Beijing Violates WTO Norms In China-Taiwan Food Fight

Last Sunday, Taiwan’s Premier Su Tseng-chang said China violated international trade norms by “discriminating” against the self-ruled island and halting Taiwanese imports, AFP reports. The accusation came after Chinese customs authorities “suddenly suspended” imports of alcoholic beverages from Taiwan on December 9, according to Taipei’s finance ministry.

Premier Su told reporters that Beijing violated World Trade Organization norms by “making its own rules” and “meddling in trade through administrative means.” China is “especially tough on Taiwan and especially discriminates against Taiwan,” he said on Sunday. Chinese customs allegedly denied some 2,400 registration applications from food, food processing, fishery, and alcohol companies. Foreign minister Joseph Wu described the measure as “economic coercion.”

The use of China’s outsized economic influence to punish Taiwan has become more common since the 2016 election of President Tsai Ing-wen, after which cross-strait relations have deteriorated. China banned certain fruit and fish imports when U.S. Speaker Nancy Pelosi visited Taipei in August, CNA reported. Last year during harvest season, Chinese authorities halted pineapple imports from Taiwan after claiming to have discovered pests in shipments.

As China’s economic presence has expanded in recent decades, coercive economic statecraft has become a key mechanism by which China leverages its bargaining power vis-à-vis foreign states. Economic instruments of national power are attractive in Beijing’s case because they are less disruptive and obvious and China lacks military power projection capabilities comparable to the United States. In recent years the Chinese government has encouraged boycotts of foreign products, restricted imports, and imposed tariffs to advance PRC interests in issues ranging from sovereignty disputes in the East China Sea to dealings with the Dalai Lama.

As William Norris explains in Chinese Economic Statecraft, Beijing’s manipulation of foreign economic ties serves three primary strategic objectives. First, China hopes to establish a reputation as a responsible power in the international system. Second, Chinese leaders seek to diversify access to energy and other natural resources located abroad necessary for sustained economic growth at home. Third, Beijing hopes to limit international recognition of Taiwan as an independent entity, prevent foreign interference in China’s domestic affairs, and protect China’s sovereignty.

China’s ability and willingness to impose economic sanctions going forward carries important implications for East Asian security. Tariffs, currency manipulation, and other forms of trade protectionism, technological battles over 5G, and supply chain vulnerabilities have created new sources of friction between market competitors. As a result, potential targets of China’s influence attempts may suffer as Beijing exploits their trade relations for political gain.

Simultaneously, economic interdependence has inflated the costs of military conflict and expanded the array of tools available to policymakers to advance the national interest. If Beijing is able to align the behaviour of neighbouring countries with its preferences through nonviolent means of coercion, Chinese leaders might be less inclined to resort to military force when dealing with Taiwan and other actors in the region. Paying closer attention to the effectiveness of China’s sanctions may therefore shed light on whether its rise will remain peaceful and what kinds of tools Beijing will rely on to advance its strategic interests.

Unfortunately, the coercive potential of these economic linkages is woefully understudied. In their paper “Exploring the Parameters of China’s Economic Influence”, University of Maryland professors Scott Kastner and Margaret Pearson state that there are no studies that systematically examine the effectiveness of sanctions for achieving Beijing’s foreign policy goals. The most recent episode with Taiwan highlights the need for renewed focus on the causal conditions that contribute to economic influence, especially for emerging players in the global economy that are often neglected by Western-centric analyses.