Page 2 of 2 Cornered: Taiwan falls behind
in FTAs By Ting-I Tsai
with
Taiwan, as some observers and government officials
speculate, is unknown.
But even staunch
supporters in Washington of a Taiwan-US agreement
question the value of the restrictions on
commercial exchanges with the mainland. Rupert
Hammond-Chambers, president of the US-Taiwan
Business Council, has argued that signing an FTA
with Taiwan is an obligation mandated by the
United States' Taiwan
Relations Act of 1979. But he believes that
Taiwan's government should continue to seek ways
to remove barriers incrementally with China,
smoothing out the supply chain and building a
critical business advantage for Taiwan.
"This isn't about any one FTA or China -
this is about globalization and the ability of
Taiwan to remain a nimble global economic player
capable of representing its interests in the
global economy. If Taiwan is shut out of any major
global economic trend, such as FTAs, that puts it
at a significant disadvantage," said
Hammond-Chambers.
In Taipei, however, any
economic proposals associated with rival Beijing
often end up being shelved. Taipei's
pro-independence supporters, who insist Taiwan
must remain separate from China in all fields,
have obstructed many policies promoting more open
economic exchanges with the mainland.
In
recent years, Taiwan has failed to remove its 40%
ceiling on mainland-bound investment. The
government feels that might compel mainland-based
Taiwanese business people to launch initial public
offerings back home, and even to encourage Chinese
capital to flow to Taiwan.
Whether that
concept could actually boost Taiwan's economy is
debatable, however, with some local economists
believing that a more liberal posture is necessary
to maintain the island's economic strength.
"I'm a pro-independence supporter, but I
believe a more liberal economic policy could lead
to that result," said Hung at the Taiwan Institute
of Economic Research. "When you dominate the
market, you have little to worry about."
Unlike South Korea, Taiwan can't publicly
initiate any serious campaign for free-trade
pacts. Yet most US enterprises and even Taiwan's
major trade partners around the world have been
reluctant to endorse an FTA with Taiwan, not
wishing to upset the authorities in Beijing.
As Taiwan's top trading partner, mainland
China has not only declined to deal with Taiwan
under the World Trade Organization mechanism but
has threatened to make a scene should any WTO
member sign an FTA with Taiwan.
In the
region, negotiations for a free-trade deal between
Taiwan and Singapore have been put on hold
indefinitely since 2002. Malaysia reiterated its
"one China" policy, and the Philippines stressed
that none of its negotiators were available for
FTA talks.
The WTO's Doha trade round,
which has failed to achieve a breakthrough after
four years of discussions, has been put on hold
indefinitely. Consultations on establishing a
free-trade zone across the Asia-Pacific Economic
Cooperation (APEC) area have yet to materialize.
While Taiwan government officials and
academics believe that no significant breakthrough
is likely until an FTA with the US is concluded,
the administration of President George W Bush has
claimed it is in no position to deal with Taiwan.
It also remains unclear whether the US Congress
will extend the president's Trade Promotion
Authority, which would make congressional approval
of such a pact more likely because trade bills are
subject only to an up-or-down vote.
Hoping
to battle its regional economic marginalization
effectively, Taiwan founded the Office of Trade
Negotiation at the end of March. John Deng, the
office's chief representative, vowed to promote
the concept to the public and remove as many trade
barriers as he could. He indicated, however, that
the current tense ties across the Taiwan Strait
and infighting among Taiwan's political parties
might have made the mission more difficult to
accomplish.
Deng admires South Korea's
determination to embrace liberalization, but he
also remains confident over Taiwan's future. "It
is obvious that Korea is using these FTA
negotiations to force itself to open up more and
move in the direction of liberalization," he was
quoted as saying by the Chinese-language Common
Wealth magazine. "But the battle is not over yet."
Ting-I Tsai is a freelance
journalist based in Taipei.
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