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China and GATT : a comparative study on the issues of Mainland China, Hong Kong and Taiwan in international.. Li, Yuguo 1994-03-06

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CHINA AND GATT:A COMPARATIVE STUDYONTHE ISSUES OFMAINLAND CHINA, HONGKONG AND TAIWANIN INTERNATIONAL ORGANIZATIONSBYYuguo LiB.A., Heilongjiang University/Harbin (1982)LL.M., Foreign Affairs College/Beijing(1985)A THESIS SUBMITTED IN PARTIALFULFILLMENT OF THEREQUIREMENTS FOR THE DEGREE OFMASTER OF LAWSinTHE FACULTY OF GRADUATESTUDIES(FACULTY OF LAW)We accept this thesis as conformingto the required standard.THE UNIVERSITY OF BRITISHCOLUMBIAMarch 1994© Yuguo Li, 1994In presentingthis thesisin partialfulfilmentof therequirementsforan advanceddegreeat the Universityof British Columbia,I agree thatthe Libraryshall makeitfreely availablefor referenceand study.I furtheragree thatpermissionfor extensivecopying ofthis thesisfor scholarlypurposesmay begranted bythe headof mydepartmentor by hisor her representatives.It is understoodthat copyingorpublicationof this thesisfor financialgain shallnot beallowed withoutmy writtenpermission.epartmentof___________________The Universityof British ColumbiaVancouver,CanadaDate/6,i9Q4-DE-6(2188)AbstractAs economic transactions become more and moreimportant for all countries in theirinterrelations, the GATT contracting partiesare considering the applications ofthePeople’s Republic of China (PRC)and Taiwan to enter into thisworld tradeorganization. This happens at a time whenthe Uruguay Round negotiationshaveresulted successfully in an agreement betweenthe contracting partiesto set up theWorld Trade Organization. The two applicantsare very important in the worldeconomy. Apart from negotiations onthe concrete concessions of thetwo applicants,other questions are under consideration.The applicants share a commonbackgroundthat the PRC, Taiwan plus Hong Kongand Macao are originally from one China,andHong Kong will be under the sovereigntyof China in 1997 which will probablyspeedup the unification of the four parts intoone China someday. So it is not tooearly toconsider questions which may arise fromthe influence of the accession styleof themainland and Taiwan on relations and positioningbetween the two sides of the TaiwanStraits, and the interrelationsbetween the four parts concerningparticipation ininternational organizations beforeand after unification. All four partsof China may beentitled respectively to participate in thisinternational economic organizationbeforeand after unification. But the negative impactson unification which may comeaboutby the style of acceptance of thecountries into the GATT cannotbe ignored. Theissues of the interrelations betweenthe four parts of China in GATI’should also bediscussed.11Table of ContentsAbstractIITable of ContentsiiiAcknowledgementsviCHAPTER I. INTRODUCTION1A. CHINA, TAIWAN AND HONG KONG1B. GATT4C. SIGNIFICANCE OF CHINA’S PARTICIPATIONTO THE GATI’SYSTEM6D. PROS AND CONS TO CHINAOF PARTICIPATION IN THEGATI’...8E. METHODOLOGY10CHAPTER II. PEOPLE’S REPUBLICOF CHINA AND GATf12A. CHINA’S MEMBERSHIPIN THE GATI’ ANDTAIWAN’SWITHDRAWAL FROM IT13B. LEGAL ISSUES OF RESUMINGCHINA’S MEMBERSHIP1NGAT161. Legal Effects of the Replacementsof Governmentsin China172. The Invalidity of Taiwan’sWithdrawal from GAIT173. The Legal Representation of the PRCGovernment204. Retroactive Effects of Recognition205. Difference between Recognitionsto State and Government221116. Theoretical Aspects of Government Succession237. Practice of Succession in the GATI’258. Resuming v. Accession30C. COMPATIBILITY OF CHINA’S ECONOMIC SYSTEMWITHTHE GATI’361. GAIT’s Purpose of Free Trade372. Non-Market Economies383. Co-existence with GATT39CHAPTER III. TAIWAN AND THEGAIT 47A. INTRODUCTION TO TAIWAN47B. RELATIONS BETWEEN TAIWAN ANDTHE GAIT 49C. SEPARATE CUSTOMS TERRITORY51D. APPROACHES AVAILABLE FORTAIWAN TO JOIN GAIT 53E. GOVERNMENT QUALIFIEDTO ACT ON BEHALF OF SCT58F. THE PRC’S AITITUDE ON TAIWAN’SAPPLICATION 61CHAPTER IV. HONG KONG ANDTHE GAIT65A. INTRODUCTION65B. HISTORICAL BACKGROUND66C. HONG KONG’S EXTERNALRELATIONS AND STATUS ININTERNATIONAL ORGANIZATIONS701. Situation of Hong Kong’s ExternalRelations702. History and Status of HongKong in InternationalOrganizations72ivD. HONG KONG’S CAPACITY TO JOIN INTERNATIONALORGANIZATIONS741. Definition and Evolution of International Organizations752. Membership and Exceptions76E. HONG KONG’S RIGHTS AND DUTIES IN EXTERNALRELATIONS AFTER 199781F. BINDING FORCE OF THE JOINT DECLARATION85G. THE RELATIVE PRACTICE OF GATT91CHAPTER V. INTERRELATIONOF THE MAINLAND, TAIWANAND HONG KONG IN INTERNATIONALORGANIZATIONS AFTER UNIFICATION96A. STRUCTURE OF CHINA’S POLITY: ONECOUNTRY,TWO SYSTEMS96B. “ONE COUNTRY, TWO SYSTEMS”VS. “ONE COUNTRY,TWO INTERNATIONAL PERSONALITIES”981. Peculiarity of “Multi-System Nations”1002. Inapplicability of Multi-systemNation Theory 1013. The Case of China102C. COEXISTENCE OF THE MAINLAND ANDTAIWAN IN THEGA SYSTEM104CHAPTER VI. CONCLUSION106Bibliography108VACKNOWLEDGEMENTSI would like to take this opportunityto thank the many people who have helped,advised and supported me in the preparationand production of this thesis.This thesis was submitted as a master thesisat the Faculty of Law of the University ofBritish Columbia. I would liketo thank my friends at the Faculty of Law, inparticular, those in the Centre for Asian Legal Studies,the Graduate Program and theLaw Library, for their support and assistance.I want to especially thank my friends, the co-supervisorsof my thesis, ProfessorPitman B. Potter and Professor MauriceD. Copithorne, Q.C., for their greatsupportand guidance in the research and preparation of thisthesis.I owe a debt of gratitude to Mrs. LillianOng, Ms. Gillian Bryant and Mrs. Joanne Y.Chung for their very kind concernand support to me in various waysduring myresearch and the preparation of this thesis.I owe special thanks to my friend, Mr.Christopher Lee, who was kind enoughto helpme to polish the final draft of this thesis.I would like to express my deep gratitudetoall my friends who offered me their concern andso much encouragement and supportthroughout my work on this thesis,and so much else.It goes without saying that any errorsor shortcomings in this thesis are whollymyown.Yuguo LiBeijing, Spring 1994viCHAPTER I: INTRODUCTIONA. CHINA, TAIWAN AN]) HONGKONGChina is a geographical term which describesa large Asian state with apopulation of approximately 1.2 billionpeople, which comprises twenty-two percentofhumanity, and territory coveringas much as 9.63 million square kilometres.1Atpresent, this country is not fully unified,being separated into four parts underdifferentadministrations, i.e. Mainland China, Taiwan, HongKong and Macao, two of themunder the control of foreign countries. Since1949, the mainland of China has beenunder the control of the governmentof the People’s Republic of China(hereinafter thePRC), which has world-wide recognitionas the sole legal government ofChina. HongKong and Macao, for a long time,have been under the sovereign controlof theGovernments of the United Kingdom andthe Republic of Portugal. In thelast decade,the negotiations between the P.R.C.and the United Kingdomand Portugal resulted inagreements on the transfer of thetwo territories to the sovereign control ofthe P.R.C.,in 1997 and 1999 respectively.2 Taiwanis the last among the fourparts on which nonegotiations have been undertakenyet about unifying with the other three parts.But itis very encouraging that the improvementof relations between thetwo sides of the1Source: Zhongguo Baike Nianjian (Encyclopediaof China), (Beijimg: The EncyclopediaofChina Publishing House, 1986),p.27.2See text at note 145.1Taiwan Straits have developed recently.3.In April 1993, substantial contact betweenthe two sides was started by the Wang-Koo talks in Singapore.The talks were thehighest level and most formal contact between thetwo sides after a long-time ofconfrontation, despite still being semi-official.4The mainland of China, Taiwan and Hong Kongtogether play a very importantrole in the world community. The PRC governmentenjoys world-wide recognition asthe sole legitimate government of China, and holdsthe seats for China in mostinternational organizations,5suchas the representative of China as a permanentmember of the Security Council of theUnited Nations. It has great economicpotentialto the world economy, for it has the largest market,low-priced labor, and an ambitiousplan for its economic reform. In foreigntrade, Chinese export performance has beenvery impressive in recent years. In 1993, thetotal value of its imports and exports wasUS$ 196 billion, exceeding the Republic of Korea, Spain,Taiwan and Singapore, andranking it as the eleventh largest tradingpower in the world.6Hong Kong, including the island ofHong Kong, Kowloonand the NewTerritories, is an area of 1067square kilometers with a population ofmore than fiveThe Taiwan Straits is between the island of Taiwanand the mainland.The talks were held between Mr. Wang Daohan,President of the mainland’s AssociationforRelations Across the Taiwan Straits (Arats)and Mr. Koo Chen-fu, Chairman of Taiwan’sStraitsExchange Foundation (SEF). On April29, 1993, Mr. Wang and Mr. Koo signed fouragreements. Theywere: (1) the general agreement on the Wang-Kootalks; (2) the agreement on institutionalizedcontactsand talks between the two organizations; (3)the agreement on the use and verificationof notarycertificates across the Straits; and (4) the agreementon inquiries and compensation concerning registeredmail across the Straits. The four agreements wentinto effect on May, 29, 1993. See,China Daily,August 16, 1993.The PRC has membership in many internationalorganizations in the fields ofeconomics,finance and trade, e.g., ECOSOC, ESCAP, UNDP,UNIDO, UNCTAD, FAO, IMF, WBG,CCC, ILO,ADB, etc. See Shen Xia, XiangyinChu, ed. The Dictionary of General Agreementon Tariffs andTrade, (Beijing: Foreign Trade Education Press,1993),p.559.6Annual Report, GAfl’, 1993. See, Jingji Ribao(Economic Daily), Beijing, 6 April,1994.2million people. Hong Kong has been separatedfrom China ever since the end of theOpium War. The separation is the consequenceof three Chinese-Anglo agreements ofthe nineteenth century.7 Up to now, HongKong has transformed itself intoan export-oriented industrial city with a very importantstatus in the world economy as one of theleading financial centers. In 1993, Hong Kongranked as the eighth largest tradingpower in the world, with the total of importantand export including the transferredtrade as high as US$ 278 billion.8Taiwan is an area of 35,981square kilometers, encompassing theislands ofTaiwan, Penghu, Kinmen and Matsu, on whichthe population is approximately 20million people. Unlike Hong Kong, Taiwanhas been viewed as beinga part of Chinafrom almost all sides and is taken as oneparty in “an unfinished civil war”.9Though ithas rarely been formally recognizedas a sovereign state, Taiwan has beenverysuccessful in its eocnomic growth. In1993, it was ranked as the world’sthirteenthlargest trading power with its recordof import and export asmuch as US$ 162billion.10Separation Between Mainland andTaiwanThe complicated case of thetwo parts of China (the Mainlandand Taiwan)should be traced back through history.The decline of the QingDynasty (from 1644 to1911), the last feudal dynastyin the history of China,was marked by the OpiumWar,and the 1911 Xin-Hai Revolution endedit. In its place, the first republicin China, theSee the text at note 148.8Supra note 6.Ralph N. dough, Taiwan’sInternational Status, Chinese Yearbookof International Law andAffairs 1981, vol. 1, ed. by llungdah Chiu,p.18.10Supra note 6.3Republic of China, led by a nationalistparty, the Kuomintang, came tobeing. After37 years (from 1912 to 1949) in power,the nationalist party was defeatedby acommunist party, the Communist Partyof China, in a bloody civil warfrom 1945-1949. The Republic of Chinafled to the islands now called Taiwan. Meanwhile,as anew government, the PRCgovernment was set up on the mainland.Since then, thetwo governments have been coexisting,with each claiming itself as theonly legitimategovernment of China.The issue of China’s unificationhas brought many questionsabout the internalstructure as well as the capacitiesof the above-mentioned partsof China in externalrelations, for instance, theirparticipation in international organizations,in particular,the GATT as we areconcerned with here. This concernis the starting point ofmythesis.B. GATTThe GAIT isa global organizaton of internationaltrade, which has 107contracting parties, plus 24 countriesto whose territories the GAIThas been appliedand which now, as independentStates, maintain a de factoapplication of the GAITpending final decisionsas to their future commercialpolicy.” Approximately90% ofthe total gross trade ofthe entire world is undertakenbetween the contractingparties ofthe GATT.12The GAIT is one ofthe principal governmentalorganizations concerning11GATT membership (April 1993),(1993) 5 World Trade Materials3, May.12Zhong Yi, GAIT and China, RenxninRibao (People’s Daily), Beijing,overseas edition,February 21, 1992.4international economic relations, along with theInternational Monetary Fund (IMF),and the International Bank for Reconstructionand Development (IBRD, or the WorldBank).’3 To meet the necessityof mutual reduction of tariffs, the UnitedNationsEconomic and Social Council (ECOSOC), inFebruary 1946, adopted a resolutioncalling for a conference to drafta charter for an International Trade Organization.’4The ITO Charter was completed in Havanain 1948, and called the “HavanaCharter”.At the Geneva meeting in 1947, threemajor parts were devoted respectivelyto: (1)preparation of a charter foran ITO; (2) negotiation ofa multilateral agreement toreciprocally reduce tariffs;and (3) drafting the “general clauses”of obligationsrelating to tariff obiligations. Thesecond and third parts togetherconstitute the GAITthe General Agreement on Tariffsand Trade. The GATT was designedto operateunder the umbrella of the ITO,but since the ITO never cameinto being, the GAIT isapplied as a treaty obligation underinternational law, only throughthe Protocol ofProvisional Application (PPA).l5The GAIT’s purpose isto promote the liberalization of worldtrade through thereduction of obstaclesto trade. The concept of themost-favored-nation standard(MFN) is the foundation oftrade liberalization, which isembodied in Article 1of theAgreement.16During the last fivedecades, the GAIT has beenimproved and enrichedby theThese international institutions comprisethe “Bretton Woods System”.Although the GATT wasnot formed at the 1944 BrettonWoods Conference, nevertheless theBretton Woods Conferencecontemplated the necessity of an InternationalTrade Organization (ITO). See,John H. Jackson, TheWorld Trading System: Law andPolicy of InternationalEconomic Relations, (Cambridge,Massachusetts: The MITPress, 1991),pp.27-28.141 UN ECOSOC Res. 13, UNDoc. E/22 (1946).1555 UNTS 308 (1947).16Art. 1, GAIT. See John H. Jacksonand Williams 3. Davey,Documents Supplements To LegalProblems of International EconomicRelations, (St. Paul: West PublishingCo., 1986), 2nd ed. p.4.5following important rounds of tariffnegotiations:1. Geneva Round in 1947, leadingto the conclusion of the GAIT;2. Torquay (England) Roundin 1951 enabling the original ContractingParties to GATT to negotiate tariffconcessions inter Se;3. Kennedy Round, 1964-67, resultingin significant tariff reductions inpercentage terms;4. Tokyo Round in 1973-79;and5. Uruguay Round in 1987-1993, completedwith the agreement to establishthe World Trade Organization.’7C. SIGNWICANCE OF CHINA’SPARTICIPATION TO TIlEGATTSYSTEMThe GAIT was designedto ameliorate a problem thathad stymied theinternational economy in1930s, the growth ofobstacles to trade resulting fromprotective tariffs. The GAITpromotes trade liberalizationby establishing a worldtrading system and bindingits members with three basicprinciples: (1) reciprocity;(2) non-discrimination;and (3) transparency. Aswith the evolution and developmentof the GAIT itself, the interdependenceof the world’s economiesand the increasingimportance of the GAITas a universal trading systemand a key international economicorganization, it becomesmore and more unacceptableand inconsistent with thepurposeof the GAIT for China to remainoutside of the GAIT.The remarkable increaseof China’s economy inthe last decade anditsremarkable share of world trademakes this country moreimportant to the world17Supra note 5, Shen Xia, XiangyinChu, Renmin Ribao (People’sDaily), Dec. 17, 1993.6economy. Compared with the 105 contractingparties to the GAIT, China’sforeigntrade makes it the eleventh largest tradingpower in the world. Consideringtheeconomic performance of the Mainland, HongKong and Taiwan in recent years, theweight of China’s economy will be raised evenmore assuming a regional economicintegration between these parties.Another factor which needs attention isthat, to the contracting parties,especially those industrialized countries,China’s huge market will offer moreeconomicopportunities, especially in the recessionyears. So, it wouldbe very important toregulate all the international economictransactions between Chinaand its tradingpartners in the GAIT systemin order to realize the idealsof reciprocity, nondiscrimination, and to set up a properuniversal trading order.The last point which needsto be mentioned is that apart fromthe otherconsiderations, the “universality”of the GATT trading systemmakes it extremelynecessary to have China withinthe GAIT scheme. China’sparticipation would beundoubtedly helpful to strengthenthis international organizationin the face oftendencies toward protectionismand regionalism, which are opposedto the ideal of theliberalization of world trade.So, it will be very important tohave China within theGAIT system for the purposeof properly establishinga true world order for economicsand trade.It would be beneficial forthe whole world if all countriesbehave as required bythe international rules in thefield of world trade, so thata normal world tradingordercan be set up. So, there isevery reason to acceptsuch a country in thisuniqueinternational organizationof trade and bind all its importsand exports within the rulesof the GAIT, and there seemsno reason to excludesuch a country out ofthisorganization. Througha review of the history of thiscountry in the last 14years, itcan be found that it hasbeen changing to coincide itspractices with the rulesof the7world community.D. PROS AND CONS TO CHINA OF PARTICIPATIONIN THE GATTChina can be listed as one of the tradingpowers in the world.18 The tradebetween China and the contracting partiesof the GATE comprises more than85 % ofChina’s total foreign trade. To China,access to the GATT will be very beneficialto itstrading conditions and also may bringa great impact to the trading systemand itsdomestic industry. This is the mainconsideration for the decision makersof Chinawhen they decide to take action towardsChina’s inclusion in the GAIT. Thebenefitsto China by acceding to the GAIT willbe:1. China may, through membershipin the GAIT, fulfil full participationininternational economic activities inan all-round way and complete its entryintoall of the principal international economicorganizations. China is alreadyamember of the other two main internationaleconomic organizations, theIMFand the IBRD.2. Participationin the GATTwould allow China to enjoygreater access tothe world market, enlarge its foreigntrade, and promote the developmentof itsforeign economic relationsby adopting international rules of trade.3. China would be provided with agreater defense against protectionistanddiscriminatory tendencies of developedcountries, and be able to jointhe debateand fight against protectionismthrough the forum of this organization.Also,18Supra note 6; see, Li Lanqing Speechon a meeting of the inspection onimported and exportedgoods of China, 18 December, 1992, ShijieRibao (World Journal, daily), 19December 1992. Mr. LiLanqing, Minister of the Ministry of ForeignEconomic and Trade. In the Spring1993, he wasappointed Vice Premier of the State Council of China.8China would have accessto the GAIT’s dispute settlement mechanismsto wardoff protectionism and discriminatorytreatment.4. It would be helpful forChina to have the unconditionalmost-favored-nation (MFN) treatment, as the GAITrequires that all contracting partiesshould be accorded such status.5. As a developing country, Chinamay enjoy preferential tariff treatmentunder the U.S. GeneralizedSystem of Preferences (GSP).China has gainedGSP treatments from alldeveloped countries that havesuch schemes except theU.S.196. China’s participationin the GATT wouldbe of great help to it indeepening and developing itsinternal economic reforms.China’s economicdevelopment and prosperity has paramountsignificance to the stabilityandpeace both of the world and the countryitself. In the last 14years, China hasmade remarkable efforts andalso great progress with its economicreforms. Atthe 14th National Conferenceof the Communist Partyof China, the basic linewas stipulated as establishing“the Socialist market economy”.20This was ahistoric change for a socialistcountry like China,though the line isstillmodified with the world “socialist”.This change is affirmativelyconsidered asa “creative and revolutionary”change and much encouragementis needed,because for China, the progressneeds support from allsides to have enough19At the first United Nations Conferenceon Trade and Development(UNCTAD) in 1964, theSecretary General of thatUN organization shepherded throughthe adoption of a report designedto focusinternational attention on theneed for special rules for the tradeof developing countries. Thefinal legalstep for these special rules was takenin the GAIT, in the formof a GATT waiver to the MFN clause,called the Generalized System ofPreferences. The waiver wasgranted in 1971 for a ten-yearperiod, soit expired in 1981. As partof the Tokyo Round negotiations,the Contracting Partiesadopted an“enabling clause” in a declarationentitled “Differential and MoreFavorable Trreatment, ReciprocityandFuller Participation of DevelopingCountries”. See, supra note13, John H. Jackson,p.278.20Supra note 8.9time to grow in a healthy way. To the internationalsociety, it is definitelynecessary to have a country like China stable politicallyand prosperouseconomically.Though China would obtain certain privilegesin international trade by fullparticipation in the GATI’, in turn, it wouldhave to make concessions by opening itsmarkets to the GAIT members and would haveto submit its trade regime tointernational scrutiny and surveillance. Furthermore,China would have to undertakemeasures to liberalize its trade regime that wouldbe commensurate with the GAITrequirements. The hard bargaining on the termsfor China’s access is foreseeable.China will be asked to make other arrangementsto ensure that its imports wouldincrease in return for tariff concessions on thepart of the contracting parties withmarket economies. Those arrangementswould be concentrated on the reductionof thelevel of imports determinedby a state plan; reduction of the substantiallicensingrequirements; abolishing the administrativelyset exchange rate; free accessto foreignexchange; and so on.E. METHODOLOGYFor the research as to theabove questions, comparative study isemployed as themethodology. Different emphasis will beplaced on the PRC, Hong Kong,and Taiwanrespectively. In Chapter I, the introduction,information will be givenon thebackground of China, Taiwan and HongKong, GAIT, the significanceof China’sparticipation in the GAIT system,and pros and cons to China ofparticipation in theGAIT. Chapter II deals with the PRCcase. Most analysis will be concentratedon thelegal issues concerning China’sresumption of GAIT membership,as well as thecompatibility of China’s economicsystem with GAIT. Chapter III dealswith the10Taiwan case. Analysis is unfolded around Taiwan’sapplication to accede to the GAITas a separate customs territory, and some legalissues concerning this. In ChapterIV,the analysis will be focused on Hong Kong, suchas Hong Kong’s status and capacity inits external relations, particularly ininternational organizations, as wellas the influenceof Hong Kong’s transfer to China in1997 on its capacity towards its internationalobligations. Chapter V mostly dealswith issues concerning the impactthe unificationof the four parts of China wouldbring to their respective capacitiesin externalrelations.11CHAPTER II: PEOPLE’S REPUBLICOF CHINA AND GATTOn 10 July 1986, the PRC officiallyapplied to resume itsmembership in theGAIT.2’ In February 1987, Chinasubmitted a memorandum onits foreign traderegime to the GATE.22 On 4March, 1987, China asked theGAIT to set up aworking group to considerChina’s trade regime and determinethe conditions underwhich China could rejoin theGAIT23.China is a veryunique case because itis nowin the midst of a transitionfrom a centrally-planned economyto a market economy24’and its application isto “resume” its seat in GAIT insteadof acceding to it.A. CHINA’S MEMBERSHIPIN THE GATTAND TAIWAN’SWITHDRAWAL FROM ITChina’s membership in theGAIT can be tracedback to the moment whenthis21Supra note 5, Shen Xia, XiangyinChu,p.231. See, China Bids to RejoinTrade Body, ChinaDaily, Beijing, 14 July, 1986.22Thid, Shen Xia, Xiangyin Chu,p.231. See, “China Moves StepTo GATT Membership”,China Daily, Beijing, 16 February, 1987.23See, Focus (GATT Newsletter),No.44, March 1987.24See, Jiang Zernin, Report to theFourteenth National Congressof Communist Party of ChinainBeijing on November 1992, “SpeedUp The Space of Reform,Opening and Modernizationand WinGreater Victories in the Socialist CauseWith Chinese Characteristics”,People’s Daily, November1992;also see FBIS-CHI-92-204-S,October 1992. Mr. Jiangis the General Secretary ofthe CentralCommittee of the ConimumstParty of China and he was electedPresident of the P.R.C.in the laterelection in Spring 1993.12international trade institution was established. China,represented by the Nationalistgovernment, participated in all the negotiationsaimed at establishing the InternationalTrade Organization (ITO) and the GATI’as early as 1946. On 30 October, 1947,China signed the Final Act of the General Agreementand became one of 23 originalcontracting parties of the GATT. On21 April, 1948, China deposited its InstrumentofAcceptance of the Protocol of ProvisionalApplications (PPA) of the GeneralAgreement. Pursuant to paragraph3 of the PPA, China provisionally appliedtheGeneral Agreement from 21 May, 1948.25During the following activitieswithin theGATE, such as the first and secondrounds of the multilateral tariff negotiations,whichwere held in Geneva in 1947and in Annecy in 1949 underthe auspices of GATE,China participated in the negotiationsfor tariff concessions with the othercontractingparties and accepted protocolsmodifying GATT provisionsand ratifying the GeneralAgreement.26Soon after these events happened,there was a replacement of governmentswithin China. On 1 October, 1949,the Nationalist Government of Chinawas oustedfrom power and replaced by the PRC.27The replacement of governmentswithin Chinawas followed by the complicated questionof the representation of Chinain the GAITand a prolonged absence of China’sparticipation in this organization.The PRC cameinto power over most parts of China’sterritory except the TaiwanIslands as well as thesmall islands of Penghu, Kinmenand Matsu, on which thedeposed regime installed25See, GATT: Status of LegalInstruments, GATT/LEG/1, Supp.No. 13, April 1988,pp.1-3.26China accepted the First Protocolof Rectification of the GeneralAgreement on 7 May, 1948,the Second Protocol of Rectificationon 14 September, 1949 and the ThirdProtocol of Rectificationon13 August, 1949.27After it had taken over almost the entireterritory of China, and wonthe Civil War defmitively,the CPC established a coalition governmentand changed the state fromthe Republic of China to thePeople’s Republic of China. On1 October, 1949, the Central People’sGovernment declared itselfestablished.13itself.The deposed regime, losing its effective controlover most parts of China, couldno longer fulfil the GA11 obligations it hadbeen subject to in the name of China,mainly the commitments of tariff concessionsto other contracting parties, because theproducts involved were exported from and importedto the mainland of China. In thissituation, realizing its incapacity to act on behalfof China in the GA’IT, it notified theSecretary-General of the United Nations ofits decision to withdraw from the GeneralAgreement28on 7 March, 1950. Meanwhile,the PRC government was preventedbythe special historical situation andexceptional circumstances from participatingininternational organizations, including theGATF, for many years.Chin&s Re-entering the GATTThe motives of China’s active effortsto resume its seat in the GATT are basedon the following concerns: the needto rebuild its domestic economy; and the desiretoparticipate in the world’s economic activities.In its first three decades from 1949,thePRC was characterized by radical ideologyin politics and centrally-plannedeconomy.The trade commitments and tariff concessionsunder the GATT betweenChina andother contracting parties ceasedto be applied. Normal trade relationsbetween Chinaand many of the GAIT contracting partiesactually ceased to exist.2928See, GATTICPI54, 8 March, 1950.29In the 1950s and 1960s, China’s foreigntrade was undertaken mainly withthe Soviet Union andother East European countries. Meanwhilemost Western countries followed theU.S.A. in an economicblockade of China. For example, amongthe thirteen countries with which thePRC had diplomaticrelations in 1949, eleven were communistcountries. In contrast, among the thirtythree countries withwhich the PRC had diplomatic relationsas of 1959, only six were Western counttries.Those wereDenmark, the Netherlands, Norway, Sweden andthe United Kingdom. See, GeneT. Hsiao, TheForeign Trade of China: Policy, Law,and Practice, (Berkeley: University ofCalifornia Press, 1977),p.28, Table 9. In 1993, the PRC has bilateraltrade agreements with 103 countries,including 71contracting parties of GAIT. See, supra5, Shen Xia, Xiangyin Chu,p.569.14Due to this situation, China ceasedto apply the GATT to the contractingparties. In the 1950s, China’s foreigntrade was mainly carried out underbilateralagreements.30 From the 1960s, the increasingshare of China’s trade withcontractingpaties of the GATT became evident.The PRC, ever since its founding, tookexecutive and legislative actions on theissue of legitimacy. Shortly after its founding,the PRC government notified theworldcommunity and all major international organizationsgenerally that it wasthe solelawful representative of China, and thatthe seat occupied by the deposedregime shouldbe assumed by the government of the PRCsince the Taiwan authorities nolonger hadthe right to represent China.31As a matter of fact, the PRChas been absent in the GATTas a contractingparty. Actually, it did nottake its seat back in the U.N., theunique and universalpolitical international organization,until1971.32“It was appropriate for itto deferaction on its GATT seat untilthe U.N. question was resolved.”33After China assumed its properseat in the U.N. in 1971, andparticularly from1980 when the country had alreadybegun economic reconstruction,it started too make30From 1949 to 1964, China concluded 408bilateral economic treaties andagreements with forty-eight states out of a total number of 762bilateral treaties and agreementswhich China reached withfifty-three states and the United Nations.See, Gene T. Hsiao, “Communist China’sTrade Treaties andAgreements, 1949-1964”, VanderbiltLaw Review, vol. 21, 1968,pp.626, 656-658.31See, Zhong Hua Ren Mm GongHo Guo Dui Wai Wen han hi, (Collectionsof Materials onForeign Affairs of the P.R.C.), vol.1 (1949-1950),pp.85-139. Also see, HungdahChiu, CommunistChina’s Attitude Towards theUnited Nations: A Legal Analysis, AmericanJournal of InternationalLaw, vol. 62,p.22, note 6.32In 1970, the United Nations General Assemblyadopted Resolution 2758 (XXVI),by which therights of the representativesof the PRC Government inthe United Nations were restoredand therepresentatives of the ROC Governmentwere expelled. See, G.A. Res.2758, 26 U.N. GAOR Supp.(No. 29) at 2, U.N. Doc. A/8429 (1972).Robert E. Herzstein, “Chinaand the GATL Legal andPolicy Issues Raised by China’sParticipation in the General Agreementon Tariffs and Trade”, 2 Lawand Policy in InternationalBusiness, vol. 18, 19986,p.396.15initial contact with the GAIT, which was followed by a series of actions betweenChinese officials and the GAIT. In 1980, China participated in the UNCTADsponsored program of Cooperation among Developing Countries and Exports of Textileand Clothing, and then took part in the textile negotiations which related to the secondsession of the Multifibre Arrangement (MFA) in 1981. Finally, in 1983, Chinabecame a signatory to the GAIT MFA.34In 1982, China expressed interest in sending representatives to participate in theGAIT Contracting Parties meeting as observers and this request wasacceptedaccordingly. It is notable that China has been reiterating its position that itsparticipation will always be “without prejudice to the Chinese government’spositionwith regard to its legal status in GAIT”.35All of these efforts made by China led tothe possible passing of the completed process for itto return to the GAIT and itsformal request of resuming its proper status in the GAIT in 1986.B. LEGAL ISSUES OF RESUMING CHINA’S MEMBERSHIPIN GATTThe PRC government is applying for the GAIT membershipby claiming theresumption of its original membership in the organization,rather than accession. Thelegal issues which this gives rise to should be discussedand analyzed.The MFA is open to all countries, whether or not contracting partiesto the GATT.For example, this position can be shown in its official communicationsto the ContractingParties through the Secretariat such as its accession to the MFA (COM.TEX/W/142),its request forparticipation as observer in Sesions of the Contracting Parties(L/5344, L15549), and participation in theCouncil of Representatives (L/57 12).161. Legal Effects of the Replacements of Governmentsin ChinaChina was one of the 23 original signatories of theGATT36.In 1949, the PRCreplaced the Republic of China.37 The ROCgovernment lost its control on themainland as well as the legitimate statusand went to the Islands of Taiwan, whichis aterritory as small as one fifty-sixth ofthe whole territory of China.This replacement of governments does notaffect the continuity of thestate,resulted in the transfer of the representationof China from the ROC to the PRC. Thus,the PRC became the legitimate governmentof this country, having the rightto succeedto the status of China in internationalorganizations. As a result, the Taiwanregimelost authority to represent the countryof China.2. The Invalidity of Taiwan’s Withdrawalfrom GATTOn 6 March, 1950, the deposed regimewhich occupied China’s seatin theGAIT ever since 1949 notifiedthe UN Secretary Generalof its decision to withdrawfrom the GAIT.38 This withdrawalfrom the GATE is not at all lawful,and withoutany legal effect because the membershipbelonged only to the countryof China, not toa part of that country. Any regime whichhad no legal rightto represent the country,though occupying a part of theterritory, cannot conducta valid act in excess of itsauthority. This view was sharedby many delegates at theContracting Parties36Preamble, GATI’, 55 U.N.T.S., 194,also GAIT, Basic Instruments SupplementDocuments,(BISD), vol. IV.. China was representedby the ROC government.In the author’s view, before the replacementof the governments happenedin China, the R.O.C.government had been the legitimate governmentof China. But after that time,the self-called ROC”government in Taiwan ceased to be thelegitimate government of China.This limitation of the titles hasimportant significance.38See, GATTICPI54.17conference held in Torquay in November1950. In its statement to the meeting,theCzechslovakian delegate expressed his government’sposition that his country didnotrecognize the validity of China’s withdrawalfrom the General Agreement becausethenotification was made by persons having nolegal powers to act on behalf of China.39On 27 June, 1951 the Government ofCzechoslovakia notified the ExecutiveSecretaryto the same effect in the context of disputing theU.S. withdrawal of concessionsnegotiated with China.40.As a matter of international law, thelegitimacy of the ROC governmentas thegovernment of China ceased when it wasousted. As a result, all its conducts afterthedate in the name of China are null andvoid, including its “withdrawal” fromtheGAIT. The question on thevalidity of the withdrawal was raisedagain when theTaiwan regime requested observerstatus in the GAIT in 1965. “Observerstatus” is anon-membership status in theGAIT, which gives no rightsand obligations to theobserver concerning the requirementsof the organization. Viewing theobserver statusas a means of access, Taiwanrequested observer status as away to return gradually tothe GAIT. It wouldalso provide Taiwan another chanceto be recognized as thegovernment of China. Basedon their recognition ofthe PRC as the sole lawfulgovernment of China, manycontracting parties, includingCzechoslovakia, Cuba,Yugoslavia, France, the UnitedKingdom, Sweden, theNetherlands, Denmark,Norway, the United Arab Republic(now Egypt), Poland, Indonesiaand Pakistan,rejected Taiwan’s request.41 Finally,Taiwan was granted observerstatus because thediscussion of the validity of itsrequest was circumventedby the announcement of theSee, Chung-chou Li, Resuming of Chin&sGATT Membership, Journal ofWorld Trade, 26 vol.21, 1987.40See, GATT/CPI115IAdd.l. Thid, Chung-chouLi.41See, Contracting Parties Summary Record,SR. 22/3, 1965.18Chairman of the Contracting Parties that theadmission of observers did not prejudicethe position of the Contracting Parties orof individual contracting partiestowardsrecognition of the government in question.It is important that Taiwan’s observerstatusin the GATI was finally terminatedby a decision of the GAIT Secretariat. The legalbasis of this GAIT decision is the ContractingParties’ agreement to followthedecisions of the U.N. on essentially politicalmatters. Though the GAITis not aspecialized agency of the United Nations,it stipulated that its decisions would coincidewith the U.N. ‘s decisions with respectto political matters. In 1950, theGeneralAssembly stipulated that the Assembly’sresolutions on the representation issue“shouldbe taken into account” by other organs ofthe United Nations”42In 1970, the UnitedNations General Assemblyadopted Resolution 2758 (XXVI),by which it “decided torestore all rights to the PRCand to recognize the Representatives ofits Government asthe only legitimate representativesof China to the United Nations,and to expelforthwith the representativesof Chiang Kai-shek from the placewhich they unlawfullyoccupy at the United Nations andin all the organizationsrelated to it,”43 TheContracting Parties to theGAIT implemented this Resolutionby re-examining thedecision they had taken in 1965on the observer status of China,and deciding to expelthe representatives of Taiwan.Thus, the GAIT not only tookthe position of expellingTaiwan from the organizationas an observer, but also,by its decision, accepted thelegal effect that the representativesof Taiwan had not legalauthority to represent Chinain the GAIT as soonas the PRC was founded on 1October, 1949.42G.A. Res. 396, 5 U. N. GAOR Supp.(No. 20) at 24, U. N. Doe.A/1775 (1950).Supra note 32.193. The Legal Representation of the PRC GovernmentThe PRC’ s position of the representation ofChina has been supported not onlyby the theory of international law,but also by the practice of the UN and mostotherinternational organizations as well asalmost all the countries in the world. Asa result,this support to the PRC’ s representation meansthe denial of the legitimacyof theactions of the Taiwan authorities on behalfof China after 1949.The terms employed in theU.N. Resolution 2758 (XXVI), like “restore”thePRC’s rights and “expel” Taiwanfrom the seat they “unlawfully occupied”,showedclearly the UN’s stand that thePRC should have succeededto the rights and duties forthe country from the date of itsfounding, and from the same date,Taiwan’s occupationin the UN became “unlawful”.That is the basis of the decisionof the GATTContracting Parties on the terminationof Taiwan’s observer statusin the organization,because the representatives wereonly the “persons having no powerto act on behalf ofChina”, including the “notificationof the Taiwan regimeto withdrawal from theGATE in March of 1950”.So, a reasonable conclusion shouldbe that China’s seat inthe GATE has never beenlawfully suspended, in otherwords, it should stillbeavailable for the lawful representativesof the PRC.4. Retroactive Effectsof RecognitionIt is generally agreed uponamong international lawyersthat, in principle, thepersonality of State isnot affected by a changeof its government or ofpersonscomposing its government,45and “. . . in the recognition ofgovernments, there is noSee, supra note 40.See, Ti-Chiang Chen, The InternationalLaw of Recognition, (London:Stevens & Sons Ltd.,1951), p. 97,note2.20question of the creation of personality. For the personalitybelongs to the state andsurvives the change of government”•46The international practice of recognition showsthat recognition is an administrative function, and differentgovernments, consideringthe political factors in different anglesbased on their own interests, make thedecisionsof recognition at different times. It is an explainableopinion that the recognition isonly a declaration of the existence ofa fact. The political conduct of recognition doesnot have the legal effect because this wouldmean the recognized state begins itsexistence after the conduct of recognition. Itsexistence begins at the time it cameintopower to control the country. In international practice,the doctrine of the retroactivityof recognition has been an accepted principle ofEnglish law as early as 1921 since thedecision in Luther v. Sagor, in whichcase the Court of Appeal held that theSovietGovernment having been recognized,it must be treated as “ havingcommenced itsexistence at a date anteriorto any date material to the dispute betweenthe parties tothis appeal”.47This principle was reaffirmed later whenthe Soviet decrees madebefore recognition were later treatedas acts of a sovereign authority.48 Inanothercase, the Supreme Court of the UnitedStates explained the doctrine further throughthefollowing:When a government whichoriginates in revolution orrevolt isrecognized by the political departmentof our government as thede juregovernment of the country in which it isestablished, such revolution isretroactive in effect and validatesall the actions and conductof thegovernment to recognition from the commencementof its existence.49Ibid,p.103.See, [1921] 3 K.B. 536, 543. Alsosee, D.P. Achenial, International Law,2nd ed., (London:Stevens &SoneLtd, 1990),p. 192.48Supra note 45, Ti-Chiang Chen,p. 173, note 13.See, [1918] 246 U.S. 297, 302-303. Ibid,Ti-Chiang Chen, p.175.21In 1936, the Institute of International Lawresolved that “recognition de jure isretroactive in its effects from the date when the newstate actually begins to exist as anindependent State.”50According to the principle of retroactivity,China’s (PRC) membership in allinternational organizations of which China(ROC) had been a signatory shouldcommence from the date it was established.5. Difference between Recognitionsto State and GovernmentIt is on this presumption, on whichthe principle of the retroactivity ofrecognition is established, that, inthe case of a changeover of governments,thesuccessor government which is habituallyobeyed by the bulk of the populationof thatstate exercises effective authoritywithin its territory, meanwhilethe deposedgovernment has lost the controlover the territory thus the latteris no longer entitled torights nor subject to duties on behalfof the state.In the case of Taiwan’s “withdrawal”from the GATE in 1952, it isclear thatthe reason for the decision to withdrawis nothing but its loss of capacityto effectivelycontrol the state and its failureto fulfil China’s GATI obligations,mainlycommitments of tariff concessionsto contracting parties since theproducts involvedwere exported from mainlandChina. More basically, whethera governmentrecognizes a new governmentin another state, generally speaking,does not affect itsrecognition of that state ifa new government is in power.In other words, the refusalto recognize a new government doesnot deny the recognition alreadygiven to thatState.Annuaire, 1936, Art. 7. Supra note 47,D.P. Achenial, 2nd ed.p.185.226. Theoretical Aspects of Government SuccessionAs a matter of international law, the “change ofgovernment does not affect thepersonality of the State. . . even when the changeis revolutionary. and “thusitmay introduce the proposition that thelegal rights and responsibility of statesare notaffected by changes in the head of state or theinternal form of government, ... if thereis continuity, the legal personality and theparticular rights and duties of thestateremain unaltered.“52•When a government is replacedby a new one, the personality ofthe State does not change. The replacementof governments does not affectthecontinuity of states or itsstatus in the international community.All internationalobligations committed by the deposedgovernments are expected to besucceeded whilethe international responsibility of thestate should be undertakenby the newgovernment. What has been changedwithin this state is therepresentatives ofauthority. Though, in somecases, this kind of change leadsto a change in thedomestic political structure,in a legal context, the change is purelydomestic. So,many cases support this principleby the fact that the representativesof a newgovernment take the seat of theState, replacing the deposedgovernment, ininternational organizations, and they aretreated as the representativesof the State byforeign countries.51D.P. O’Connell, International Law,(London: Stevens & Sons Ltd., 1970),2nd ed., vol. 1,p.394.52Ian Brownlie, Principles of Public InternationalLaw, (Oxford: ClarendonPress, 1979), thirded. p.87. Comments on this topicare also from Louis Henkin, RichardCrawford Pugh, OscarSchachter, Hans Smit, InternationalLaw: Cases and Materials, (St. Paul,Minn: West PublishingCo.,1980), p.675, “The replacement of one stateby another is different, of course,from the changes ingovernment which take place withoutaffecting the legal identityof the state,” and H. Lauterpacht,Recognition in International Law, (Cambridge,England: The University Press,1947), p.87, States arenormally concerned with changesin the composition or in the form of governmentwhich occur in othercountries; the international personalityof the state is not affected by transformationsof that kind.”.23Questions also arise on the attitude ofthis new government towardsthe rightsand obligations in international relations enjoyedand undertaken by the predecessorgovernment in the name of thestates. According to the principle ofstate sovereignty, anew government of a state may makeits own judgement on the successionof theinternational rights and obligations.In practice this discretion is alwaysconsideredabused because the denial and abolishmentof its former international obligations issocontroversial to the principleof estoppel and cause retaliation fromthe concernedcountries. This pick-and-choose styleis under argument and brings,in practice, manydisputes.However, as it represents the statewhich used to be representedby itspredecessor,“a successor government is required by internationallaw to perform theobligations undertaken on behalfof the state by its predecessor.53.Also, its rights willnot remain unless it undertakesthe accompanying obligations.As to the membershipof states in international organizations,in most cases, this remainsunchanged whenachangeover of governments occurs.The first categoryof examples is of aconstitutional changeover ofgovernments, which is undoubtedlyof no effect to thestatus of the state in international organizations.The second category is of thesuccession between the newand old governmentsby revolution, which also supports the conclusionthat the personality ofstate is notaffected by the change of government,thus the status of thestate in internationaltreaties should be intact.The third category isnewly-independent countries. Evenif it is of thesuccession of state, far from thatof government, the statesof this category succeedtothe memberships in internationalorganizations of their predecessorstates.54 From theSupra note 51, D.P. O’Connell,p. 394.24general practice, it appears conclusive thatin the sense of succession,since theconditions of the personality ofa state is not affected by the change of governments,the new government should succeedto the rights of representation for themembershipof the State in international organizationsunless it explicitly declares its unwillingnessto succeed.55The above-said analysis, thoughsimple due to the length of thisthesis, supportsstrongly and reasonably the conclusionthat the PRC government, eversince the date ofits founding, should succeed fromits predecessor governmentall the rights ofrepresentation of the State of Chinaconcerning international organizations,such as theGAIT.7. Practice of Successionin the GATTWithin the framework of the GAIT,the succession of membershipin theorganization between governmentshas less frequently beena problem than has thesuccession of states.By reviewing and examining the GAITpractice on the successionof states, wecan know the principles and considerationsof the contracting partiesof the GAIT onsuch issues, which will givethe answer to thisquestion on the successionofmembership in the GAIT eitherby a successor state or a newgovernment of a statewhose status in the GAITis not at all affected by thechangeover of the governments.The provision in the GeneralAgreement relative to statesuccession is ArticleXVI, paragraph 5(c). This specialclause provides:54For example, the new Dominion ofIndia claimed to be the sameinternational personalityasBritish India which had been oneof the founding members of the UnitedNations, and therefore itremains a member of the U.N.55See, D.P. O’Connell, The Law of StateSuccession, (Cambridge, England:The UniversityPress, 1956),p. 67.25If any of the customs territories, in respect ofwhich a contracting partyhas accepted this Agreement, possessesor acquires full authority in theconduct of its external commercial relationsand of the other mattersprovided for in this Agreement, such territoryshall, upon sponsorshipthrough a declaration by the responsiblecontracting party establishingthe above-mentioned fact, be deemedto be a contracting party.56This clause was originally recommendedby the Ad Hoc Sub-Committeeof theTariff Agreement Committee, whenthe General Agreement was drafted. Atthat time,Burma, Ceylon and Southern Rhodesia, under thecontrol of the British Government,had autonomy in external commercialrelations. The question was whether thoseterritories could be admittedto participate as full contracting parties in the GAIT.Theaffirmative answer to this question ledto the existing Article XXVI par.5(5). “Sincethe date of acquiring full autonomyin external commercial relations almostalwayscoincided with the date of acquiring fullindependence, this special clause has provideda convenient formula a flexible application ofwhich has in fact facilitatedstatesuccession.”57In the case of theFederation of Rhodesiaand Nyasaland,58 after theGovernments of the United Kingdomand Southern Rhodesiasubmitted jointdeclarations respectively on September22, 1953 and November6, 1953 to themembers of GAIT, which declaredthat the Federation had acquiredfull responsibilityfor matters covered by the GeneralAgreement, the contractingparties in a declaration56This clause was originally Article XVI paragraph4, section proviso (55 U.N.Treaty Series 274)in almost identical wording, which becamepar. 4(c) pursuant to an amendingprotocol of August 13,1949 (62 U.N. Treaty Series 114), and thenpar. 5(c) pursuant to the ProtocolAmending the Preambleand Parts II and III of the General Agreementwhich entered into force onOctober 7, 1957 (228 U.N.Treaty Series 204).Tasuro Kunugi, “State Successionin the Framework of GATT”,American Journal ofInternational Law, vol. 59, 1965,p.270.58Southern Rhodesia was an originalsignatory to the Protocol of theProvisional Application ofthe General Agreement. The Federation ofRhodesia and Nyasaland was establishedby the Act of theBritish Parliament dated March 24, 1953, whichbecame effective on August 1, 1953.26on October 29, 1954, decidedthat the Government of the Federation of Rhodesiaand Nyasaland shallhenceforth be deemed to be a contracting party ...and to have acquiredthe rights and obligations under the GeneralAgreement of theGovernment of Southern Rhodesia and the Governmentof the UnitedKingdom...59This undeniable right of successionto the status of their predecessors in thisorganization can be viewed in many othersimilar cases, showing the practices oftheGATT.60 Though new states were expectedto follow a process by sendingdeclarations to the contracting parties of the GAIT,the practice affirms a state’ssuccession to the GATT.61 The examplesof state succession to the GAIT all happenedwith respect to new states establishedby decolonization, thus the personalities of thestate were changed somehow. This is affirmativesupport for the succession ofgovernments to the rights and obligations inthe GAIT where no changesto thepersonality of the states has occurred.Another important point comingfrom the analysis on the GAIT practice onthemembership of successor states with respectto their memberships in the organizationisthat the succession of states should beginfrom the date the new states areestablished.In the case of Nigeria, the contractingparties made a declaration onDec. 18, 1960,B.I.S.D., 3rd Supp. (1955),pp.29-39.60Such cases involve Ghana, Malaya, Nigeria, SierraLeone, Tanganyika, Trinidad and Tobago,as well as Uganda, Laos and Guinea in their acquisitonsof memberships in the GATI.61Ghana became independent on March 6,1957, the contracting parties madethe declaration onOctober 17, 1957, BTSD, 6th Supp. (1958),p.9; Malaya became independent onAugust 31, 1957, andgot the declaration from the contracting parties onOctober 24, 1957, BISD, 6th Supp.(1958),p.9-10;Nigeria, became independent on October1, 1960, and got the declaration from the contractingparties onDecember 18, 1960, BISD, 9th Sup.(1960), pp.13-14; Sierra Leone becameindependent on April 27,1961 and got the declaration from the contractingparties on May 19, 1961, BTSD,10th Supp. (1962),pp.11-12; Tanganyika became independent onDecember 9, 1961 and got the declarationfrom thecontracting parties on December 9, 1961, BISD,10th Supp. (1962), 14-15;Trinidad and Tobagobecame independent on August 31, 1962 and gotthe declaration from the contractingparties on October23, 1962, BISD, 11th Supp. (1963),pp.44-45.27which reads in part:“the Government of the Federation ofNigeria is deemed to be acontracting party to the General Agreementon Tariffs and Trade as from1 October 1960 [the date of its independence]hI.62The explicit words are used to make theeffect of the declaration under Article XXVI,par. 5(c), “retroactive whenever it was necessary.63In these examples, it can be found inthe GAIT practice that succession ofstates should begin from the date of their establishment.It appears more clearly that,in the cases of succession of governments,the personality of states are not changed, inother words, the states remain the sameas before the changeover happened, thustheirstatus in the international organizationsshould be nothing more than unaffected.It is abasic assumption through which comesthe necessity of Article XXVI,par. 5(c) ofGAIT. This provision is just an arrangementfor the new states in succeedingtherights and obligations of their predecessorsin the GAIT by non-accessionprocedures.It should be noted that the GAITallows the new states concernedan option asto whether to succeed to their predecessors’memberships in GAITby declaring theirwishes.“It is, however, characteristic thata new state, and not the organization,has an option as to whether thatstate should succeed or not underArticleXXVI as it has been interpretedand applied”64In other words, a newstate still has the membership inthe organization of itspredecessor state before it explicitlyshows whether or not itwishes to succeed to it. Itmay be concluded that the principleof identity or continuedpersonality of a new state62BTSD, 9th Supp. (1961),pp.13-14.63Supra note 57, Tatsuro Kunugi, p.273.The same method was also used in thecases of SierraLeone, Tanganyaka, Trinidad andTobago, and Uganda, which were deemedto be contracting parties asfrom the dates of their independence.64Thid, Tasuro Kunugi, p.285.28should be an essential test of its succession ofthe multilateral treaties.But it is clear that it is the successorstates not the GATT which has the optionto succeed or not. The declarations of their wishesdo not represent applications ofaccession but succession to the rights and obligationsof the predecessor states. Therequirements of declaration seem to “suggest thatstate succession under Article XXVIis not entirely ‘automatic’ in the sensethat new states continue tobe bound by theGATT instruments irrespective of the intentionof the states concerned.”65 Since not allnew states concerned submit their declarationsprior to or soon after theirbecomingindependent, questioned that how much time wouldbe reasonable for the new states toconsider succession before they actuallymake their decisions through declarations.Taking a review of the history of the GATI’for such a question, there seems tobe no reasonable and decisive standard of timingtill now.66.The frequent changing of65Thid,p.273.66The Recommendation of November18, 1960 stated:Recognizing the governments of newly-independentterritories will normally requiresometime to consider their future commercial policyand the question of their relationswith the GeneralAgreement, and that it is desirablethat meanwhile the provisions ofthe General Agreement shouldcontinue to be applied to trade between theseterritories and the contracting partiesto GATI’.The Contracting Parties recommend that contractingparties should continue to apply de factotheGeneral Agreement in their relations withany territory which has acquiredfull autonomy ... for a periodof two years from the date on whichsuch autonomy was acquiredSee, BISD, 9th Supp. (1961),pp.16-17. Ibid, Matsuro Kunugi,p.274.And the Recommendation of December9, 1961 allowed a further periodof one year withrespect to any state which before expiry of thetwo-year period requests an extensionof the time limit.The decision of November 14, 1962 allowedfurther time by stating that:Considering that it is desirable to provefurther time for these states... and that an inform time -time for the expiry of the Recommendationof 9 December 1961 in respect ofthese States and by theContracting Parties.Recommend that contracting partiesshould continue to act upon the [said]Recommendationuntil close of the last ordinary sessionof the Contracting Parties in 1963 ...,and29the time limit of de facto application shows the extent of thedifficulty in setting up a“reasonable” standard applicable to various cases which are verycomplex.8. Resuming v. AccessionIn pursing its GATT membership, the PRChas insisted on resumption ofChina’s original contracting status in the GATT insteadof accession as a new member.It has been repeatedly claimed in the PRC government’sstatements that resumptioninstead of accession is the first among the threeprinciples the Chinese government setout for its entry into the GATL67 Early in July 1986, the PRCgovernment advisedthat, upon recalling that China was one of theoriginal contracting partiesto theGeneral Agreement, the PRC government had decidedto “seek the resumption of itsstatus as a contracting party to the GAIT’ and wasprepared “to enter into negotiationswith the GAIT contracting parties on the resumptionof its status as a contractingp.ity”68In the subsequent elaboration in a statementof the Chinese delegation to theGATT, this approach of resumption wasfurther explained to support the argumentthatthe PRC’s resumption of China’s statusas a GAIT contracting party isjustified underinternational law and supported by internationalpractice, and the PRC has the right torequest such resumption.69The position of the Chinese governmentto insist on resumption instead ofDecide to review the status of the above-mentionedterritories at their last ordinary sessionin1963.See, BISD, 10th Supp. (1963),PP.53-54. Thid, Matsuro Kunugi,p.275.67The other two principles are: (1) joining theGATT as a developing country;and (2) nospecial discriminary provisions attached in theChina protocol. See Statement by Shen Jueran,DeputyMinister of Foreign Economic Relations and Trade, Headof the Chinese Delegation at the Third Sessionof the GAIT Working Party on China, Geneva,26 April, 1988.68GAIT Doc. L/6017, 14 July, 1986.69Thid.30accession into the GATE has substantive significanceonly to the question of who hasthe right to represent the country, the PRCgovernment or Taiwan authorities (theROC). The core of the issue is thequestion of orthodoxy. This reflects the unsolvedquestion left over by the civil war from 1945-1949.In the last 40 years, the PRC hasbeen successfully striving for recognitionfrom the world community. Thequestionmay hang on the relationship betweenthe PRC and the ROC especially facingtherecent inclination towards unificationof the country. The basis of the applicationofresumption is the reflection of the oneChina policy, i.e., the politicalconsideration onTaiwan’s independence. In essence, itis more political rather than legal,and moredomestic rather than international.70Though resumption to the GAITmay, to the PRC, solve the questionof therepresentation of China, some otherrealistic problems, relating toGATT regulations,would still make the resumption approachinapplicable. Those are asfollows:(1) The case of China’s resumptionin the GAIT differs from theothercases concerning restoration of China’smemberships in the United Nations,IMF,World Bank and other related organizationswhere China’s seat hadbeen occupieduninterruptedly by the ROC until replacedby the PRC. The relationsbetween Chinaand the GAIT have been suspended,while the relationship in theother cases wascontinuous. During the suspension,China has been absent in theGAIT for more than40 years, without fulfilling itsGAIT obligations. Sucha long absence weakens supportfor the application of resumption. TheTaiwan authorities had noright to represent70This opinion can be affirmed by the practiceof the PRC to take it as a definitecondition ofestablishing diplomatic relations withforeign countries that the PRC isthe sole legal government ofChina and Taiwan is only a part of the country.Also this principle is appliedin the relationshipsbetween China and most international organizationsin which membership is appliedonly to sovereignstates, e.g., the United nations,IMF, and World Bank. But the PRCdoes not oppose Taiwan’sapplication to enter into the GATT,and it only demands that it shouldaccede to the GATT beforeTaiwan.31China after 1949, and its withdrawal fromthe GATT was null and void. But it doesnot mean that this case can refer to the modelsof the Mainland restoration of China’sseats in the United Nations as well as the IMF, theWorld Bank and other relatedorganizations, because in the GATr China’sseat has been interrupted or suspended forsuch a long time.It is well known that the PRC governmentadopted an analytical approachtowards the existing treaties its preceding governmentconcluded instead of abrogatingor automatically succeeding all the old treaties.This policy is describedas one inwhich the PRC government would make its determinationas to owhether to “recognize,abrogate, revise or renegotiate” eachof such treaties according to its content.71According to this policy, the PRC governmentshould have shown its attitude clearlytowards its membership in the GATT long beforethe late 1970s. Instead, it didnotexpress its interest in the GATT until thelate 1970s and its official position regardingits GAIT membership remained unclearand indefinite until its formalrequest forresumption. During the years ever sincethe changeover of governmentsin China, thePRC government has carriedout all of its foreign trade through separatebilateralagreements with most of the GAIT contractingparties, providing for MFN treatmentin their respective bilateral tradeand other trade-related matters,72without bearing anyGAIT obligations.71This principle was stipulated in Article55 of the Common Program of theChinese People’sPolitical Consultative Conference (1949), whichserved as a quasi constitution of thePRC from 1949 to1954. See 3. Cohen and H. Chiu, People’sChina and International Law, (Princeton:New Jersey,Princeton University Press, 1974),v. II, 1121-1129; T. Wang, InternationalLaw, (Beijing: LawPublishing House, ed. 1981),p. 121. This article provides: The Central People’s Governmentof thePeople’s Republic of China shall examinethe treaties and agreements concludedbetween the Kuomintangand foreign governments, and shall, in accordancewith their contents, recognize, abrogate,revise, orreconclude them respectively.72China had bilateral trade agreements containingMFN clauses with over ninety countriesandregions, as at 1988, and most of those countriesare GATT Contracting Parties. GATTDoc. Spec (88)13/Add 4.32(2) The changes to the domestictrade policy and economic system withinChina after 1949 has made it questionable for Chinato fulfil its old GATT obligationsof tariff concessions. The statement of thePRC’s delegation gives the realisticexplanation to the approach of resumption:However, having taken into accountthe contractual nature of theGeneral Agreement, we agreeto enter into substantive negotiations withcontracting parties for the resumptionof China’s contracting party statusand set the rights and obligations. In view ofconsiderable changeshaving taken place during the suspensionof relations between China andGATI’, my government proposesto take a non-retroactive approachtoissues which occurred during the period ofsuspension.73This suggestion shows that PRC is willingto enter into substantive negotiationsin order to set its rights and obligationson the basis of contemporary conditionsand thenon-retroactive approach would avoid allthe legal issues arising out of old rightsandobligations. Generally speaking, thisis the approach of resumptionin form, butaccession in substance.All the practice and analysis mentionedabove constitute the negative influenceswhich challenge and weaken the PRC’srequest for resumption of itsstatus in theGATI’.(3) In China’s case, resumption maymeet some legal problems, includingthe applicability of Article XXXV ofthe General Agreement, the availabilityof the“existing legislation” exemption for China.These include:a. Applicability of Article XXXV.Article XXXV ofthe GeneralAgreement, entitled “Non-Applicationof the Agreement between particularContractingParties”, provides a contractingparty with the right notto apply the GeneralAgreement with another if eitherparty does not consent to such applicationand has notSupra, note 64.33entered into tariff negotiations with the otherat the time either accedes to the GAIT.74A contracting party which invokes Article XXXV againstanother at the time of thelatter’s accession may vote in favor of such accessionpursuant to Article XXXIII.75No contracting party would be forced toenter into GAIT relations with anotherwithout its consent.76Since Article XXXV can onlybe invoked at the time of accession pursuant toArticle XXXIII, it would not be applicableto China in the case of resumption. Inthisway, only the original signatories of the PPAhave the right to invoke Article XXXVagainst China. The inability to invoke ArticleXXXV would be unfair to thosecontracting parties which acceded to the GAITafter the time China began tobe absentin GAIT in 1949 or China withdrew from theGAIT in l950. No matter which oneis the legal reason, China’s membership in GAITand its substantive relations withother contracting parties were suspendedeither from 1949 or 1950.No GAITrelations can be found between Chinaand those contracting parties whichacceded tothe GAIT since then. The issuecannot be ignored especially comparingthe current107 contracting parties with only 23 originalsignatories to the General Agreementin1948. It is understandable for Chinato resume its GAIT membershipas a specialcase, but it would raise the question that resumptionto GAIT relations between ChinaArticle XXXV, para. 1. For discussionof Article XXXV and its origin and applicationin theGATT history, see John H. Jackson, World Tradeand the Law of GATT, (Jndianapolis:Bobbs-Merrill,1969),pp.98-102.Article XXXIII, GATI’.76Historically, Article XXXV was drafted to accommodatethe change in voting requirement underArticle XXXIII from unanimity to a two-third majority,which raised the possibility that a contractingparty could be forced to enter GATT relations withanother country without consent. See YaQin, Chinaand GATI’: Accession Instead of Resumption,J. of World Trade, vol. 27, No. 2, April1993, note 32,p.93; Jackson, supra, note 13,p.92.‘Ibid, Ya Qin,p.83.34and those counttries is inapplicable since no suchrelations ever existed before.78b. The “existing legislation” exemption. Theexisting legislation clause,also known as the grandfather clause, is provided inthe PPA and every protocol ofaccession. It permits each contracting party toapply Part II of the General Agreement,which covers mostly restrictions on theuse of non-tariff barriers, only “to the extentnot inconsistent with existing legislation” atthe time of its entry into GATT.79Concerning the availability of the “existing legislation”exemption for China, it wouldbe hard to define the date for any legislation whichalready existed with respectto thisexemption. For resumption of China’smembership in GATT, thedate for China toenter into the GAT[’ as an original signatory isthe date it signed the PPA.So, theapplicable date of existing legislation forthe original contracting parties is30 October,1947.80Now in the case of resumption, no such exemptionseems to be applied toChina since the legislation before thatdate has long since been abolishedby the PRC.The suggestion that the applicable datefor China’s existing legislationexemption be thedate of its resumption instead of the dateof the PPA would appear inconsistentwith theGATE rules and practice.81Regarding all this background whichnearly makes the resumptionof the PPAimpracticable, both the GATEcontracting parties and thePRC seem to accept the78Ibid.The PPA, 1(b).80A GAT.F ruling was made that PPA “refersto legislation existing on 30 October,1947, the dateof the Protocol as written at theend of its last paragraph.” See, Dateof Reference for the Phrase“Existing Legislation” in Paragraph 1(b)of the Protocol: Ruling by the Chairmanon 11 August, 1949,2 BISD, 35 (1952).81The Chinese delegation stated at themeeting of the Working Party onChina that “upon theresumption of its membership, China would applyPart II of the General Agreementto the fullest extentnot inconsistent with domestic legislation existingat the time of resumption.” GATTDoc. Spec (88)13/Add. 5,p.2.35approach of resumption in form and accession insubstance. A GATI working party onChina’s status as a Contracting Party was setup in March 1987 with the mandateto“examine the foreign trade regime” of the PRCand to “develop a draft Protocol settingout the respective rights and obligations”, and now the ChinaWorking Party is in theprocess of tariff negotiations and drafting of theprotocol.82 In this way, the approachof resumption means only the recognitionby the contracting parties of the PRC’s rightto succeed its preceding government since October, 1949 andthe invalidity of Taiwan’swithdrawal from the GAT’T in 1950.At the same time, the non-practicability ofresumption is apparent concerning the realizationof the GATE rights and obligationsby the way the GATT Working Party on China hasbeen working on renegotiation ofthe new tariff concessions and otherobligations. Behind this method is the requirementthat the PRC’s claim on the invalidity of Taiwan’swithdrawal from the GATT meetsno challenges and the contracting parties’ concernabout how much interest they can getthrough the process of bargaining rather thanthe question of China’s representationdescending from history, which wouldnot make any difference to their interestsatpresent.C. COMPATIBILITY OF CHINA’S ECONOMICSYSTEM WITH THEGATTThough the PRC should be entitled tostatus in the GATI because it shouldsucceed to the international rights and obligationsits preceding government hadtaken,the basic changes which have happenedto the economic system inside this country82GAIT Doc. L/6191/Rev. 2, 26 April, 1988.36make it arguable as to whether its economic system isconsistent with the GATTrequirements. The most principal character ofthe change is the centrally-plannedeconomic system which is greatly different fromthe system before 1949. This newsystem, plus many other historical factors, made allthe obligations and concessionscommitted by the former government impossible forthe new government to honoratthat time.So the analysis should go from review of theGAIT system to the practice ofGATT with non-market economies. Finally anexamination should be taken of China’seconomic system and the recent economic reforms,to determine as to whether there iscompatibility between China’s economic systemand the GATT.1. GATT’s Purpose of Free TradeThe basic assumption of the GATE is aninternational free market system oftrading. It is believed “that free internationaltrade is beneficial to a nation becausewhen each nation specializes in making the productsthat it can make most efficientlyand trades them for the other productsit needs, overall welfare is increasedin eachnation.83 Generally, free trade promotesa mutually profitable divisionof labour,greatly enhances the potential real nationalproduct of all nations, and makes possiblehigher standards of living all over the globe.The objectives of GATE are:raising standards of living, ensuringfullemployment and a large and steadilygrowing volume of real incomeand effectivedemand, and developing the full use ofthe resources of the worldand expanding theproduction and exchange of goods.84These objectives should be achievedby: entering83John K. Jackson, William J. Davey, LegalProblems of International EconomicRelations, (St.Paul: West Publishing Co., 1986), 2nd ed., p.17.84Supra note 31, John H. Jackson, William3. Davey,p.3.37into reciprocal and mutually advantageousarrangements directed to the substantialreduction of tariffs to trade and tothe elimination of discriminatory treatmentininternational commerce.85 This internationaltrading system “is obviously based onrules and principles which more orless assume free market-oriented economies.”86The GATT, pursuantto trade liberalization, is a trading system basedon private marketmechanisms in the domesticeconomies. Thus, any interference,especially fromgovernment, in market mechanisms,is supposed to be limited.In the reality of world trade,the tariff is most generally usedas a restriction onthe import of goods. As it is the principalform of a trade barrier, tariff reductionisthe major method for countriesto mutually ensure that their exportedgoods can fairlycompete in foreign markets sincethe commitments for tariff concessionsare reciprocal.The tariff reduction means greateraccess in other markets for itsexports and is thuslooked to for the quid pro quo of greateraccess to its own market for productsof othercountries. The most-favoured-nationtreatment becomes the fundamentalprinciple toapply tariff reduction to thegoods of all contracting partiesequally. Thus, twocornerstones of the GAIT tradingsystem are: nationaltreatment reflecting theprinciple of reciprocity andMFN treatment as theprinciple of non-discriminationamong all contracting parties.2. Non-Market EconomiesAfter World War II, somecountries changed to socialist politicaland economicsystems, of which the PRCwas one. With central planningas the typicalcharacteristic, this kind of economicsystem differs from thefree market-oriented85Thid, p.3.86Supra note 28, John H. Jackson,p.283.38economies, so it is calleda non-market economy (NME). In the non-market economiesin contrast to the market economies, the economic modelmakes all the assumption offree trade hardly applicable, because in thosecountries “... resources are not regulatedby a market, but instead by central planning; the governmentdoes not interfere withthe market process but replaces it”87Compared with the market function in marketeconomies, the determining forcein the centrally planned economies for priceand quantity of goods is not the marketitself but central plan, i.e., the pre-establishedeconomic goals set up by the planningauthorities. In this way, the price of goodsdoes not adequately reflect their productioncost. Thus, the centrally planned economies canmake the access of imported goods totheir market much more difficult than market economiesthrough unfair competitionwith the methods of mandatory production,plan-oriented pricing, lack of freelyconvertible currency, state trading andimport monopolies. As a result, theGATI’mechanisms, based mainly on tariffconcessions to ensure market accessin faircompetition, would not be so efficientas the GATT contracting parties supposethem tobe. In short, to the market economies, it wouldnot be fair to play the same gamewithtwo sets of rules in the competition with the centrallyplanned economies,by which themarket economies would definitely benefitless.3. Coexistence with GATTIt is arguable whether there isa definitely unbridged gap between thetwoeconomic systems in their GATT relations.(1) Regulations in the GAIT Context.In the text of the GAIT, thereare noprovisions to preclude the non-market economies.In preparing the draft of theGATT,87Kevin C. Kennedy, The Accession of the Soviet Unionto Gatt, 21 Journal of World TradeLaw,2, 1987, vol. 23, p. 26.39the drafters proposed an article entitled “ Expansionof Trade by Complete StateMonopolies of Import Trade,” which wassupposed to apply to non-market economies.This article was removed finally because theSoviet Union did not becomea member ofthe International Trade Organization (ITO).Article XVII of the GATT addressesthe problem of the State Tradingenterprises, which is the oniy rulerelated to non-market economies.This articlerequires “[Ejach contracting partyundertakes that if it establishesor maintains a Stateenterprise, ... such enterprise shall... act in a manner consistent withthe generalprinciples of non-discriminatory treatment... for governmental measures affectingimports or exports by private trade;”88and “such enterprises shall ... makeany suchpurchases or sales solely in accordancewith commercial considerations,... and shallafford the enterprises of the othercontracting parties adequate opportunity“•89Bythis article, we can see that the coverageon the State Trading in theGATE, though notso precise as to stipulate the non-marketeconomies, implies no exclusionof the non-market economies from the GAIT.The requirements setup in Article XXXIII do not precludeaccession of non-market economies, which reads: “[A]government not partyto this agreement, ... mayaccede to this agreement ... on termsto be agreed betweensuch government andContracting Parties. Decisionsof the Contracting Parties ...shall be taken bya two-thirds majority.”90 Actually, on onehand, “even in marketeconomies there are manyinstitutions which do notoperate under free-market principles,such as state tradingagencies or monopolies, government-ownedindustries, and the like;”9’and on the88GAIT, Article XVII, par. 1(a).89Ibid.90Ibid.40other hand, “the experience of Romania, Hungary,Yugoslavia and Poland in theGAIT, however, offers evidence that whiletheir economic, social, and politicalsystems are different from the market economymodel to which the GAIT wasintended to apply, they arenot so fundamentally different that mutually beneficialaccommodation is impossible.”92It seems proved, by the fact that the GAIThas explicitly accepted some non-market economies under special provisionsor protocols, that GAIT should have noproblems accepting new non-marketeconomies, because those precedentsshow thepossibility of compatibility of non-marketeconomies within the GAIT.2. Practice of the GAIT. Amongthe examples of NMEs’ membershipinthe GAIT, Cuba and Czechoslovakiawere accepted to the GAIT beforethey shifted toa non-market economy structure.93Yugoslavia acceded to the GAITin August 1966 through the normalaccessionprocedure, i.e., under theterms of a Protocol of Accessionidentical to a marketeconomy country and on thebasis of tariff concessions. Afterthe establishment of therelations between Yugoslavia andthe GAIT ContractingParties, Yugoslavia’seconomy was no longer “centrallyplanned” as it had been in 1951.Prior to itsentering into the GAIT, Yugoslavia’ssignificant economic reformssuccessfullydecentralized its foreign tradingsystem. So, Yugoslaviagot provisional accessiontothe GAIT in November 1962and then the full accession inAugust 1966, without any91Supra note 16, John H. Jackson,p.283.92Eliza R. Patterson, “Improving GATI’Rules for Non-market Economies,”Journal of WorldTrade Law, vol. 20, No. 2, 1986,P.185.Cuba and Czechoslovakia became contractingparties in 1948 with the protocolsof originalentrant. Also see, supra note 28, JohnH. Jackson, p.287.41further commitments.94Poland acceded to the GAIT in October1967, following Yugoslavia. Afterafruitful period of association between Polandand the GAIT, which provided forannualreviews of trade relations between them,Poland became a full memberof GAIT, withthe commitment to “increase the totalvalue of its imports from theterritories ofcontracting parties by no less than 7 per centper annum”, a figure designedto equalthe increase in Poland’s exports expectedto result from the operation of theGAIT andfrom the tariff reductions and other concessionsgranted by the contracting parties.95Romania, after having been anobserver to the GAIT for more than10 years,acceded to the GAIT on the terms ofcommitment to “increase its importsfrom thecontracting parties asa whole at a rate not smaller than growthof total Romanianimports provided for in its Five-Year Plans.”96Hungary applied for GAIT membershipin 1969 and acceded to the GAITin1973 on the normal scheduleof concessions in accordancewith Article XXXIII,andwithout any additional commitments, partlybecause it had successfully decentralizeditstrade regime and introduceda new tariff system.97From these practices of the GAITadmitting non-marketeconomies, it seemsgenerally accepted that the membershipfor non-market economiesin the GAIT shouldbe conditioned with its abilityto conduct its trade according toGAIT principles ratherReport of the Working Partyon the Accession of Yugoslavia, GATT,BISD, 14 Supp. 49(1967), and Protocol for the Accession ofYugoslavia, GATr, BISD 15Supp. 53(1968).Protocol for the Accession ofPoland, GATT, BISD, 15 Supp.46 (1968); and Report of theWorking Party on the Accession of Poland,GATT, BISD, 15 Supp. 109(1968).96Protocol for the Accession of Romania,GAIEF, BISD, 18 Supp. 5(1972), and Report of theWorking Party on the Accessionof Romania, GATT, BISD, 18 Supp.94 (1972).Protocol for the Accessionof Hungary, GATT, BISD, 20 Supp.3 (1974), and Report of theWorking Party on the Accession of Hungary,GATT, BISD, 20 Supp. 34 (1974).42than other factors.It is suggested that two general provisionsshould be contained in the non-market economies’ protocols as an integralpart of the framework: ... the first,a basicguideline according to whichit would be agreed that the GAIT willbe applied by andto the non-market economies “to the extent compatiblewith its economic system;”thesecond, a dual commitmentby the non-market economies to use all the meansavailablein their economic and foreign tradingsystems in a manner which willensurecompliance with the GAIT, and notto use the means available in its economic systemsto nullify and impair the benefits ofthe GAIT.983. Analysis for China Case. In thecase of China’s application to resumemembership in the GAIT,its efforts to decentralize its foreign tradesystem and thetransition from its centrally planned economyto a market economy qualify Chinaformembership in the GAIT.After years of economic reformswhich have brought prosperityto China’seconomy, bringing it closerto the requirements for participating inthe GAIT andmore integrated into the world economy,this country decidedto take a decisive step inits economic reform. On 12 October,1992, the Secretary Generalof the CommunistParty of China, hang Zemin,declared in his report to the 14thNational Congress ofthe Communist Party of China,that “the target of our country’seconomic structurereform is to build a socialist marketeconomic system.”99He further explained thetarget using the following words:the market is allowed to playa fundamental role in the allocationofresources under the macroscopicregulation and control of thesocialistcountry, so that economic activitiesobey the requirements ofthe law of98Supra note 92, Eliza R. Patterson, p.186.Supra note 24, FBIS-CHI-92-204-S,p.8.43value and adapt to changes in the supply demand relationship.”°°This socialist market economy is similar to other marketeconomies in the worldin its general features. First, market force shall play a decisive rolein nationalallocation of resources and operation of national economy; second,it has to follow therule of market force, particularly the law of value, interplay ofsupply and demand andcompetition rules; third, it shall gear enterprisesto be responsible for their ownbusiness operation, profits and lossesand compete on an equal footing; fourth, all thefactors of production, including imports, capital, laborand technology and etc., shallenter into the market, while government exercisesindirect macro control of theeconomy, and all economic relations shallbe based on a comprehensive legalsystem.101To structure this economic system, much remarkableprogress has been made inexposing enterprises to market competition, further reducingstate mandatory plans,pressing ahead with price reform, accelerating establishmentof a legal system, andintensifying reform of foreign trade regime.102For the purpose of the reform of foreign trade,China has been makingcommitments to concede tariffs on a large scale, eliminate therestrictions on licensing,foreign currency exchange and imports examinations.As for the licensing, more thantwo thirds of the import licensing requirements willbe removed within two or threeyears.103 As for the tariff concessions, followingthe lowering the duty rates of 225tariff lines early in last year, China decidedto continue to lower the duty rates of3371100Thid.101Statement of Mr. Tong Zhiguang, Head of the Chinese Delegationat the 12th Session of theWorking Party on China, 9 December 1992.102Ibid.103Shijie Ribao, (World Journal, daily), 6 January 1993.44tariff lines on 4 December1992.104This will result in the reduction of the tarifflevelby 7.3%. which represents the broadest and most significanttariff cuts the People’sRepublic of China has ever made.Comparing the relative practice of the GATI’to China’s change, the points canbe concluded as: one, the requirements for membershipto the GATI’ are not only thenature of the economic system, but alsotheir ability to adhere to theirGATTobligations as well, and furthermore,the former is less importantas a form and thelatter more importantas the basic requirement; two, the precedentsof the GAITmembership of some non-marketeconomy countries like Yugoslavia,Poland, Romaniaand Hungary proves the compatibilityof non-market economies with theGAIT, withsome conditions. All these points are positivesupport for China’s returnto the GATI’.The Working Party setup by the GAIT to consider China’strade regime ceasedits work from 1989, and continuedits work in 1991. The considerationon China’sforeign trade regimewas finished at the 11th session on21 October, 1992 and theProtocol of Accession on ResumingChina’s status as contractingparty was beingprepared at the 12th sessionof the Working Party in December 1992.105Thus, thesubstantive negotiationsare going on for the terms, or “admittingticket”, for China’smembership.Furthermore, the necessityof China’s resumption of itscontracting party statusin the GAIT does not lie inunilateral benefits to China, butrests with the fulfilment ofthe GAIT’s purpose of establishinga global institution for internationaltrade.On this idea, John H. Jacksonwrote:104Thid, 5 December 1992; RenininRibao(People’s Daily), overseased. 5 December, 1993.105This session was held from December 9-10,1992 in Geneva, at which substantivenegotiationswere undertaken on the major contentsof the Protocol on China, thusthe basis was set up forthefollowing drafting. Supra, note 5, Shen Xia,Xiangyin Chu,p. 592.45[I]t is my view that it will be very difficult in thelong run to denymembership in the GAIT to any important nationof the world. Sincethe GAIT is the principal world tradinginstitution, strong argumentscan be made that it must be a universalinstitution, for both political andeconomic reasons. Politically, it mustbe recognized that an importantgoal of the economic institutionis the preservation of peace and theprevention of tensions which couldlead to war or other conificts. Aninternational institution which acceptedall nations of the world into anendeavour to try and accommodate respectiveinterests would seem to bean important part of that generalpolicy. In addition, economicconsiderations suggest the possibleenhancement of world welfarethrough the additional tradingopportunities, economies of scale, andcomparative advantage of general inclusionof all important trading blocsof the world.106The GATE, as an international institutionfor world trading, is not supposedtofunction for its purpose by using GATEmembership as a baitto try to force differentnational economic systems to change.”Its responsibility should be “tochange and tofigure out an appropriate wayto accommodate the different economicsystems.”107Supra note 13, John H. Jackson,p.290.107Ibid.46CHAPTER III. TAIWAN ANDTHE GATTA. INTRODUCTION TO TAIWANTaiwan, in the formation of theIsland of Taiwan, as well as the smallernearbyIslands of Penghu, Kinmen and Matsuwith a population of approximately 20millionpeople, has been under the effectivecontrol of the government of Taiwan,the ROC.In the terms of economy, Taiwan’s percapita income was more thanUS$6,000 in1989.108In 1993, Taiwan’s imports and exportsmake it the thirteenth largest tradingarea in the world.109This position that Taiwan is a part of Chinais shared by both sidesof theTaiwan Straits, the Mainland and Taiwan.This “one China” principleis explained asthat there is only one Chinaand Taiwan is one of its provinces.It was during thecolonization period in 19th centurywhen, after the Sino-JapaneseWar, Taiwan wasinvaded by Japanese. Accordingto the Treaty of Shimonoseki, Taiwanwas ceded toJapan. This unequal treaty wassigned under the force of Japanand its lawfulness wasquestioned and opposed not onlyby China but other countriesduring the World War II.In the Cairo Declaration in1943, the United States andthe United Kingdomproclaimed that Taiwan was theterritory “stolen” by Japan andshould be “returned tothe Republic of China”.Such provisions were reaffirmedin the Potsdam108Chung-yang Jih-pao, Nov. 25, 1989,p. 2.109Supra, note 6.47Proclamation. After World War II, Taiwanwas returned to China, thus closing itshistory of foreign occupation. Fromthen on, Taiwan was once againa province ofChina.The Civil War in China between theNationalists and the CommunistsafterWorld War II resulted in the changeoverof governments on 1 October, 1949.On thatdate, the PRC was established and the communistsbegan to control most partsofChina, meanwhile the ROCgovernment was deposed and theNationalists withdrew toTaiwan.For more than forty years, theMainland and Taiwan have beenseparatelycontrolled by the two sides. Upto now, most of the countries and internationalorganizations have recognized thelegitimacy of the PRC andsupport explicitly orimplicitly the position of bothsides of China on a “one China”principle. The titlePRC” is recognized worldwide asthe lawful government of China.At the same time,Taiwan has been under the controlof the ROC government separatelyfrom the otherparts of China. So, Taiwan,as an entity active independentlyin world affairs,especially in economic transactions,refers to the territory controlledby the ROC afterOctober 1949. The ROC was thelegitimate government ofChina before 1949, at thattime it controlled the wholeof China. But after 1949, itbecame only the authoritativegovernment of the Taiwanarea, losing its legitimacyas the government of thewhole ofChina. Generally speaking, thereis an intrinsic differencein the sense of legitimacybetween the ROC before October1949 and the one after that time,though under thesame title.48B. RELATIONS BETWEEN TAIWANAND THE GATTThe relations between Taiwan and the GATTshould be traced back to as earlyas October 1949, before which date, there wereno relations between Taiwan andanyinternational treaties at all. As forthe civil war of China resulting in the changeoverofthe governments, the ROC was deposed andlost its legitimate control over thecountry,meanwhile the PRC took over thepower to control the countryand became thelegitimate government of China.The Nationalists used the same titleof the ROC for their authorities on Taiwanafter October 1949, for they still triedhard to be active in international transactionsinthe name of China. Realizingand recognizing the fact that it couldno longer controlthe trade policies and practice of the mainland,the Taiwan authorities notifiedtheSecretary-General of the UnitedNations that it was withdrawing fromthe GAIT, asprovided in GAIT Article XXXI,on 7 March1950.110In 1965, Taiwan requested observerstatus in the GAIT in thename ofChina.HlThe request was approved despite muchopposition. The focusof thediscussion was on the questionof the legitimacy of the representativesof the Taiwanregime. The opposition came from theopinions that the representativesof the Taiwan110The Taiwan government made, in thename of China, withdrawals from manyinternationalorganizations in 1950’s.For example, it gave the one year’s notice ofdenunciation of the Convention onInternational Civil Aviationon 31 May, 1950. As of December 1988,Taiwan maintained membershipstatus in only nine international organizations:the International Union for Publicationof CustomsTariffs (IUPCT); the international Committeeof Military Medicine and Pharmacy(ICMMP); theInternational Criminal Police Organization(INTERPOL) under thename of “China, Taiwan”; theInternational Office of Epizoites (JOE);the International Cotton AdvisoryCommittee (ICAC) under thename of “China, Taiwan”; theAsian Productivity Organization(APO); the Afro-Asian RuralReconstruction Organization (AARRO);the Asian and Pacific Council(ASPAC); and the AsianDevelopment Bank (ADB) under the nameof “Taipei, China”.111Supra note 28.49regime were “persons having no legal powersto act on behalf of China”.112 In 1970,Taiwan was unrecognized by the United Nationsand was expelled “from the placewhich they unlawfully occupy at theUnited Nations and in all the organizationsrelatedto it,” because it was considered unlawful that the Taiwanregime acted in the name ofChina.113 As a result, the Contracting Parties,at the 27th Session in November1971,recalled its decision on granting observer statusto Taiwan and decided to removeTaiwan from the seat of observer in theGAIT.On 1 January, 1990, Taiwan requested,in a letter to Mr. Arthur Dunkel,theDirector-General of the GAIT, accessionto GAIT under Article XXXIIIof theGeneral Agreement in the capacityof the separated customs territory ofTaiwan,Penghu and Matsu.114 This decision reflectsthe determination of the territorytocooperate with other trading nations in theGAIT to “defend an open tradingsystembased on competition among free enterprises inthe world markets”.115 This actioncanalso be considered as another stepof Taiwan to take part inthe internationaltransactions with the realistic attitudeof Taiwan towards itsstatus in the internationalrelations.116112Supra note 40.113Supra note 26.114Taiwan’s Bid to Join GAIT Set to RaisePolitical Storm, Financial Times, 5Jan. 1990.115Memorandum on Foreign Trade Regimeof the Customs Territory of Taiwan,Penghu, Kinmenand Matsu Submitted by the Republicof China to the General Agreementon Tariffs and Trade (1 Jan.1990), Chinese Yearbook of International Lawand Affairs, edited by Hungdah Chiu,vol. 9 (1989-90),p.226.116Taiwan has already participated insome international treaties as anon-sovereign entity.Examples will be given later in thispaper.50C. SEPARATE CUSTOMS TERRITORY IN GATTThe Separate Customs Territory (SCT) inthe GAIT is the very specialmembership in this international trading system.As early as in the course of draftingthe General Agreement, consideringthat the General Agreement would deal only withtariffs and trade matters and there were someterritories with autonomy only in externalcommercial affairs but not in politicalaffairs, the drafters agreed to accept theseSCTsin the GAIT as contracting parties.The relevant clauses of territorial applicationin the General Agreement. ArticleXXIV:2 stipulates that,for the purpose of this Agreement a customsterritory shall be understoodto mean any territory with respect to whichseparate tariffs or otherregulations of commerce are maintainedfor a substantial part of thetrade of such territory with other territories.117Article XXIV, 1 provides thatthe provisions of this Agreementshall apply totwo kinds of territories. The first is thekind ofthe metropolitan customs territoriesof the contracting parties, andthesecond is the kind of any other customsterritories in respect ofwhichthis Agreement has beenaccepted under Article XXVI oris beingapplied under Article XXXIII or pursuantto the Protocol of ProvisionalApplication, ... each such customsterritory shall, exclusively forthepurpose of the territorial application ofthis Agreement, be treatedasthough it were a contractingparty.118This classification of the twokinds of territories actually refersto the reality ofinternational relations at thetime the General Agreement wasdrafted. After WorldWar II, there were still many coloniesin the world. These territoriesdid not have117GATI Article XXIV:2.118GATT’ Article XXIV, 1.51political independence, so they were not sovereignentities. They were under thecontrol of their suzerain states. But some of themhad full autonomy in the conduct ofexternal commercial relations, despitetheir political dependence ontheir suzerainstates. In Article XXIV: 1, the metropolitancustoms territories mean those sovereignstates which have suzerain relations with theircolonies, and the phrase “anyothercustoms territories . . .“ refers to those colonialterritories qualified under therequirements of Article XXVI or ArticleXXXIII.Article XXVI:5(a) provides that “[Ejachgovernment accepting this Agreementdoes so in respect of its metropolitanterritory and of the other territoriesfor which ithas international responsibility“) Article XXVI:5(c) provides thatany of thecustoms territories possessing or acquiringfull autonomy in the conductof its externalcommercial relations andof the other matters provided forin this Agreement, “shall,upon sponsorship through a declarationby the responsible contracting party establishingthe above-mentioned fact,be deemed to be a contractingparty”120Hong Kong andMacao are contracting partiesof this group, which acquiredthe membership underArticle XXVI:5(c). Amongthis group, Burma, Ceylonand South Rhodesia are theprecedents, which became contractingparties with the statusas an SCT or a colony. Inother words, their relationswith the GAIT were establishedby their suzerains underArticle XXVI:5(a) of the General Agreement.The requirements of membership inthe GAIT, is different frommost of theinternational organizations.It emphasises the applicant’sautonomy in externalcommercial relations. In otherwords, a governmentof a territory can be qualifiedas acontracting party of the GAIT,if, together with otherrequirements, it acts on behalf119GATT Article XXVI:5(a).120GATT Article XXVI:5(C).52of a separate customs territory possessing fullautonomy in the conduct of its externalcommercial relations and of the other mattersprovided for in the GAIT In thisway,the GAIT allows applications for membershipto be filed by not only “governments” inthe traditional sense, but also by a “governmentacting on behalf of a separatecustomsterritory possessing full autonomy in theconduct of its external commercialrelationsand of the other matters provided for inthis Agreement.”121By using terms like “government”and “contracting party” in the GATTformembership, instead of“state” or “country” or “memberstates”, the definition of thecontracting party surely includes governmentsof both sovereign states andseparatecustoms territories.B. APPROACHES AVAILABLEFOR TAIWAN TOJOIN GATTIn the GAIT practice, thereare three groups of contractingparty statusaccording to the approaches of acquiringthe membership. The first grouprefers to the23 original contracting parties whichsigned the Provisional Protocolof Application(PPA) when it entered into force; thesecond group is made up of thoseacceding to theGAIT under Article XXXIII,which has never beenused by any applicants intheprocedure to accede to the GAITexcept Taiwan; the thirdgroup is of those acquiringthe membership under ArticleXXVI:5 (c), which has beenthe main entrance for theexisting SCT members of theGAIT.Article XXVI:5 and Article XXXIIIconstitute two different provisionsof theGeneral Agreement, regulatingthe accession of the SCTs inthe GAIT. In the first121GAY1’ Article XXXIII.53case, the SCTs, under Article XXVT:5, as above-mentioned,a customs territory shouldbe deemed to be a contracting party “uponsponsorship through a declarationby theresponsible contracting party”, through whichway most SCT contracting partiesfulfilled their procedure of accessionto the GATI’. The other case allows for the SCTsto become contracting parties underArticle XXXIII, which providesthat “... agovernment acting on behalfof a separate customs territory possessingfull autonomy inthe conduct of its external commercialrelations and of the other matters providedfor inthis Agreement, may accede tothis Agreement, ... on termsto be agreed between suchgovernment and the Contracting Parties.”But in the GAI1” s history, theArticleXXXIII approach has neverbeen invoked by the SCTs in theiraccession to the GAIT.In contrast, the SCTs preferto adopt the Article XXVI:5 (c) approachfor accessionbecause in this way theycan be exempted from makingfurther tariff and tradeconcessions with contractingparties. It is interesting that Taiwan’sapplication for theGATE membership becomes the firstcase under Article XXXIII.Taiwan’s Decision. Thepolitical perspective of Taiwan’sdecision to apply forthe GATT membership underthe title of SCT comesfrom the reality of China’ssituation from October 1949,especially from the 1970s.122Based on the doctrinethatthere is only one Chinaand Taiwan is part of China, whichis claimed by both sides ofthe Taiwan Straits, Taiwan,in efforts to participatein international transactions,gaveup holding onto the title of theROC in joining in internationaltransactions under the122In Oct. 1949, the PRC government replacedthe ROC government as the legitimateauthoritiesfor the country, with the actual controlover most parts of China, meanwhilethe latter kept its controlonly over a very small partof China, i.e., the islands of Taiwanand Penghu, as well as the islandsofKinmen and Matsu offshore from Fujianprovince of the mainland. Tn1971, the action the UnitedNations General Assembly tookto adopt Resolution 2758 (XXVI)led to the removal of Taiwanfromnearly all governmental internationalorganizations. As a result,the PRC government returnedto mostinternational organizations,and in a broad sense, returned tothe international community.54reality of the wide recognition from the internationalcommunity that the PRC shouldrepresent China.123Taking account of the awkwardsituation in which Taiwan has beenunrecognized as the representative of the sovereignstate of China, which thus preventsTaiwan from applying for membershipin the GATT as the government ofa country,and the urgent need to join the world tradinginstitution in order to directly benefitfrom the open system heraldedby the GATT, Taiwan decidedto request its accessionto the GAIT as a SCT in accordancewith Article XXXIII of GAIT.As to the regulations for the SCTs enteringinto the GAIT, there are two ways,i.e. the SCTs can be contracting parties eitherby “sponsorship through a declarationbythe responsible contracting party... under Article XXVI:5(c),or through theapplication procedure by“ a government acting on behalf ofan SCT possessing fullautonomy in its conduct of externalcommercial relations andof the other mattersprovided for in this Agreement”,“... on terms to be agreed betweensuch governmentand the Contracting Parties”.Accession for SCTs under ArticleXXVI:5(c) requires threeconstituents. First,a contracting party has accepted the GeneralAgreement in respect ofa SCT. Second,the SCT possesses or acquiresfull autonomy in the conduct ofits external commercialrelations and other matters providedfor in the Agreement. Andthird, a sponsorshipisneeded through a declarationby the responsible contractingparty establishing theabove-mentioned fact. In thisway, no new negotiationsare necessary for the accession123In March 1981, the Olympic Committeeof Taiwan agreed to accept the1979 decision of theInternational Olympic Organizations(IOC) by which Taiwan wouldbe allowed to competein the gamesprovided it did so underthe name “Chinese Taipei Olympic Committee”and used a new flag andanthemrather than the flag and anthemof the ROC. Up till now, Taiwanhas maintained its membershipsin theInternational Criminal PoliceOrganization (INTERPOL)under the name of “China,Taiwan”, theInternational Cotton Advisory Committee(ICAC) under the name of “China,Taiwan” and the AsianDevelopment Bank (ADB) underthe name of “Taipei, China”.55of SCTs.Such negotiations, in contrast, are unavoidablein the other kinds of cases foraccession of SCTs under Article XXXIII. In thisway, the accession of a governmentacting on behalf of an SCT possessing fullautonomy in the conduct of its externalcommercial relations ... mustbe based on the terms to be agreed betweensuchgovernment and the Contracting Panes,... and a two-thirds majority of theContractingParties is needed for such decision.The negotiations offer the existingcontractingparties a good chance to bargain withthe applicants for more favourabletariffconcessions and other preferential treatments.The SCT applicants must payfor the“admission ticket”.Comparatively, to save on the expenseon the “admission ticket”,SCTs, inaccession under Article XXVI:5(c), are required to be in a situationin which theirexternal relations are under theresponsibility of their suzerain governments.Thiscategory of cases includes Burma,Ceylon and South Rhodesiaas well as Hong Kongand Macao in recent years.In Taiwan’s case, it cannotaccede to the GATI eitheras a government ofsovereign state because theopinion of “One China”is constituted in the laws ofbothsides of the Taiwan Straitsand supported by the commonsense of internationalcommunity, or as an SCT underthe sponsorship through a declarationby a governmentestablishing the fact of its autonomyin the conduct of its externalcommercial relationsand other GATI matters. That is whyTaiwan has taken the choiceto accede to GATIunder Article XXXIII.Taiwan, in its Memorandumto the GATT, refersto itself as “[T]he CustomsTerritory of Taiwan, Penghu,Kinmen and Matsu encompassingthe islands of Taiwan,Penghu and the islands of Kinmenand Matsu off Fukien.124It is separated from56mainland China by the Taiwan Straits”.“[T]he Territory has enjoyedde factoautonomy. It constitutesa separate customs territory with full autonomy in theconductof its external commercial relations”.125The common ground between thetwo sides of the Taiwan Straits about thelegitimacy of the State is that boththe mainland and Taiwan are inseparableparts ofChina. Both sides claim one China. In politicalperspectives, the fact of coexistingofthe PRC government and the Taiwangovernment is only the continuityor the productof the Civil War in China. Asa matter of international law, it is groundlessto considera territory as a nation-state if it itselfdoes not claim so, like the case of Taiwan.124“Fukien” means Fujian Province inChina.125Supra, footnote 115.57E. GOVERNMENT QUALIHE]) TO ACTON BEHALF OF SCTIt is reasonable to question whether Taiwan’sgovernment is eligible to accedetothe GAIT as a “government acting onbehalf of a separate customs territorypossessingfull autonomy in external commercialrelations and the other matters provided forinthis Agreement.”According to the GATI’, two kinds ofgovernments may accede to theGAIT.126 The first kind is the governmentof a sovereign states which in most of thecases act as the creators and participantsof all the international treaties andinternational organizations. The otherkind is the government of a SCTwhich mayaccede to the GAIT under certain requirements.Those requirements are mainly asfollows.1. The degree of autonomy of anSCT with respect to external commercialrelations and other GAIT matters.In the cases of Burma, Ceylonand South Rhodesia,such autonomy was requestedto be proved, (a) the ability to determineand modify itstariffs without the consent of its suzerainstate; (b) the ability to applythe GeneralAgreement without referenceto its suzerain state; and (c) the abilityto enter intocontractual relations on commercialmatters with foreign governments.This apparentlyfalls under Article XXVI:5(a) and (c), because such SCTshave their suzeraingovernments which have international responsibilityfor them and have established thefact that these SCTs possessor acquire full autonomy in theconduct of their externalcommercial relations and other GAITmatters.2. The procedure for SCTsto accede to the GAIT.In some cases,126Article XXVI:5, Article XXXIII.58sponsorships are required by the responsible governmentsthrough declarations.127 Asin Article XXXIII, ... a government actingon behalf of a separate customs territorymay accede to this Agreement, ... on behalfof that territory ...“. It is ambiguouswhich government it refers to, the localgovernment of the SCT, or thecentralgovernment of the country to whichthe SCT belongs to, or eitherone. Thisambiguity, together with the “admissionticket” provided in Article XXXIII,makes thisan unused Article, and has causedsome legal problems in the firstcase of itsapplication ever in the GATT history,i.e. the Taiwan case.In this case, Taiwan is part of Chinaof which the PRC government isthe onlylegitimate one. On the other hand,there is no suzerain relationsbetween the two sidesof the Taiwan Straits. All the requirementsare not applicable. It seems impossible foreither the PRC’s sponsorship througha declaration for Taiwan accessionto the GATT,or the PRC government’s accessionon behalf of the SCT of Taiwan.Compared withArticle XXVI:5 (c), the provisionin Article XXXIII aboutSCT can be applicable onlyin the case that an SCT meetsthe requirements of accessionto the GATI’ and acceptsthe Agreement while the centralgovernment of the country,of which the mentionedSCT is a part, is not a contractingparty. Even in this case, theaccession of such SCTto the GATT is often thoughtto require some kind of confirmationfrom the centralgovernment of the countrywhich such SCT belongsto. An SCT should be understoodas a part of the territory ofa country with different andseparate tariff systemandpolicies from the rest ofthe parts of the territoryof the same country,with fullautonomy in the conduct of itsexternal commercial relations.An SCT is by no meansa sovereign state. It is onlya part of the territory ofa sovereign state with fullautonomy in external commercialrelations. The governmentof an SCT is onlya local127Article XXVI:5(c).59government of that country. On the basic internationallaw principle of statesovereignty, such local governmentcannot participate in any external relationswithoutcertain confirmations from the centralgovernment unless stipulatedotherwise in itsdomestic laws.That is the basis of the requirementsof sponsorship in the form of declarationfor an SCT to accede to the GATI in ArticleXXVI:5 (c). In the modern world, thereare such territories which are neithersovereign states nor belongto certain sovereignstates. Surely there are some formercolonial territories which becamesemi-independent under the trusteeshipsystem set up by the United Nationsafter World WarII. In these cases, the external relationsof these territories are under the supervisionordirection of appointed sovereignstates. In other words, these sovereignstates areresponsible for the external affairsof these territories. Assuming thissituation, thedrafters of the GATT kept in mindthat a non-sovereign separatedcustoms territoryshould have a sovereigncountry responsible for its externalaffairs. Though the SCThas “full autonomy in theconduct of its external commercialrelations...” and thus canbe deemed as contractingparty according to the GATTprovisions, its accessionisconditioned with the sponsorshipof the country which isresponsible for its externalrelations and has establishedthe fact of its autonomy in externalcommercial relations.Reviewing the relevant practiceof the GATE’, most SCTsbelong to this groupand they all accededto the GATE’ under Article XXVI:5(c). Taiwan’s case is the firstone applying the provisionsof Article XXXIII.According to the requirementsin Article XXVI:5(c),it would be difficult forthe PRC governmentto be the sponsor for Taiwan’saccession to the GATTbecause,firstly, the PRC governmentis not a contractingparty yet; secondly, thePRCgovernment has not beenresponsible for Taiwan’sexternal affairs, and thirdly,thePRC government can inno way be considered theone who has establishedthe fact that60Taiwan “possesses or acquires full autonomy inthe conduct of its external commercialrelations and of the other matters provided forin the Agreement”.Based on the one-China principle and theworldwide recognition of the PRC asthe legitimate government of China, Taiwanauthorities can only be consideredas agovernment of a local entity of China.Measured by both the GATr regulationsandpractice, it would be without precedentto accept a government of a local entityof asovereign country to GAIT withouta certain kind of confirmation from the centralgovernment of that country.What the PRC is concerned aboutis not to impede Taiwan’s accessionto theGAIT, but to avoid any negative impactsupon the one-China principle. Dueto thecurrent situation on the relations betweenthe two sides, it is also impossible forTaiwanto agree with the confirmation from thePRC as a precondition of itsaccession to theGAIT. The major divergence is onthe relations between the two governments.Tothe PRC government, the relationsbetween the two sides should bepositioned as theone between the central governmentand the local government. It isunacceptable toTaiwan to be considered asa local government, because inthis way, it would lose itsbargain margin in the negotiationswith the mainland.F. THE PRC’S ATTITUDEON TAIWAN’S APPLICATIONThe attitude of the PRCgovernment towardsTaiwan’s application forcontracting party status as a SCTinfluences the consideration ofall contracting partieson this matter.On 16 January, 1990, halfa month after Mr. Arthur Dunkel,the Director-General of the GAIT, receivedthe letter sent by the Taiwangovernment requesting61accession to GATE under Article XXXIIIas a SCT, he was notified by the PRCgovernment that Taiwan’s action wasan “utterly-illegal application”.128 Itwas the firstreaction by the PRC to Taiwan’s request forGATI membership, which was constituentwith the PRC’s long-time policyon Taiwan’s efforts to take part in internationalorganizations as an independent politicalentity. In the last fourdecades, especiallyfrom 1972 when the PRCreturned to the United Nationsas well as the otherinternational organizations relatedto it, the PRC has been trying hardto advocate to“expel” or “exclude” Taiwanas the representative of China in allinternationalrelations. The basic point ison the representative of the country,or in other words,who is the legitimate authorityover China. Essentially, it is theextension of domesticpolitical conflicts to external affairs.Fearing that Taiwan, underpolitical pressure andthe instigation both from insideand outside, would be separatedfrom the country, thePRC holds on to the one-Chinaprinciple, and is determinedto prevent and stop theseparation of Taiwan from Chinaat every cost.129 It reflects theunmovable stand ofthe PRC on the matter of principles.Coming from this viewpoint,the PRC opposesTaiwan’s request to be contractingparty as an SCT. By analysison the provisions ofthe GATT, we may findthe legal reasons for bothTaiwan’s request and thePRC’sopposition.Under Article XXVI:5(c),a SCT shall be deemed tobe a contracting party withthe conditions of “sponsorshipthrough a declarationby the responsible contractingparty” establishing the factthat the concerning SCT“possesses or will acquirefull128China Moves to Block Taiwan’sBid for GATT’, Financial Times,17 January, 1990.129Supra note 24, Jiang Zemin,FBIS-CHI-92-204-S, 21 October1992,P.20. In this report, Jiang,the Secretary-General of the CommunistParty of China, reaffirmedthat “Taiwan is an inalienable partofChina’s sacred territory. Weresolutely oppose “two China,”“one China, one Taiwan”, or“one country,two governments” in any form.We resolutely oppose any attemptsand actions designedto make Taiwanindependent.62autonomy in the conduct of its external commercialrelations and other mattersprovided for in this Agreement”. In this case,a certain relation is required between theSCT and the contracting party which is responsiblefor the external relations ofthe SCTand has established the SCT’s fullautonomy in it’s conduct of external commercialrelations and of the other matters providedfor in the General Agreement. The rationaleof this article is based on the fact that,at the time the Agreement was drafted,therewere many colonies like Burma,Ceylon and South Rhodesia, whichwere notindependent politically buthad their own autonomy in external commercialrelations.So comes the requirement of the sponsorshipsthrough declarations by their suzerains.In this way, the procedure issimple and such SCTs can enjoy thecontinuity ofmembership by virtue of its legal relationshipwith their current metropolitanpower,instead of paying the “admission ticket”by new commitments in the formof newprotocols. Reviewing the practiceof GAIT about accepting SCTsas contractingparties, it can found that nearly allSCTs who are contracting partiesfulfilled theadmitting procedure under Article XXVI:5(c),like Burma, Ceylon and South Rhodesiaand so on.Taiwan’s case is peculiar for althoughboth sides between the TaiwanStraitsstick to the one-China principle,the reality of the divided territoryof China in the lastfour decades does not mean any likelyrelations of suzerainty between them.The fullautonomy of Taiwan in theconduct of its external commercialrelations is notestablished by the PRC government. Taiwansurely cannot follow thisprocedure toseek its membership in GATE, because itwould spoil its grounds in thestruggle withthe mainland government for the legitimacyto present China, and further itwouldresult in its recognition of thelegitimacy of PRC government.It would be incredibleand impossible for Taiwan to acceptsuch a sub-ordinate position giventhe currentpolitical reality. Because it can accedeto the GAIT neither asa sovereignn nation nor63as an ACT under Article XXVI:5(c), Taiwantook the last and the only choice, i.e.toaccede as an ACT under Article XXXIII.130All the controversies around Taiwan’sapplication focus on Taiwan’slegal statusin international transactions. Therelevant practice of Taiwan, the mainlandand theinternational community give positiveverification on this question. First,both of thetwo sides agree that there is only one China,and Taiwan is a part of China.Second,Taiwan has not been acceptedby very many in the world communityas a sovereignstate, whereas the representation andparticipation of the PRC governmentas thelegitimate government ofChina has been recognizedby most countries andinternational organizations in theworld.131 This reality is with theacquiescence of theTaiwan government.’32 Third,the activities of the ROC in internationalrelationsbefore October 1949 was definitelythe state behavior of China.Due to theestablishment of the PRCgovernment in 1949, the ROClost its legal basis forexistence as the legitimate governmentof China.133130A SCT can accede to the GATT underArticle XXXIII which requiresthe applicant to pay forthe “admission ticket”, which,in Article XXXIII, reads as the “termsto be agreed between suchgovernment and the Contracting Parties”,and the “decisions of the ContractingParties ... shall be takenby a two-thirds majority.”131The PRC has diplomatic relations with 155countries at present.132Taiwan has given up claimingthe legitimate representation forChina, and uses the titleof“China, Taipei”, or “China, Taiwan”in many international organizations.Its application for the GATTas an SCT is another exampleby which it explicitly claimsits representation for the territoryof Taiwan,Penghu, Kinmen and Matsu only.133In other words, the ROC, in a legal sense,has a very different definition beforeand after thedate of 1 October, 1949. Beforethen, the ROC was the legitimategovernment of China in internationalrelations. After then it has not been recognizedas the government of Chinaby most countries of theworld community and is considered onlya de facto government with controlover a small part of thecountry. Its activities under the title ofthe ROC in international relationsafter 1949 is notat all thecontinuity of the former Chinese governmentin legal sense, because its activities inthe name of “China”have no authority, no representation, thusare unlawful.64CHAPTER IV. HONG KONGAN]) THE GATTA. INTRODUCTIONHong Kong, as a very important internationalfinancial center and free harbour,has established itselfas an important player in the global economic arena.It is one ofthe world’s largest bankingcenter, the world’s tenth largest trading entity,and one ofthe world’s busiest container ports.Hong Kong is also a major foreign exchangeandcommercial market, the regionalheadquarters of a large numberof multinationalenterprises, and Asia’s leading communicationscenter. Hong Kong hasvery closeconnections with the mainlandin trade.In the last more than a hundredyears, Hong Kong has beenseparated fromChina by three Sino-British treaties.134On 19 October, 1984,People’s Republic ofChina and Britain signed the JointDeclaration on the Questionof Hong Kong betweenthe Government of the People’sRepublic of China and HerMajesty’s Government ofthe United Kingdom of GreatBritain and North Ireland, accordingto which HongKong will return to China on 1 July, 1997.135The transfer of sovereigntyover HongKong to China raises many newquestions. One important field relatedto the transferis Hong Kong’s status in internationalrelations as well as the internalrelations withinChina between Hong Kong andthe central government concerninginternational134Those treaties will be reviewed in the textat note 141.135Treaty Series No. 26 (1985), Cmnd. 9543.65transactions, especially in the major internationaltrade organization, the GeneralAgreement on Tariffs and Trade.On 24 April 1986, the Secretariat ofthe GATT notified the contractingpartiesthat Hong Kong had becomea contracting party of the GATI’ on 23 April, 1986.136China is now in the process of resumingits membership in the GATT. Onthe otherhand, Hong Kong will be under the exerciseof the sovereignty of China.Thecomplexity leads our analysisto the following steps, i.e. the positioningof Hong Kongin China, Hong Kong’s status in internationalorganizations, and capacityto participatein international relations, the successionof treaty rights and obligationson Hong Kongafter 1997, and the relations of theHong Kong Separate AdministrativeRegion(hereinafter Hong Kong SAR)137 withthe central government in thefield of externalaffairs and so on.Another case is about Macao.Concerning that much similaritylies betweenMacao and Hong Kong in thesense of their status in internationalorganizations andtheir capacity in external affairsas non-sovereign entities, HongKong is chosen insteadof Macao as the example forthe following analysis.B. HISTORICAL BACKGROUNDIn 1840, the Opium War brokeout between the Britishand China. On 29August, 1842, the Britishgovernment forced the Chinesegovernment of the Qing136GATT, Doc. GATT/1384, 24 April,1986.137According to the Joint Declaration betweenChina and British in 1984, HongKong will be in thestatus of Separate Administrative Regionwith high autonomy.66Dynasty to sign the Treaty of Nanjing,’38by which the Island of Hong Kong wasannexed to Great Britain. In 1856, Britainlaunched the Second Opium War, andforced the Qing government to sign the Conventionof Beijing139 on 24 October, 1860,which was originally called the SupplementaryProtocols for the Treaty ofNanjing.Under this convention, the Qing governmentwas forced to cede the Chinese territorysouth of Boundary Street on KowloonPeninsula, facing the Islandof Hong Kong, toBritain. Thirty years later, takingadvantage of China’s defeat inthe Sino-JapaneseWar of 1894-1905, Great Britain forcedChina to sign the Conventionfor the Extensionof Hong Kong Territory on 9 June, 1898,by which a much larger area north of theKowloon Peninsula, later calledthe New Territories, was leasedto Great Britain for 99years.’4°These three treaties were consideredby Chinese governments as “unequaltreaties”141As early as during World War II, thegovernment of the Republic ofChina demanded the terminationof the 1898 lease of the NewTerritories in thenegotiations with Great Britainfor the termination of Britishextraterritorial and otherspecial rights in China.142 Afterthe PRC government replacedthe ROC governmentin late 1949, its policy onthis matter was very clearly declaredin the following words:138Treaty of Nanjing, August 29,1842, Great Britain-China, art.III, 50 British and Foreign StatePapers ( Gr. Brit.) 389; 93 Parry’s T.S.465, 467.139Convention of Friendship, Oct.24, 1860, Great Britain-China,art. VI, 50 British and ForeignState Papers(Gr. Brit.) 10; 123 Parry’s T.S. 71,73-74.140Convention for the Extensionof Hong Kong Territory, June9, 1898, Great Britain-China,reprinted in Hertslet’s China Treaties 130(3d ed. 1908); 186 Parry’s T.S. 310.141This policy has been shared by both theChinese Nationalist governmentbefore 1949, i.e. theRepublic of China, and the Chinese Communistgovernment after 1949, i.e. thePeople’s Republic ofChina. See, Hungdah Chiu, Comparisonof the Nationalist and Communist ChineseViews of UnequalTreaties, in China’s Practice Of InternationalLaw, 239, 248-56, ed. by 3.Cohen, 1972.142Hungdah Chiu, Introduction, in 20 CaseWestern Reserve Journal of InternationalLaw, No. 1,1988, p. 2.67At the time the People’s Republic of Chinawas inaugurated, ourgovernment declared that it wouldexamine the treaties concluded byprevious Chinese governments with foreigngovernments, treaties thathad been left over by history, and would recognize,abrogate, revise, orrenegotiate them according to their respective contents.As a matter of fact, many of these treaties concludedin the past eitherhave lost their validity, or have been abrogatedor have been replaced bynew ones. With regard to the outstandingissues, which is a legacy fromthe past, we have always held that, when conditionsare ripe, they shouldbe settled peacefully through negotiations andthat, pending a settlement,the status quo should be maintained. Withinthis category are thequestions of Hong Kong, Kowloon,and Macao and the questions of allthose boundaries which havenot been formally delimitedby the partiesconcerned in each case.143In its practice in the followingyears, the Chinese government hasnever givenup its claim on Hong Kong.144143A Comment on the Statement of the CommunistParty of the United States ofAmerica, Peopl&sDaily (Remain Ribao), Mar. 8,1963. Supra note 71, Jerome A. Cohen andHungdah Chin,p. 380(1974).144One case of the Chinese striving for theirsovereign rights over Hong Kongin the 1960s to the1970s is about the listing of Hong Kong withthe colonial territories. Tn 1964, the WorldYouth Forumadopted a resolution puttingHong Kong and Macao on a par withTimor Island, Papua, Oman,Adan,and South Arabia and demanded “independence”for those places in accordance with the1960 UnitedNations Declaration on the Grantingof Independence to Colonial Countriesand Peoples. For theDeclaration, see G.A. Res. 1514,15 U.N. GAOR Supp. (No. 16) at 66 U.N.Doc. A/4648 (1960). Thisresolution met a strong protest fromthe PRC delegates. In the United Nations,the PRC readdressed itspolicy after its entry into the United Nations.On March 10, 1972, the ChineseAmbassador to theUnited Nations, after finding that the GeneralAssemblys Special Committeeon Colonialism includedHong Kong and Macao in its list of colonialterritories, sent a letter to theChairman of the Committee,stating that:As known to all, the question ofHong Kong, and Macao belongs to thecategory of questions resultingfrom the series of unequal treatiesleft over by history, treaties which theimperialists imposed on China.Hong Kong and Macao are partsof Chinese territory occupied by theBritish and Portuguese authorities.The settlement of question of Hong Kongand Macao is entirely withinChina’s sovereign right and doesnot at all fall under the ordinary categoryof colonial territories.Consequently, they should not be includedin the list of colonial territories coveredby the Declaration onthe Granting of Independenceto Colonial Countries and Peoples.With regard to the question ofHong Kong and Macao, the Chinese governmenthas consistently held that68The Resolution of the Question of Hong Kong.After negotiations on thefuture of Hong Kong between thetwo sides, the PRC and Britain initialled the JointDeclaration on the Question of Hong Kong.’45 Accordingto the Joint Declaration,Hong Kong will be under the sovereigntyof China on 1 July, 1997, and Chinapromises Hong Kong’s prosperity with thedetailed policy on Hong Kong, the post-1997 Hong Kong regime, and its internationalrelations. These policies mainly includethat Hong Kong will enjoya “high degree of autonomy” except in foreign and defenceaffairs, as a Special Administrative Region;Hong Kong will maintain the capitalisteconomic and trade systems for fifty years after1997. As to its international relations,the Declaration affirms that HongKong may participate in relevant internationalorganizations and international agreements.It may establish official and semi-officialeconomic and trade missionsin foreign countries, using the name “HongKong, China”to maintain and develop relations and concludeand implement agreements withstates,regions, and relevant international organizationsin appropriate fields.they should be settled in an appropriateway when conditions are ripe. The UnitedNations has no rightto discuss these questions.For the above reasons, the Chinese delegation is opposedto including Hong Kong and Macao in thelistof colonial territories covered by the declarationand requests that the erroneous wordingthat Hong Kongand Macao fall under the category of so-calledcolonial territories be immediately removedfrom thedocuments of the special committee andall other United Nations documents.145The Joint Declaration on the Question ofHong Kong between the Governmentof the People’sRepublic of China and Her Majesty Governmentof the United Kingdom of Great Britainand NorthIreland, was signed on 19 October, 1984,and the instruments of ratification wereexchanged on 27 May,1985.69C. HONG KONG’S EXTERNAL RELATIONSAND STATUS ININTERNATIONAL ORGAMZATIONS1. Situation of Hong Kong’s ExternalRelationsHong Kong’s significant status in internationaleconomic transactions makes itvery necessary to let Hong Kong participatein international treaties, thoughit hasnever been a sovereign subject.The international activities of HongKong are so worldwide as to includemembership and participation in severalinternational organizations and multilateralconventions, as well as negotiation andconclusion of agreements with foreigngovernments. Actually, Hong Kong, eitherthrough the United Kingdom oras aseparate member, is in fact participating inmore than 85 multilateral treatiesorarrangements, relating to arbitration, aviation,copyright, settlement ofinvestmentdispute, judicial assistance, maritimematters, the control of narcotics,patents,publications, satellite communications,telecommunications and other matters.146Hong Kong has also been granted separateexport quotas by its majortrading146Tn May 1990, the international organizationsHong Kong participates in includethe UnitedNations Economic and Social Commission forAsia and the Pacific (ESCAP); InternationalBank forReconstruction and Development (IBRD);International Monetary Fund (IMF);United Conference onTrade and Development (UNCTAD);Food and Agriculture Organization (FAO);International LaborOrganization (ILO); International Maritime Organization(IMO); Universal Postal Union (UPU);International Telecommunication (ITU); InternationalTelecommunication SatelliteOrganization(INTERSAT); International Atomic Energy Agency(IAEA); International Criminal PoliceOrganization(INTERPOL); General Agreement onTariffs and Trade (GATT); Asian DevelopmentBank (ADB);Asian and Pacific Development Centre (APDC);Asia-Pacific Postal Union(APPU); Asia-PacificTelecominunity (APT); Customs Co-operationCouncil (CCC); International Typhoon Committee(ITC);International Development Association(IDA); International Finance Corporation(IFC); InternationalHydrographic Organization (IHO); InternationalMaritime Satellite Organization(INMARAT); UnitedNations Commission on Narcotic Drugs (UNCND);World Health Organization (WHO);WorldMeteorological Organization (WMO).70partners such as the United States, the U.K.,Canada, and the European EconomicCommunity. Hong Kong maintains its ownmemberships in 312 internationalnongovernmental organizations. Thereare more than 60 countries thatmaintainconsulates and eight British Commonwealth countriesthat maintain commissioner’soffices (i.e. consulate in fact) in Hong Kong. Externally,Hong Kong has many officesin other countries.147 Being a part of HongKong’s external relations,the bilateralagreements between Hong Kong and other governmentsare many and range widely.148147At the governmental level, Hong Kong maintainsoffices in London, Geneva (under theU.K.Mission to the United Nations EuropeanHeadquarters), Brussels, Toronto, Tokyo,and Washington(under the British Embassies), and New York(the offices of the Commissionerfor Hong KongCommercial Affairs in the British Consulate General).For the industrial promotion, HongKong hasoffices in Tokyo, London, Stuttgart, and SanFrancisco. The Hong Kong Trade DevelopmentCouncilmaintains offices in 17 cities suchas Vienna, London, Paris, New York, Toronto.Hong Kong’sinterests are represented by the British embassiesor consulate for the areas or countriesin which it has nospecial offices.148Under the authorization from the BritishGovernment and the agreement of theSino-British JointDeclaration, Hong Kong is entitledto act on behalf of itself, for example,in one of the important fieldsof governmental cooperation, civil aviation. Theinternational standardization of machineryfor technicalor operational safety in air transport need the determination,assurance and control of sovereign states,most of the concerned agreements are signedbetween the governments of sovereignstates. So, all thebilateral air service agreements whichwere in force in respect of Hong Kongwere between the U.K. andthe concerned countries. For example,Australia, Burma, Canada, Sri Lanka(Ceylon), France,Germany, India, Indonesia, Italy,Japan, Kenya, Korea, Kuwait, Lebanon,Malaysia, New Zealand,Philippines, Portugal, Singapore,South Africa, Switzerland, Thailand,USA. See Gary Heilbronn,Hong Kong’s First Bilateral Air ServiceAgreement: A Milestone in Air Lawand An Exercise inLimited Sovereignty. Also see, Hong Kong LawJournal, vol. 18, Jan. 1988,No. 1, p.&l, note 2.On 26 June, 1987, the Agreement betweenH.K. and the Netherlands ConcerningAir Servicescame into force. It was signed at theHague on 17 September, 1986. See,Special Supplement No.5 toHong Kong Gazette, June 26, 1987 and replacing,for Hong Kong, UK-Netherlands agreement(cmd No.6893, Aug. 13, 1946) entry into forcein Hong Kong, Nov. 31, 1971,by cmnd No. 4856. It is the firstair service agreement entered intoby Hong Kong in its own right alsoit is the first example ininternational aviation’s relatively shorthistory of an international air servicesagreement being made by apolitical entity possessing less than thefull sovereignty. Up to now, theH.K. has concluded agreementson civil aviation with Netherlands, Switzerland,Canada, France, New Zealand, Malaysia,Brunei andBrazil.712. History and Status of Hong Kong in InternationalOrganizationsHong Kong’s relations with, and its activitiesin international organizations hasbeen formed and determinedby the special relation between Hong Kong and Britaininhistory.In the passing century, the governmentof the United Kingdom has beenresponsible for Hong Kong’s internationalrelations, because of itsdominance over itsoverseas territories. But Hong Konghas been authorized withconsiderable autonomyin the area of commercial andcultural relations. Hong Kong’s statusand functions arevaried in different internationalorganizations according to the variousnatures andregulations of those organizations.Cases are classified in generalas follows:(1) Some internationalorganizations regulate that onlystates (sovereignstates) are qualified for membership.Hong Kong can bea participant in theconferences of these organizationsas a member of the U.K.‘s delegation to suchorganizations. In other words,Hong Kong takes partin the activities of theseorganizations only because the U.K.has the membership. HongKong has no separatestatus in these organizations,though its representative,as a member of the U.K.‘sdelegation, may, in some cases,make a speech on matters concerningHong Kong. Incase of the International MaritimeOrganization of which55 maritime countries aremembers. The U.K. becameone of its members on May3, 1967. The membershipbrought Hong Kong withinthe application of theConvention as wellas being aterritory of which the U.K.was responsible for internationalrelations.(2) In some internationalorganizations, membershipsare open not only tostates, but also to some areasor the governments of theseareas, with the former(states) as the formal membersand the latter as formalmembers, quasi-members,associate members and observers,etc. Hong Kong has variousseparate status in such72organizations. For instance, the Economicand Social Committee of Asia and Pacific(ESCAP, it was first called the EconomicCommittee of Asia and Far East, ESCAFE)is a subsidiary body of the United NationsEconomic and Social Council. Hong Kongwas included in the geographical scope of Asiaand the Far East by Resolution37 (IV)of the ECOSOC on March 28, 1947by which the ESCAFE was established. In theResolution 69(V) of ECOSOC on August5, 1947, Hong Kong was classified withinthelimits of the function and administrationwere of ESCAFE, thus becomingone of theareas qualified to be associate memberswhen the applications forthe membershipswere submitted by the memberstates which are responsible forthe internationalrelations of these areas. Afterwards,Hong Kong became an associatemember of theESCAP through the application of theU.K. In the Asian Development Bank (ADB),Hong Kong obtained a separate membershipby its own qualification for the ADB. Itisregulated in the Protocol of theAsian Development Bank that thememberships areopen to the members and quasi-membersof the UNESCAP, other countriesin thisarea, and the developed countriesin the United Nations or thespecial agencies of theU.N. Hong Kong’s membershipas a quasi-member in the ADBwas obtained throughthe U.K. ‘s application onMarch 27, 1969 accordingto Article 3(3) of the Protocolofthe ADB.(3) In some international organizations,though the membershipsare limitedto states or the official representativesof states, the territoriesor the governments ofthe territories for whicha member state is responsible forits international relationsareallowed to take part separatelyin the regional organizationsor conferences subsidiaryto the organizations in the namesof themselves, such asthe International CriminalOrganization (ICO). TheHong Kong Branch of theInternational Criminal organizationwas established in 1960, subordinateto the British NationalBureau of ICO.Afterwards, Hong Kong’s representativetook part in the plenaryconferences of the73ICO as a member of the British delegation,and in the names of “U.K., H.K.” and“H.K.” made presentations in the conferenceson the Asian Region calledby theSecretary General and some seminarsconcerning criminal affairs.In some international organizations, thememberships are open not onlytostates, but to states which, though they arenot located in the certain regionsthemselves, are responsible forthe international relations of some areasin theseregions. For instance, accordingto such regulations, the U.K. becamea member ofthe West Pacific Region Committeeof the World Health Organizationby theResolution WHO 2.103 of the World HealthOrganization on June 30, 1949,becausethe U.K. was responsible for the internationalrelations of Fiji (not independentthen)and Hong Kong which were located in theWest Pacific Region. Before1970, HongKong and Fiji sent theirrepresentatives in turn to take partin these conferences as thedelegation of the U.K. in the name ofthe U.K.. Hong Kong itself hasrepresented theU.K. in these conferences afterFiji became independent.D. HONG KONGtS CAPACITY TOJOIN INTERNATIONALORGANIZATIONSOn Hong Kong’s capacity ininternational organizationsas a non-sovereignentity, consideration is concentratedto the status of non-sovereignentities ininternational organizations accordingto practice, and so on.It is necessary toscrutinize the evolution, essence,and the characteristics ofinternational organizations.741. Definition and Evolution of InternationalOrganizationsThe development of international organizations is anoutstanding characteristicof the modem world of mankind in the senseof international cooperation and progress.In general, international organizationsare defined as “bodies of various kindsset up bymultilateral agreements between States for variousco-operative purposes .... Suchorganizations are normally created by multilateraltreaty, but may be created in otherways, such as by resolution of the United NationsGeneral Assembly”149 or as an“intergovernmental organization constitutedby States to which its MemberStates havetransferred competence over mattersgoverned by this Convention, including thecompetence to enter into treatiesin respect of those matters,”150orintergovernmental organizations [arejcreated by nation-statesto promote commonpurpose through agreements among themselves• •“•151The functions of international organizationsat present range from the universalinternational political organizationssuch as the United Nations to theregionalinternational organizations as the CentralAmerican Common Market(CACM),covering the issues of political, economic,social, cultural, scientific,and technologicalcooperations among states.Ever since the beginningof the contemporary systemof sovereign territorialstates from the end of the Thirty-YearsWar in 1648, concludedby the Peace of149David M. Walker, The Oxford Companionto Law, (New York: Oxford UniversityPress,1980), p.641.150This phrase is used in Annex IX, Art.1 of the United Nations Convention on the Lawof the Seato describe the international organizationssuch as the European Community. Parryand Grant,Encyclopedia Dictionary of InternationalLaw, (New York, U.S.: Oceana Publications,Inc., 1986),pp.277-78.151Lung-chu Chen, An Introduction to ContemporaryInternational Law, (New Haven:YaleUniversity Press, 1989), p.50.75Westphalia, the interactions between states in Europewere, in the seventeenth and thegreater part of the eighteenth centuries, determinedby the concerns of these statesabout prestige, military power, and territorial security. Butunder the impact of theIndustrial Revolution, international economic relationsassumed greater importance, andby the nineteenth century interstate relations increasinglyembraced matters ofcommerce and trade in manufacturedgoods.152Since World War II, the numberof international organizations has growntremendously. One of the main reasonsfor that growth is the factthat the number ofstates has more than tripled since then, largelyas a consequence of decolonization.2. Membership and ExceptionsGenerally speaking, the membershipof International Government Organizations(IGOs), in most cases, belongs onlyto states, because “the subjects of therights andduties arising from the Law of Nationsare States solely and exclusively.”153The basicassumption is that onlynation-states are capable to representa nation’s interests andinteract with each other in this sense.154With respect to InternationalNon-governmental Organizations(INGOs),membership does not require theparticipants to be representative ofthe government ofa nation-state. INGOs carry outa variety of border-crossing activitiesto attain theirgoals in the pursuit of the interests forwhich they have beencreated. These activities152Werner J. Feld, Robert S. Jordan ,Leon Hurwitz, InternationalOrganizations, (New York:Praeger Publishers, 1983),p.1.153II. Lauterpacht, Oppenheims InternationalLaw, 8th ed. (Longmans,Green and Co. Ltd.,1955), p. 19.154Ibid, pp.4-S. ‘Law of Nations or InternationalLaw (Droit des gens, Volkerrecht)isthe name forthe body of customary and treaty rules whichare considered legally bindingby States in their intercoursewith each other.”76create relationships of the INGOs withboth governmental and nongovernmentalentitiesand actors; such relations have beenlabelled transnational in contrastto traditionalinternational relations, which are generallyunderstood to apply onlyto activities andcontracts between governmental actors.Except for the distinction between IGOsand INGOs, some exceptionscan stillbe found to show that some non-stateterritories have certain status insome IGOs.a. Canada and Australia, as dependentmembers of the Commonwealth,were members of the Universal PostalUnion prior to the FirstWorld War. At thattime, they did not “becomesubjects of International Law (althoughthe position wassomewhat anomalous) whenthey were admitted, sideby side with the mother country,as parties to administrative unions, suchas the Universal Postal Union.Even whenthey were empoweredby the mother importance with foreignstates, they still did notthereby become subjects of InternationalLaw, but simply exercisedfor the matters inquestion the treaty-making powerof the mother country whichhad been to that extentdelegated to them.”155 This exceptionshows a precedent of the participationof nonsovereign entities within the Commonwealthin the IGOs.b. Danzig. The details of thesettlement regarding Danzigunder the PeaceTreaty of Versailles and the ParisConvention of 1920 betweenPoland and Danzigarea matter of the past. It isstill interesting to analysethe characteristics of theinternational personality.156155Thid, H. Lauterpacht, p.198.156Thid, H. Lauterpacht,p.193, footnote 5. The Free Cityof Danzig was created a separate Stateby Article 100-198 of the Treaty of Peacewith Germany in 1919 and “placedunder the protection oftheLeague of Nations,” which wasrepresented at Danzig by a HighCommissioner. The constitution,thatis, the political organization, of the FreeCity was placed under the guaranteeof the League. A treatyofNovember 9, 1920, between the FreeCity and Poland regulated therelations between them uponanumber of points and provides thatthe Polish Government shall undertakethe conduct of the foreign77The Permanent Court of InternationalJustice upheld Danzig’s claimto beentitled to an international personality of itsown, and “the ordinary rules governingrelations between States” applied in the relationsbetween Danzig and any otherstate.In accordance with these rules the general principlesof international lex specialis, “tothe treaty provisions binding upon the FreeCity and to decisions takenby the organs ofthe League under these provisions.”157Danzig, as a half-sovereign state half-protectorate,would have had to receive ineach case the prior consent of Polandbefore she could have takenpart in any of thenormal activities of internationalorganizations. To answer the questionwhetherDanzig could become a member of theInternational Labor Organization, theCourtheld that, unless Poland waived inadvance her objections to any action ofDanzig as amember of the International LaborOrganization, the Free City was not eligibleformembership.158 In other words,Danzig could be a partyto international organizationssuch as the ILO, with the consent ofPoland.c. Ukraine and Byelorussia. The UkrainianSoviet Socialist RepublicandByelorussian Soviet Socialist Republicswere, herewith, the two republicsof the formerSoviet Union. These two republics tookpart in the San Francisco Conferencein 1945by which the United States was established,among 50 states, and theybecamemembers of the U.N. as “SovereignStates.”This is an exception to the requirementof sovereignty. Neither ofthe tworepublics were sovereign statesunder international law becausethey were part of therelations of the Free City as well asthe diplomatic protection of its citizenswhen abroad. Thus Polandexercised on behalf of the League thisvery important aspect of the Protectorate,and all disputes betweenthe Free City and Poland arising outof this matter or any other matter under theTreaty of Versailles orany arrangements or agreements made thereunderare decided in the first instanceby the HighCommissioner of the League, subjectto an appeal by either partyto the Council of the League.157A/B 44, (Series A/B, the P.C.I.J., 1931-1940).158[161 B 18, at 15, (Series B. the P.C.I.J. 1922-1930)78Soviet Union and controlled by that government.But they got admission to fullmembership in the United Nations.159 Thisis a precedent to allow a state extrarepresentation through assigning sovereignstatus to territorial units within a state, andalso the precedent that non-sovereignstates can become members of this largestofpolitical intergovernmental organization)6°A similar phenomena to the Ukraine and Byelorussiais India’s status as anoriginal member of the League of Nations,although its full sovereigntywas notestablished until1947.161Another exception is the Philippines beingalso accorded thestatus of original member prior to the transfer ofsovereignty. All the concessions tothe memberships of the Ukraine, Byelorussia,India and Philippines in the twomajorpolitical, intergovernmental organizationsdid not meet generally accepted standardsofstatehood and made important exceptions andprecedents in the history of theinternational organizations.d. Other cases. Many cases of thiskinds of exceptions of the membershipin IGOs appear to form a clearpicture that many non-sovereign entitiesare formalparticipants in IGOs by various flexibleprovisions of these IGOs. Inthe GATT, 28parties (plus Kiribati, Tongaand Tuvalu) are the territories to whichthe GATI’ applied159Stephen S. Goodspeed, The Nature andFunction of International Organizations,2nd ed. (NewYork: Oxford University Press, 1967),pp.81-82.160The two republics also participatedin some U.N. specialized and relatedagencies, such asInternational Atomic Energy Agency (IAEA),International Court of Justice(ICJ), International LaborOrganization (ILO), International TelecommunicationUnion (ITU), United Nations Education,Science,and Culture Organization (UNESCO), UniversalPostal Union (UPU), WorldHealth Organization(WHO), World Intellectual PropertyOrganization (WIPO), World MeteorologicalOrganization (WMO),and International Civil Aviation Organization (ICAO).161The membership of the League of Nations wasstated as being open to “any full self-governingstate, dominion or colony” might be admittedby a two thirds vote of the Assembly.See A. LeRoyBennett, International Organizations,(New Jersey: Prentice Hall, Inc., 1977),p. 66.Source: ZhongguoBaike Nianjian (Encyclopedia of China), (Beijing:The Encyclopedia of China PublishingHouse, 1986),p.2779to before their independence, and another case is HongKong, which became acontracting party in 1986. The Holy See (VaticanCity) has memberships in TAEA,ITU, UPU, and WIPO.162As the requirements of membership in various internationalorganizationsdepend upon the very regulations of eachorganizations, it is very hard to classify themaccording to their membership requirements. Manyof the organizations’ decisions willbe made by its organs consisting of representatives of memberstates.According to the Charter of the UnitedNations, the requirement formembership in this organization isstated as follows:Membership in the United Nationsis open to all other peace-lovingStates which accept the obligations containedin the present Charter and,in the judgement of the Organization,are able and willing to carryoutthose obligations.’63The case of the memberships ofUkraine and Byelorussia in the United Nationsreflects mainly the bargaininigand concessions made between the twosuperpowers inorder to keep political balance in futureconfrontation. But, as the modernworld founditself in desperate need of enhancingcooperation among the membersof thisinternational society, memberstates of some internationalorganizations put moreweight upon consideration of thecapacity and willingnessof an applicant to carry out162Political Handbook of the World, 1981 (New York:McGraw- Hill, 1981),pp.673-76.163Article IV, para. 1, Charter of the U.N.In the Advisory Opinion of InternationalCourt ofJustice in 1948, the requisite conditionsare five in number: to be admittedto membership in the UnitedNations, an applicant must be: (1) a State; (2)peace-loving; (3) acceptedthe obligations of the Charter;(4) able to carry out these obligations;and (5) willing to do so. See, InternationalCourt of Justice,Advisory Opinion, 1948.[19481 I.C.J. 57. Also see, Frederic L. Kirgis, Jr., InternationalOrganizationsin Their Legal Setting: Documents, Commentsand Questions, (West Publishing CO.1977.),pp.84-85.A widely recognized definition of statehood isstipulated in Article 1 of the Conventionon Rights andDuties of States, signed in Montevideo in1933, which is as follows: “Thestate as a person ofinternational law should possess the followingqualifications: a) permanent population;b) a defmedterritory; c) government; d) capacity to enter intorelations with other States.”Frederic L. Kirgis, Jr.,p.89.80the obligations of membership in the organization.E. HONG KONG’S RIGHTS AND DUTIES INEXTERNAL RELATIONSAFTER 1997The Arrangement between the PRC and the U.K.in Part XI of Annex I of theSino-British Joint Declaration on Hong Kong’64was made so that Hong Kong, inaddition to its high autonomy in internal affairs withinthe territory, enjoyed somerights in its external relations.1. The representatives of the Hong KongSpecial Administrative Region(Hong Kong SAR) Government mayparticipate, as members of the delegationsof theGovernment of the PRC in negotiationsat the diplomatic level directly affectingtheHong Kong SAR concludedby the Central People’s Government.2. The Hong Kong SAR may on itsown, using the name “Hong Kong,China”, maintain and develop relationsand conduct and implement agreementswithstates, regions and relevant international organizationsin the appropriate fields,including the economic, trade, financialand monetary, shipping, communications,tourism, cultural and sporting fields.3. The representatives of the HongKong SAR Government mayparticipate, as members of delegations ofthe Government of the PRC, ininternationalorganizations or conferences inappropriate fields limited to States andaffecting theHong Kong SAR, or may attendin such other capacity as maybe permitted by the164Supra note 145. The Sino-British Joint Declarationincludes three annexes. Annex I: Elaborationby the Government of the Peoples Republic ofChina of Its Basic Policies RegardingHong Kong: AnnexII; Sino-British Joint Liaison Group; Annex III:Land Lease.81Central Government and the organizations or conferencesconcerned, and may expresstheir views in the name of “Hong Kong, China”.4. The Hong Kong SAR may, using the nameof “Hong Kong, China”,participate in organizations and conferencesnot limited to States.It is clear from the declaration thatHong Kong is authorized to participatein theinternational organizations or conferences“not limited to States”. Furthermore,it isauthorized to participate even in internationalorganizations or conferences limitedtoStates.Hong Kong SAR may participate, with therestrictions of being membersof thedelegations of the PRC Government,“in appropriate fields ... andaffecting the HongKong SAR.” With thepermission of the Central People’sGovernment and theorganizations or conferences concerned,Hong Kong SAR may attendin “such othercapacity and express their viewsin the name of ‘Hong Kong, China”. Thoughthevague words “appropriate fields” and“affecting” are employed, whichwill depend onthe interpretation of the StandingCommittee of the National People’sCongress, it isvery important that Hong KongSAR is authorized to maintainand develop relationsand conclude and implementagreements on its own with States,regions and relevantinternational organizations,with some limitations.As to the application concerninginternational agreementsto the Hong KongSAR, the Joint Declarationstipulates that these are dealt withaccording to differentcases.1. The international agreementsto which the PRC is or becomesa party.The application of such agreementsto the Hong Kong SAR “shallbe decided by theCentral People’s Government.”But this decisive power is withthe restriction of“according to the circumstancesand needs of the Hong KongSAR” and “seeking the82views of the Hong Kong SAR Government”beforehand.2. The international agreements which are implementedin Hong Kong, butto which the PRC is not a party, may remainimplemented in the Hong Kong SAR.3. The international organizations of whichthe PRC is a member and inwhich Hong Kong participates in one capacityor another. In this case, theCentralGovernment “shall take the necessarysteps to ensure that the Hong KongSAR shallcontinue to retain its status in an appropriatecapacity in these internationalorganizations.” This wording showsthe policy of the PRC towards HongKong SAR’ sremaining in these international organizations,but leave enough space for consultationwith the concerned international organizationsfor their consent.4. The international organizationsin which the Hong Kong isa participantin one capacity or another,but of which the PRC is not party.In such cases, theCentral Government shall facilitate thecontinued participationof the Hong Kong SARin an appropriate capacity insuch international organizations.All these arrangements are basedupon two principles. Oneis the principle of“State sovereignty”, which means that“foreign affairs are theresponsibility of theCentral People’s Government,”165and the Hong Kong SAR isa part of China with a“high degree of autonomy.”The basis of the SAR is that“Hong Kong’s accessto itsprincipal overseas market in theindustrialized world, whichis crucial to Hong Kong’sindustry, depends upon recognitionof the separate nature of theseinterests.”166 Thepurpose of these arrangementsis that the Hong Kong SAR willbe able to look after itsown particular interests in certainareas by virtue of thepower to be given to it toconclude agreements in appropriatefields and to be represented inthe delegations of165See, Explanatory Notes, AnnexI, the Sino-British Joint Declaration.166Thid.83the PRC at negotiations of direct concernto Hong Kong.For the implementation of the Joint Declaration,the Sino-British Joint LiaisonGroup has been working ever since May 27,1985, when it came to being according toAnnex II of the Joint Declaration. Asto the transition arrangements of the relevantinternational rights and duties concerning HongKong, the agreement has beenconcluded within the Liaison Group, inthe first five years of its work, about theparticipation of the Hong Kong SAR in appropriatecapacity in 24 internationalorganizations.167As to the continued applicationafter 1997 to the Hong Kong SAR ofmultilateral international agreements whichare presently implemented in Hong Kong,both sides within the Liaison Group haveagreed in principle until June 1992, withthecontinued application to the Hong KongSAR of 35 international agreementsimplemented in Hong Kong presently,including those relating tocustoms, research,health, trade, post and internationalprivate law.168As to the conclusion of bilateral agreementsbetween Hong Kong andconcerning countries in appropriate fields,it is agreed within the Liaison Groupthat theHong Kong Government, withthe appropriate authorizationof the British Government,may, in the transitional period,conclude bilateral agreementsin the fields like civilaviation, extradition and investmentprotection with the concernedcountries; theseagreements will, in principle, continueto be effective from July 1, 1997.169167Achievements of the Joint LiaisonGroup and its Sub-group on InternationalRights andObligations, 1985-May 1990.168Ibid.169Thid.84F. BI]D1NG FORCE OF THEJOINT DECLARATIONThe above arrangements madeby China and Britain drew some questionsabouttheir binding force not only on the two sides,but on third parties.First, whether the Joint Declaration hasbinding force on the two parties,orwhether it is a treaty. TheChinese negotiators insisted that thedocument would beunder the name of “declaration”,170rather than an “agreement”.It made no differenceon the legal nature of a document whetherto use explicitly the term “treaty”.TheChinese mode of thinking originatesfrom the attitude of the ChineseGovernment torefuse to recognize the effectivenessof three treaties on Hong Kong,as “unequal”treaties.Actually, it is no longer doubtfulbecause both sides repeatedlyemphasized thelegal binding effects of this declaration.171“By signing a declarationinstead of atreaty, China merely soughtto avoid the political embarrassmentof admitting thatBritain had a previous legal rightto Hong Kong.”72 In internationallaw, a statementof agreement is a promise thatwill be upheld by the forceof law, and a declarationintended as an international agreementis a treaty.173Obviously, both the sidessigned170In the process of designation, Xinhua,the Chinese official newsagency, uses the term“declaration” to describe the coming document,and never uses the word“agreement” which the Britishpreferred to. See, Hong Kongclears the First Hurdle, Asian WallStreet Journal,Oct. 1, 1984,p.6.171Zhou Nan, the then Chinese DeputyForeign Minister, stated thatthe agreement “provides aneffective guarantee forHong Kong’s future prosperity andstability”, in Hong Kong Lives,Asiaweek,Oct, 5, 1984, p.22. and the legal bindingnature of this agreement hasbeen confirmed by the high Britishofficials in many cases, Thid., p.6.172Susan Karamanian, Legal Aspects ofthe Sino-British Draft Agreementon the Future of HongKong, Texas International Law Journal,Winter 1985, vol. 20,No. 1,p.183.173Vienna Convention on the Lawof Treaties, opened for signatureon May 23, 1969, U.N. Doe.A/CONF. 39727, art. 2(1)(a), reprintedin 8 I.L.M. 679 (1969). Alsosee, T.Elias, The Modern Lawof85the declaration as a treaty and are willingto be bound by it. The Declarationwas sentto the United Nations for registration under Article 103which was clearly an attempt toemphasize its binding nature.Secondly, a very interesting point onthe discussion of the binding effects of thisdeclaration is that of its effects on the thirdparties, especially those provisionsconcerning Hong Kong SAR’s participationin the international organizations,whereHong Kong’s status does not only depend onthe attitude of China and Britain,but veryimportantly on the consent of themembers of those internationalorganizations.According to the Moving Treaties FrontiersRules, the transfer of sovereigntyof aterritory causes the transferof the international rights and duties appliedto thisterritory. Or, “territorial changes altertreaty frontiers but the regime ofalreadyexisting treaties is itself not affected.”174The two aspects of the movingtreatiesfrontiers rule are expressed as follows.The positive aspect is that thetreaties of thesuccessor state begin automaticallyto apply in respect of the territoryas from the dateof the succession. The negativeaspect is that the treaties of the predecessorstate, inturn, cease automatically to apply in respectof the territory.”175 Yet, thisrule has noeffect of jus cogens, and the partiesof the Sino-Joint Declaration excludedsome of theconsequences from the succession ofstates,176 to avoid theunacceptable effects onHong Kong’s future prosperityand stability.But such a bilateral agreementdoes not have an erga omnes(“binding allothers”) effect. So, all the arrangementsneed the acceptance of thirdparties. That isTreaties, 13-14 (1974); alsoN. Green, International Law, 161-53 (1973).174George Ress, “The Hong Kong Agreementand Its Impact on InternationalLaw’, Hong Kong, AChinese and International Concern,edited by Jurgen Domes and Yu-mingShaw, (Boulder, U.S.A.:Westview Press, 1988),p.145.175H. Waldock, Third Report on the Lawof Treaties, Y.I.L.C. (1969), pt.2,p.52.176See the text at note 165.86the reason that there are rather vague formulations,such as “appropriate arrangementsfor the application to the Hong Kong SARof international agreements to which thePRC is not a party”, and refers to the participationin “an appropriate capacity” ofHong Kong in international organizations)77 InAnnex I of the Joint Declaration,it iseven worded that “this will require consultationwith third countries.”178Though Hong Kong’s presentstatus in those international organizationsdependmainly on its own potential andimportance in the international transactions,it isunavoidable to say that its membershipin many international organizationsare legallybased on three conditions: first, its identificationas a territory (or crown colony) of theU.K.; second, the representationof the United Kingdom Governmentin thenegotiations for its access; andthird, the terns negotiated by theU.K. Government.So, those circumstances and conditionswill be definitely changedas the changeof sovereignty happens onJuly 1, 1997, though the signersof the Joint Declarationhave tried hard to keep mostof Hong Kong’s internationalrights and duties basicallyintact in order to “Keep HongKong’s prosperity and its importancein the worldeconomy.179But since Annex I, Art. XI doesnot have an erga omns effect,there is a ratherlarge field for complicationsand much work must be donebefore the question issolved, because Hong Kong’sstatus in each internationalinstitution or organization ortreaty depends on the specificregulations and the willingnessof the members of thebodies.177Supra note 174, George Ress,p.145.178Annex I, the Sino-British Joint Declaration.179From all the arrangements by the Sino-BritishJoint Declaration and thework of the JointLiaison Group for the continuationof Hong Kong’s remainingin international organizations, it isclearthat both sides have tried to reduce thecost of the transfer of sovereignty.87The Annex I, Art. XI enables Hong Kong, usingthe name “Hong Kong, Chinato maintain and develop relations and implement agreementswith foreign states andregions and relevant international organizationsin the appropriate fields. Thisformulation clearly constitutes Hong Kongas an entity with the capacity to enter intointernationally binding relations withinthe specified fields and enables HongKong toplay a full role in these fields, “includingthe economic, trade, financial andmonetary,shipping, communication, tourism, culturaland sports fields.”180The complications sometimes may leadto the predicament to the territory evenin the following cases. In the first case,Annex I, Art XI provides that “internationalagreements to which the PRC isnot a party but which are implementedin Hong Kongmay remain implemented inthe Hong Kong SAR.” Aswe know, treaties are madeapplicable to Hong Kong by theirterms or by British legislation.181 Inthe case thatHong Kong is a member ofan international organization as an adjunctof the Britishdelegation, and the PRC is notor even will not be a memberin 1997, questions willarise to Hong Kong’s presence especiallywhen the meetings are confinedto sovereignstates.Take the question of the participationof Hong Kong, Chinaas a contractingparty in the GAIT after 1997needs to be studied.In Art. XXVI, 5(c) of GATT,it clearly differentiates betweenthe “responsiblecontracting party” and “customsterritory”. The separate customsterritory, whichacquires full autonomy inthe conduct of their externalcommercial relations, aredeemed “to be a contractingparty” upon the declaration fromthe responsiblecontracting party. A governmentof a separate customs territorybecomes a contracting180Anthony Neoh, “Hong Kong’s Future:The View of a Hong Kong Lawyer”,California WesternInternational Law Journal, vol. 22,1991-1992, No. 2,pp.351-352.181Thid, p.350.88party under Art. XXVI, 5(c) on the terms and conditionspreviously accepted by themetropolitan government on behalf of the territory.Under this procedure, Hong Kongbecame a contracting party with the United Kingdomas its metropolitan government.The question appears here whether Hong Kong,China would continue to be deemed acontracting party after 1997 when the responsiblegovernment for the territory willchange and the new one is not (for the time being)a contracting party of the GAIT.182In the provisions of the GAIT, there isno regulation stipulating whetheraseparate customs territory, which does not gainindependence, may continue or bedeemed a contracting party or not, when it changesits dependence from the formerresponsible metropolitan state which isa contracting party to a state which is not acontracting party of the GAIT.183 So the questionof the continuation of the status of“Hong Kong, China” in the GAITafter 1997 will cause discussion among thecontracting parties and needs consent from them.Hopefully, it can be predictedoptimistically that it would be resolvedbased on two factors: one is the unaffected andunchanged full autonomy of HongKong in the conduct of its externalcommercialrelations after 1997, and the other isthat the PRC becomes a contracting party,whichis quite possible in the near future. TheGAIT council, at the time Hong Kongbecamea contracting party of the GAIT in April 1986,made statements promising that theterritory could retain its separate statusafter the PRC acquires sovereigntyover it.184In the second case, Annex I, Art.XI of the Sino-British JointDeclarationprovides that “the applicationto the Hong Kong SAR of internationalagreements to182Supra note 174, George Ress,pp.146-147.183Ibid.184Harold K. Jacobson and Michel Oksenberg,China’s Participation in the IMF,the World Bank,and GATT: Toward a Global Economic Order,(Ann Arbor, U.S.A.: The University of MichiganPress,1990),p.101.89which the PRC is or becomes a party shallbe decided by the Central Government, inaccordance with the circumstances and needs ofthe Hong Kong SAR, and after seekingthe views of the Hong Kong SAR Government.” From thelegislator’s willingness, therestricted power of decision of the Central Governmentis to some degree symbolic in aforeseeable future in “appropriate fields.” Inthe case of the membership of “HongKong, China” in the GAIT, it is confirmedby the declaration of the PRC that “HongKong, China” will continue to be deemeda contracting party after 1997.On the presumption that both the PRCGovernment and the Hong Kong SARGovernment are members of an internationalorganization, still a critical question needsto be resolved, i.e. whether, after the return of sovereigntyto China, the internationalrights and duties of this territory from the predecessorstate are still acceptable toeither the successor state or the third parties. If thisis not acceptable to either side, itwould damage the territory’s status ininternational agreements, and bringnewnegotiations. For example, in thecase of GATT, the conditions under whichHongKong is now to be deemed a contractingparty of the GAIT are those that previouslyhave been negotiated by the UnitedKingdom. Assuming the PRC becomesacontracting party before 1997,it would still make quite a difference whethera Britishcrown colony, i.e. a territory forwhich the United Kingdom isand has beenresponsible and for which the relevant conditionshave been negotiated, or a territoryfor which the PRC is responsible becomesautomatically a contracting party oris“deemed to be a contracting party” withouta new negotiation of the conditions.185It will depend on whether theterms and conditions negotiatedfor Hong Kong’sstatus of contracting party asa separate customs territory are still acceptablewithoutany renegotiation or changesto the contracting parties after 1997.There is no185Thid,p.146.90regulation in the context of the GATLG. THE RELATIVE PRACTICE OF GATTAccording to Article XXVI,5(c), “if any of the customs territories, in respectof which a contracting party has acceptedthis Agreement, possesses or acquires fullautonomy in the conduct of its external commercialrelations and of the other mattersprovided for in this Agreement, suchterritory shall, upon sponsorship throughadeclaration by the responsible contractingparty establishing the above-mentionedfact,be deemed to be a contracting p.ry.”186 Thisclause was originally intendedto dealwith the questions over whether Burma,Ceylon, and Southern Rhodesia, which,according to the British Government,were possessed of autonomy in externalcommercial relations, could be admitted toparticipate as full contracting partiesto theGeneral Agreement.’87 “Thisspecial clause has provided a convenientformula for aflexible application of which hasin fact facilitated state succession”only because thedate of acquiring full autonomy inexternal commercial relations almostalwayscoincided with the date of acquiring fullindependence.”188186This clause was originally Art. XXVI, par.4, sectionproviso (55 U.N. Treaty Series274) inalmost identical wording, which becamepar. 4(c) pursuant to an amending protocolof Aug. 13, 1949(62 U.N. Treaty Series 114), andthen par. 5(c) pursuant to the Protocol Amendingthe Preamble andParts II and III of the General Agreementwhich entered into force on Oct. 7, 1957(278 U.N. TreatySeries 204).187It was worked out by the Ad Hoc Sub-Committeeof the Tariffs Agreement Committeewhen theGeneral Agreement was draftedby the Second Session of the Preparatory Committeeof the U.N.Conference on Trade and Employmentin September 1947. And further, theAd Hoc Sub-Committeesuggested to include this special clausefor the similar case in the future.See, U.N., Second Sess. of thePreparatory Committee of the U.N. Conf.on Trade and Employment: Docs. E/PC/T/198and 205, andEIPCIT/TACIPVI13, 24, 25, and 28(1947).188Supra note 57, Kunugi,p.270.91But in the case of “Hong Kong, China”,the customs territory does not gainindependence but becomes a dependentpart of the P.R.C. as a SAR.189 Thisdifference would not change Hong Kong’squalifications.First, Hong Kong, as a separatecustoms territory, “has accepted thisAgreement” through a declaration ofa contracting party, British Government,to whichHong Kong is a dependant. This identificationand situation coincides with clause.So,Hong Kong can be sucha case.Second, according to the Joint Declaration,the Hong Kong SAR will enjoy“full autonomy in the conduct of its external commercialrelations and other mattersprovided for in this Agreement.”This should be the basic requirement forsuch acustoms territory “to be deemedto be a contracting party”. In other words,if, asprovided in the Joint Declaration, HongKong SAR’s full autonomy inthe conduct ofits external commercial relations isnot changed or affectedby the transfer ofsovereignty in 1997, its statusas a contracting party shouldbe renegotiated, because itsabove-mentioned autonomy isnot affected by the transfer of sovereignty.The relevant practice of GATTwhich has almost always coincidedwith thecases accompanied by political independencecannot be elaboratedto the effect thatpolitical independence becomes one ofthe requirements orconditions. A customsterritory not politically dependentbut with full autonomy in theconduct of its externalcommercial relations can bea contracting party, no matterwhether or not itsmetropolitan country is changedfrom one to another.Third, another requirement ofthis clause is a proceduralone, i.e. thesponsorship through a declarationby the responsible contractingparty establishing theabove-mentioned fact.” It is easyto identify that on July 1, 1997,the PRC can be the189Supra note 174, George Ress,p.145.92country responsible for establishing theabove-mentioned fact. The key problem isthatif the PRC is not a contracting party(since it is not for the time being), it will notbequalified as a “responsible contracting party11.This situation was out of the predictionof the GA’IT drafters, i.e.a separate customs territory succeeds its statusas acontracting party when it changesit subordination, but it finds the countryitsubordinates to is nota contracting party to the GAIT.As developments occur in the working groupon China, it is quite possible thatthe PRC will bea contracting party before 1997. If so, the PRCwill be the“responsible contracting party establishingthe above-mentionedfact” to givesponsorship througha declaration for the status of “Hong Kong,China” as acontracting party. Another unpredictedquestion comes out as whetherthe declarationof the PRC Government for Hong Kong’sbecoming a contracting party onApril 23,1986 is valid, for the PRC wasnot a contracting party at thattime, or will anotherdeclaration be needed when thePRC is qualified by its sovereignjurisdiction overHong Kong after July 1, 1997.The Terms for “Hong Kong, China”as a Contracting Party. HongKongbecame a contracting party underthe terms negotiated whenit was subordinate to GreatBritain. So comes another concernabout the obligations or terms for“Hong Kong,China” to be a contracting party,or whether it is possiblethat the date of July 1, 1997would be a chance for the contractingparties to bargain for morebenefits on a quid proquo, and furthermore whether thisdemand, if any, has any legalbasis.With a review of the formerdiscussion, it can be found that HongKong becamea contracting party mainly becauseits full autonomy in theconduct of its externalcommercial relations. Consequently“Hong Kong, China” may,at that time, succeedto the rights and obligations it hasbefore July 1, 1997, because nothingis changed with93this autonomy. So no regulations in the contextof the GAIT would be foundtosupport the suggestion of new negotiationsfor new terms. After Indonesia becameindependent on December 28,1949, the Netherlands, at the FourthSession of theContracting Parties, proposed that Indonesia shouldbecome a contracting party.190 Inthe Declaration of April 1, 1950, theContracting Parties took a note that Indonesiahadbecome a party under the provisionsof Article XXVI and that consequentlycertain“sections of the schedules had ineffect become separate schedulesrelative toIndonesia.”191According to the general practice ofthe GAIT concerning the succession ofrights and obligations, when a customsterritory transfers its subordinationfrom onecountry or another, or becomes independent,the above-mentioned rights andobligations remain unaffected. Inthis kind of cases, it makes no differencewhether thecustoms territory becomes politicallyindependent or a part of anothercountry. Thispoint of view can alsobe supported by the provisions of GATI’per se. Thoseconcerning regulations are concentratedon:(1) The purpose and objectof the General Agreementto substantially reducethe tariffs and other barriersto trade and to eliminate thediscriminatory treatment in190Tn an official publication prepared by the GATESecretariat, it is noted that “Indonesia,havingacquired independence status, becomea contracting party in its own righton 24 Feb. 1950.” BTSD, 1stSupp. (1953),p.6.191BISD, 2nd Supp. (1954) 15-16.After the formation of the Federationof Rhodesia andNyasaland as semi-autonomous membersof the Commonwealth which wasestablished by the Act of theBritish Parliament dated March24, 1953 and became effective onAug. 1, 1953, the GovernmentsofGreat Britain and Southern Rhodesiasent joint declaration dated September22 and November 6, 1953, toinform the Contracting Parties thatthe Federation had acquired full responsibilityfor matters covered bythe General Agreement. The ContractingParties adopted a declarationon October 29, 1954, by whichthey considered the Declarations sentto the Contracting Parties by theGovernment of Southern Rhodesiaand the Government of theUnited Kingdom as a notificationand declared “that the Governmentof theFederation of Rhodesia and Nyasalandshall henceforth be deemed to bea contracting party ... and tohave acquired the rights and obligationsunder the General Agreementof the Government of SouthernRhodesia and of the Government of the UnitedKingdom ..‘. BISD, 3ndSupp. (1955),pp.29-30..”94international trade.’92 To realize this purpose, allseparate customs territories shouldbe deemed to have equal rights to participate in this Agreement, no matterwhether theyare sovereign states or not, if they meet the requirements of fullautonomy in theconduct of external commercial relations.(2) So comes the title of “contracting party”for all members of hisAgreement instead of those such as “memberstates”, without any hierarchicalclassification of members such as “full member”,“associate member” and so on.All those regulations reflect the basic principleof non-discrimination or equalityin the mind of the drafters of the General Agreement.It is definite that Hong Kong’s transfer to the sovereigncontrol of the PRC in1997 should not affect its status as a contractingparty, as well as its rights andobligations under the GAIT.192GATr, Preamble, par. 3. See, supra note 31,John H. Jackson and William J. Davey,2nd ed.(St. Paul: West Publishing Co., 1986),p.3.95CHAPTER V. INTERRELATIONOF THE MAINLAND,TAIWAN, AND HONG KONG IN INTERNATIONALORGANIZATIONS AFTER UNIFICATIONIt is not unrealistic that “Hong Kong, China”,as a part of China, willconcurrently with the PRC be members in the GATT,assuming that the PRC willattain its membership in this internationaltrade organization before long, aswell as insome other international organizations. Questionsarise consequently in a foreseeablefuture, such as, if and when Taiwanwill possibly reunify, along with HongKong andMacao, with mainland China, and how theseregional entities of China plus Macaowillmaintain a harmonious coexistence in someinternational organizations giventhe needand possibility.A. STRUCTURE OF CHINA’SPOLITY: ONE COUNTRY,TWO SYSTEMSThe two very important legal documentson the Hong Kong’s future, theSinoBritish Joint Declaration and theBasic Law on Hong Kong,’93are peculiarly based onthe doctrine of “One Country, TwoSystems”.194 For the definitionand content of the193Supranote 183.194Zhang Youyu, The Reasons for and Basic Principlesin Formulating the Hong KongSpecialAdministrative Region Basic Law, andits Essential Contents and Modeof Expression, 2 Journal ofChinese Law, 9, (1988).96concept of “One Country, Two Systems”, Deng Xiaoping’s statementis necessary to becited here:“One country, two systems” must be discussedon two levels. On onelevel is the fact that within a socialist countrywe will be permitting aspecially privileged area to be capitalist notjust for short period of time,but for decades or a full century. On anotherlevel, we must affirm thatthe principal system throughout the country is socialistThis unprecedented doctrine will be decisiveno only on Hong Kong’s status inChina but also on the fate of Taiwan’s unificationwith the mainland both in thenearfuture and the foreseeable long term.From July 1, 1997, accordingto the Joint Declaration, the Hong KongSARwill neither be an internationalized territory,nor have the sovereignty andterritorialjurisdiction in the hands of differentstates, rather the Hong Kong SAR willbe a part ofthe national territory of the PRC.The Hong Kong SAR will enjoya very high degree of autonomy inmany fields.This autonomy is under the limitsof sovereignty, whichmeans territorial integrity.The content of the sovereign controlof the Central Government overthe Hong KongSAR includes those regarding foreignaffairs and defence, meanwhilethe Hong KongSAR has such a high level of autonomyin its internal affairs that itcan even keep thecapitalist economic and social systemsfor 50 years. The Hong KongSAR actually isauthorized with special statusin its external relations,to guarantee further economicdevelopment, including itscapacity to enter into both bilateralagreements with otherstates and multilateral treaties tosome degree, e.g. the powerto conduct its ownrelations to conclude agreementswith states, regions, andinternational organizations in“appropriate fields”.The autonomy gives theHong Kong SAR a status similarto or even beyond that195Thid.97of the component units within a federalstate196 and much more capacity to exercisefunctions and undertake rights and obligations inexternal relations rather than that ofthe component units of other federal states. Bythis special status, the Hong KongSAR’s relations and connections with theCentral Government is looser thanthatbetween the component units and the federal governmentsin those federal states.With respect to Taiwan’s unificationwith the Mainland as well as with theHong Kong SAR and Macao SAR,Taiwan’s concern focuses on the relations withthemainland government and the harmto its economic prosperity. But, in theexternalrelations, given the even more favourablestatus than the Hong Kong SAR isbeingoffered by the mainland, Taiwan willenjoy more autonomy, such as in its capacityofparticipation in international organizationsand treaty-making with foreignstates. Itmight be very attractive forTaiwan, provided the conditionsare ripe, to have suchstatus, though such arrangements needa lot of legal work before theycan be realized,such as the consent of third partiesand technical arrangements forthis would-bereunified country.B. “ONE COUNTRY, TWOSYSTEMS” VS. “ONE COUNTRY,TWOINTERNATIONAL PERSONALITIES’The Hong Kong model will bethe realization of the doctrineof “One Country,Two Systems”. It only refersto the domestic polity. Asto its influence on the196As examples, the Cantons of Switzerlandcan conclude treaties “in respect of public,economy,frontier relations and police”, see, Art.9, Art. 86 (5), Art. 102 (7), the Constitutionof Switzerland,;also see, W.E. Rappard, La Constitution Federalde La Suisse (Boudry, LaBaconniere, 1948),pp.192and 393 for commentary. The Federal Republicof Germany gives the Landerthe power to concludetreaties with foreign states, Art. 32 (3)of the Basic Law, also see supranote 186, Luigi Di Marzo,p.32.98evolution of China’s polity, this step will leadto a federalism polity within China in thefuture, given the fact that Hong KongSAR enjoys such a high degree of autonomy.From this autonomy, the Hong Kong SARis given much capacity in the conductofexternal relations though limitedto non-political, or non-sovereign matters. But thiscapacity, because it comes fromthe autonomy, is based on theconstitutionalauthorization, not its identification of“international personality”.Under the “One Country, TwoSystems” style, the sovereignty ofa state isintegrated, and belongs to the CentralGovernment, and the autonomy ofthe SAR isacquired from the authorization of the constitution.The SAR Government isa localgovernment, thus the SARdoes not enjoy any part of the sovereignty.Hong Kongneither has had an independentinternational personality withthe characterization of anentity sui generis, nor will it have anyafter 1997.So, under the conception of “OneCountry, Two Systems”, the capacityof theSAR in international relationsis different from that of theCentral Government. Theformer’s capacity isacquired from the constitutionof the nation, while thelatter’scomes from its sovereigntywhich cannot be deprived inany case. This nation’scapacity in international relationscannot be deprived andis the basic and mostimportant characteristic comparedwith that of a SAR. So, the former’scapacitycannot be exaggerated as beingan international personality equalto that of the CentralGovernment, and can onlybe, at most, a partial internationalpersonality.The same logicand deduction is also applicableto Taiwan if and when it unifieswith the mainland China,regardless of the difference betweenHong Kong and Taiwan.Compared with the “OneCountry, Two Systems” scheme,some authors makethe suggestion of the “multi-systemstate”197 concerning thecase of Taiwan. The197Hungdah Chiu, “The InternationalLegal Status of Republic ofChina And The Issue ofReturning to International Organizations”,Chinese Annual Reportof International Law and World99kernel of this theory is “One Country, Two InternationalPersonalities”.1. Peculiarity of “Multi-System Nations”According to the opinions on the multi-systemnations, main characteristics canbe summarized as follows:(1) In such a nation, two or moreparts of the territories of this nation are separatelyself-controlled;(2) “Each part formerly belongedto a unified country; and while divided now, eachpart still maintains the national goal of unification.”;198(3) Each part claims to be the sole legal governmentof that country in internationalrelations, thus, the representationof this country in an international conferencewasgiven to one part only, while the other partwas totally excluded from participation inthat conference;199(4) None of the parts will acceptan arrangement that both the concernedparts berecognized as independentstates. “On the contrary, each governmentinsists on beingrecognized as the sole legal governmentof both parts of the country, includingthat partover which it has no effective control.“;2(5) Each part triesto use “political pressure from its alliesto prevent the other partfrom being recognizedas a state or to prevent the government ofthe other part frombeing recognized as the legal governmenteven within the territory underthe latter’sAffairs, (Taipei: Commercial Publishing House,1989), ed. by Hungdah Chiu, vol.3,pp. 3-26. Alsosee, Queng-cheng Fu, Report atthe Seminar on Foreign Policy and Policieson the Mainland, Thid,pp.144-iSO.198Hungdah Chiu, “The InternationalLaw of Recognition and Multi-System Nations:With SpecialReference to Chinese (Mainland-Taiwan)Case,” Chinese Annual Report of InternationalLaw and WorldAffairs, (Taipei: Commercial PublishingHouse, 1981), vol.1, ed. by HungdahChiu,p.5.199Ibid.200Ibid.100effective control.”•201These characteristics are summarized from thepractice in Korea and China,aswell as the former Germany and Vietnam.2. Inapplicability of Multi-system NationTheoryFrom the above analysis, it is clear thatthe nation would be divided intotwo ormore international personalities bythe division of state sovereignty. Asknown, themost basic characteristic ofstate sovereignty is the integration,which explicitlyincludes the indivisibility. In practice, suchdivision of sovereignty is far frombeingrealized if only one part agrees so.And no force or influence can bea decisive factorfor such division of sovereignty withoutthe consent of the concerned partsof so-calledmulti-system nations. So, such conceptionof multi-system nation is contraryto theinternational law, and there is noprecedence in the relevant practice.Among the dividedstates, Germany was the most differentfrom the case ofChina, and cannot be usedas a precedent. The former Germanyused to be two parts:the Federal Republic of Germany(FRG) and the German DemocraticRepublic (GDR).The sovereignty division of Germanywas decided by international agreementbetweenoutside powers, which in fact resultedinto two sovereign states.Legally, they couldnot be considered one state whenthey existed in the worldas East Germany and WestGermany. On the contrary, thetwo Germanies acted and were treatedas two sovereignstates with full independence. Thisis evidenced by the fact they wereadmitted to theUnited Nations on September18, 1973 and have normalized theirrelations through thetreaty of December 21, 1973 on theBasis of Intra-German Relationsand accompanyingdocuments.202201Ibid1013. The Case of ChinaThe case of China (Mainland andTaiwan) is very different fromthat ofGermany in many characteristics. Thefirst difference lies in the diminutivesize ofTaiwan compared to the restof China, and the smaller population of Taiwan,around20 million, comparedto the 1.2 billion on the mainland.The second is that both sidesclaim the situation as an unfinished civilwar, orthe current situation is the continuationof the civil war. Both sides deny the orthodoxyof the other part. The long-lasting civilwar, if we call it so, has steppedon the way ofpeaceful solution long ago. The longtime waiting for negotiationswhich show thegood faith in trying to find a peacefulsolution does not constitutea “considerableperiod” in which Taiwan canbe said to be an independent state.Thirdly, both sides oppose thepolicy of “One China, one Taiwan”,i.e. there isonly one China. Consequently,“no claim of separate statehoodfor Taiwan has beenmade and in such a case itis difficult to maintain that suchan unsought statusexists.”203 Or, fromanother scholar, since “it considersitself as a part of the “old”China thus excludingthe concept of being a separate anddivided state.”204Fourthly, it is well acceptedby the world community that thereis only oneChina and the PRC Governmentis the sole legal governmentof this country. The PRChas very wide diplomatic relationswith almost all countries in theworld and occupiesthe seats of China inall international organizations inwhich the country hasmemberships, while theROC maintains diplomaticrelations with only 23 stateswhich202I.L.M., vol. 12, 1973,pp.16-24.203Malcolm N, Shaw, InternationalLaw, 2nd ed., (Cambridge: GrotiusPublishing, Ltd., 1986),p.149.204Meinhard Hilf, “Divided States”,“Encyclopedia of Public InternationalLaw”, ed.,(Amsterdam: Elsevier Science PublishersB.V., 1987),p.127.102are all small countries with little influence in the world community.Actually, in world-wide acknowledgement, Taiwan is,at most, a part of Chinaunder separate administration.205 From practice,“Taiwan is not a State, because itdoes not claim to be and is not recognized as such: its status is thatof a consolidatedlocal de facto government in a civil war situation”,206and furthermore, the governmentof Taiwan has not operated as that of an independentstate for a long time, even duringthe period from 1949 to 1972, the legality of its presenceas the government of China isvery much in question and groundless. So, it can beconcluded that the conception ofmulti-system nation still remains at the level ofhypothesis, or at least, it does not suitthe Taiwan case. Because the presumption ofthe theory is contrary to the basic ofprinciple of sovereign integration in internationallaw. Taiwan should not be the caseto affirm the applicability of this conception, thoughit may be the only case amongthose who try to approve this hypothesis.Furthermore, talking about the capacityof Taiwan and Hong Kong ininternational relations under the structure of “onecountry, two systems”, if and whenunified with the mainland, the two cannot be includedin the category of “one country,two personalities”.Generally speaking, two different systemscan equally and peacefully coexistwithin one country in each part of the territory,without interference to each other.Butthis equality cannot be extendedover the boundary of the country,thus there is onlyone representation for the country in internationalrelations. So the possibility oftwointernational personalities for the country isprecluded. To meet the needsof thedifferent economic and socialsystems in the SARs, some specialfunctions and205Supra note 204, Meinhard Hilf, p.217.206Crawford, The Creation of States in InternationalLaw, (London: Oxford University Press,1979), p. 151.103responsibilities are authorized by the constitutionfor the SARs to participateininternational transactions, but this is limitedto non-political affairs and is acquired notinherent.C. COEXISTENCE OF ThE MAINLANDAND TAIWAN IN TIlE GATTSYSTEMTaking account of the GAIT’s functionof regulating the relations of rightsandobligations between the Contracting Partieswith different tariffs and tradesystems andits membership covering countriesand non-state SCTs, Taiwan’s status willnot beharmful to the reunificationof China some days in thefuture. First, Taiwan’sparticipation in the GAITas a SCT will not enhance the possibilityof its politicalindependence. Second, thedifferent tariff systems which applyto the mainland andTaiwan constitute de factotwo Chinese customs territoriesto have their owncontracting party status in theGAIT. It would be extremely difficultin practice forthe PRC governmentto accept the General Agreementon behalf of the SCT in Taiwaneven after the PRC accepted theAgreement. Furthermore,it is acceptable to all sidesthat the two differenttariff systems, the two customsterritories as wellas the twoChinese contracting parties in theGATE will exist even after thereunification of Chinain future.Though in political reality,Taiwan’s relations withthe mainland have beenunder abnormal circumstancesbetween the PRC governmentand the Taiwangovernment, the legal statusof Taiwan as a local entityof China has been legallydetermined by not only thehistory and reality in China in thelast decades, but also theinternational treaties as wellas the practice of internationalorganizations among which104the United Nations is the major one. TheGATT has been carrying the policyto followthe U.N. decisions on essentially politicalmatters.105CHAPTER VI. CONCLUSIONAs the world trading system develops,especially through the establishment ofthe World Trade Organization,and the great progress of China’s economic reformaswell as Asian economic growth, it becomesmore than important to acceptthe PRC andTaiwan into the GATE as wellas the WTO. The development of thework on theapplications of the PRC and Taiwanto the GATE, the working Groups,up to now, arereaching the substantial work on the draftingof the protocols.207 So it is predictablethat the approval of the ContractingParties on the two applications wouldnot be faroff. The analysis on the significanceof the participation of the PRC andTaiwan inGATE will help to eliminate alldoubt on the great importanceto accept the twoapplicants in GATE, bothto the applicants and the GATE itself.While the contracting partiesconsider mostly on whetherthe two applicantsmeet the requirements for themembership of GATE andhow much they can benefitfrom the tariff concessions andcommitments given by the twoapplicants, it would bewise not to be involved in the domesticdispute within China andtake actions againstthe general principlesand practice of the international relations.Conclusively, it isacceptable that the PRC accedesto the GATE in the style of resumptionand prior toTaiwan. More attentionwill be drawn onto the evolutionof the process of the207The negotiations on China’s applicationto the GATT are reachingto the step of the discussionon the protocol and tariffs concession.See, China and U.S. WillDiscuss the Protocol of China’s Reentry to the GATT, People’s Daily,(Renmin Ribao), Beijing, July24, 1993; The Negotiation onChina’s Re-entry to GATT Comesto the Substantial Step, People’s Daily,(Renmin Ribao), Beijing,August 15, 1993; People’s Daily,(Renmin Ribao), Beijing,March 16, 1994; The 16th Meetingof theWorking Party on China Endedin Geneva, People’s Daily, (RenminRibao), March 19, 1994.106unification of mainland China, Taiwan, HongKong and Macao, as well as theinteractions of the four regions within Chinaand under the state sovereignty of China,than the comparatively independentcapacity of Taiwan, Hong Kong and Macao in theirexternal relations. 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