TPP: Taiwan Must Be Prepared

TPP: Taiwan Must Be Prepared
China Times Editorial (Taipei, Taiwan, ROC)
A Translation
August 14, 2015

Executive Summary: The latest round of Trans-Pacific Partnership Agreement (TPP) talks have collapsed, primarily because the 12 economic and trade leaders have issued non-negotiable demands. Japan is committed to the elimination of US auto parts tariffs, in return for Japanese concessions on agricultural products. But Mexico wants to maintain its competitive advantage in the US market. It insists that car and truck components be 65% domestic content, and that only TPP members may enjoy lower tariffs. Canada is about to hold a general election. It has no desire to liberalize the dairy market, and has clashed on this with New Zealand. In order to win Republican support in congress, the United States seeks to extend drug patents for TPP members by 12 years. leaving all member countries unhappy.

Full Text Below:

The latest round of Trans-Pacific Partnership Agreement (TPP) talks have collapsed, primarily because the 12 economic and trade leaders have issued non-negotiable demands. Japan is committed to the elimination of US auto parts tariffs, in return for Japanese concessions on agricultural products. But Mexico wants to maintain its competitive advantage in the US market. It insists that car and truck components be 65% domestic content, and that only TPP members may enjoy lower tariffs. Canada is about to hold a general election. It has no desire to liberalize the dairy market, and has clashed on this with New Zealand. In order to win Republican support in congress, the United States seeks to extend drug patents for TPP members by 12 years. leaving all member countries unhappy.

Participants in TPP negotiations include the United States, Canada, Mexico, Peru, Chile, Australia, New Zealand, Japan, Singapore, Malaysia, Brunei and Vietnam. These countries vary greatly in their economic scale and development, and are subject to different political forces. Former US government trade negotiator Susan C. Schwab said that with 12 different countries negotiating, some are certain to be in the midst of elections. When the negotiations get down to brass tacks, they naturally result in deadlock.

Democratic presidential candidate Hillary Clinton is unwilling to declare her support for the TPP.  Negotiations have broken down. As a result, some observers think the future of the TPP looks dim. Others consider this a minor setback. Julio Lancaster, chief economist for The Economist magazine, publicly declared the TPP dead. The Australian Financial Review criticized TPP participants, saying they were promoting protectionism not free trade. It said the next soonest negotiations could resume would be November 2016, after the US presidential election. Fortune magazine said many member states are preparing to hold general elections, therefore final negotiations are likely to be delayed. On the other hand, on the 7th, US Secretary of State John Kerry expressed confidence TPP signing would be complete before the end of the year. Time magazine agreed, saying it expected the TPP to be finalized by the end of this year. The Washington Post said the completion of the first round of TPP talks is merely a matter of time.

Since the TPP involves US strategic interests, we believe it will be signed sooner or later. The TPP is the most important component of Obama's "Asian rebalancing" strategy. Promoting the TPP counters the Mainland's RCEP, bilateral trade agreements, Asian Infrastructure Investment Bank, even the recent One Belt, One Road, and ensures Asian economic dominance. It gives domestic US industries an leg up over those in emerging economies, and provides a boost for US economic recovery. Promoting the TPP is Obama's chief economic achievement. TPP failure amounts to "Asian rebalancing" failure. Therefore no matter how much member countries may be at loggerheads currently, the United States will mediate and ensure its passage.

Will Taiwan be allowed to join the TPP? Two factors are involved. One is the Mainland's attitude and the other is our own state of readiness. In the former case, both sides could end up joining, in the same way they joined the WTO. But that scenario is not under our control. That is up to the United States. It also requires cross-Strait trust and goodwill. All we can do is make preparations and seize the opportunity when it arises, and ensure that Taiwan's industries do not lag too far behind those of other countries.

If the TPP is signed into law, new members will be allowed to join the second round of negotiations. South Korea has expressed willingness to participate. The Mainland has also hinted that it might join. In response, Taiwan has carried out some feasibility studies. The Ministry of Economic Affairs says that over 50 ROC laws and regulations conflict with the TPP. Increasing freedom of trade and eliminating conflicting laws and regulations will help Taiwan win a seat in the second round of negotiations.

The TPP's biggest impact on Taiwan is in agriculture and services. Agriculture is supreme. Allowing in US pork and beef organ meats will help us join the TPP. Farmers and special interest groups are of course opposed. But the TPP allows more than just pork and beef organ meats imports. It also allows in pork organ meats, chicken, and rice. Taiwan has long been highly protective of its agriculture. As this newspaper reported recently, the average tax rate on agricultural products is 13.88%. In addition, 21 agricultural products enjoy special protection or tariff quotas. These products account for 46% of our total agricultural output. They too face future challenges.

In response to regional economic integration, the government has begun making reforms. The Council of Agriculture announced that starting next year, the 40-year old policy of purchasing rice would be gradually adjusted. In response, farmers protested on Ketagalan Boulevard, by drying their rice on the road. The impact of agricultural trade liberalization is huge. The government must offer a more proactive response. It must provide Taiwan farmers with alernative business strategies, and support agricultural transformation.

The TPP requires opening up the service sector to foreign professionals, allowing them to enter the country. Banks will be allowed to conduct electronic cross-border transactions. They need not establish local business sites. The TPP promotes the free flow of information across borders. The establishment of local information centers or servers is not required. Telecommunications must eliminate foreign ownership restrictions. Many of these conflict with our current laws and regulations.

The TPP includes 29 chapters. Many are highly controversial. Others require further deliberation. We must demonstrate sincerity and determination. We must be ready to join the regional economy, and ready to carry out reforms. The greatest danger is procrastination. One day negotiations will begin in earnest. Unless we are prepared, the opportunity will pass us by.

社論－操之在人 先做好加入TPP準備

跨太平洋夥伴協定（TPP）最近一輪談判破局，主要是因為與會12國經貿首長對開放項目各有堅持。美國對日本承諾加速取消汽車零組件關稅，以回報日本在農產品上的讓步，但墨西哥為維護本國產品在美國市場的競爭優勢，堅持汽車或卡車零組件應有65%在TPP成員國內生產，才可享有低關稅；加拿大大選將屆，不欲開放乳製品市場，與紐西蘭意見相左；而美國為獲得共和黨議員支持，提案將本國12年藥品專利期擴大適用於TPP成員國，讓各國都不滿。

參加TPP談判的國家包含美國、加拿大、墨西哥、祕魯、智利、澳洲、紐西蘭、日本、新加坡、馬來西亞、汶萊和越南，這些國家經濟規模差異極大、開發程度不一，並且受到各方政治因素影響；如同前任美國政府貿易談判代表的蘇珊‧施瓦布（Susan C. Schwab）所言，「談判國家多達12個，總有國家快要選舉。」隨著談判進入細項，自然陷入僵局。

民主黨總統參選人希拉蕊也不願表態支持TPP，加上談判破裂，有人認為TPP前途不妙，有人認為只是小挫。《經濟學人》智庫首席經濟學家巴普斯特直指TPP已死；《澳洲金融報》批評各國參加TPP不是為了貿易，而是保護主義，認為下一次重啟談判最快要等到2016年11月美國總統大選後；《財富雜誌》認為許多成員國大選將屆，TPP最終談判很可能會延誤。但在另一方面，美國國務卿凱瑞於本月7日表示，有信心年底前將完成簽署；《時代雜誌》亦預期TPP將於今年底完成；《華盛頓郵報》認為完成TPP首輪談判是遲早的事。

我們認為，無論早晚，TPP牽涉美國戰略利益，最後還是會簽。TPP是歐巴馬「亞洲再平衡」戰略中最重要的一環。推動TPP一方面防止中共藉由RCEP、雙邊貿易協定、亞投行，乃至於最近一帶一路，獲取亞洲經濟主導權；另一方面也替本國產業創造參與新興經濟體發展的優勢，為美國經濟復甦提供動能。推動TPP是歐巴馬的重要經濟政績，TPP失敗就是「亞洲再平衡」失敗，因此無論各國目前如何相持不下，美國必將全力調解，促成TPP簽署。

台灣能否加入TPP，涉及二個面向，一是中共態度，二是我們自己是否準備好。前者有可能是以兩岸均加入TPP收場，一如WTO模式。然此不操之在我，須看美國態度，也要看未來兩岸能否有足夠的互信及善意。現在我們可以做的，是做好因應準備，把握機會，讓台灣產業不至於落後其他國家太多。

TPP若順利簽署生效，將開放新成員加入第二輪談判。先前韓國曾表示意願，中國大陸亦暗示可能加入TPP。對此，台灣也進行了一番可行性分析，經濟部表示，目前我國相關法規與TPP約有50多項落差，提升貿易自由度、減少落差將有助於台灣獲得第二輪談判席次。

TPP對台灣衝擊最大的是農業和服務業，其中以農業為甚。日前關於開放美豬與美牛雜有助於我國加入TPP一事，已經引起農民及利益團體反對，但TPP開放的不止是豬肉和牛雜，還有豬內臟、雞肉、稻米等。台灣農業長期受到高度保護，如本報先前報導，農產品平均稅率為13.88%，另外對21項農產品採取關稅配額或特別防衛措施，這些產品產值占我農業總產值的46%，未來也要面對自由化挑戰。

為因應區域經濟整合，政府已經開始進行改革，例如農委會宣布明年起逐步調整施行40年的稻米保價收購政策，也引來農民在凱達格蘭大道曬稻穀抗議。農業受貿易自由化衝擊很大，政府應更積極研擬因應方案，提供台灣農民經營策略、扶助農業轉型。

服務業方面，TPP主張開放外國專業人士入境提供服務、銀行可以電子傳輸跨境交易，不須設立當地商業據點、提倡資料跨境自由流通，不得要求設立當地資料中心或伺服器、電信業應取消外資持股限制等。許多主張都與我國現行法規相悖。

TPP有29章，除爭議最大的幾項外，還有許多地方台灣可以先研議改進，我們應該展現誠意與決心，踏實做好加入區域經濟整合之準備，也趁此機會進行體制改革。最怕因循苟且，日復一日拖延，有一天真要談判開放，又瞻前顧後，錯失良機。