Despite sniping from Congress, President Bush lofted a trial balloon this past week on trade with China that deserves to keep soaring - with one possible modification.

Though China hasn't curtailed the human rights violations that preceded and followed its bloody 1989 crackdown in Tiananmen Square, the White House wants to extend its most-favored-nation trade relationship with Beijing.So be it. MFN status simply provides for normal, non-discriminatory trade. The United States extends this status to nearly every country. Even Iraq had MFN status until just before it invaded Kuwait.

Besides, this arrangement with China has paid off. By avoiding such a confrontation, as President Bush noted, Washington helped persuade China not to veto United Nations steps against Iraq during the Persian Gulf crisis.

In coming weeks, China could again play a pivotal role in the U.N. by determining whether a U.N. police force will replace American troops protecting Kurdish refugees in northern Iraq. MFN status for China seems a small price to pay for a step that could keep American forces from being sucked into a long-term presence in the ever-volatile Middle East.

Even so, there's room for disappointment over the Bush administration's failure to exact even a small price from China in return for MFN status. After all, such status helps the Chinese sell their products abroad. And there is a concession that China could grant with no loss of face.

We're referring to the travesty by which Taiwan is kept out of the General Agreement on Tariffs and Trade, the 100-nation agency overseeing global trade. China should drop its unfair objection to Taiwan's admission. And the West should abandon its misguided deference to China on this score.

The Chinese base their objection on the unrealistic claim that Taiwan is just a province of China. China makes the same claim regarding Hong Kong. Yet Hong Kong has belonged to GATT since 1986.

As the world's 13th largest trader, Taiwan has a logical place in GATT. Indeed, Taiwan's open-market economy meets the normal entrance requirement for the organization while China's semi-centralized system falls short.

By continuing to do business with China, the United States is simply acting in its own self-interest. But Washington hurts itself by failing to fight for GATT membership for Taiwan, already America's sixth largest trading partner, with a bigger market for U.S. products than China seems likely to offer for many decades to come.