US-Taiwan Free Trade Agreement

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

Thursday, July 27, 2006




Date: July 26, 2006

Taiwan’s Deputy Finance Minister Kevin [sic] Chen told reporters on July 25 that Taiwan is now prepared to negotiate a free trade agreement with the U.S., although he also conceded that the possibility of opposition from China is a legitimate foreign policy factor that will also be considered before a decision is reached to launch the talks. Speaking at the American Enterprise Institute, Chen admitted that it would be “too narrow” to decide to launch an FTA with Taiwan on purely economic terms.

Still, Chen argued that an FTA between the U.S. and Taiwan would improve economic growth between the two economies. While not listing countries specifically, Chen said that the U.S. had signed FTAs with three countries in recent years that had a smaller economic benefit to the U.S. combined than the potential economic benefit under an FTA with Taiwan.

Chen also argued that there would be benefits to almost every sector of the U.S. economy through an FTA with Taiwan. The U.S. would likely be given almost complete market access, including in the service and health care sectors under an FTA, Chen said. U.S. motor vehicle and machine equipment manufacturers and textile producers would also be given significant market access, he said.

Chen also promised increased IPR protection, an area that Taiwan has already made significant improvement, and an increased flow of investment between the U.S. and Taiwan.

At the same event, U.S.-Taiwan Business Council President Rupert Hammond-Chambers noted several political obstacles to an FTA with Taiwan, but still cited progress in these areas and described himself as an “optimist.” For example, he argued that Taiwan has made significant reforms that have been requested by the U.S., including areas such as IPR protection.

Hammond-Chambers also said U.S. companies have made significant progress in disproving claims from U.S. trade officials that U.S. companies are indifferent to the idea of an FTA. He pointed to last week’s testimony from Deputy U.S. Trade Representative Karan Bhatia, who said the “continued strengthening” of industry support for an FTA is needed, which Hammond-Chambers said implies that business support is there and growing (see separate story).

Hammond-Chambers also said the “economic case” for an FTA with Taiwan has been built. He cited Chen’s work with Bhatia on the talks held in Taiwan in May under the existing Trade and Investment Framework Agreement (TIFA). Hammond-Chambers believed that substantive progress was gained at TIFA meeting that went “very well.”

Hammond-Chambers also believed that the “optics” of Bhatia’s trip helped Taiwan’s case. After two to three years of strained relations, a very successful TIFA meeting helps Taiwan’s message resonate.

Bhatia said after his visit that the chances of an FTA with Taiwan are slim, citing both the lack of industry support and little time before the Trade Promotion Authority (TPA) or “fast track” authority expires at the end of the year. However, he also held open the possibility of some form of increased economic ties with Taiwan that might fall short of an FTA (Inside US-China Trade, June 7).

Not everyone at the July 25 panel was as optimistic as Chen and Hammond-Chambers on the impact of an FTA. Claude Barfield, a resident scholar at the American Enterprise Institute, did not believe that the economic justifications for an FTA were sufficient to get the U.S. to agree to a deal. The Bush administration’s view of trade as a subset of strategic foreign policy means that concerns over China’s reaction to an FTA can still trump economic justifications, Barfield said.

Also, due to Taiwan’s strong moves toward market liberalization, Barfield doubted that the economic gains for the U.S. from an FTA would be as significant as cited by Chen and Hammond-Chambers. To truly strengthen its economy, Barfield believed, Taiwan should move to strengthen its trade with Asia, which accounts for 60 percent of its trade.

Monday, July 17, 2006

US-Taiwan FTA is in US' interests: former AIT official

Friday, July 07, 2006

Prospects for a U.S.-Taiwan Free Trade Agreement - FPRI