Publication Date：11/19/2011
Source： Taiwan Today
By John Wren
On Nov. 14, ROC President Ma Ying-jeou reaffirmed his administration’s commitment to satisfying conditions for Taiwan’s entry into the Trans-Pacific Partnership. He said that membership of the proposed trade agreement is an absolute must if the island is to stave off the threat of economic marginalization and transform itself into a regional trade hub.
The fact that Ma is eager for Taiwan to join the TPP comes as no surprise. The state-of-the-art trade pact is an exciting concept that involves more than just tariff reductions and winking at World Trade Organization requirements. It promises to streamline regulatory structures and set new standards in areas such as the environment, intellectual property, investment, labor and government procurement.
But more importantly for Taiwan, the arrangement enables the island to be bolted on to an impressive structure comprising negotiating partners Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States. Three other nations, Japan, Mexico and South Korea, are also making noises about seeking to join discussions on the TPP, adding further weight to the nascent agreement.
At the recently concluded Asia-Pacific Economic Cooperation Leaders’ Meeting in Honolulu, former Vice President Lien Chan—Ma’s envoy at the event—made no secret of Taiwan’s desire to participate in the TPP. He took every opportunity to seek out allies for this cause, coming away with the impression that the door is well and truly open for Taiwan to come on board.
Lien said the message conveyed during sideline talks at APEC was Taiwan needs to come up to scratch in all areas linked to high-standard free trade agreements before it can be considered for TPP membership. But given that the ROC government is undertaking a program of wide-ranging reforms spanning the country’s legal, public sector and regulatory environments, meeting this requirement should be no great stretch.
The real problem, however, lies in the TPP’s mandate to deal with areas that are deemed domestic policy and exist beyond the bounds of mainstream trade deals. One area set to be addressed covers rules governing the actions of state-owned businesses, which are often recipients of low-cost funding and various forms of protection.
In Taiwan, the government owns controlling stakes in numerous enterprises such as Chungwha Post Co. Ltd., petroleum refiner CPC Corp., Taiwan Power Co., Taiwan Sugar Corp., Taiwan Tobacco and Liquor Corp. and Taiwan Water Corp. Under the ROC Constitution, utilities and monopoly businesses are required to be run by the state, presenting a contrast with TPP stipulations aimed at ensuring a level playing field for free-traders.
This hurdle can be cleared if the government begins drafting changes sooner rather than later to the Constitution and implementing a privatization program. Of course, there would be stiff opposition from affected enterprises, but the short-term pain involved in divesting state assets sends the right signal to TPP members about Taiwan’s commitment to joining a free trade zone that could change the global economy.
Ma’s belief that the TPP is an effective way of delivering increased commerce, investment flows and growth to Taiwan and the Asia-Pacific region is shared by U.S. President Barrack Obama. During APEC, the U.S. leader said he wants America to sign the “next-generation trade agreement” by the end of 2012. He added that the TPP would go beyond the scope of normal trade deals to become a “model” or “seed” for a more expansive set of agreements.
For Taiwan, much like the U.S., the TPP is a unique chance to get in on the trade action in Asia where economic growth averages above 7 percent. The pact will allow Taiwan to significantly increase exports, create homegrown jobs and enhance competitiveness, guaranteeing that the benefits of the TPP are shared by all citizens. This is not an arrangement designed to help multinationals fatten profit margins, rather it is about rewarding nations that play by the rules and do more than just pay lip service to the principles of free trade.
This is good news for Taiwan’s small and medium enterprises, many of which are beginning to feel the pinch as the global economy wrestles with the effect of crises in Europe and the U.S. Long considered the island’s economic lifeblood, SMEs need fresh fields if they are to continue fulfilling their Rock of Gibraltar role.
Although the Cross-Straits Economic Cooperation Framework Agreement (ECFA) has provided a bevy of openings from the other side of the strait, they are not coming quickly enough for many SMEs. In addition, the thorny issue of investment protection remains unresolved between Taipei and Beijing, leaving many Taiwan firms in the sector a little gun-shy when it comes to setting up new ventures in mainland China.
Ma’s goal of steering Taiwan toward TPP membership is the right one, but he will need to make sacrifices and work hard to educate the public about the considerable benefits on offer from the agreement. If these tasks can be accomplished using a leaf from the ECFA promotion book, then there is every reason to view the TPP as Taiwan’s ticket to prosperity in the golden decade.
John Wren is a freelance writer based in Keelung. These views are the author’s and not necessarily those of Taiwan Today. Copyright © 2011 by John Wren
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