US Sanctions on Taiwan

CASE NUMBER: 7
CASE MNEMONIC: USCHINA
CASE NAME: US Sanctions on Taiwan

1. Issue

Many of the world's mega-fauna -- such as rhinoceros and tiger -- are rapidly declining. The world's rhinoceros population has declined 90 percent within the last 23 years to the present level of less than 10,000 animals worldwide and the tiger population has declined 95 percent to 5,000 animals. The rhinoceros is among the world's most endangered mammals. When the Convention on International Trade in Endangered Species (CITES) entered into force in 1975, the rhinoceros was one of the first species to be included in the CITES protected appendices. Two species of rhino in Asia (Javan and Sumatran) and one sub-species in Africa are on the edge of extinction. In the past 20 years the number of black rhinoceros has plummeted from an estimated 65,00 to 3,000 and is near extinction in large parts of Africa. The southern white rhino and the Indian rhino are relatively well conserved, but their total world population is only in the low thousands. Tiger populations have fallen to a similar degree. Many countries have violated this ban and in a unilateral act, the United States targeted Taiwan. The United States placed retaliatory sanctions on Taiwan for its continued trade in rhinoceros and tiger products and rescinded it about a year later.

2. Measure: Retaliation

The United States charged that Taiwan and China continued trade in rhinoceros and tiger despite the CITES ban and imposed sanctions on Taiwan, but not China, in 1994. In 1995, President Clinton lifted the sanctions on imports from Taiwan in wildlife products. It was the first time the United States had used trade sanctions to protect an endangered species, and the first time U.S. sanctions had been imposed on Taiwan for any reason.1 This case study will focus on rhino trade, rather than tiger, in part because of data availability.

3. Exporter and Importer: TAIWAN and USA

4. Trade Impacts

The Clinton administration's deployment of sanctions over Taiwan's continued rhino and tiger trade was the first time the United States (or any country) had used legal trade measures to protect the environment. U.S. sanctions on Taiwan equaled about $25 million, covering coral, mollusk-shell jewelry, and lizard, snake, and crocodile skin shoes, and other leather products. Also included were exotic leather goods such as shoes and handbags made from the skins of snakes, lizards, crocodiles, and alligators, pets such as birds and reptiles, and coral jewelry. Overall trade with Taiwan in the products is $25.1 million a year.2 Such a U.S. import ban would cost China between $50 million and $60 million a year, according to Genette Hemley of TRAFFIC.

China imported 10,621 kilograms (kg) of African horn and 433 kg of Asian horn between 1982 and 1986. The origin of these imports was not declared, but believed to be from North Yemen, Hong Kong, Macau and Taiwan, with smaller quantities smuggled in from Singapore and Thailand. Mandatory registration of stocks in 1988 revealed 9,874 kg in various medicine corporations -- this excluding stocks in retail medicine, museums and private ownership.

Taiwan was also a major importer of rhinoceros horn for the period 1979-1985. Supplies came mainly from South Africa, Hong Kong, and Singapore. Taiwan is not a member of CITES because it is not recognized by the UN. Nevertheless, the government banned imports and exports of rhino horn in 1985, at least in law. Trade continued, however, at least until 1989. Taiwan is believed to be stocking horn and acting as an entrepot, since Macau and Singapore imposed successful bans on both imports and exports of horn in 1985 and 1986. The Taiwan government also undertook a legally mandated registration completed in 1990 that produced a stock of 1,456 kg for 410 registrants. However, surveys in 1991 showed that approximately 1,800 pharmacies stocked horn and suggested stockpiles of at least 3,712 kg and possibly as much as 8,943 kg.3

5. Other Economic Impacts

In the 1970s, about one-half of rhino horn exports went to Yemen and the other half to East Asia. In Yemen and Oman, rhino horn is used to make the handle and sheath of the traditional dagger, or jambiyya. Male Yemenis and Omanis have worn these rhino daggers for centuries and is part of the rite of male initiation. Substitutes, such as antelope horn, now replace rhinoceros horn in producing the dagger.

Three East African countries -- Kenya, Uganda and Tanzania -- are the leading exporters of rhino horn. East African exports peaked at approximately 3,400 kg/year (1,180 rhinos/year) in the 1970's. Customs statistics show that China directly imported 13 percent of East Africa's declared exports from 1949-76 and most likely imported more via entrepots. When China became a party to CITES in 1985, it banned the use of rhino horn in new products, but domestic use continued. China probably is a worse offender in tiger and rhino trade than Taiwan. China was a major manufacturer of medicine containing rhino horn and a major exporter of products. Until the prohibitions, it was consuming approximately 600-700 kg annually.

The rhinoceros horn grows back at 6 cm per year. Rhino horn is literally worth more than its weight in gold. The rhino horn trade may be worth as much as $3 million annually."4

Based on an average horn weight of 3.5 pounds an African rhino horn is worth around $1,500. However, Asian horn is even more highly valued, and wholesale prices reach over $4,000 per pound in some markets. This gives an Asian rhino horn a value of around $14,000.

Under a cooperation agreement that ended the U.S. sanctions, the U.S. Fish and Wildlife Service will help Taiwan improve conservation and law enforcement efforts. Presumably, this will be a cost incurred by the U.S. government. In any total accounting framework, this value should be added to the total costs of the measure.

6. Environmental Benefits

The sanctions were meant to preserve remaining stocks of tiger and rhinoceros in the wild. These two species have been decimated over the last decade, with at least 90 percent of their populations killed. Why preserve them? The moral argument is that we have the duty to preserve the species. The economic argument is that through tourism and other activities species protection is affordable.

7. References

1. "Tigers, Rhinos, Near Extinction as Superstition Survives,"Los Angeles Times, March 19, 1995.

2. "U.S. Puts Sanctions on Taiwan." New York Times (April 12, 1994), D1.

3. N. Leader-Williams, "The World Trade in Rhino Horn: A Review" 22 (Traffic International 1992).

4. The Environmental Effects of Trade, OECD, Paris, 1994, Joanne Burgess, 133.