Decisive strategy needed for TIFA talks

By Liu Da-nien 劉大年  / 

Fri, Mar 15, 2013 - Page 8

Talks over the Trade and Investment Framework Agreement (TIFA) between Taiwan and the US that were delayed for five years recently started up again.

The agreement is essentially a mechanism for negotiating trade issues between the US and nations it could possibly enter into free trade agreements (FTA) with.

Taiwan and the US began the trade talks in 1994. At the time, the US was Taiwan’s most important export market. Because Taiwan had not yet joined the WTO, it lacked a communication platform with the US, and the TIFA was very helpful in solving trade issues between the two countries, minimizing trade friction and furthering bilateral trade.

The resumption of TIFA talks is very encouraging for Taiwan.

However, the real challenge has only just started. After a hiatus of five years, it is easy to imagine that the US and Taiwan will have many trade issues to discuss and it is impossible that this most recent round of talks will solve them all in one go. Lessons learned need to be remembered for the TIFA talks to progress smoothly.

Taiwan is an important market for US agricultural products, and during past TIFA meetings the US always viewed agriculture as a priority.

This time has been no exception, with the most important issue being pork. The import of US beef and pork both hinge on to whether Taiwan has adopted food safety laws in line with international standards and whether the government can effectively explain the reliability of those standards to the public.

Looking back at the previous issue of US beef imports, Taiwan still has a lot of room for improvement. In particular, given that pork imports will have a much larger effect on Taiwan’s domestic agricultural industry than the importation of US beef, the government needs to be careful and strive for completeness when it comes to future negotiation strategies, related policies and other measures. Taiwan should rationally face these issues and avoid politicizing them.

Apart from agriculture, the government should strive to handle other issues the US is concerned about, such as investment, taxes, intellectual property rights, government procurement and market liberalization, in an appropriate manner.

Taiwan should also leverage the TIFA to gain entry into the Trans-Pacific Partnership (TPP) which is directed by the US. In recent years, increasing regional economic integration has begun to threaten Taiwan. There are 11 countries currently involved in the TPP and Japan may also soon join. If this happens, about a third of Taiwan’s exports will be tied up with TPP members and the nation would be deeply affected if it is unable to join the TPP soon.

Gaining entry into the TPP would be beneficial for Taiwan because it would help increase its exports, but the TPP operates to high standards of free trade, so Taiwan must also prepare itself to open up its markets. The primary condition in doing this is to make the US and other TPP members believe that Taiwan is determined to open its markets, promote trade liberalization and carry out reform. This is the only way to assure Taiwan’s entry to the TPP.

If the nation remains indecisive when it comes to liberalization and hesitant when dealing with systems reform, instead adopting a conservative wait-and-see approach, there will be no way for Taiwan to gain the US’ support in the future for entry into the TPP. All attempts to use the TIFA as platform for TPP membership will then have been in vain.

Liu Da-nien is head of the Regional Development Study Center of the Chung-Hua Institution for Economic Research.

Translated by Drew Cameron