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March 27, 2017

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FTA is of mutual interest to Taiwan and the U.S.

After years of endeavor since 2002, Taiwan has gained growing support and attention from the U.S. over its initiative for reaching a bilateral free trade agreement (FTA) as a means to boost business interactions across the Pacific Ocean. The FTA issue is by nature mutually beneficial to both Taiwan and the U.S. in light of the continuously growing trade and investment links between the two sides.

The American Institute in Taiwan (AIT) disclosed some statistics, showing that the orders placed by American firms amounted to US$68.9 billion last year, accounting for 27% of the total received by Taiwanese manufacturers in 2005. American firm Hewlett Packard (HP) keeps the crown as Taiwan's largest foreign buyer in the world. Meanwhile, the bilateral investment relationship is fostered by several major American investment projects in recent years such as the new glass substance plants of Corning in central and southern Taiwan, the new research facilities of Microsoft and Motorola, plus the newly inaugurated IC material center of DuPont in July.

The thriving bilateral business interactions added to the importance of signing an FTA between Taiwan and the U.S., especially amid the growing global trend of forming regional free trade blocks. It has been a consensus among government officials, scholars, as well as private enterprises that an FTA between Taiwan and the U.S. is very helpful in preventing the two active economic entities from being marginalized in the Asia Pacific area where Japan and ASEAN (Association of Southeast Asian Nations) countries have become increasingly active in promoting a regional free trade block.

Pragmatic thinking

The AIT's new director, however, pointed out several factors which may hinder the progress of the FTA talks between Taiwan and the U.S. for the time being. "With very little time remaining before the expiration of our Trade Promotion Authority (TPA) next summer, it's premature to discuss it with Taiwan at this time," said AIT Director Stephen Young who rejoined the AIT this May, roughly five years after his previous service at the same institution as deputy director.

Young made the remarks when he spoke at the general meeting of the ROC-USA Business Council on August 16. The Council, as Young described, has been working closely with its American partner, U.S.-Taiwan Business Council, in cultivating better bilateral relations since their establishment three decades ago to the consolidate and mature stage at present.

As part of the Trade Act signed by U.S. President George Bush in 2002, the TPA provides a fast track for the complex trade agreements under negotiation between the U.S. and its trading partners to go through the congressional approval process. In regard of the several major existing FTA proposals on the TPA agenda, it's considered unlikely for the U.S. Congress to add new proposals for discussion before the TPA runs out on July 1 next year.

Young, therefore, suggested that Taiwan should focus on the Trade and Investment Framework Agreement (TIFA) as the best channel to discuss a wide range of issues such as drug licensing, patent regulations as well as other telecom, agricultural and trade issues for the present. "Progress on these issues talked through TIFA channel could also build U.S. domestic support for an FTA if the U.S. Congress extends the TPA," he believed.

Mainland policy

Considering it a long-term goal for Taiwan and the U.S. to reach an FTA, Young called for an even more open and closer interactive link across the Taiwan Straits as the current most effective way for Taiwan to earn support for an FTA among U.S. businesses. "U.S. businesses are eager to integrate their Greater China operations into one seamless market," he stressed. Removal of the restrictions on cross-Strait trade, investment, and transportation, Young continued, is called by many of Taiwan's own world-class companies, the American Chamber of Commerce (AmCham) on behalf of U.S. businesses as a whole, and Ambassador Karan Bhatia during his May trip to Taipei.

In his speech, Young particularly applauded Premier Su Cheng-shang's efforts in convening the recent Conference on Sustaining Taiwan's Economic Development and discussing the benefits and risks to Taiwan's economy of further cross-Strait opening. "I hope that the government will act soon to implement the range of recommendations that emerged from the conference. Easing restrictions on the flow of goods, money and people across the Taiwan Strait is critical for Taiwan to retain its place in the regional economy," said the new head of the AIT.

Meanwhile, Young expressed U.S. support for Taiwan to make its voice heard by the international community through appropriate channels. "We want Taiwan to be able to play a role commensurate with its status in other international organizations by helping Taiwan to become a signatory to the WTO's Government Procurement Agreement and to participate in important discussions on trade and human security matters at APEC," he said. Besides, he continued, "We're working to boost Taiwan's meaningful participation in the vital health-related work of the World Health Organization.

Mutual benefits

As another special guest on behalf of the Board of Foreign Trade (BOFT) at the August meeting of the ROC-USA Business Council, BOFT Deputy Director Wu Hsin-hua disclosed the official estimation that over 100 U.S. Senators and Congresspersons have endorsed their support to an FTA between Taiwan and the U.S., in addition to several critical civil organizations such as the International Intellectual Property Association (IIPA), the U.S.-Taiwan Business Council and AmCham.

Wu quoted Max Baucas, a senior Congressman from the Democratic Party, as saying, "Concluding a free trade agreement with Taiwan is a concrete step towards supporting an ally that shares U.S. values."

Wu also cited the USITC (U.S. International Trade Commission) figures as saying, "The FTA will help accelerate the growth in the bilateral trade between Taiwan — 16 percent for annual imports from the U.S. and 18 percent for Taiwan's exports to the U.S." Regarding the potential benefits an FTA will bring to both Taiwan and the U.S., Wu stressed, Taiwan pledges to continue its efforts on promoting FTA talks with the U.S. through various private and official channels.

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