US-Taiwan Free Trade Agreement

Tracking news and information about the proposed US-Taiwan Free Trade Agreement (FTA)

Tuesday, July 29, 2003

Free-Trade Agreements: Taiwan's Turn?

Friday, July 25, 2003

U.S.-Taiwan trade dispute heats up

Thursday, July 24, 2003

U.S. Suspends Meetings With Taiwan Until Some Progress Shown on Trade Issues

International Trade
July 23, 2003

By Noah J. Smith, The Bureau of National Affairs, Inc., Washington D.C.

The United States has suspended high-level economic meetings with Taiwan and is refusing to engage in talks for a bilateral free-trade agreement sought by Taiwan until the island shows progress in a range of trade issues where the United States has longstanding complaints, sources recently told BNA.

Taiwan has responded by pushing through some legislative changes that begin to address U.S. concerns, and by engaging in working-level dialogues with the United States in other areas, Taiwanese officials told BNA.

Analysts said that the U.S. posture, and Taiwan's apparent desire to show a positive response, may be part of a dance in which Taiwan wants a free-trade agreement with the United States for largely political purposes, and the United States is trying to bid up the price of its cooperation.

On the U.S. side, Taiwanese officials and U.S. analysts said that the Bush administration has in place an "unwritten" policy of refusing to send high-level economic officials to Taiwan, and refusing to meet with Taiwanese counterparts should they come to Washington.

U.S. sources said the policy went into effect early this year after a handful of disappointing high-level meetings last year. "The Taiwanese were just restating promises that they 'might' do something, but there was no real substance [to the meetings last year]," executive director of the American Chamber of Commerce in Taiwan Richard Vuylsteke told BNA.

U.S. 'Reluctance' Will Continue
The current "decided reluctance" of U.S. officials to engage in meetings will continue, he said, "until Taiwanese officials have real, solid reports on progress made on issues that have been raised for quite some time by the U.S. government."

"We understand that the United States has some concerns about bilateral trade issues, particularly intellectual property rights enforcement, and rice trade, and others. But for those two, actually, both sides have undertaken many discussions during the past few months," said Chiu Bo-Chin, spokesman for Taiwan's Ministry of Economic Affairs. "And the latest development is the copyright amendment. That's quite significant. The U.S. side is still consulting with industry to evaluate whether this legislation will be sufficient to meet their satisfaction."

Taiwan's legislature passed a revised copyright law in June that some analysts say may finally get the Taiwanese authorities to crack down effectively on optical disk piracy. Lawyers said the amendments were pushed through the Legislative Yuan (Taiwan's parliament) in record time (see related report in this section).

"We've been pressing for this law for years, now it's been changed in an unprecedented manner. It went through the Legislative Yuan in a month," said Jeffrey Harris, a director of AmCham in Taiwan's IPR committee.

Taiwan is particularly eager to have continuous engagement with the United States on economic issues because it sees the United States as its only major trade partner that is not cowed by China from dealing with Taiwan in a straightforward manner.

In an effort to help solidify this relationship, Taiwan has been pushing to for a free trade agreement with the United States since at least late 2001.

Taiwan Pins Trade Hopes on U.S
Taiwan is also hopeful that an FTA with the United States could help clear the way for similar arrangements with countries in the region who are reluctant to undertake formal agreements with Taiwan, or even to hold talks with Taiwanese officials, for fear of upsetting China. China routinely lashes out, diplomatically and economically, at any country that has dealings with Taiwan which imply a recognition of the island as a sovereign state.
"Taiwan is going to have trouble doing an FTA with anyone else in the region until the U.S. does one," said Daniel Rosen, a research fellow at the Institute for International Economics who specializes in China trade issues, in an interview. "The Japanese and others are going to be reluctant because of China. That's why Taiwan would like to see a U.S.-Taiwan FTA, hoping that would break up the logjam and make it possible for them to do FTAs in the region that would be more valuable economically."

Taiwan Would Gain More With ASEAN Pact, Study Says
A forthcoming paper by Rosen and Nicholas Lardy, also a fellow at the IIE, estimates that Taiwan's economy would gain 1.1 percent from participation in an "ASEAN +3" FTA (covering members of the Association of Southeast Asian Nations plus Japan, China, and South Korea) but would gain only 0.3 percent from an FTA with the United States. The difference reflects both relative trade volumes and the fact that Taiwan already enjoys freer trade with the United States than with most of its Asian neighbors, and thus stands to gain more from a negotiated reduction of trade barriers there.
Some congressmen, such as Senator Max Baucus (D-Mont.) and House Majority Leader Tom DeLay (R-Texas), have been advocating such a deal. But the Bush administration has been cool toward the idea, saying formal talks are still years away.

Douglas Paal, director of the American Institute in Taiwan and de facto U.S. ambassador to the island, has said repeatedly that progress toward an FTA could only move forward once the U.S. is satisfied with Taiwan's progress on a range of issues including IPR, agricultural trade, pharmaceuticals, and foreign investments in telecommunications. [The U.S. is barred from having a formal embassy on Taiwan under its 1979 agreement to recognize Beijing, which claims Taiwan as a province.]

Taiwan, however, continues to push for quicker progress. Chiu of the Ministry of Economic Affairs said that Taiwanese representatives in Washington are "talking with the U.S. Trade Representative's office to see when would be a good time to hold bilateral meetings [on an FTA], but we haven't gotten a response yet. We were told they are quite busy in preparing FTA's with other countries."


Business Week
July 7, 2003, By Paul Magnusson; Edited by Mike McNamee

The Bush Administration has a new weapon in the war against terrorism: offering free-trade deals to allies from Australia and Morocco to the tiny Persian Gulf emirate of Bahrain. But the GOP's business allies aren't impressed. They complain that such grand diplomacy makes for poor trade policy. Sensing a way to mend frayed ties to well-heeled business groups, Democrats are taking up their cause.

This fall, the Administration intends to start talks on a deal with Bahrain, which supported the Iraq invasion and hosts the U.S. Navy's Fifth Fleet. And on June 23, President Bush dispatched U.S. Trade Representative Robert B. Zoellick to the Middle East to kick off a 10-year drive for a regional free-trade zone, pointedly excluding unfriendly Iran and Syria. The idea is to reward friends, enhance economies, and spread the free-market gospel.

That's nice, says Big Biz, but what about the bottom line? Two-way trade between the U.S. and Bahrain was a mere $ 800 million last year, about what the U.S. and Canada ship to each other every 18 hours. ''Now that we've given trade such a high economic priority, we shouldn't be using trade to promote other objectives,'' says Calman J. Cohen, president of the Emergency Committee for American Trade, which represents the largest U.S. exporters. The National Association of Manufacturers, the U.S. Chamber of Commerce, and the Business Roundtable are also dismayed.
Corporate America has a point. Zoellick's 135 negotiators are already spread so thinly among big multinational talks that the agency is considering teleconferences. Free-trade pacts with individual countries require months of tedious negotiations and, in the case of developing nations, a rewrite of each country's intellectual-property and investment laws -- further distracting the USTR. The deal with Chile, for example, runs to 800 pages and took more than two years to complete.

Business fears that the battle to win fast-track negotiating authority for the President will have all been for naught if the Bushies don't concentrate on high-value partners. ''Now, we're going to have more negotiators working on little Bahrain than on talks with China,'' says Howard F. Rosen, former executive director of the Competitiveness Policy Council, a Washington think tank.

Dems are relishing the chance to be more pro-business than the GOP as they demand a shift in Administration priorities. ''You need to get the most bang for your buck, and there are countries with much greater economic potential'' than Morocco or Bahrain, says Max Baucus (Mont.), senior Democrat on the Senate Finance Committee. He has called for a General Accounting Office investigation into negotiating priorities.

Business groups are drawing up their own wish list for free-trade deals, focusing on countries such as Thailand and Taiwan. Not only do those two together already buy $ 24 billion in American goods, but U.S. corporations are eager to build plants there to export throughout Asia. Investment guarantees typically built into a free-trade deal would speed that process.

To appease business constituents, the Administration is apparently willing to jump Thailand to the head of its list. But it won't concede that it has misplaced priorities. ''We are not pushing better opportunities aside,'' insists USTR General Counsel John Veroneau. ''Trade agreements also promote the rule of law and the political stability that reinforce U.S. national security goals.'' Maybe. But with manufacturing in a three-year slump, Corporate America would rather have its needs -- not diplomacy -- as trade strategy's Job One.