Does China’s Pressure on Airlines to Write Off Taiwan Break WTO Rules?

At this stage in the game, Taiwan can no longer just count on the kindness and principles of other players in the international community to protect its interest. It, along with its friends, needs to go on the offensive by pushing back where it might hurt Beijing the most. The WTO might be a good place to start.

In recent months Chinese authorities have ramped up their pressure on international airlines to remove all references from their web sites, online booking services and APPs to Taiwan suggesting it is a country.

In January this year, the Civil Aviation Administration of China (CAAC) ordered all foreign airlines operating flights to China to conduct a full review of their client information content such as their official websites or APPs to ensure they do not breach Chinese laws. The CAAC also reportedly summoned the representatives of 25 foreign airlines operating in China and demanded their companies remove all references to Taiwan as a country, as well as its national flag, from their web sites. On April 25, the CAAC renewed its pressure with a letter to 36 foreign airlines, including a number of American carriers.

A number of airlines, including Qantas, Delta, Lufthansa and British Airways have since given in to pressure and now list Taiwan as “Taiwan, China,” or “Taiwan, Province of China.” A number of companies operating in other sectors have also given in to Beijing’s demands, some of them going as far as to issue apologies to the Chinese people for “hurting their feelings.”

An attempt by the Chinese government to compel U.S. carriers American Airlines and United earlier this month resulted in rare pushback from a government, with the White House at the weekend condemning the tactic as “Orwellian nonsense.”

“This is Orwellian nonsense and part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies,” the White House said in a statement. “We call on China to stop threatening and coercing American carriers and citizens.” (Australian Foreign Minister Julie Bishop has since followed suit with her own warning to Beijing on the matter.)

The refreshing reaction by the U.S. government sparked the expected angry riposte from Beijing, which countered with the claim that overseas companies operating in China should respect its sovereignty and territorial integrity, follow Chinese law and “respect the national feelings of the Chinese people.”

“No matter what the United States says, it cannot change the objective fact [sic] that there is only one China in the world and that Hong Kong, Macau and Taiwan are indivisible parts of Chinese territory,” Chinese Ministry of Foreign Affairs spokesman Geng Shuang said.

Pressure on international firms is one of a series of new measures unleashed by Beijing in the past year to isolate Taiwan, the democratic island-nation it claims as part of its territory — a claim that has very little appeal with its 23.5 million people.

If enough carriers and states come together and challenge China at the WTO for using politics — or spurious claims to national security or integrity — to create an unfair trade environment that limits or undermines market access, it is possible that arbitration could force Beijing to put an end to all that silliness.

With such pressure on global firms expected to continue, and Taiwan relying on the moral fortitude of companies and governments alike, the time may have come for a more creative approach to countering Beijing’s revisionism — or indeed the “Orwellian nonsense” it seeks to impose on all of us.

Since this latest tactic touches on international trade, one area that is worthy of greater exploration by Taiwan and its allies is the World Trade Organization’s (WTO) Annex on Air Transport Services. Given that Beijing intends to punish airlines that fail to comply with its domestic laws over a highly dubious claim (“Taiwan as part of the People’s Republic of China”), and that such punitive measures would conceivably put those companies that fail to comply with the directive at a disadvantage vis-à-vis their competitors and Chinese carriers (e.g., fines, limits to market access and so on), the case could perhaps be made that such behavior constitutes a violation of WTO rules and the Annex, to which China is party.

According to the WTO web site, the Annex “applies to measures affecting trade in air transport services, whether scheduled or non-scheduled, and ancillary services.” While the Agreement, including its dispute settlement procedures, does not apply to measures affecting traffic rights and services directly related to the exercise of traffic rights, it does apply to measures affecting the selling and marketing of air transport services as well as computer reservation system (CRS) services — the two areas that have come under direct pressure from the CAAC with regards to how international operators refer to Taiwan (the third area is aircraft repair and maintenance services).

If enough carriers and states come together and challenge China at the WTO for using politics — or spurious claims to national security or integrity — to create an unfair trade environment that limits or undermines market access, it is possible that arbitration could force Beijing to put an end to all that silliness. This isn’t even about Taiwan, or even the recognition of its statehood and right to self-determination: this is simply an issue of preventing a government from putting undue pressure on carriers and creating an unfair environment for transporters that, for whatever reason, refuse to play along.

At this stage in the game, Taiwan can no longer just count on the kindness and principles of other players in the international community to protect its interest. It, along with its friends, needs to go on the offensive by pushing back where it might hurt Beijing the most. The WTO might be a good place to start.

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