U.S. Trade with China and Taiwan Is Inextricably Linked to Security

CIAO DATE: 8/01

U.S. Trade with China and Taiwan Is Inextricably Linked to Security

On The Issues

May 2000

American Enterprise Institute for Public Policy Research

Trade and peaceful coexistence between the United States and China intersect in two pieces of legislation that Congress will act upon this spring: one would grant China permanent normal trading relations, and the other would mandate closer military cooperation between the United States and Taiwan. The Clinton administration is worried that making our support for Taiwan explicit will damage U.S.-Chinese relations. Nevertheless, candor and a clear delineation of policies are a better means of avoiding conflict than the obfuscation and vagueness of past agreements.

Opposition leader Chen Shui-bian's victory in Taiwan's recent presidential election underscores two important points. First, with an astonishing 82-percent voter turnout and the rejection of fifty years of Kuomintang Party rule, it is clear that democracy is well entrenched on the island Beijing considers a renegade province. Second, Beijing's clumsy attempts to influence the election with threats and intimidation only strengthened the resolve of the Taiwanese people, making them even more resistant to reunification with the mainland.

Taiwan is not the only place where China's strategy of intimidation has backfired. Chinese prime minister Zhu Rongji's bellicose warnings in the run-up to the elections—combined with a new, hard-line threat regarding the timetable for reunification—produced a strong reaction in the United States. Even U.S. newspapers not known for their hawkish attitude toward the People's Republic of China—the Washington Post, the Los Angeles Times, and the New York Times—have now called for linking Taiwan's security with establishing normal trade relations with China. The Los Angeles Times, for example, editorialized that a strong U.S. response to China's military threats would provide "an opportunity for [President] Clinton to convince doubters that he can pursue open trade . . . [and] stand firmly behind Taiwan."

Trade and peaceful coexistence between the United States and the PRC intersect in two pieces of legislation that Congress will act upon this spring. One is the legislation granting China permanent normal trading relations (PNTR) with the United States. This legislation is necessary to fulfill the WTO obligation (after China becomes a member later this year) to treat all members on equal terms. The second is the Taiwan Security Enhancement Act (TSEA), which mandates closer military cooperation between the United States and Taiwan, including a new direct secure communications system between Taiwan and the U.S. Pacific Command. The Clinton administration strongly opposed the original version of the Taiwan Security Act, but the administration should reverse course and support the legislation in some form for three reasons: (1) the United States must give a firm, unified response to the more bellicose policies against Taiwan recently announced by China; (2) in its amended form, the TSEA represents a reasonable basis for negotiating just such a united front by the president and Congress; and (3) some political accommodation with Congress over Taiwan security will be vital in the drive to achieve a majority in the House on PNTR—particularly among Republicans who must provide the vast majority of the votes.

Trade Negotiations

The history of the administration's campaign to get China into the WTO is replete with miscalculations, missed opportunities, and—quite recently—betrayal within the president's own inner circle. First, bowing to political advisers who worried about labor unions and steel and textile opposition, the president in April 1999 turned down a Chinese market access offer that gave the United States far more than our negotiators thought possible. Then, having caused Premier Zhu Rongji to lose face badly at home, the administration became a hostage to fortune with the accidental bombing of the Chinese embassy in Belgrade—an event which caused a suspension of WTO negotiations for some six months and forced the administration to put off a vote on normal trade relations with China until the politically charged election year 2000.

The bilateral deal that was finally struck last November gave the United States all it had asked for in April, and more. Despite this, the fate of congressional legislation to grant China PNTR hangs in the balance. Once again, disruptive events have intervened. First came the debacle at the Seattle trade meeting, which left opponents of the WTO—led by major U.S. labor unions—vowing to block Chinese membership as part of a larger campaign against globalization. Two months ago, President Clinton's campaign to achieve congressional approval of PNTR was undercut by his own vice president who, behind closed doors with AFL-CIO leaders, promised to get a better deal next year if Congress put off the vote. Gore later recanted, but his brazen pander undoubtedly has given some wavering House Democrats just the excuse they needed to attempt to thwart passage of a PNTR bill this year.

Enter the Chinese. Not to be outdone by the clum-siness of the Clinton administration, on February 21, Chinese leaders suddenly roiled the waters by publishing a white paper that bluntly threatens to use force against Taiwan if unification talks drag on indefinitely. That represented a new, more confrontational policy by the Chinese, which was doubly offensive in that Chinese leaders had given no indication of the imminent threat during meetings just two days before with a high-level U.S. delegation, headed by Deputy Secretary of State Strobe Talbott.

Security Relations

Beginning with the passage of the 1979 Taiwan Relations Act (TRA), diplomatic and security relations among the triad of parties—United States, PRC, and Taiwan—have been characterized by a calculated ambiguity. The defense portion of the TRA makes no specific commitment concerning defense systems or services the United States will provide, merely promising "such defense articles and services . . . as may be necessary to enable Taiwan to maintain a sufficient self-defense capability."

During the Clinton presidency, the swings in U.S.-Chinese relations have increased dramatically, resulting in ever-greater pressure to make explicit the policies that political leaders in both countries thought best left vague. The tumult includes bitter exchanges over the persecution of religious and democratic activists, alleged Chinese complicity in missile proliferation, campaign finance scandals in the United States, and allegations of nuclear espionage.

Hamstrung by its own complicity regarding the campaign finance embarrassment and the extraordinary laxness regarding nuclear secrets, the Clinton administration has often seemed like a ship bobbing up and down, rudderless, in heavy seas. The president did react decisively in 1996 when the PRC, responding to the grant of a visa to Taiwanese president Lee Teng-hui, conducted a series of live-fire missile exercises in the Taiwan Strait. Soon after that exercise, the United States, in a show of force, dispatched two carrier battle groups to the area.

In June 1998, however, during his summit trip to China, the president veered back toward appeasement when he explicitly—and gratuitously—agreed to U.S. adherence to the "three noes" binding Taiwan (no declaration of independence, no support for a two-China policy, and no membership for Taiwan in organizations for which statehood is a requirement). In response, Sen. Jesse Helms (R-N.C.), chairman of the Senate Foreign Relations Committee, charged that the administration clearly prefers to "curry favor with Beijing" at the expense of Taiwan's security.

Meanwhile, less partisan observers have expressed concern that over time Taiwan's ability to defend itself has eroded. Their fears were heightened in early 1999 when the Defense Department, under mandate from Congress, issued a report concluding that by 2005 China would have the ability "to attack Taiwan with air and missile strikes which would degrade [read: destroy] key military facilities and damage the island's economic infrastructure." Since that report, the PRC has steadily increased its purchases of attack submarines, missile-firing destroyers, fighter aircraft, and Russia's best air-to-air missiles.

The Taiwan Security Enhancement Act

It was against this confused and, at least to some, ominous background that the Taiwan Security Act was introduced in both houses of Congress in the summer of 1999. In its original form, the bill contained an introductory section that laid out a series of strong—inflammatory, according to critics—findings concerning China and Taiwan. In its most controversial section, the bill named a group of specific weapons systems that the president was authorized to transfer to Taiwan.

On October 26, 1999, the full House International Relations Committee marked up the House version (H.R. 1838), and in the course of the mark-up, after extensive bipartisan negotiations among the members, substantially revised key sections of the legislation. For instance, the opening sections of the original bill contained graphic descriptions and implied condemnation of China's military buildup and its threat to Taiwan. The revised bill removes the most provocative language about the PRC military buildup, and it introduces as a new guiding principle the idea that the time has come to clarify the terms that form the basis for U.S.-Taiwan relations—and by extension U.S.-PRC relations. The measure states, "It is in the national interest of the United States to eliminate ambiguity and convey with clarity continued United States support for Taiwan," because "lack of clarity could lead to unnecessary misunderstandings or confrontations between the United States and the People's Republic of China, with grave consequences for the security of the Western Pacific region."

The key new operational provisions of the bill are found in sections four, five, and six. Through various means, these sections provide for closer military relations between the United States and Taiwan. They move beyond the original 1979 terms of the TRA but stop well short of creating a formal military alliance. Among other measures, the sections mandate: (1) an annual report to Congress detailing Taiwan's defense requests and needs and a justification for U.S. decisions on sale of defense articles to Taiwan, (2) a new finding that Taiwan's defense needs (and not earlier agreements with Taiwan and the PRC) will be the sole basis for determining defense articles and services to be provided to Taiwan, (3) that the secretary of defense develop and/or implement a plan for enhanced military exchanges and operational training within 210 days and submit the plan to Congress, (4) that the secretary of defense submit an annual report on the security situation in the Taiwan Strait, and (5) a report from the secretary of defense (to be updated periodically) on the ability of U.S. forces to respond to a major military "contingency" with relation to Taiwan.

Finally, the most problematic section of the revised House bill, section five (d), requires that the secretary of defense "certify" to relevant committees that a direct secure communications system has been established between the U.S. Pacific command and the Taiwanese military command.

With little change in the committee version, the House passed the Taiwan Security Enhancement Act on February 2 by a veto-proof vote of 341-70. Responding to an immediate statement by Chinese officials that full passage of the act would create a "serious damaging effect" on U.S.-Chinese relations and to the first of several threats by the People's Liberation Army of missile retaliation against the West Coast if the United States intervened to defend Taiwan, the Clinton administration quickly condemned the House bill and vowed to veto it.

The Future Course

Whatever the combined substantive and political reasons behind that unfortunate knee-jerk reaction in February, events on both the trade and the security fronts over the past several weeks call for an urgent review of the administration's current stance—most specifically, the refusal to admit that some accommodation with Congress on the security and defense front may be necessary in order to secure passage of the PNTR legislation.

It is widely conceded that the prospects for passage of the China trade bill have been jeopardized by the PRC's threats against Taiwan in the white paper. Republican and Democratic congressional leaders have explicitly linked the two issues. Sen. Trent Lott (Miss.), Republican majority leader, called the threat a "great danger" to the China PNTR bill, and Sen. Tom Daschle (S.Dak.), Democratic minority leader, stated that the Chinese threats "could not have been more counterproductive."

Most observers believe that the key battle will come in the House (though there is the danger that a filibuster could be mounted in the Senate, which would require sixty votes to overcome, rather than a mere majority). Republican leaders say that they can count with some certainty on about 150 out of 222 Republicans. The Democratic count is in dispute: Democratic opponents and labor leaders claim that 128 of 211 Democrats now oppose PNTR; Democratic proponents disagree with this count, though they have vouched for no specific number.

The key swing votes, then, will be some seventy-odd Republicans and at least an equal number of Democrats. Certainly for the swing Republicans, and to some degree also for the pro-trade Democrats, linkage between the trade and Taiwan security issues will be crucial. They will need to be able to state to their constituencies that they advanced Taiwan's security and stood up to Chinese threats, while at the same time voting to open Chinese markets through PNTR and pave the way for China's entrance into the WTO.

With that in mind, President Clinton should signal the administration's willingness to accept the House's Taiwan security bill as the basis for negotiations with bipartisan leaders of both houses. As he has often done in the past with the policies of erstwhile opponents, the president could even claim as his own the new theme of U.S.-China-Taiwan relations: that is, that candor and a clear delineation of policies are better means of avoiding conflict than the obfuscation and vagueness of past agreements. As to the other language and provisions in the House bill, the president might press for a legislative affirmation that the United States does not support Taiwan independence and specific assurance that the United States does not contemplate a military alliance with Taiwan (unless there is a direct military threat, in which case all bets would be off).

With one exception, the other operational provisions of sections four, five, and six of the act, while potentially onerous in such matters as new reporting requirements, do not seem to represent a drastic change in policy or a direct provocation to the Chinese. The one exception is the secure direct military communications system between the U.S. Pacific command and the Taiwanese military. Even here, it could be argued that instant U.S. knowledge of Taiwanese plans in a crisis would likely help to avoid dangerous missteps by Taiwanese leaders; however, if some defusing of Chinese fears is necessary, a number of steps could be taken, including a variety of interim actions that would stop short of actual implementation of a secure direct system unless and until a crisis arose. Given the infinite flexibility of military communications systems today, the U.S. and Taiwanese military leaders could have a standby system tested and ready to go without the fanfare of a new agreement.

Two points should be underscored in the end. First, the Chinese will continue to bluster ferociously against the Taiwan Security Act and the onset of a new phase in Chinese, U.S., and Taiwanese relations. But it is also true that in large measure the Chinese have brought that situation on themselves. The white paper changed the terms of the older, vague world of indirect diplomacy and opaque commitments. The United States must react accordingly. As China scholar Thomas Christensen of MIT recently wrote: "The supporters of continued ambiguity are losing the battle in U.S. politics for two reasons: They fail to realize that a conditional commitment [to defend Taiwan's security in return for no declaration of independence] need not be ambiguous, and they have unnecessarily ceded the moral high ground. . . . Advocates of a moderate Taiwan policy need to recognize that a clear but conditional commitment to Taiwan is possible and is the surest way to pursue not only America's strategic and economic interests but also America's moral mission of defending and spreading democracy."

As for the Clinton administration, the president should heed the advice of one of his own. Representative Gejdenson, ranking Democrat on the House International Relations Committee, has pointed out that although every administration "would like to see Congress disappear" in matters relating to China and Taiwan, that day is past. Beyond this, argues Gejdenson, the Taiwan Security Enhancement Act "is consistent with every administration since the Taiwan Relations Act has occurred."

If the administration truly wants to pass PNTR, it will heed this advice and come to terms with Congress on a new legislative mandate regarding Taiwan's future security and its relations with the PRC.

Claude E. Barfield is a resident scholar at AEI. Mark A. Groobridge is a research fellow at the Cato Institute. They are coauthors of Tiger by the Tail: China and the WTO (AEI Press, 1999). A shorter version of this article appeared in the Asian Wall Street Journal on March 23, 2000.