CONFIDENTIAL
European Protocols on Chinese accession. China would have an obligation to pay 34 years of back dues (totalling nearly 3 million Swiss francs, to which compound interest could presumably be added) and to bring her tariff into conformity with the 1950 schedule. We would however argue that neither
the other members of the GATT nor the Chinese Government had
at any time acted as if China was a contracting party since
Nationalist China formally withdrew from the GATT in 1950 (certainly the Contracting Parties have not acted as if there was a vacant seat: unanimous decisions have been taken, and
tariff preferences enjoyed by Taiwan before 1950 have been revoked by several CPs, including the UK, France and the US); and that China has taken no steps to preserve its position and could not simply take up the empty seat without making a fresh application. The Chinese might find it politically
difficult to abandon their claim to the old Chinese seat -
but they might be prepared to disarm opposition by offering some form of assurance to trading partners in place of a negotiated protocol (eg by offering to conclude degressive VRAS in place of existing QRs). And the evidence is that the Chinese accept the obligation to negotiate the terms under which they would be allowed to resume membership. This would amount to a full negotiation of accession terms, with resumption of the vacant seat as a cosmetic procedural device.
18. The Chinese have now been admitted by the GATT Council as observers (without voting rights) to meetings of the Council and its subordinate bodies. They were welcomed by a representative cross-section of Contracting Parties, including the EC and Hong Kong. In doing so, the EC expected full negotiations in due course, the US and Canada observed that observer status was without prejudice to the legal position.
The Chinese have said that the Council's decision will
facilitate China's eventual decision on membership. This is indeed the normal first step towards eventual membership, although there is nothing automatic in the process. China recognises the complexities ahead and while making clear that they want to move ahead with all practicable speed, are not
rushing.