Taiwan Legal Survey: A Year of Continuity and Change

By Arjun Subrahmanyan

Taiwan and China both joined the WTO in December 2001, although in a delicate diplomatic balancing act Taiwan was forced to join the world trade body the day after the PRC, and specifically as the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu". Some international observers of Taiwan's economic and legal reform efforts over the past decade have argued that Taiwan was actually ready to join the WTO years ago but membership was delayed due to political considerations. The problems in cross-straits relations have led Taiwan to keep many laws on the books that prohibit or limit PRC-Taiwan business and investment transactions, but which actually run counter to the WTO stipulations about open markets and free access that Taiwan committed to in its accession agreements.

Indirectly, Taiwan today is among the largest investors in the PRC. There are an estimated 300,000 Taiwanese businesspeople living in the Shanghai area alone, and perhaps one million Taiwanese in total in China. Taiwanese investment in the mainland is increasing, and there is considerable ongoing relocation of manufacturing and other production facilities to the mainland by Taiwanese and international firms. It is estimated that about 65% of Taiwanese companies' overseas investment goes to China.