Trans-Pacific Partnership: Key to Free Trade Island
United Daily News editorial (Taipei, Taiwan, ROC)
November 14, 2011
Summary: A crisis is an opportunity. But a crisis also creates opportunities. The Trans-Pacific Strategic Economic Partnership Agreement (TPP) was once unknown. Only economic and trade experts had heard of it. But today many nations are in crisis. This has forced the TPP onto the international stage. Taipei is an important participant in the Asian-Pacific regional economy. But it has been unable to join the club, and is in danger of marginalization. The TPP offers Taipei an excellent opportunity to join. The government should make a concerted effort do so.
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A crisis is an opportunity. But a crisis also creates opportunities. The Trans-Pacific Strategic Economic Partnership Agreement (TPP) was once unknown. Only economic and trade experts had heard of it. But today many nations are in crisis. This has forced the TPP onto the international stage. This has transformed the TPP into an Asian-Pacific trade and economic battlefield for Washington, Tokyo, and Beijing. The TPP has yet to be established. Taipei is an important participant in the Asian-Pacific regional economy. But it has been unable to join the club, and is in danger of marginalization. The TPP offers Taipei an excellent opportunity to join. The government should make a concerted effort do so. It should expand without and change within. It should resolve to create a free trade island.
The TPP was jointly promoted by four members of APEC: Singapore, Chile, Brunei and New Zealand. They felt APEC was too disorganized and too passive. They felt it stood in the way of a well thought out free trade agreement. In 2009, following the Asian financial crisis, Washington began taking part in the negotiations. Washington focused on the benefits of economic development and the threat of a rising Mainland China. Washington attracted new members, and led negotiations. This year's APEC leaders meeting is about to convene. Tokyo has long resisted free trade. But South Korea, the European Union, and the United States have signed FTAs. Japan's domestic industrial base is being hollowed out. These internal pressures have forced Japan to join. The world's first largest and third largest economies have simultaneously joined, and given the TPP a tremendous boost.
With powerful encouragement from the United States and Japan, the TPP now has 10 members. This will accelerate the development of the TPP, which now comprises one-third of the world's economy. U.S. President Barack Obama says he hopes an agreement can be reached next year. This is bound to encourage Asian-Pacific countries to join. Under the circumstances, the TPP is not merely a bully pulpit for the United States. It may also become a mini-WTO inside APEC. It may become a Free Trade Area in the Asian-Pacific (FTAAP). Beijing is the leader of ASEAN plus one (Mainland China), ASEAN + Three (Mainland China, Japan, and South Korea), and ASEAN plus Six (Mainland China, Australia, New Zealand, Japan, Korea, India). This means the Asian-Pacific trading system will have two leaders, Mainland China and the United States. Will they check and balance each other? Or will they become one? These trends will affect the Asian-Pacific region. Mainland China does not oppose the TPP. But it stresses the importance of multilateralism. This means it has more to say on the matter. More importantly, under United States leadership, the TPP will probably become a platform for new generation international trade rules. Traditionally FTAs have emphasized the liberalization of trade in goods. New generation international trade rules emphasize the environment, labor, intellectual property rights, and other criteria, Obama has stated that the TPP has the potential to become a model for all future trade agreements, and not merely the Asian-Pacific region,
The TPP is taking a certain direction. This tells us that joining the TPP is essential for Taiwan, due to its high dependence on trade. It is essential for three reasons. First, it is essential to expanded trade, lowered tariffs, liberalized markets, and other measures conducive to Taiwan's exports, and reduce the cost of imports. Minister of Economic Affairs Shih Yen-hsiang bluntly declared that if members protect each other and open themselves up to each other but exclude Taiwan, we will find the going very hard. This was originally one of Taiwan's economic strategies. President Ma set up groups to promote an FTA. But little progress was made toward recognizing the Republic of China's sovereignty, due to harsh international realities. This is the second reason we must join the TPP.
The TPP is an agreement whose members were primarily supposed to come from APEC. Taipei has a moral and legal right to join. It is not entirely free from interference by sovereign states. Other governments have negotiated FTAs individually. By comparision, Taipei's status has led to different kinds of complexities and difficulties. Taipei and Beijing disagree about Taipei's participation in international trade organizations. But they have a shared framework, that enables Taipei's participation in TPP negotiations. They can consult with its ten member governments. This is an efficient and feasible way to prevent Taiwan's marginalization, therefore should not be taken lightly.
The third is the urgent need for industrial restructuring on Taiwan. Joining the TPP is the same as promoting FTAs. The hope is that others will open their markets to Taiwan, and that others will want Taiwan to open its markets to them. In sum, it is all about opening one's markets, and restructuring one's industries. The only difference is some FTAs are more open than others, The TPP is more open than most FTAs. It is considered a high quality, high threshold FTA. Will Taipei be able to join? This does not depend entirely on others. It depends more on ourselves. As Beijing's Taiwan Affairs Office Director Wang Yi asked Taipei: "Do you really want to join?" He hit the nail squarely on the head.
The government has promoted FTAs for years. But it has never made the necessary changes to our industry. We have made little real progress in FTAs. Slow industrial restructuring is hardly the only reason. Another reason is idle industrial capacity. Therefore the government must not just talk about joining the TPP. It must gather its wits and marshal its forces. It must formulate a comprehensive plan to accelerate industrial restructuring, It must turn Taiwan into a true free trade island.