WTO MEANS MORE THAN TRADE FOR CHINA, TAIWAN

WTO MEANS MORE THAN TRADE FOR CHINA, TAIWAN

The issues of granting China membership in the World Trade Organization and selling arms to Taiwan promise to generate many headlines over the next year. These issues, however, are linked in many ways that are not immediately apparent.

Assuming both China and Taiwan can join the global organization - as both seek to do - WTO membership could advance the cause of peace and stability in the Taiwan Straits as much as arms sales.Although it has received limited attention, trade and investment are among the few bright spots in the Taiwan-China relationship. Despite the constant threat of conflict, economic ties have dramatically increased over the last decade.

According to Beijing's statistics, Taiwan is now China's fifth-largest trading partner. Since 1987, trade between mainland China and Taiwan has totaled almost $2 trillion; it grew at a 7 percent annual rate in 1999.

Investment has also undergone similar growth. According to statistics from Taiwan, businesses there have invested $14.4 billion spread over 22,000 projects in the mainland. Beijing's statistics put the level of completed investment even higher: $22.4 billion divided between 44,000 projects.

Despite the ongoing hostility, China is by far the leading market for Taiwanese investment, claiming more than 40 percent of Taiwan's total foreign investment.

This growth has not been unfettered. Direct trade between the two is generally prohibited, with most commerce passing first through Hong Kong.

Taipei has also screened Taiwanese investment in China. The current Taiwanese government has argued that too much trade and investment with the mainland could pose a security risk. The newly elected Taiwanese president, however, has indicated a willingness to explore liberalizing these restrictions.

This move to expand trade and investment could be boosted by another international development that both Taipei and Beijing are pursuing - membership in the WTO.

China's high-profile campaign for WTO membership seems to be in its final stages. Taiwan's effort is even more advanced, with the necessary talks with WTO members essentially completed.

Acting through surrogates, however, China has attempted to hold up Taiwan's membership, at least until Beijing is admitted.

Assuming that China refrains from last-minute maneuvers to upset the apple cart, both China and Taiwan are likely to be admitted to the WTO this year.

Although either Beijing or Taipei could take formal reservations against the other to avoid complying with WTO provisions regarding the ''other China,'' WTO provisions would likely require liberalization of trade and economic ties over the Taiwan Straits. Most current restrictions on Taiwan-China trade and investment are incompatible with WTO requirements.

Thus, WTO membership could reinforce the move for liberalization already afoot in Taiwan and encourage the new Taiwanese president to lift existing restrictions. The almost certain result would be still more trade and investment between Beijing and Taipei.

Expanded economic ties are not a panacea for tensions between Taiwan and China. The relationship between Taipei and Beijing is complex, and maintaining peace will also require military and diplomatic steps and considerable ongoing U.S. involvement.

Mutual WTO membership and the expanded economic interaction that it is likely to bring, however, could be an important step toward comity. Already, trade and investment has created substantial business interests in Taiwan and Mainland China in favor of detente. Peace-minded leaders on both sides of the Taiwan Straits see economic ties as an important element of a lasting strategy to reduce tensions.

WTO membership itself also has an often-overlooked direct benefit in this connection. If both Taiwan and China were WTO members, the WTO could be a forum for direct communication on and adjudication of economic and trade disputes. The current virtual absence of direct ties often makes frank contact and negotiation difficult.

WTO membership would also provide Taiwan with something it has long sought, a forum in which Taipei and Beijing could deal as equals. Though again not a panacea, this would be a significant step forward for cross-straits relations.

A dispute between Taiwan and China is widely seen as the likeliest route to a new world war. There are, however, opportunities to reduce tensions and make conflict less likely.

If the United States is willing to exercise leadership within the WTO and Taiwan and China both behave responsibly, WTO membership for Taipei and Beijing could be secured this year. This would be just one step down the doubtlessly long and rocky road to peace, but it is nonetheless an important step in the right direction.

Mutual WTO membership for Taiwan and China and the expanded economic ties it is likely to bring represent an opportunity that should be grasped.