinguished by free 
institutions, representative government, free elections, 
guarantees of individual liberty, freedom of speech and 
religion, and freedom from political oppression. The second way 
of life is based upon the will of a minority forcibly imposed 
upon the majority. It relies upon terror and oppression, a 
controlled press and radio, fixed elections, and the 
suppression of personal freedoms. I believe that it must be the 
policy of the United States to support free peoples who are 
resisting attempted subjugation by armed minorities or outside 
pressures. I believe that we must assist free peoples to work 
out their own destinies in their own way.'' So said Harry 
Truman.
    Now, he spoke these words in 1947, at a time when it was 
very difficult to stand up to communism on the march from the 
Soviet Union. The challenge we face today in dealing with China 
and Taiwan should not be as great as the courageous struggle of 
the cold war. The administration cannot support China's entry 
into the WTO without equally supporting Taiwan's entry into the 
WTO. This is but one of many signals we should be sending to 
the Communist regime in Beijing, about America's determination 
to meet our commitments and our resolve to support Taiwan.
    Mr. Chairman, last night, I received a letter from 
President Clinton that responded to a letter that I sent him in 
July along with 30 other Senators, including yourself, Mr. 
Chairman, that sought assurances that his administration 
remained committed to Taiwan's entry to the WTO. In the letter, 
the President stated, and I am quoting, ``my administration 
remains firmly committed to the goal of WTO General Council 
approval of the accession packages for China and Taiwan at the 
same session.'' The President's letter went on to say that 
while, ``China has made clear on many occasions, and at high 
levels, that it will not oppose Taiwan's accession to the WTO. 
Nevertheless, China did submit proposed language to their 
working party stating that Taiwan is a separate customs 
territory of China. ``We have advised the Chinese,'' the 
President went on to say, ``that such language is inappropriate 
and irrelevant to the work of the working party and that we 
will not accept it,'' end of quote from his letter.
    As the President clearly acknowledged in his letter, 
despite previous assurances by China and the administration 
that Taiwan will be admitted to the WTO without opposition, 
under the surface there is a problem. As it always does, China 
is using yet another diplomatic opportunity to assert its view 
that Taiwan is nothing more than a province of China.
    This is an important issue that the President and his 
administration need to resolve. They must make it clear that 
there will be consequences should China fail to live up to its 
commitments not to block Taiwan's entry to the WTO as a 
separate customs territory, Chinese Taipei, not a separate 
territory of China. It is my hope the President can give the 
Senate such concrete assurances before we begin debate on a 
bill extending permanent normal trade status to China, failing 
which it may be necessary for Congress to consider a 
legislative solution to this problem.
    Thank you, Mr. Chairman, for the opportunity to testify.
    [The prepared statement of Senator Kyl follows:]

                 Prepared Statement of Senator Jon Kyl

    Mr. Chairman, thank you for the opportunity to testify at today's 
hearing.
    I believe it is important for the United States to support Taiwan's 
entry into the World Trade Organization (WTO). First because of the 
economic benefits that its entry would bring. Secondly, because of the 
need to meet our commitments to our close and longstanding ally. And 
third, due to our desire to defend and promote democratic governments, 
with free markets, that respect the rule of law and the human rights of 
their people.
    Let me first discuss the economic importance of Taiwan's admission 
to the WTO. The WTO plays an important role in promoting free and fair 
trade. Under the WTO, member countries agree on a set of rules and 
principles for trade, which in turn creates a stable and predictable 
trade environment. Secondly, the WTO provides a mechanism to enforce 
these rules, including a procedure for countries to resolve trade 
disputes. And finally, the WTO provides a forum for negotiations to 
reduce trade barriers worldwide.
    Since the founding of its predecessor GATT in 1948, membership in 
the organization has grown from 23 countries to 136 today. The general 
view among economists is that a more predictable trade environment, and 
a reduction of trade barriers, has contributed to the unprecedented 
economic prosperity that most countries currently enjoy. Statistics 
support this view: In 1998, world exports were 18 times larger than in 
1950, and world GDP was 6 times greater in 1998 than 1950, according to 
the Congressional Research Service.
    Based on its importance to the world economy, Taiwan should be 
admitted to the WTO. It has the 19th largest economy and is the 14th 
largest trading nation in the world. Taiwan's economy is also closely 
linked to the U.S. It is America's 8th largest trading partner and 
purchases more American goods than many of our other major trading 
partners, like mainland China, Australia, and Italy. U.S. trade with 
Taiwan should continue to grow. Over two years ago, we signed a 
bilateral WTO agreement with Taiwan that included significant 
reductions in tariffs and other barriers for exports of a variety of 
U.S. goods and services, including agricultural goods, automotive 
products, and pharmaceuticals. The admission of Taiwan to the WTO 
ensures that market barriers to U.S. products will remain low and 
American companies will have a means to solve disputes over 
intellectual property and other matters.
    Taiwan has been negotiating to become a member of the WTO since 
1990 and has met the substantive conditions for membership. According 
to the Congressional Research Service, it has completed agreements with 
each of the 26 WTO members that requested bilateral negotiations, and 
has held 10 meetings with the WTO Working Party in Geneva, resolving 
all substantive issues surrounding its admission.
    China has insisted that Taiwan can get into the WTO only after it 
does, and has lobbied other countries to support this position. In the 
past, Clinton Administration officials have assured us that Taiwan's 
accession would closely follow China's. In February, U.S. Trade 
Representative Charlene Barshefsky testified to the House of 
Representatives that ``. . . the only issue with respect to Taiwan's 
accession . . . pertains to timing . . . there is a tacit understanding 
. . . among WTO members in general--but also, frankly, between China 
and Taiwan--that China would enter first and China would not block in 
any way Taiwan's accession thereafter, and that might be immediately 
thereafter or within days or hours or seconds or weeks. . . .'' Later 
that same month, in response to a statement by Sen. Roth that ``. . . 
there's a great deal of concern that Taiwan might be blocked [from 
entering the WTO] once China secures such membership,'' Ambassador 
Barshefsky testified that ``. . . the United States would do everything 
in our power to ensure that that does not happen in any respect because 
Taiwan's entry is also critical.''
    Recent press reports have renewed concern that China may be 
planning to block Taiwan's WTO entry. As the Wall Street Journal 
reported in July,

        . . . as WTO staff members draw up the so-called protocol 
        agreements--the reams of paper that define exactly what 
        concessions China will make in order to gain entry into the 
        organization--China is insisting that its claim over Taiwan be 
        recognized in the legal language . . . chief Chinese negotiator 
        Long Yongtu said . . . such a stand ``is a matter of principle 
        for us'' . . . . That would upset a consensus within the WTO 
        that Taiwan should be allowed to enter the club as a separate 
        economic area--that is, not an independent country, but also 
        not as an explicit part of China. Some WTO members have argued 
        that Taiwan has long since fulfilled its requirements to join 
        the club and its application has been held up only to satisfy 
        China's demand that Taiwan shouldn't win entry to the 
        organization first.

    Last night, I received a letter from President Clinton that 
responded to a letter I sent him in July along with 30 other Senators, 
including Chairman Helms, that sought assurances that his 
administration remained committed to Taiwan's entry to the WTO. In the 
letter the President stated that, ``My administration remains firmly 
committed to the goal of WTO General Council approval of the accession 
packages for China and Taiwan at the same session.'' The President's 
letter went on to say that while ``China has made clear on many 
occasions, and at high levels, that it will not oppose Taiwan's 
accession to the WTO. Nevertheless, China did submit proposed language 
to their working party stating that Taiwan is a separate customs 
territory of China. We have advised the Chinese that such language is 
inappropriate and irrelevant to the work of the working party and that 
we will not accept it.''
    As the President acknowledged in the letter, despite previous 
assurances by China and the administration that Taiwan will be admitted 
to the WTO without opposition, under the surface there is a problem. As 
it always does, China is using yet another diplomatic opportunity to 
assert its view that Taiwan is nothing more than a province of China. 
This is an important issue that the President and his administration 
need to resolve. They must make it clear that there will be 
consequences should China fail to live up to its commitments not to 
block Taiwan's entry to the WTO as a separate customs territory, 
Chinese Taipei, not a customs territory of China. It is my hope the 
President can give the Senate such concrete assurances before we begin 
debate on a bill extending permanent normal trade status to China, 
failing which it may be necessary for Congress to consider a 
legislative solution to this problem.
    As I mentioned earlier, the United States should support Taiwan's 
admission to the WTO, not merely for economic reasons, but also to 
honor our commitments to a close, long-standing ally, and to 
demonstrate our intention to support democracies that respect the rule 
of law.
    When our nation switched diplomatic recognition to mainland China, 
we also enacted the 1979 Taiwan Relations Act to state our continued 
commitment to the security of Taiwan. This law states, ``. . . the 
United States decision to establish diplomatic relations with the 
People's Republic of China rests upon the expectation that the future 
of Taiwan will be determined by peaceful means.'' It goes on to say the 
U.S. would ``. . . consider any effort to determine the future of 
Taiwan by other than peaceful means, including by boycotts or 
embargoes, a threat to the peace and security of the Western Pacific 
area and of grave concern to the United States.'' And finally, it says 
the U.S. will sell ``. . . defense articles and defense services in 
such quantity as may be necessary to enable Taiwan to maintain a 
sufficient self-defense capability.''
    Unfortunately, the Clinton administration has not lived up to the 
spirit of the Taiwan Relations Act. For example, despite the fact that 
China enjoys a 65 to 4 advantage in submarines, the administration has 
refused to sell submarines or other equipment to Taiwan that would 
allow it to fend off an attempt by China to impose a naval blockade on 
the island. The administration refuses to offer Taiwan the latest 
theater missile defense systems to defend against a buildup of Chinese 
ballistic missiles. And, it has reportedly said it will sell AMRAAM 
air-to-air missiles to Taiwan, which would help it maintain air-
superiority over its territory, only if the missiles are stored in a 
warehouse in the U.S. until China acquires an equally advanced weapon.
    The administration has also allowed China to increase Taiwan's 
diplomatic isolation. In addition to holding up its admission to the 
WTO, the communist regime in Beijing has also blocked its admission to 
the World Health Organization. Taiwan has sought membership in this 
organization to have access to the latest information on vaccines. An 
outbreak of the enterovirus in Taiwan in 1998 killed some 70 children, 
yet it received outside assistance only from the U.S.
    The administration has taken these steps despite the fact that 
China's leaders refuse to renounce the use of force in retaking Taiwan, 
and issue thinly veiled threats to use nuclear weapons should the U.S. 
intervene. For example, in March, the main newspaper of China's 
military said, ``China is neither Iraq nor Yugoslavia, but a very 
special country . . . it is a country that has certain abilities of 
launching a strategic counterattack and the capacity of launching a 
long-distance strike. Probably it is not a wise move to be at war with 
a country like China, a point which U.S. policymakers know fairly 
well.'' Another article in a Chinese military-owned newspaper went 
further, saying, ``The United States will not sacrifice 200 million 
Americans for 20 million Taiwanese. They will finally acknowledge the 
difficulty and withdraw.''
    In outlining what became known as the ``Truman Doctrine,'' 
President Harry Truman said,

        At the present moment in world history nearly every nation must 
        choose between alternative ways of life. The choice is too 
        often not a free one. One way of life is based upon the will of 
        the majority, and is distinguished by free institutions, 
        representative government, free elections, guarantees of 
        individual liberty, freedom of speech and religion, and freedom 
        from political oppression. The second way of life is based upon 
        the will of a minority forcibly imposed upon the majority. It 
        relies upon terror and oppression, a controlled press and 
        radio, fixed elections, and the suppression of personal 
        freedoms. I believe that it must be the policy of the United 
        States to support free peoples who are resisting attempted 
        subjugation by armed minorities or outside pressures. I believe 
        that we must assist free peoples to work out their own 
        destinies in their own way.

    Harry Truman spoke these words in 1947, at a time when it was very 
difficult to stand up to communism on the march from the Soviet Union. 
The challenge we face today in dealing with China and Taiwan should not 
be as great as the courageous struggle of the Cold War. The 
administration cannot support China's entry into the WTO without 
equally supporting Taiwan's entry into the WTO. This is but one of many 
signals we should be sending to the communist regime in Beijing, about 
America's determination to meet our commitments and our resolve to 
support Taiwan.
    Thank you again Mr. Chairman for the opportunity to testify today.

    [The letters to which Senator Kyl referred follow:]

                                      United States Senate,
                                     Washington, DC, July 27, 2000.

President William J. Clinton,
The White House,
Washington, DC.

    Dear Mr. President:

    As the Senate nears consideration of legislation extending 
permanent normal trade relations to the People's Republic of China 
(PRC), we are writing to express concern that Beijing may be planning 
to take actions that would have the effect of blocking Taiwan's 
accession to the World Trade Organization (WTO). According to press 
reports, the PRC recently offered a proposal at the WTO calling for 
that organization to recognize the PRC's position that Taiwan is part 
of the mainland. Taiwan is the United States' eighth largest trading 
partner, and we support its admission to the WTO as soon as it meets 
the criteria for membership.
    On several occasions, Administration officials have indicated that 
Taiwan's accession to the WTO would closely follow the PRC's. For 
example, in February, U.S. Trade Representative Charlene Barshefsky 
testified to the House of Representatives that ``. . . the only issue 
with respect to Taiwan's [WTO] accession . . . pertains to timing . . . 
there is a tacit understanding . . . among WTO members in general--but 
also, frankly, between China and Taiwan--that China would enter first 
and China would not block in any way Taiwan's accession thereafter, and 
that might be immediately thereafter or within days or hours or seconds 
or weeks, . . .'' Later that same month, in response to a statement by 
Senator Roth that ``there's a great deal of concern that Taiwan might 
be blocked (from entering the WTO) once China secures such 
membership,'' Ambassador Barshefsky testified that `` . . . the United 
States would do everything in our power to ensure that that does not 
happen in any respect because Taiwan's entry is also critical.''
    We respectfully request that you clarify whether your 
Administration continues to believe that Taiwan's entry to the WTO is 
critical, whether you remain committed to that goal, and whether you 
remain convinced that Taiwan will enter the WTO within days after the 
PRC's accession. Furthermore, is the Administration aware of any 
efforts by the PRC to impose extraordinary terms and conditions on 
Taiwan's accession to the WTO? What specific assurances has Beijing 
provided regarding the timing and substance of Taiwan's accession to 
the WTO? And what steps has your Administration taken to ensure that 
Taiwan will in fact join the WTO immediately following the PRC's 
accession?
    We would appreciate a response to this inquiry by August 18, in 
order to consider its contents prior to Senate debate on extending 
permanent normal trade relations to the PRC.

            Sincerely,

          Jon Kyl                       Orrin Hatch
          Larry Craig                   Mike Enzi
          Don Nickles                   Trent Lott
          Bob Smith                     Frank Murkowski
          Conrad Burns                  Gordon Smith
          Wayne Allard                  James Inhofe
          Mike DeWine                   Fred Thompson
          Mitch McConnell               Slade Gorton
          Pete Domenici                 Jesse Helms
          Connie Mack                   Tim Hutchinson
          Mike Crapo                    Arlen Specter
          Strom Thurmond                Jeff Sessions
          Jim Bunning                   Spencer Abraham
          Craig Thomas                  Robert Bennett
          Phil Gramm                    Susan Collins
          Dick Lugar

                            THE WHITE HOUSE

                               WASHINGTON

                             August 31, 2000

The Honorable Jon Kyl
United States Senate,
Washington, DC.

    Dear Senator Kyl:

    Thank you for your letter regarding Taiwan's accession to the World 
Trade Organization (WTO). My administration remains firmly committed to 
the goal of WTO General Council approval of the accession packages for 
China and Taiwan at the same Session. This goal is widely shared by 
other key WTO members.
    China has made clear on many occasions, and at high levels, that it 
will not oppose Taiwan's accession to the WTO. Nevertheless, China did 
submit proposed language to their working party stating that Taiwan is 
a separate customs territory of China. We have advised the Chinese that 
such language is inappropriate and irrelevant to the work of the 
working party and that we will not accept it. We believe that this 
position is widely shared by other WTO members.
    Again, thank you for writing concerning this important matter.
            Sincerely,
                                              Bill Clinton.

    The Chairman. Senator, I thank you very much, and may I 
inquire, will your schedule permit you to stick around so that 
we can sort of have a dialog between you and the next witness?
    Senator Kyl. I would be pleased, if the chairman thinks 
that would be helpful.
    The Chairman. Well, if you would do that, if you want to 
come up and sit here, that would be good, whatever you like.
    Senator Kyl. Thank you, Mr. Chairman. Perhaps I can just 
stay at the table with the next witness, and we can have a 
dialog if you like.
    The Chairman. Yes, sir, and that next witness is a long-
time friend of many of us on this committee, a distinguished 
American. He is the former Assistant Secretary of State for 
International Organization Affairs, and today he is widely 
recognized as an expert on so many aspects of foreign policy. I 
myself call on him for his ideas about something that I am 
contemplating, and many of the major daily newspapers of this 
country solicit from him his thoughts in the form of op ed 
pieces.
    John, we welcome you here this morning. We are now 
delighted to hear from you.

STATEMENT OF HON. JOHN R. BOLTON, FORMER ASSISTANT SECRETARY OF 
          STATE FOR INTERNATIONAL ORGANIZATION AFFAIRS

    Mr. Bolton. Thank you very much, Mr. Chairman. It is a 
pleasure to be here today. I, too, have a prepared statement I 
will ask be submitted for the record and try and summarize it.
    The Chairman. And it will, without objection.
    Mr. Bolton. As Senator Kyl has pointed out, this question 
of the accession of Taiwan to the WTO has been with us for 
quite some time.
    The Chairman. John, let me inquire, can the young folks in 
the back hear? You are able to hear. All right, good.
    Mr. Bolton. Indeed, earlier this year, when the PRC issued 
a white paper about a month before the Taiwanese election, it 
became clear that the issue of Taiwan's status vis-a-vis the 
PRC was going to be something that could impinge even on the 
question of WTO accession for both of those entities, and I 
think it is important to repeat just briefly what the PRC said 
back in February of this year.
    They said, and I am quoting now from their Foreign Ministry 
spokesman, ``Taiwan is purely an internal matter of China. 
Taiwan is an indivisible part of Chinese territory.'' This was 
their document. We view the white paper and the issue of normal 
trade relations as two entirely separate issues.
    What has happened in the WTO context is that Beijing has 
signaled, as Senator Kyl pointed out, that they want a 
political statement, in effect, made in the Protocol of 
accession that would apply to Taiwan. They want just a few 
words, but they want to try and show politically that Taiwan is 
and has essentially the same status internationally as Hong 
Kong does.
    Hong Kong is a member of the WTO, it is a separate customs 
territory, but it is also indisputably a part of China under 
the one-country-two-systems formula, and in fact the one-
country-two-systems formula was devised by Beijing not for Hong 
Kong originally but for Taiwan, which has repeatedly rejected 
it.
    In 1992, when these accession negotiations began, Taiwan, 
recognizing that it did not exactly hold the whip hand here, 
agreed to the accession package we have been talking about 
whereby the PRC would be admitted first and then essentially 
Taiwan would come in almost instantaneously behind it. That has 
been the understanding under which all of the complex bilateral 
negotiations between Taiwan on the one hand, the PRC on the 
other, and their trading partners have been carried out, as 
well as the work of the working parties in Geneva devising the 
protocols of accession.
    So when just a short time ago the PRC interjected this 
question of Taiwan's political status, it was not simply 
overturning the fundamental understanding that we had been 
working on for 8 years, it was also, in my view, taking direct 
aim at the World Trade Organization. I speak here today both as 
a free trader and as a supporter of expanding the role of free 
trade and as a believer, in fact, that if free trade and free 
markets ever did occur in mainland China it would have 
measurably important effects for the freedom of the Chinese 
people.
    But the WTO's basic theory is that it is a limited 
organization. It has an important role, but limited to economic 
trade issues. By trying to superimpose the political issue--the 
question of Taiwan's status--in these negotiations the PRC is 
taking direct aim at the independence and integrity of the WTO 
itself. We have seen with the recent demonstrations in Seattle, 
the pressures even within the United States to move the WTO 
agenda into extraneous issues like environmental questions and 
labor standards. The WTO is vulnerable to these kind of outside 
pressures, and those of us who favor free trade should be the 
strongest defenders of keeping the WTO free from these 
pressures.
    Nor is the approach that China has taken here unprecedented 
in international organizations, sad to say, and I lay out in my 
testimony--I will not repeat here--a summary of the extensive 
experience that we faced with the Palestine Liberation 
Organization in the late 1980's, when it was attempting to 
enhance its international status and in effect establish facts 
on the ground vis-a-vis Israel through its work in 
international organizations.
    It was only the strong leadership and opposition of the 
United States that prevented the PLO back in those days from 
achieving its objective, but this is a battle that is fought in 
many arcane and seemingly trivial fashions. The PLO's struggle 
was really the reverse of what China is trying to do--the PLO 
was trying to enhance its status. The PRC is trying to reduce 
Taiwan's status.
    But the PLO in 1988 declared itself a State. We have been 
through this struggle with them before. They already declared 
themselves a State, and in the United Nations, where they were 
an observer organization, they said, we want to take our name 
card, which at that time read ``Palestine Liberation 
Organization,'' and change it to the word, ``Palestine,'' and 
since it was their name card they were allowed to change it. 
That is the way it works at the U.N.
    Now, you say surely this cannot be something that takes up 
the attention of serious diplomats, but it took up a lot of 
attention. They were able to change from being an organization 
on their name card to being ``Palestine,'' which sounds like it 
is a real place, in fact it is a real place, and that was 
exactly their objective.
    They tried to do a number of other things to gain 
membership in the specialized agencies of the United Nations, 
which generally speaking require State status under customary 
international law, all of which were designed to change their 
position vis-a-vis Israel. As I say, they were defeated in 
those efforts.
    Mr. Chairman, the lesson of the PLO experience for the 
United States is that maintaining the nonpolitical nature of 
specialized and technical international agencies is entirely 
worthwhile, but it is even more beneficial to strive to prevent 
them from becoming venues of political conflict in the first 
place.
    Even successfully opposing efforts to use such agencies for 
political purposes, such as in the PLO example, can impose 
significant costs on the organizations by diverting them from 
their underlying missions and by setting adverse precedents not 
easily overcome later. The fact is, that without concerted 
American leadership, what the PRC is up to here has a very 
substantial chance of success. Let us be clear, I do not think 
even they believe their ultimate objective is to stop Taiwan 
from entering the WTO. I think their objective is much more 
subtle, and that is to say, ``well, it is just language in the 
protocol of accession. Certainly we can find language that 
would be acceptable, to both sides,'' but which nonetheless 
makes their political point. As I said in the prepared 
testimony, Mr. Chairman, you know, when health ministers deal 
with political questions sometimes your knees get a little bit 
shaky. I would just say with all due respect to my colleagues 
in the trade area, their dealing with political questions as 
sensitive as the status of Taiwan makes me a little bit nervous 
as well.
    The fundamental point here is that, as with the PLO, it is 
the PRC's approach that is illegitimate, not Taiwan's. It is 
China that is breaching the nonpolitical nature of the WTO by 
inserting this entirely political question, and Taiwan that is 
in effect defending the WTO's integrity by resisting.
    The people being intransigent and uncooperative here are 
from Beijing, not from Taipei. If the United States and others 
succumb to the PRC's ploy, not only will Beijing likely succeed 
against Taipei, but it will also have severely damaged the 
WTO's ability to withstand pressures to consider other 
extraneous, nontrade issues.
    This, Mr. Chairman, to sum up, is where I think Congress 
could well play a very important role. This is a real trade 
issue. This is not a human rights issue. This is not a question 
of Chinese proliferation of weapons of mass destruction. This 
is an issue that is directly related to PNTR status, and I 
would hope that Congress in one fashion or another could come 
up with a way to make it clear both to Beijing and to the 
administration that not only do a vast bipartisan majority 
object to any effort to stop Taiwan from coming into the WTO, 
but you also object to any effort by China or any concession by 
this administration in the negotiations that would attempt to 
change or alter or redefine Taiwan's political status.
    Thank you very much, Mr. Chairman. I would be pleased to 
answer any questions you may have.
    [The prepared statement of Mr. Bolton follows:]

               Prepared Statement of Hon. John R. Bolton

    Mr. Chairman and Members of the Committee, it is a pleasure to 
appear before you this morning to discuss issues relating to the 
proposed accession of the People's Republic of China (``PRC'') and the 
Republic of China on Taiwan (``ROC'' or ``Taiwan'') to the World Trade 
Organization (``WTO''). I have a prepared statement that I will 
summarize, and submit for the record, and I would be happy to answer 
any questions that Members of the Committee might have.
    On February 21 of this year, just a month before Taiwan's 
presidential election the PRC released an 11,000 word white paper 
reiterating Beijing's position that it reserved the right to use 
military force in order to reunify Taiwan with the Mainland. Indeed, 
the white paper announced that Beijing would consider military force 
permissible merely if Taiwan, in the PRC's view, unjustifiably delayed 
talks on reunification, a major escalation of the threat level against 
the ROC. (Previously, Beijing had said that invasion would be justified 
if Taiwan explicitly declared independence from the PRC, or if Taiwan 
was occupied by a foreign power.) Although the United States rejected 
this PRC assertion, and although many believed that it backfired on 
Beijing in the ROC election, the white paper unquestionable represented 
a major escalation of international pressure by the PRC against Taiwan.
    Accordingly, since at least early this year, many have worried that 
the PRC would not adhere to the terms of the initial agreement under 
which both PRC and ROC applications to the General Agreement on Trade 
and Tariffs (``GATT'') (and now in GATT's successor organization, the 
WTO) would be treated effectively in tandem. When criticisms of the 
white paper were raised in the United States, just a few days after its 
release, the PRC reacted angrily to any suggestion that its military 
threats against Taiwan should be considered in connection with 
Congressional deliberations over Permanent Normal Trade Relations 
(``PNTR'') status for China. PRC Foreign Ministry Spokesman Zhu Bangzao 
said: ``Taiwan is purely an internal matter of China. Taiwan is an 
indivisible part of Chinese territory . . ..'' Zhu said: ``we view the 
white paper and the issue of normal trade relations as two entirely 
separate issues,'' and that China ``firmly opposes any attempt to link 
these issues.'' The March 18, 2000, election of Chen Shuibian as 
Taiwan's President, and the effective demise of the ``one China'' 
policy reflected in the broad popular consensus on the island, have 
only exacerbated those fears.
    Until the successful conclusion of the requisite bilateral 
negotiations between the PRC and the United States, the European Union, 
and other major trading partners, the issue of Taiwan's accession 
pursuant to the original ``understanding'' had not received prominent 
attention in Washington. Just recently, however, Beijing has explicitly 
introduced the explosive political issue of Taiwan's political status 
into the WTO's consideration of the pending membership applications for 
China and Taiwan. Although apparently not directly challenging Taiwan's 
application, the PRC is attempting to condition Taiwan's WTO entry on 
accepting the long-standing PRC position that Taiwan is part of 
``China.'' If the PRC's insistence on this seemingly innocuous bit of 
nomenclature were to prevail, it would mark a significant victory in 
its campaign to assert sovereignty over Taiwan. Moreover, such a 
politicization of the WTO could gravely damage this already-shaky new 
organization, both in the United States and in the world as a whole.
    The WTO is intended to be purely a trade organization, divorced 
from political questions that should be handled bilaterally or in other 
international organizations. Trade issues themselves are often 
intractable, and introducing political or other non-trade issues might 
bring the entire WTO process to a halt. Thus, neither the WTO nor its 
predecessor, the GATT, requires members to be ``states'' in 
international terms, but only ``customs territories'' that have 
effective control over customs policies within their geographical 
territories. Under this approach, Hong Kong, for example, is a WTO 
member, even though it is indisputably part of the PRC. This is an 
entirely salutary approach (and was long followed in the GATT context), 
one that it is in the long-term interests of the United States, and one 
that we should work hard to preserve. It clearly differentiates 
questions of WTO membership from membership in the United Nations, or 
the UN's specialized and technical agencies, which almost invariably 
limit membership to ``states'' as understood under ``customary 
international law.''
    Taiwan is also currently on track for WTO admission as a ``customs 
territory,'' thus avoiding, for WTO purposes, the flammable issue of 
Taiwan's international political status. When the accession process for 
Taiwan and the PRC was launched in late 1992, all agreed that the 
underlying political disputes would be put aside, consistent with 
GATT's limited focus on trade. Under that arrangement, once all of the 
requisite bilateral and multilateral negotiations were successfully 
completed, the PRC was to enter GATT (and, subsequently, the WTO) 
slightly ahead of Taiwan, which would in turn become a member under the 
name ``Chinese Taipei.'' At that point, the PRC, Hong Kong and Taiwan 
would all be full WTO members as ``customs territories,'' with the 
still-unresolved political issues to be fought out elsewhere.
    The PRC's interjection of the disruptive political status issue 
into the WTO admissions process now was obviously carefully calculated 
in Beijing. Washington's first reaction was that the PRC might have 
endangered the PRC's quest for PNTR with the United States, which the 
Senate is still considering. To avoid unrest in Congress, the Clinton 
Administration correctly stated that it opposed the PRC effort. 
Significantly, however, Deputy U.S. Trade Representative Rita Hayes 
also said publicly that the 1992 arrangement was still in place, and 
that ``China is going to live up to its commitments,'' something that 
the PRC itself has not yet acknowledged. To the contrary, China's 
Deputy Trade Minister, Long Yongtu, responded ominously: ``the one 
China policy is a matter of principle for us.''
    In fact, the PRC is trying to advance its political agenda in a 
non-political forum, rather than directly trying to keep Taiwan out of 
the WTO (although that might well be the practical consequence). 
Because the trade negotiators, business interests and lawyers who 
inhabit the WTO world are relatively isolated from larger international 
political issues, the stakes will not appear to them as high as they 
really are. Mere questions of ``name cards'' seem insignificant 
compared to ``important'' questions like PRC agricultural export 
subsidies (on which, not coincidentally, the PRC is also now 
backtracking).
    This is a familiar tactic in international organizations. The 
undisputed master is the Palestine Liberation Organization (``PLO''), 
which for years attempted to enhance its international status by 
campaigning for membership in such bodies as the World Health 
Organization (``WHO''), which requires that members must be ``states'' 
in international parlance. By so doing, the PLO hoped to enhance its 
international status (or at least the perception of that status, which 
may be nearly the same thing), and thereby create ``facts on the 
ground'' in its negotiations with Israel, thus bolstering its 
bargaining position.
    The PLO began this effort in 1988, by declaring its ``statehood,'' 
and changing the name card in front of its desk at the U.N. from 
``Palestine Liberation Organization'' to ``Palestine.'' ``Palestine,'' 
of course, sounds much more like a ``state'' or at least a geographical 
entity than something with the word ``organization'' in its name. This 
name change the PLO could accomplish unilaterally, but membership in 
U.N. specialized agencies required affirmative votes of the existing 
memberships. Accordingly, in late 1988 and early 1989, the PLO began a 
massive diplomatic campaign to secure both diplomatic recognition, as 
well as the necessary majorities in international organizations. 
Although the PLO was blocked in its campaign to join the WHO in 1989, 
for example, its efforts at least briefly created chaos within the U.N. 
system, from whose members the PLO hoped to extract political or other 
concessions, even if it did not achieve the ultimate objective of full 
membership. (I have attached a brief description of the WHO controversy 
as an Appendix to this testimony.)
    Even after its unsuccessful efforts in the WHO, the PLO tried 
similar, and ultimately unsuccessful approaches in a number of other 
international organizations. One of its last efforts to enhance its 
status was in the U.N. General Assembly. There, the PLO proposed that 
its desk on the floor of the U.N. General Assembly be physically moved 
closer to the location of the desks of the observer states (Switzerland 
and the Holy See), hoping thereby to pretend that it too was an 
observer state rather than an observer national liberation movement. 
One might say, correctly, that such apparent trivialities should not 
impinge on truly important policy issues, but, sadly, in international 
diplomacy almost nothing is too trivial.
    The lesson of the PLO experience for the United States is that 
maintaining the non-political nature of specialized and technical 
international agencies is highly worthwhile, but that it is even more 
beneficial to strive to prevent them from becoming venues of political 
conflict in the first place. Even successfully opposing efforts to use 
such agencies for political purposes, such as in the PLO case, can 
impose significant costs on the organizations by diverting them from 
their underlying missions, and by setting adverse precedents that are 
often not easily overcome later. Moreover, the PLO example also 
demonstrates how seemingly arcane points of argument can assume 
enormous significance if not handled properly when they arise. Finally, 
had it not been for the leading role played by the United States in 
opposing the PLO, it almost surely would have succeeded in its quest 
for U.N. membership, with untold adverse consequences for the Middle 
East peace process and the U.N. system itself. The fact remains that, 
absent concerted American leadership and diplomacy, disruptive 
political agendas have a far higher chance of success in technical 
organizations, a point we cannot ignore in the present discussion.
    Just as there is nothing so unedifying as the sight of Health 
Ministers attempting to resolve international political questions, also 
unappetizing is the notion of trade officials negotiating the political 
status of Taiwan. The PRC will doubtless offer ``compromises'' on its 
initial demand, and insist that Taiwan's subsequent unwillingness to 
give way is the real source of the ``problem.'' Trade officials, like 
their health ministry counterparts faced with PLO intransigence, will 
predictably hail the PRC ``concessions,'' and pressure Taiwan to accept 
what would otherwise be flatly unacceptable. This is the PRC's real 
strategy, and Deputy USTR Hayes' enthusiastic embrace of the Chinese 
view shows that Beijing has carefully measured its marks in the Clinton 
Administration.
    But the fundamental point is that, as with the PLO, it is the PRC's 
approach that is illegitimate, not Taiwan's. It is China that is 
breaching the non-political nature of the WTO by inserting this 
entirely political question, and Taiwan that is, in effect, defending 
the WTO's integrity by resisting. The people being intransigent and 
uncooperative here are from Beijing, not Taipei. If the United States 
and others succumb to the PRC's ploy, not only will Beijing likely 
succeed against Taipei, but it will also have severely damaged the 
WTO's ability to withstand pressures to consider other extraneous, non-
trade issues, such as labor standards and the environment, to name just 
two. Certainly the past few years have shown us just how vulnerable the 
WTO is to such pressures, and it would be irresponsible not to take the 
implications of Beijing's ploy seriously.
    Here is where Congress must declare unequivocally that the PRC's 
maneuver is unacceptable, and that there is no possible compromise on 
this point. This is a real trade issue, not one of human rights or 
weapons proliferation, and one that therefore is directly related to 
PNTR status. Congress should insist, before granting PNTR, that the PRC 
drop all political objectives in the WTO, and specifically that is 
should not attempt to derail Taiwan's accession, or attempt to extract 
political leverage from the process. It should also insist, in the 
Clinton Administration's waning days, that the President himself ensure 
that U.S. diplomats are not seduced by Chinese ``reasonableness,'' and 
not allow the 1992 accession agreement to be subverted.
    Senator Kyl's proposed amendment would go a long way toward 
achieving this objective. Because of the Administration's weak defense 
of the original WTO ``understanding'' on PRC and ROC accession, 
Congress has little maneuvering room if it wishes to take up the slack. 
The Kyl amendment attempts to overcome that problem, not by 
undercutting the granting of PNTR status to China, or by introducing 
extraneous non-trade issues, but simply by calling on China to adhere 
to its original agreement on the sequence of accession to the WTO for 
both the PRC and ``Chinese Taipei.''
    The amendment is a limited and prudent step, and one that should 
not derail or unduly delay the PNTR process. There is no inconsistency 
between the Kyl amendment and a position fully supportive of free trade 
and the WTO. To the contrary, in order to preserve the WTO as a non-
political body, Congress would do well to consider the long-term 
benefits for the WTO that would accrue by supporting what could be an 
important and precedent-setting declaration of Congressional intention 
to insulate the WTO from extraneous political debates. Whatever one's 
position on PNTR, or on other amendments concerning PNTR that have been 
proposed, the Kyl amendment should be considered on its own merits as a 
genuine effort to expand the legitimate membership of the WTO, enhance 
trade opportunities for Americans, Chinese and Taiwanese alike.
    Mr. Chairman, thank you again for the opportunity to testify today, 
and I would be pleased to answer any questions the Committee may have.

     Appendix: The Status of the Palestine Liberation Organization

    In 1988, after the Palestine Liberation Organization (``PLO'') 
officially renounced the use of terrorism, some ninety nations 
acknowledged the PLO as a ``state'' for Palestinians in the West Bank 
and the Gaza Strip. Shortly thereafter, the PLO mounted a wide-ranging 
effort to join various agencies in the U.N. system to further 
``confirm'' its international law status as a ``state.'' Since almost 
all U.N. bodies provide full membership only to ``states,'' the PLO saw 
membership as a validation of international legitimacy, and an 
important source of political assistance in the Arab-Israeli peace 
process.
    In early 1989, Israeli officials signaled to the United States that 
they were quite concerned about PLO initiatives to join bodies as 
diverse as the World Health Organization (``WHO''), the International 
Telecommunications Union (``ITU''), UNESCO and others. The United 
States accepted Israel's analysis that the PLO was not a ``state'' 
within the meaning of customary international law, and had no rightful 
claim to join any U.N. organization as a ``member state.'' Moreover, 
the United States was particularly insistent that the legal and 
diplomatic issues surrounding the PLO's status not be contested in the 
U.N.'s specialized agencies, whose politicization we had long resisted.
    By early April, 1989, however, it seemed quite likely that the PLO 
might succeed in obtaining WHO membership, if for no other reason than 
that a majority of WHO members had already recognized the PLO's 
``statehood.'' Indeed, the U.S. Mission in Geneva believed that the 
PLO's membership in the WHO was virtually ``inevitable.'' Other Western 
nations had essentially the same assessment, in part because of the 
PLO's efforts, and in part because of professed outrage at Israeli 
treatment of Palestinians in the occupied territories. The PLO itself 
was confident of its prospects, rejecting the U.S. request that it back 
away from its U.N. membership campaign.
    Given these circumstances, only a vigorous American effort could 
derail the PLO. Secretary of State James A. Baker, III personally 
emphasized the strength of American opposition in a variety of ways. 
One of the first of these was a world-wide cable to all American 
embassies, instructing them to approach foreign ministries at the 
highest possible level to explain the American position, and to stress 
the importance we attached to the issue. Similarly, the Department 
called in Ambassadors in Washington to make the same points. By then, 
PLO rhetoric had risen to the point that PLO leader Yassir Arafat told 
U.N. Secretary General Perez de Cuellar that he would seek to have 
Israel expelled from the U.N. General Assembly if the PLO were not 
admitted to the specialized agencies. Arafat was also engaging in an 
extensive disinformation campaign, telling Ambassadors in Geneva that 
the United States was actually ``indifferent'' to whether or not the 
PLO succeeded, and that U.S. ``opposition'' to the PLO's efforts was 
purely for domestic American political consumption.
    By late April, 1989, word of the PLO's efforts reached Capitol 
Hill, where opposition to the PLO was quite strong. Some Senators spoke 
openly about not paying the U.S. assessment (typically twenty-five 
percent of the budget) to any U.N. agency that admitted the PLO. 
Secretary Baker accepted this approach at the end of April, and stated 
it publicly on May 1, 1989: ``I will recommend to the President that 
the United States make no further contributions, voluntary or assessed, 
to any international organization which makes any change in the PLO's 
present status as an observer organization.'' Obviously, Baker had 
already spoken to President Bush, and was completely confident that his 
recommendation would be immediately accepted, if necessary.
    Baker's public statement, coming just a few days before the opening 
of the World Health Assembly in Geneva, had a dramatic effect. First, 
it proved conclusively just how strongly the United States cared about 
the possibility of the PLO joining the WHO. Second, it demonstrated in 
American domestic political circles the importance the issue had for 
the President and Secretary of State. Third, it got the attention of 
U.N. officials around the world, who finally began to realize the 
potentially enormous impact of an international decision to admit the 
PLO to any U.N. body or agency.
    When the World Health Assembly formally opened on May 7, 1989, the 
issue of the PLO's status was still unresolved. Health Ministers, who 
typically head delegations to the Assembly, had no real sense of the 
political meaning of the PLO's efforts, and they were largely 
uninstructed from their foreign ministries. Moreover, ``compromise'' 
Assembly resolutions being floated by several Western governments in 
Geneva seemed to imply that the PLO's membership in the WHO (and then 
other components of the U.N. system) was only a question of timing 
rather than substance.
    Accordingly, despite Secretary Baker's unequivocal public 
statement, the United States remained very concerned about what would 
actually happen in Geneva. The Western Group was divided and uncertain, 
and other regional groupings seemed perfectly inclined to allow the 
PLO's application to succeed. Procedural complexities consumed enormous 
amounts of time, particularly on the possibility of secret votes in 
committees and in the World Health Assembly itself on the key issues. 
Draft resolutions multiplied, but the American delegation was 
unequivocal that it would not accept any compromise on the basic point 
that the PLO was simply not qualified to be a WHO member because it was 
not a ``state.'' The firmness of the United States position surprised 
many delegations, especially among the European health officials. There 
was considerable resentment about the financial ``threat'' that the 
United States had made, but there was no question that the message had 
gotten across.
    When the floor debate in the World Health Assembly finally began, 
confusion was rampant. Efforts at close coordination among Western 
countries frequently broke down, requiring numerous recesses and 
further consultations (all complicated by internal EU consultations). 
Fortunately, several African and Pacific island countries were strong 
supporters of the U.S. position. One critical vote was to cut off 
further debate on the PLO's application, which carried by a substantial 
majority of those voting (although there were many abstentions). The 
final vote rejecting the PLO application, as the New York Times 
reported, ``came after six hours of tumultuous and confused 
parliamentary maneuvering.'' Congressional reaction to the World Health 
Assembly's vote rejecting the PLO was uniformly positive. Subsequent 
PLO efforts in 1989-90 to enhance its status were similarly 
unsuccessful.

    The Chairman. I am going to comment to both of you your 
testimony is just right on target.
    A question prepared for me, and I just asked the young man 
if he can give me the direct figures and he said, of course, 
which I expected him to do, and he said, Taiwan imports from 
the United States almost $20 billion a year. Mainland China 
imports only about $14 billion.
    Now, the interesting thing about that is that China has 50 
times the population of Taiwan, and all sorts of things like 
that. Now, I want to ask you, both of you, and particularly you 
on the first one, John, you were Assistant Secretary of State 
for International Organization Affairs. I believe that was your 
specific title at the time. Now, tell me how China could work 
to block Taiwan's entry into the WTO in the months before China 
itself enters the WTO. Either one of you, or both of you.
    Mr. Bolton. Well, I think they have already started to do 
it.
    The Chairman. I know that.
    Mr. Bolton. I think your question is right on target. The 
path they have chosen is language that to the nonexpert on 
cross-Strait issues would seem like something that is pretty 
innocuous, frankly. What they are trying to do is to put the 
political question of Taiwan's accession into their protocol 
document in a way that would make it impossible for Taiwan to 
accept.
    In other words, they are trying to, in effect, condition 
Taiwan's membership on accepting political subordination to 
Beijing, and their argument is going to be: ``we are not 
blocking Taiwan. We are just proposing something that we 
think,'' as their Foreign Ministry spokesman said, ``is a 
matter of deep principle. We are happy to have Taiwan in, just 
as we are Hong Kong.'' That is why this is such a pernicious, 
such an adept diplomatic effort by them and why it is so 
dangerous, because it appears to float below the radar screen 
when in fact it has enormous implications.
    The Chairman. Now, Hong Kong is on the Rules Committee of 
the WTO, is that not correct?
    Mr. Bolton. I believe that is right, yes, sir.
    The Chairman. Jon, I believe that is correct.
    Now, Jon, I believe you mentioned President Clinton's 
response to the letter that I joined you in sending. I think 
there were 30 of us who joined you, as a matter of fact----
    Senator Kyl. Yes.
    The Chairman [continuing]. Asking what assurances China 
gave the United States regarding Taiwan's accession to the WTO, 
and I do not believe the President answered the question, and 
we were sincerely seeking a response.
    It reminds me of an old gentleman back home, Mr. Nee 
English, N-e-e English. Now, I was working in a drug store at 
the time. I was in high school. I looked out the front window 
and there was a lady just pointing her finger at Mr. English, 
and he came in shaking his head, and I said, Mr. English, what 
did she say to you? He said, ``I don't know. She didn't say.''
    And so Mr. Clinton, whoever wrote the letter for him, did 
not say how he would respond to that letter. Now, it appears to 
me that from the letter all of China's assurances to the 
administration seemed, before China started the shenanigans 
going to Taiwan's status--and I believe that was back in July. 
It does not state in the President's letter that Clinton-Gore 
received pledges in writing from Beijing about permitting 
Taiwan's accession to the WTO. Am I incorrect about that?
    Senator Kyl. Mr. Chairman, you are correct, there is no 
reference to any written assurance, and the implication from 
the President's letter is that the assurances were prior to 
China's most recent statements. I think in some respects the 
President has answered. He did it very carefully and 
diplomatically, but I might actually quote the paragraph.
    The answer is one which is not satisfactory, but I do think 
he has answered, and I would stress to my colleague, Senator 
Thomas, I think this is the point made. The President himself 
is signaling that we have got a problem here, and I think the 
question is, how can we in Congress help him, in what I believe 
is a very sincere effort on the part of the President to ensure 
that Taiwan enters into WTO accession under the right terms, 
exactly as Mr. Bolton has said.
    The President first said ``China has made clear on many 
occasions, and at high levels, that it will not oppose Taiwan's 
accession to the WTO,'' but now comes the other shoe. 
``Nevertheless, China did submit proposed language to its 
working party stating that Taiwan is a separate customs 
territory of China.''
    Here is where the President put forth his position. ``We 
have advised the Chinese that such language is inappropriate 
and irrelevant to the work of the working party,'' precisely 
Mr. Bolton's point, ``and that we will not accept it,'' the 
President said. ``We believe that this position is widely 
shared by other WTO members.''
    Words matter. I am a lawyer, and I cannot tell you how many 
times I have argued with other lawyers about one or two words, 
and nonlawyers might say, what difference does it matter, but 
it can be the difference between lightning and lightning bug. 
There is a big difference sometimes.
    And what Mr. Bolton said is exactly correct. What the PRC 
is attempting to do here is to use this nonpolitical entity to 
help create the legal basis for its claim that Taiwan is 
nothing but a province of China, whereas most of the world 
community treats Taiwan as something different from that. It is 
a subtle distinction, but an important one, and that is why the 
difference between the words, ``separate customs entity, 
Chinese Taipei,'' which is the Taiwnese description, and that 
which the United States has heretofore supported, I believe.
    It is so much different than ``separate customs entity of 
China,'' which is the PRC language that has been submitted. It 
may seem unimportant today to a lot of people, but for the 
reasons that Mr. Bolton pointed out and, frankly, confirmed by 
President Clinton in his letter, it is very important.
    It is unacceptable to the United States, and I believe that 
the Congress should do whatever we can to support the 
President's position so that the PRC understands very clearly 
that this is a unified position of the American Government. We 
are all for China's accession, but we are also all for Taiwan's 
accession under the right terminology.
    The Chairman. I am going to turn it over to my friend to 
the right in just a minute, but the United Nations is beginning 
its sessions this week. That is correct, is it not?
    Senator Kyl. Today.
    The Chairman. And Taiwan I am confident is going to make a 
bid for membership in the United Nations. Now, last year the 
Clinton-Gore administration in fact spoke against Taiwan's 
membership. Is my memory correct on that? Whereas previously 
the administration has simply stayed silent.
    Now, I will stop there and put a pause, and I yield to you, 
sir.
    Senator Thomas. Thank you, Mr. Chairman. A couple of 
questions, I guess. It is kind of unusual in a hearing not to 
have a witness who represents a different point of view. You 
apparently do not. The two of you represent the same point of 
view, so that is fine. Do you favor WTO for China, the PRC?
    Mr. Bolton. I favor it ultimately, yes, I do. I should not 
step on my lines. Tomorrow I am going to appear as a member of 
the United States Commission on International Religious 
Freedom, where we have taken--which is a bipartisan 
Commission--certain views on when it would be appropriate for 
China to enter, given its repression of religious freedom, but 
I do favor China's admission, and I do support it at an 
appropriate time.
    Senator Thomas. You are not particularly interested in 
whether it happens during this session of Congress or not?
    Mr. Bolton. I think the timing of the grant of PNTR status 
and, indeed, China's accession sends an important signal and 
given, for example, just in the area of religious freedom, that 
the Clinton administration's own report, issued yesterday, says 
that conditions of religious freedom in China have deteriorated 
markedly in the past year, not our report but the 
administration's report, I do worry about the timing, and I 
think getting----
    Senator Thomas. I do not understand. What do you mean, you 
worry about the timing?
    Mr. Bolton. I think it sends a bad signal to Beijing that 
they can increase repression of religious freedom and still get 
PNTR status.
    Senator Thomas. So you are talking about religious freedom 
here and not trade, is that right?
    Mr. Bolton. Well, you were asking the question and I wanted 
to give you a full answer. I believe that the question of 
Taiwan's political status is highly important to American 
foreign policy, and I do not think--what the thrust of my 
testimony is, it should not be swept aside, as I believe the 
PRC would like to have it done, simply to grant them PNTR 
status.
    Senator Thomas. You think the House swept it aside when 
they passed----
    Mr. Bolton. I do not think they considered it, because I 
think the most recent PRC effort, this language in the 
accession document, occurred after House action. What the House 
would have done had they done it before----
    Senator Thomas. I do not understand that. We have been 
dealing with them for a very long time. To be surprised in the 
last couple of months, I do not understand that. If you have 
been involved with China--I assume you have--they have changed 
substantially over the last number of years, and to suggest 
that we did not know what is happening over there seems to be a 
little naive.
    Mr. Bolton. I can only speak for myself on that point, 
Senator. I have worried about this point with respect to Taiwan 
from the get-go.
    Senator Thomas. OK. Well, that is fine.
    Jon, or Senator Kyl, I agree entirely with your view, and I 
think we ought to help the President and support what he 
indicated in the letter. Do you think not having WTO, or normal 
trade relations, passed in this session would be helpful?
    Senator Kyl. Well, Mr. Chairman, Senator Thomas, I agree 
with you that we should grant WTO status to the PRC, and I have 
no objection, notwithstanding the same concerns that Mr. Bolton 
has, to that occurring in this session. But, I do think some 
other things need to accompany it. It needs to be based upon 
certain fundamentals, one of which is that the Chinese, the 
PRC, should not be able to dictate the exact terminology with 
respect to which Taiwan also comes in, and I have no objection 
to Taiwan coming in immediately after the PRC as well. My point 
is that they should not use their entry into the WTO to score a 
different political point.
    It is the same thing you were talking about with respect to 
human rights. While it is related, it is not the trade issue 
per se, and I would say the same thing here. While the Chinese 
fixation on identifying the political status of Taiwan is a 
related issue, it should not be a factor in the granting of 
either WTO status for the PRC or Taiwan.
    Senator Thomas. And I agree with you. I agree with you 
entirely.
    Mr. Bolton, is it not true that PRC probably will be in WTO 
whether we pass this or not?
    Mr. Bolton. I think that is correct, but I think--and I do 
not object to that, as I have said, but what I do think is 
important is that we not set a precedent that will damage the 
WTO in years down--in years to follow, where political 
questions like this can be interjected and where, if other 
countries see the opportunity for political gain, they will use 
the WTO and corrupt it.
    Senator Thomas. I agree with you entirely, but there is no 
assurance that that is going to happen. We can oppose that, and 
we can do it in the working group.
    Mr. Bolton. The most important thing, Mr. Chairman, in my 
experience in international organizations--and I think it is 
true for others as well--the single most important thing is 
American leadership, absolutely firm American leadership that 
there will be no compromise on this question of keeping the 
political question out, and that is--I believe it is very 
important that Congress make its views on that clear.
    Senator Thomas. I could not agree with you more. My concern 
is that some kind of an amendment or several amendments that go 
on this bill that keep this from happening.
    I guess the real question--I do not know that anybody would 
disagree with any of those things, religious freedom, all this 
sort of stuff, but that is really not the issue. We all agree 
with that. The issue is, how do we best bring about change in 
the PRC? Do we do it by pushing them off and making it more 
difficult, or do we insist on certain things as they move 
forward? It seems to me that is the issue.
    It is pretty easy to just complain and say we are not going 
to do this, we are not going to do that, but if we want to 
bring about change, then how do you do that?
    Senator Kyl. Mr. Chairman, could I just make a quick 
comment on that?
    The Chairman. Sure.
    Senator Kyl. There has been a lot of concern about the 
PRC's willingness to abide by the rules of the WTO once it is 
admitted to the organization, and that concerns me, too. I 
think that over time it is useful for a country like the PRC to 
be in a regime like this. Over time the hope is that it will 
learn to live with the same rules that everybody else learns to 
live with, and so for that reason, even though I am somewhat 
skeptical about their initial willingness to comply with these 
rules, I think that that is useful.
    I think a good starting point is to make it clear to them 
that they cannot dictate the words with respect to Taiwan's 
accession, and that is why I agree with the President that he 
says, their words are unacceptable, and we need to make it 
clear.
    Senator Thomas. Yes, I agree, and we ought to find a means 
of doing that, and I think we can do that. I do believe 
strongly, and this is one of the reasons I am a strong 
supporter of it, I think we would have better luck and have a 
better chance to deal with PRC over time.
    So thank you, Mr. Chairman.
    The Chairman. But how about Taiwan. Are we going to leave 
them hanging, dry and high, and that is precisely what the 
argument is among so many people who favor doing it now.
    Now, does anybody believe that the House of Representatives 
would balk at an amendment giving fair play to Taiwan, an 
amendment to that effect? Would that kill the proposition?
    Senator Thomas. I do not know, Mr. Chairman. Part of it, I 
read about it, is the difficulty on timing and so on, but you 
know--but I guess I would just respond I could not agree with 
you more.
    Listen, we have been committed to Taiwan, we are committed 
to Taiwan. There is no question about that.
    The Chairman. Except when the vote is involved on this 
question.
    Senator Thomas. I do not think that is the question 
involved here. I think the process here is what you are talking 
about, not our commitment, and I agree with Senator Kyl, we 
need to find a way to get that message there, but I do not 
think an amendment is--that is my view.
    The Chairman. So what happens, I ask you, to Taiwan?
    Mr. Bolton. Well, I think the risk of Congress not doing 
something now is that at some point in the very near future, 
let us say PNTR passes this month, goes into effect. The 
resolution is adopted, and then the PRC actually joins the WTO, 
and then, and only then--that is to say, once it is clearly a 
member, and once PNTR has kicked in--then it says: ``we would 
be delighted to have Taiwan in, except we want an explicit 
acknowledgement it is a province of China.'' Then they are 
already in. Then your leverage is gone.
    I would just think as a bargaining matter you are in a 
stronger position to do something now, just to have a very 
simple----
    The Chairman. You are exactly right.
    Mr. Bolton [continuing]. Amendment that says: ``do what you 
say you were going to do, stick to your commitment.''
    Senator Thomas. Well, there is a list of bargaining issues 
as long as your arm, you know that and so do I, so bring them 
up--there is tons of them. Why do we not put them all on?
    Mr. Bolton. Because I think this one, as I said in my 
testimony, goes to the heart of the integrity of the World 
Trade Organization itself.
    Senator Thomas. Absolutely.
    Mr. Bolton. If this one goes awry--this is not a human 
rights question, it is not a WMD question, it is not a 
religious freedom question. It is about whether the WTO will 
work or not, and I think we have an interest in making the WTO 
work. I fear what is going to happen if we allow this kind of 
behavior from an entity that is not even in the WTO.
    Senator Thomas. You are suggesting something is going to 
happen that is not necessarily going to happen.
    Mr. Bolton. I am worried based on----
    Senator Thomas. I know you are worried, but that does not 
make it happen.
    Mr. Bolton. No, but I----
    Senator Thomas. A lot of people are worried about other 
things.
    Mr. Bolton. I am worried about the position, and the 
strength of the position of this administration. I think 
Congress can measurably stiffen its spine.
    Senator Thomas. I think we can, too. Let's find a way to do 
it besides an amendment.
    The Chairman. Well, the fact remains that Taiwan qualified 
itself for admission to WTO years ago.
    Mr. Bolton. I was going to say, Mr. Chairman, on that 
point, if you look at the actual agreement in 1992, that was 
probably a mistake then. It probably was a mistake for Taiwan 
or the United States to conclude that we would allow the PRC to 
enter first and Taiwan only to enter second. We should have 
said they should enter when they are ready, irrespective of 
political considerations, and had we done that Taiwan would 
already be a member now.
    Senator Thomas. Was the agreement you talk about ever 
finalized?
    Mr. Bolton. No, it was not, and it was an oral agreement, 
and many people have questioned it from the beginning.
    I am trying to be realistic, Senator, as I think you are, 
and say we are not going to go back to 1992 and reopen that. 
Let us take it for what it is and simply ask that the PRC agree 
to what they agreed to.
    Senator Thomas. But my point is, you indicated the 
agreement in 1992. There was no agreement in 1992.
    Mr. Bolton. There was certainly no written agreement, that 
is correct, but I do not know of any person involved in trade 
policy who has not referred to it as an agreement.
    Senator Thomas. Sure, and I agree with you, and there are 
26 countries, most of whom would agree with that.
    The Chairman. Further comment.
    Senator Kyl. Well, Mr. Chairman, I just hope that we can 
find a way over the course of the next couple of weeks to stand 
united for the proposition that Taiwan needs to come in under 
the terms that the administration and the Congress believe is 
appropriate, and that we should hold out the prospect of 
legislative action to ensure that as one way for the 
administration to nail it down.
    And I would just suggest, and do this with all deference to 
my colleague from Wyoming, that perhaps we could all be a 
little bit less specific about what we may or may not do under 
the circumstances. It could be that if there is an 
understanding that Congress might well act legislatively if the 
PRC is not willing to agree with the administration, if we are 
able to hold out that possibility, then I think it likely that 
the PRC will work with our administration.
    But if we announce in advance that no matter what they do 
we are still willing to grant them entry, then we have 
certainly given up one element of legislative leverage, and 
after all, it is the U.S. Congress that has this authority. 
And, we could use it to help the administration right now, if 
we will only do that.
    The Chairman. John.
    Mr. Bolton. Just one last bit of history. Congress has 
acted in this way before. During the PLO's efforts to join the 
World Health Organization in 1989, for example, it became clear 
to us we were going to lose that fight unless we took some 
pretty strong diplomatic action.
    And my boss at the time, Jim Baker, issued a statement just 
before the World Health Assembly where he said, ``I will 
recommend to the President that the United States make no 
further contributions, voluntary or assessed, to any 
international organization which makes any change in the PLO's 
present status as an observer organization.'' That was tough 
language. That is using contributions as a weapon, and it 
worked. Frankly, if Secretary Baker had not said that, we would 
have lost.
    Congress was not satisfied with that. Congress, after the 
PLO failed to get into the World Health Organization, took 
almost exactly that language and put it in statutory form to 
say: ``it is not that we do not trust Jim Baker and President 
Bush. We want to make it clear Congress has an independent view 
of this.''
    So Congress does this all the time.
    The Chairman. Let me ask the three of you this. Suppose, 
hypothetically, we did the right thing instead of playing 
Chicken Little because of the heavy lobbying that has been done 
on this, being honest about it, heavy contributors who in the 
past perhaps have contributed to me--in the future they may 
not, but that is up to them.
    I think that this issue is so important that the Congress 
ought to go ahead and do something in the Senate first about 
Taiwan that is specific so it does have to go back to the 
House, and I wonder how many House Members and how many Senate 
Members would object to coming back after the election if the 
schedule warrants it. If we are not willing to do that, we are 
not very concerned about Taiwan. I think we ought to stand up 
for Taiwan now, and not in some vague future time.
    Any further comment or response?
    Senator Kyl. Mr. Chairman, I have personally visited with 
your former colleague and my friend, Barry Goldwater, about 
Taiwan, and he impressed upon me many times before his death 
the importance of that relationship. I would feel duty bound to 
do whatever I could to ensure nothing but fairness, which we 
have all agreed on here, and if that required us to come back, 
that would certainly be no problem for me.
    I think that Senator Thomas has rightly pointed out that 
there is a risk, if we are hoping to do this before the 
election, but I actually believe that because there is such 
strong support both for WTO admission for the PRC and for 
Taiwan, it would not take long at all for that one change to be 
approved.
    I understand there is a risk trying to do it before the 
election, and that that is of concern to people, but I also 
believe that sometimes matters of principle are so important 
here that a little bit of extra time that it may take is worth 
it, and I would be willing to do whatever it took to ensure 
that Taiwan comes in under the right terms.
    The Chairman. That is precisely the point. If there be no 
further business to come before the committee, we stand in 
recess.
    [Whereupon, at 11:23 a.m., the committee adjourned.]

                                   -