Trade Liberalization, Substance over Form
China Times editorial (Taipei, Taiwan, ROC)
March 18, 2013
Summary: Taiwan-US Trade and Investment Framework Agreement (TIFA) talks were
suspended six years ago. Last week they finally resumed. The
participants issued two joint statements. They organized two working
groups. They offered a surfeit of diplomatese. The verbal exchange
concluded amidst dense rhetorical fog. The government said the meeting
was fruitful. But it was more symbolic than substantive. An accurate
evaluation of TIFA effectiveness and pragmatic follow-up consultations
are critical to Taiwan-US trade policy and Taiwan's overall trade
Full Text below:
Taiwan-US Trade and Investment Framework Agreement (TIFA) talks were suspended six years ago. Last week they finally resumed. The participants issued two joint statements. They organized two working groups. They offered a surfeit of diplomatese. The verbal exchange concluded amidst dense rhetorical fog. The government said the meeting was fruitful. But it was more symbolic than substantive. An accurate evaluation of TIFA effectiveness and pragmatic follow-up consultations are critical to Taiwan-US trade policy and Taiwan's overall trade policy.
Consider the TIFA agreement's substance. Its purpose is to establish a platform for economic and trade dialogue. Its purpose is to enable Taipei and Washington to promote bilateral trade and investment. It contains no substantive provisions. It does not even spell out the frequency with which TIFA should convene committee meetings. Taipei and Washington have numerous formal and informal channels of communication outside of TIFA. Therefore, strictly speaking, whether TIFA convenes or not, will not substantially affect Taiwan-US economic and trade interaction. In 1998 inadequate protection of intellectual property rights (IPR) and other issues led to a six year hiatus. But during that time our government gained the approval of the United States and other WTO members. It gained access to the World Trade Organization (WTO) in 2002. South Korea and the United States have no TIFA relations. Nevertheless they negotiated a Free Trade Agreement (FTA). That is the best example.
Therefore the suspension and resumption of TIFA talks is basically a matter of show, both for Taipei and Washington, but especially for Washington. The suspension of talks began with the US beef imports controversy. The resumption of talks is a symbol that the disagreement has been resolved. Therefore the suspension and resumption of TIFA talks has long been more symbolic than substantive significanc. In other words, if the meeting proceeded smoothly, its purpose has already been achieved. Any concrete progress is merely icing on the cake.
Consider the US pork imports controversy. It is similar to the previous U.S. beef imports controversy. As long as Washington feels the need, it will raise concerns whether TIFA talks resume or not. Therefore people should not perceive this as a basis on which to support TIFA. Everyone looks forward to the Taiwan-US Free Trade Agreement (FTA) and our government's accession to the Trans-Pacific Partnership Agreement (TPP). Washington has yet to offer an official response. But talks were suspended for six years. Our government's liberalization is not yet complete. Under the circumstances, we cannot expect Washington to offer an official response yet. Our government raised these issues mainly to mollify domestic sentiment. The lack of progress was expected.
The resumption of talks is largely symbolic. But TIFA remains a substantial prize. Especially noteworthy are signs that Taipei and Washington may sign investment agreements. Taipei has been promoting investment agreements with Washington for ten years, without concrete results. This time, Taipei and Washington jointly announced an "International Investment Statement of Principles." They established an investment working group. The two sides have achieve a high degree of consensus. A Taipei-Washington agreement on investments should be just around the corner.
Consider the direction of TIFA following the resumption of talks. Everyone questions Washington's too high asking price. But to be fair, whether Taipei and Washington sign an FTA, or Taipei joins the TPP, the economic and trade impact on the United States and other TPP members will be limited. The "China Factor" may involve considerable extra political risk. Therefore it is not surprising that Washington is demanding a high asking price. Taipei is in a difficult situation. For it to take part in regional economic integration, it must indeed pay a price.
Whether TIFA talks resume, or whether we wish to join the TPP, we will be subject to the demands of the United States or other countries. These requirements may provoke a domestic backlash or impact government administration and industrial restructuring. But if the result enables industry and the people on Taiwan to benefit equally, then Taiwan will clearly being taking a giant leap forward.
We have been weighing these points for years. The bottlenecks in the way of liberalization have slowly emerged. Everyone tends to accuse a minority of agricultural workers and sunset industries of being the stumbling blocks to a solution. But the real problem is the government's style over substance mentality. This phenomenon is not confined to TIFA. It applies to many policies.
The government's liberalization of public works is weak. Almost all recent reform and liberalization relate to cross-Strait exchanges. But cross-Strait exchanges do not really qualify as liberalization. At best we are playing catch-up. Various agencies have inventoried their regulations and concluded that they have no problems. But our European, US, and other trade partners are not buying it. They repeatedly question our resolve. They think we care only about the number of agreements we can sign, not about their quality.
Another example is the US pork imports controversy. If Washington makes concessions, we must make concessions in return. But our pockets are empty. In fact, the FTA or TPP are ultimately economic and trade interests. We have relatively little to offer in terms of natural resources. If we cannot offer something else, these FTA or TPP strategies will be difficult to implement, no matter how many policy road maps we draw up. In short, if our proposals are continually rebuffed, the government will have only itself to blame. If that happens, do not attempt to use industry as an excuse.