The Chinese authorities have requested all foreign airlines flying to Taiwan to alter the name of their destination from “Taiwan” to “Taiwan, China.” Source: Aleem Yousaf,wikipedia, https://upload.wikimedia.org/wikipedia/commons/0/07/American_Airlines%2C_N727AN_Boeing_777_%2817323894215%29.jpg
Source: BriYYZ, wikipedia, https://upload.wikimedia.org/wikipedia/commons/3/31/Air_Canada_A320_C-FKCO_%284491591203%29.jpg
Newsletter 2018 No. 14
Taiwan's Countermeasures to an Imposed Change of Name
Dr. Chu-cheng Huang
Institute of Law for Science and Technology,
National Tsing Hua University, Taiwan
July 10, 2018
Chinese insistence on an alleged 1992 Consensus regarding the status of Taiwan has led to it putting increasing pressure on the government of President Tsai Ing-Wen. Lately, the Chinese authorities have requested all foreign airlines flying to Taiwan to alter the name of their destination from ‘Taiwan’ to ‘Taiwan, China’, thereby suggesting that Taiwan is a recalcitrant province of China.
This nuisance has caused distress to travelers to Taiwan when they check-in or book flights to the country. Yet, apart from relying on self-restraint from the Taiwanese (i.e., their refusing to choose airlines which comply with China—something that is hardly practical) are there no countermeasures Taiwan could adopt?
The answer seems to be negative. Retaliation through non-tariff barriers, such as economic sanctions or regulatory compliance, are in fact everyday practices of governments. Take the 1978 U.S./French air service agreement dispute as an example. When the French authorities tried to narrow down the cross-Atlantic business of Pan American Airlines, the then Civil Aeronautics Board of the United States immediately ordered two French carriers operating in the country to render detailed compliance reports under U.S. economic regulations as a countermeasure. This is considered as a legitimate form of retaliation by international arbitration tribunals.
Yet before we reach any possible countermeasures for Taiwan, we must remember that the formal dispute resolution mechanism of the WTO, of which both China and Taiwan (the latter under the name Chinese Taipei) are members, does not cover this dispute. Since the Annex on Air Transport Services of the GATS explicitly excludes its applicability to measures affecting traffic rights and services directly related to the exercise of traffic rights. With this restriction, the WTO cannot adjudicate in any dispute on trade in services relating to traffic rights or the negotiation of traffic rights. A unilateral change of code or destination name is, without doubt, a matter related to “scheduled and non-scheduled services to operate and/or to carry passengers, cargo and mail for remuneration or hire from, to, within, or over the territory of a Member [of the WTO], including points to be served, routes to be operated, types of traffic to be carried, capacity to be provided, tariffs to be charged and their conditions, and criteria for designation of airlines, including such criteria as number, ownership, and control” per Article 6 of the Annex. As a matter of fact, under current practice, even the selling and marketing of air transport services is excluded from the jurisdiction of the WTO.
The context of an air traffic agreement between Taiwan and China may not be so clear, yet it is evident that, due to political concerns, China grants to Taiwan only the right to fly return flights to certain cities. No extension to third countries is allowed. This curtails the efficiency of Taiwanese carriers who must operate long-haul fleets for these return flights. On the contrary, Chinese carriers, such as China Eastern and China Southern, take advantage of their Shanghai and Guangzhou hubs to substantively extend their return flights from Taipei to North America, resulting in extremely unfair competition and violating the purpose of mutuality, not only because Chinese travelers are not allowed to travel through Taipei to the States or Australia, but because Chinese carriers offer cross-Pacific routes at one third of the normal cost. Following the precedent of the Taiwan/Philippine 6th rights dispute in 1999, the Philippines successfully forced Taiwan to drop any commercial activities related to extension rights, and constantly exercised supervision to ensure there would be no true stop-over before the reinstatement of the traffic agreement. There is no excuse for Taiwan authorities not to carry out economic sanctions against Chinese airlines for the same reason.
Allocation of airport slot time is also a very handy mechanism for a receiving country to retaliate against unfair treatment from a counterpart. It is beyond doubt that the allocation of slot time is strictly subject to local discretion. Every governing authority has the right to determine accessibility and allocation. Even a proponent of deregulation like the United States manipulates slot time intensively as a leverage to achieve economic efficiency. It would be beneficial for the Taiwan authorities to use slot time allocation as a countermeasure to this change of name, since Chinese carriers, as newcomers in Taiwanese airports, are not eligible to claim historical rights to any competitive slot times. Furthermore, there is no secondary market allowed in Taiwan to obtain residual slots. So Chinese airlines could be ordered to switch their departure and arrival times to much less competitive hours. They would certainly realize the gravity of the name change.
Nothing of the measures suggested here is extreme or in violation of the traffic agreement, since the Chinese authorities used slot time allocation at airports in Shanghai and Beijing to mitigate the market impact of Taiwanese carriers from day one of direct cross-strait flights. Taiwanese airlines can hardly obtain any economically feasible slot times at these airports.
The context of an air traffic agreement reflects not only the strategic concerns of governing authorities, but also issues of territorial sovereignty. This explains why China has chosen air transport as her target of first strike. Any acquiescence by the Taiwanese authorities in such aggression will definitely imply that the country lacks the capacity to exercise full and absolute sovereignty over the island. The Taiwanese authorities need to remind themselves that the operation of Chinese carriers to and from this island is subject to our absolute supervision and constant review, and any retaliation is legitimate.