common ground

Trade and Transatlantic Issues

Program 0222 May 28, 2002

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(This text has been professionally transcribed, however, for timely distribution, it has not been edited or proofread against the tape.)

DAVID LAMPTON: The economic relationship between Taiwan and the mainland has outstripped the capacity of both governments to fully control and manage it. Money is hemorrhaging from Taiwan into the mainland.

KRISTIN MCHUGH: This week on Common Ground, growing trade between two enemies. Plus, the potential for trade conflicts between two allies.

DOUG CASSEL: That information can only be used by that company for the purpose for which it was gathered and not be shared with other companies for other purposes, such as later sending you a barrage of solicitations for 15 products you didn’t know you needed.

KEITH PORTER: Common Ground is a program on world affairs and the people who shape events. It’s produced by the Stanley Foundation. I’m Keith Porter.

MCHUGH: And I’m Kristin McHugh. China and Taiwan are unlikely trading partners. Yet some say it may be the reason they peacefully coexist.

PORTER: Both are new members of the World Trade Organization. Common Ground’s Cliff Brockman recently talked with a panel of experts about China, Taiwan, and the WTO, and what one of them says is the real economic story.

DAVID LAMPTON: Well, I think it’s great that both the People’s Republic of China and Taiwan have entered the WTO. I think it’s great for the world economy. These are two of the world’s largest trading entities. And so not only is it good for the two parties involved but it’s good for the world economy.

CLIFF BROCKMAN: Dr. David Lampton, the Director of Chinese Studies at the Nixon Center at Johns Hopkins University.

LAMPTON: This provides Taiwan a opportunity to be an international organization with an equal and dignified role. And that is certainly something the people of Taiwan had wanted. And in a previous era of cooperation, it was even something that the PRC was willing to agree with APEC, the Olympics, the Asian Development Bank. So I hope that this signals maybe a more liberal approach on the part of Beijing. But I think the real story isn’t about—economically—isn’t about the World Trade Organization. It’s about what’s going on across the Straits, in economic terms.

The fact of the matter I think is that the economic relationship between Taiwan and the mainland has outstripped the capacity of both governments to fully control and manage it. Money is hemorrhaging from Taiwan into the mainland, in terms of foreign direct investment. Trade is growing at a very healthy rate. Technology transfer. I just was with the former mayor of Shanghai, Xu Kuangdi, not so many months ago and he was talking about as many as 300,000 people from Taiwan being residents of the area around Shanghai. So I think one of the most healthy trends is this growing economic integration—if that’s the right word, or interaction—between the two sides of the Straits. And I think membership in the World Trade Organization will provide a basis maybe to be helpful in regulating and maybe dispute resolution and so forth. But I think the real story is just the spontaneous combustion of economic relations across the Straits.

Suisheng: The economic exchanges between these two sides have been developed very dramatic in the last ten—I mean, last two decades.

BROCKMAN: That’s Dr. Suisheng, the Executive Director of the Center for China-US Cooperation at the University of Denver. He also edits the Journal of Contemporary China. Dr. Suisheng is a native of mainland China.

Suisheng: Both sides entered the WTO and it could further promote economic exchanges across the Taiwan Strait. And in fact, that’s economic implication. But politically I think there’s a kind of concerns maybe from Taiwan side how to control the, the further exchanges with China, deal with the Chinese government in the World Trade Organization. So the entry of World Trade Organization of these two sides I think should be very interesting to look at how these two sides will behave.

Antonio Chen: China right now is our second largest market, only next to United States.

BROCKMAN: Antonio Chen is the Director General for the Taipei Economic and Cultural Office in Chicago.

Chen: For the last year the trade, indirect or direct trade, between China and Taiwan reached to more than $40 billion in United States dollars. And Taiwan enjoy more than $20 billion trade surplus with China’s market. We also understand our investment in China really can help the employment market for the Chinese there. And we are looking for the investment. And healthy economic relations between China and Taiwan can reduce the tension, the political, in political field.

BROCKMAN: We’ve just passed the 30th anniversary of President Nixon’s historic visit to China. Dr. Lampton, if I could get your assessment on where you think things have gone in the past 30 years.

LAMPTON: Well, I think if President Nixon would state what he thought 30 years ago and then look back on it, he would be amazed in almost all respects. China now is America’s fourth-largest trading partner. I think that would have been inconceivable to President Nixon and Henry Kissinger at the time. China is a member of the World Bank in good standing. China is a major recipient of American foreign direct investment. So whether you look at it strategically or economically I think the interests of the United States and the interests of the people of China have been well served by what he did and I don’t think he could have foreseen the magnitude of the success.

I think also it’s been a remarkable success for the people of Taiwan. I think many people at the time that Nixon went, saw it perhaps as a betrayal of Taiwan. But I think it forced the people of Taiwan to look at their own internal system and make their case for democracy, ultimately, to the rest of the world’s people. And I think that was a very fortunate thing for the people of Taiwan. Their economy on Taiwan has grown really dramatically in the period since President Nixon went. And the relations across the Straits are infinitely more extensive than they were when he went.

BROCKMAN: I’d like wrap up by asking each of you, we’ve been 30 years since President Nixon visited China. And so using that kind of yardstick, where you think the relationship between the three countries—United States, China, and Taiwan—will be in the next 30 years. Dr. Lampton?

LAMPTON: The exciting thing about observing China and Taiwan and this part of the world is that there are multiple possibilities. I think one possibility, of course, is that the two sides of the Strait and the United States don’t properly manage this relationship. And were that to occur certainly conflict between two nuclear powers is not inconceivable. I don’t think that’s the most likely and I think we’re developing interests in all three societies to avoid that. But we should not forget that this is one of the more dangerous areas in the world. It requires the constant attention of the US Government and the two governments involved. That is a possibility. I don’t think it’s the most likely.

I think the most likely is, is the economic interests between the people of Taiwan and the mainland are going to multiply and continue to grow and strengthen. I think that means that conflict will be increasingly expensive and costly for both sides and therefore they will seek to avoid it. I think China in the next phase is probably going to try to initiate more genuine and extensive political reform. And therefore I think that I would hearken back to a word that the President Cheh Shui-bian used, and that is at some point we can talk about what political integration might mean. But I think, I think that’s the direction that things will take. Thirty years may be a little fast. I don’t know. But we should never forget if we mismanage this, conflict is a possibility as well.

BROCKMAN: Antonio Chen?

CHEN: I do believe for the majority of the next 30 years the relations between the United States and Taiwan; I don’t think there will be much change. The relations between United States and China also will be up and down. And maybe in the direction, maybe still a good direction, but I do believe that the conflict of the countries’ interest is unavoidable. I do believe that relations between both sides of the Taiwan Strait will go to the right direction, good direction. But I still don’t think that unification or independence can happen within 30 years.

BROCKMAN: Do you think it will ever happen?

CHEN: I don’t think within next 30 years, it will not happen.


SUISHENG: China-US relationship is the most important relations for the Chinese leaders and Chinese people. In fact, China is becoming more and more like the US the Chinese leaders has been very persistent. I think from Deng Xiaoping to Jiang Zemin, to emphasize to, the importance of the US, China-US relations, for China’s economic modernization and even for its political future. Because to a certain extent, although they talk about the communism, it’s a communist society, but it is changing. US to a great extent is a model for China—China’s political change, political reform. So China has been more and more integrated, not only to the economic, international economic system, but politically also more and more similar to most democratic societies. So in that case, the relationship for China, the relationship between China and US is very, very crucial for China’s future.

From the China-Taiwan relations, for Chinese leaders, no Chinese leaders can afford to let Taiwan to become independent and to leave China. Any Chinese leaders that [let] that happen, would lose their legitimacy and would not be able to stay in power. However, Chinese leaders, from my reading, that they are not very hurry at this point to bring Taiwan to unification with China. Because they know at this point it’s very difficult. It’s almost impossible at this time. If Taiwan does not explicitly declare independence so there would no war in China. War is the last thing that China would like to go. As Dr. Lampton said, it’s very expensive and also they don’t know what would happen if war, if US would get involved. If Taiwan in next 30 years would not have independence, I would see a peaceful across the Strait, Taiwan Strait for next 30 years.

BROCKMAN: That’s Dr. Suisheng, the Executive Director of the Center for China-US Cooperation at the University of Denver. We also spoke with Dr. David Lampton, the Director of Chinese Studies at the Nixon Center at Johns Hopkins University, and Antonio Chen, Director General for the Taipei Economic and Cultural Office in Chicago. For Common Ground, I’m Cliff Brockman.

MCHUGH: The US and Europe battle over computer privacy, next on Common Ground.

DOUG CASSEL: This is a problem that could yet become a major litigation and commercial thorn in the relationship between the two largest economic markets in the world.

PORTER: Printed transcripts and audio cassettes of this program are available. Listen at the end of the broadcast for details, or visit our Web site at Common Ground is a service of the Stanley Foundation, a nonprofit, nonpartisan organization that conducts a wide range of programs designed to provoke thought and encourage dialogue on world affairs.

MCHUGH: Since the dawn of the Internet, users have worried that personal, financial, and medical information and computer networks may not be adequately protected. Businesses are already involved in buying and selling this data. And criminals can use the information to steal money and steal identities.

PORTER: Coping with data privacy and data protection has become an international issue. The rules for computer privacy differ greatly from country to country, and some experts predict a serious trade dispute between the United States and Europe over this very issue. At Northwestern University’s law school, a new program is examining transatlantic data privacy. I recently spoke with two of the projects organizers, Richard Newman and Doug Cassel.

DOUG CASSEL: I would say there are two enormous policy differences between the, Europe and the United States that relate to the question of privacy protection. One is privacy and the other is protection. There does seem to be a greater concern for personal privacy in Europe, generally speaking, than generally speaking, there is in the US, from what we can tell. Just a deep-seated cultural difference stemming at least in part from the European distrust of government intrusion coming out of World War II. The other difference relating to protection is the US prefers a free enterprise approach whereas the Europeans are much more open to having government regulation be used as the way to protect privacy.

PORTER: Mr. Newman, you’re saying the average citizen in Europe has a greater expectation of privacy and a greater realization of privacy then the average American citizen does.

RICHARD NEWMAN: Europe has about the same number of people as this country has but they’re jammed into a, a much smaller space. They live side by side and cheek by jowl to a far greater extent than we do. And I can’t offer you concrete proof. But one could, I think, speculate that the mere fact that the density of population is so great, may have something to do with the European passion for privacy. In contrast to the unusually open society compared to others that we have in this country. And I think anyone who has visited Europe could easily distinguish the difference.

PORTER: Professor Cassel, you talked about the difference between privacy and protection. Privacy being an individual concern that people have their own personal data and how it gets shared across businesses or from business to business is what we’re talking about there? Is that, that’s privacy?

CASSEL: It’s one aspect of privacy and it happens to be the one where the battle lines have been most clearly drawn between Europe and the United States. Because a few years ago the European Union adopted a regulation that is binding on all of the EU member states that basically says that whenever a customer provides information to a company—for example, if you give certain information to in order to buy a book on the Web, or if you provide certain information to a department store in order to get a credit card, that that information can only be used by that company for the purpose for which it was gathered and not be shared with other companies for other purposes, such as later sending you a barrage of solicitations for 15 products you didn’t know you needed.

The Europeans have regulated that very strictly. And they’ve included a provision that says that when European countries transfer data to a foreign country such as the United States they must meet certain standards. So that right away sets up a clash between the US, which does not provide for these protections to the same degree, and the Europeans. And so there was a very tense negotiation as to how to resolve this matter. They’ve papered it over a little bit. But they really have not solved the differences and I think this is a problem that could yet become a major litigation and commercial thorn in the relationship between the two largest economic markets in the world.

PORTER: Mr. Newman, this brings up the question that I think maybe some people have at least, and that is, so what? The United States has one set of standards; Europe has another set of standards. They’re different. So what?

NEWMAN: There are many, many thousands of subsidiaries of American corporations abroad. And those corporations, if they violate European law and export data to the US or to other countries that do not have adequate—adequate is a term they define—legal protection, legal action can be brought against the US subsidiary. And as evidence of the reality of that, I’d like to point out that many if not all major American law firms in a very short period of time find themselves with departments emphasizing privacy. And I say departments in major Chicago firms; there are departments advising their clients, American corporations, with subsidiaries abroad, on their vulnerability to litigation in the event they violate European law in this respect. So it, it is not an abstract matter. It’s a matter of very serious concern.

PORTER: Are we also looking at potential trade war kind of issues? I mean, I think we can understand the steel issue, where there’s a company in one country that makes steel, it’s cheaper, and the other country tries to protect its own steel industry. Are there those kinds of issues where we have governments trying to protect the interests of their local businesses, which may set them up in a battle with the people on the other side of the ocean?

CASSEL: Potentially there are. And that’s one of the motivating factors behind our project. We hope to bring together opinion leaders from Europe and the United States to discuss these issues to try to understand each other’s point of view better, precisely in order to avoid not only very expensive litigation but the possibility of a trade war. The problem that, the fundamental problem that we have here is that maybe a hundred years ago it would have been possible for the Europeans to say, “We’ll do things our way and the Americans to do it their way.” But in a globalized economy where many of the products that both Europeans and Americans buy were produced by a corporation that has offices in Europe and other places around the world, you can’t really separate their economy all that neatly from ours. But we’re still in a situation where they have their governments and we have ours and each one is attempting to reflect the demands of its constituents. So potentially, there could be a trade conflict or a trade war here if this situation is not worked out to mutual satisfaction.

PORTER: A minute ago you gave us some concrete examples on data privacy: the person puts their order in on Amazon. Do you have some examples like that on the protection side?

CASSEL: Under the European system any company which collects data has to register with the National Privacy Commission, which in turn has to report to the EU Data Collection Commission, and has to demonstrate to the government regulators what safeguards it is adopting to make sure that, that private consumer information does not get transferred to other companies or other entities for use for purposes for which it was not intended. In the United States on the other hand, we do sign on to and lots of other companies all the time. And generally speaking we don’t have that kind of protection. We don’t have the right to look at all of the records that private companies have on us, to check to see whether they’re accurate, to correct them if they’re not; if they’re out of date, to get them updated. If they’re giving them to other companies, we probably don’t even know that, let alone have a way to stop it. So the, the difference in degrees of protection between what little we do here and the very extensive regulation imposed by the Europeans is, if not night and day, at least it’s a very large qualitative difference.

PORTER: Mr. Newman: tell us something about what the project is doing and you know whether or not these data privacy issues can be resolved between the two sides.

NEWMAN: The issues can be resolved. Whether they will be resolved remains to be seen. And there’s a great deal of tension. The title of our project is “Privacy, Data Protection, and Security.” Security became a very more important concern after September 11. And by bringing people together, people who are parliamentarians, representatives, United States senators, leading jurists, government officials, business people and academicians, for discussion, which there will be 35 or fewer people. One of the seminars will be in Europe and the other will be in New York. We hope to facilitate relationships. We hope that some of the animosities and tensions that have developed, particularly in the last three or four years since the directive we’ve been talking about became effective in October 1998 will, will abate as a result of these meetings. We will have very direct and intensive discussions of many of the principle questions.

I might say, following up what Doug said, that in among the privacy principles that are common to all of us but interpreted and practiced in different ways between Europe and the US, for example, is the question of opt-in and opt-out, which everyone is now familiar with because US law required statement of privacy, since about a year and a half ago. These are interpreted differently in Europe than they are here.

PORTER: I’m sure you don’t want to prejudge the outcome of the project here. But it seems to me that the American public might actually like to have more privacy. Might actually appreciate having some of the European standards that you’ve talked about here. Is that one option, where perhaps the American people could just demand more privacy and therefore our laws would be more in line with the European laws?

CASSEL: My sense is the American people would like to have a lot more privacy than they now have. But one of the questions is how do you get there? There’s a traditional American preference, not only in our government but in also among the public, for private sector free enterprise approaches rather than government regulation. I don’t know to what extent the US public would support, for example, creating a federal agency to privacy all across the United States in the same way that the European Union now has an Office of Data Protection that regulates privacy all throughout the European member countries, which in turn are each required to have their own national commissions. But I hope that being the pragmatists that we Americans are supposed to be that if the American public takes a look at what’s now being done by private industry and sees that for various profit-motivated reasons industry is not providing adequate privacy protection. For example, you can make a lot of money reselling your customer lists to other companies that will then market their products to your customers. That the American people would consider, you know, there are times when the government does need to step in and this may be such a time.

NEWMAN: I think direct confrontation and discussion between the kinds of people that we expect to invite to the seminar will point toward a middle way. But the middle way is more urgent than ever. Because now we have a situation since September 11 in which the public, according to the polls—and we know from, and I’m sure you know—that we cannot have under the conditions of terrorism that exist in the world, all of the privacy that we certainly would like to have. And so a considerable amount of legislation necessarily has passed since September 11, which limits privacy. And the problem becomes one of trying to find a, at the right middle course between the demand and the need for security, and the public desire for privacy. Which is clearly very strong.

PORTER: Richard Newman and Doug Cassel are both from the Northwestern University School of Law. Newman runs the school’s Project on Privacy and Privacy Rights. Professor Cassel is Director of the Center for International Human Rights.

MCHUGH: Cassettes and transcripts of this program are available. The transcripts are free. Cassettes cost $5.00. To place an order or to share your thoughts about the program, write to us at: The Stanley Foundation, 209 Iowa Avenue, Muscatine, Iowa 52761. Please refer to Program Number 0222; that’s Program 02-22. To order by credit card you can call us at 563-264-1500. That’s 563-264-1500.

PORTER: Transcripts are also available on our web site, Commongroundradio is all one word. Our e-mail address is For Common Ground, I’m Keith Porter.

MCHUGH: And I’mKristin McHugh. Cliff Brockman is our Associate Producer. B.J. Liederman created our theme music. Common Ground is produced and funded by The Stanley Foundation.

© 2002 by The Stanley Foundation

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