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August 20, 2017

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Taiwan minister urges U.S. to forge free trade agreement

On the eve of Taiwan's legislative elections, the island's top economics official was in Washington D.C. urging the U.S. to begin negotiations toward the establishment of a bilateral free trade agreement (FTA).

With the U.S. and Taiwan recently reviving discussions under the trade and investment framework agreement (TIFA), and the prospects for Taiwan being taken off the U.S. watch list of countries with poor records in protecting intellectual property rights (IPR) looking good, Economics Minister Ho Mei-yueh has reason to be upbeat.

Speaking at lunch hosted by the U.S.-Taiwan Business Council on Friday, Minister Ho described a U.S.-Taiwan FTA as the "logical next step" in trade relations between Taipei and Washington.

In 2004, U.S. exports to Taiwan are expected to have increased by 31 percent, with exports from Taiwan to the U.S. up 9 percent, according to Ho. Taiwan continues to rank as the eighth largest trading partner of the U.S., with two-way trade for 2004 expected to be in the region of US$53 billion, she explained.

Ho spoke of the "very successful" TIFA meetings held in Washington on Nov. 29-30, meetings that reinforced the view that Taiwan looks set to be removed from Washington's Special 301 Priority Watch List of IPR violating countries. And, though the watch list is normally reviewed annually in the spring, Taiwan's case is currently undergoing an "out of cycle" review by the Office of United States Trade Representative (USTR). The result of this review could be announced "within" the next "couple of weeks," according to Ho.

Earlier, Ho attended the launch of a study conducted by the Institute for International Economics (IIE) on the prospects for U.S.-Taiwan FTA.

Though the report agrees with a 2002 study conducted by the U.S. International Trade Commission that a U.S.-Taiwan FTA would result in only "modest" welfare gains, the authors note that this is the case with other FTAs the U.S. has undertaken.

"In absolute terms," the gains to the U.S. of an FTA with Taiwan "would be larger than from all but two" countries — South Korea and Thailand — examined in a 2003 study conducted by John Gilbert, noted the IIE report.

Taiwan should take responsibility for own defense

While the primary focus of Minister Ho's visit to the U.S. capital was to press the case for a U.S.-Taiwan FTA, a former U.S. secretary of defense took the opportunity on Friday to remind Taiwan that the U.S. may not necessarily come to the island's aid should mainland China decide to launch an attack.

Now serving as the chairman of the U.S.-Taiwan Business Council, William Cohen, secretary of defense in the Clinton administration, stressed, "Taiwan really must face up to its responsibilities" when it comes to the island's defense.

With the passing of the island's US$18 billion special defense budget stalled in the Legislative Yuan, the Bush administration has become frustrated by what is seen as Taiwan taking U.S. security guarantees for granted.

The U.S.-Taiwan Business Council, which counts among its members a number of leading U.S. defense contractors, wants "the Taiwanese people to understand they must make a commitment to reforming, revitalizing and enhancing their defensive requirements and needs," regardless of U.S. obligations under the Taiwan Relations Act (TRA), said Cohen.

Cohen expressed his hope that following the island's legislative elections, the island's lawmakers will make a "very strong commitment" to that end.

In response, Minister Ho reiterated that indeed Taiwan has an "obligation" to protect itself. To do this, however, the island must have a strong economy, which requires U.S. support, she said.

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