WTO Breakthrough: Threat of Taiwan's Marginalization Persists
United Daily News editorial (Taipei, Taiwan, Republic of China)
December 10, 2013
Summary: This reduction of tariffs from 10% to zero, and the liberalization of service concessions, are limited to FTA Contracting States. The Taiwan Region of the ROC has almost no FTAs. It has not joined the TPP. It must abide by outdated entry conditions from 18 years ago. Compared to South Korea, Japan, and other competitors, Taiwan stands at a disadvantage. Therefore although the WTO has made a breakthrough, Taiwan still faces the threat of marginalization. We have no room to relax.
Full text below:
The Ninth World Trade Organization (WTO) Ministerial Conference in Bali, Indonesia has just adjourned. The conference reached resolutions on trade facilitation, agricultural products safety, and trade development. These Doha Round issues have been bandied about for years without resolution. Now, finally, we have achieved results. As a result, the international media has used provocative titles to describe this major breakthrough. Some even say the Doha Round is over. These three resolutions did not come easily. Actually they had little to do with Doah Round core issues. The prospect of Taiwan's marginalization remains undiminished.
In 2001 the WTO initiated the Doha Round of negotiations. Nine issues were included. These include agriculture, liberalization of the industrial and service sectors, trade facilitation, trade regulation, trade and development, trade and the environment, dispute resolution, and intellectual property rights. Too many issues were involved. Member states increased to 159 nations. As a result, 12 years have elapsed, but the round has yet to reach a conclusion. Every time the Council of Ministers expected a breakthrough. But every time they were disappointed. The last Council of Ministers even hoped the countries would consider an alternative. They were ready to give up on Doha. Under the circumstances, the Council of Ministers consensus on some of the nine issues is truly exciting.
Take trade facilitation resolution. The disclosure of information, risk management , simplification of procedures, and provisions for relief will reduce unnecessary costs and trade barriers created by international customs clearance and customs inspection procedures. The remaining agriculture-related resolutions are more relevant to developing countries. One of them relates to countries such as India, with its food safety considerations. Government budgets are used to acquire rice, wheat, and other major food stores, These are distributed to the poor. If they exceed the limit for "domestic agricultural support," other countries may not object to these temporary measures. The other two relate to agricultural tariff quota management, and the management of agricultural export subsidies .
Another issue affects Taiwan more directly -- trade facilitation resolution. Global rules may further reduce the inconvenience and cost of exports. This is definitely a good thing, especially the more complex customs procedures. These cause much greater inconvenience, distress, and harm to SMEs than multinationals. SMEs export less. They lack professional talent. They have less inventory. They are extremely concerned about time. According to international estimates for large enterprises, customs procedure trade costs are almost irrelevant. But they account for 10 to 20 percent of the cost for SME exports, almost as much as customs duties.
For supporters of WTO and multilateral liberalization, a consensus is possible on these small packages. They give the Doha Round a chance to survive. More importantly, the aforementioned trade facilitation resolution has already met the basic terms for bilateral free trade agreements in general (FTA). For example, the Taiwan-New Zealand and Taiwan-Singapore economic agreements have similar provisions. This means that a variety of bilateral and regional integration mechanisms, such as the Trans-Pacific Partnership Agreement TPP) are are likely to lead to global convergence.
The recent resolutions on these three issues are important. But strictly speaking, they are second bananas in global trade liberalization, and not the stars of the show. The WTO refers to these items in the Doha menu as "a la carte" items.
In particular, the current resolution does not include the stars of the show, tariff reductions for agricultural and industrial products, or liberalization of the services market. Most of the Member States remain committed to the standards of the WTO when it was established 18 years ago. This has motivated them to promote FTAs. For example, for many Southeast Asian countries, WTO tariff rates exceed 10%. FTAs have enabled these countries to eliminate tariffs entirely on nearly all goods. Also, 18 years ago, we were still unsure about service sector liberalization. Attitudes toward liberalization were conservative. But over the past decade, in order to attract foreign investment, many countries have promoted the modernization of services. They have substantially relaxed foreign investment restrictions.
This reduction of tariffs from 10% to zero, and the liberalization of service concessions, are limited to FTA Contracting States. The Taiwan Region of the ROC has almost no FTAs. It has not joined the TPP. It must abide by outdated entry conditions from 18 years ago. Compared to South Korea, Japan, and other competitors, Taiwan stands at a disadvantage. Therefore although the WTO has made a breakthrough, Taiwan still faces the threat of marginalization. We have no room to relax.
2013.12.10 04:20 am