By not opening up public infrastructure projects to overseas companies, the government is costing the Taiwan taxpayer money, the European Chamber of Commerce Taipei (ECCT) said yesterday.
"You don't get access to international know-how at international prices if you exclude international competition," said ECCT vice-chairman Dirk Saenger, speaking at the release of the ECCT's annual report on Taiwan's compliance with WTO regulations. "It's not protecting the local industry by forcing [infrastructure projects] to go local, it's cheating the local taxpayer."
Research by the ECCT's Project and Procurement Committee shows that infrastructure projects in Taiwan cost on average 20 percent more than similar projects in other countries.
In January of last year, when Taiwan joined the WTO, it agreed in principle to sign the Government Procurement Act, which opens up all government projects to WTO member states. Objections from Beijing, which is not yet ready to sign the agreement, have so far prevented Taiwan from signing.
But Taiwan could live up to the letter of the agreement, even before it signs.
"We see no reason why Taiwan should be excluding European companies from government projects," said ECCT chairman Hugh Inman, adding that Taiwan could play a leadership role in opening up to European companies in the run up to its signing of the WTO procurement act.
Other issues in yesterday's report include the protection of intellectual property rights, which remains a concern for Europeans. In legal disputes with counterfeiters in Taiwanese courts, the power of attorney of European companies is not accepted as legal. Foreign companies currently have to obtain a notarized power of attorney approved by a Taipei Representative Office. This cumbersome process can take many weeks.
"We want our signatures and lawyers to be recognized," said Inman. "This would be a simple internal procedural matter. Nothing could be a clearer sign that Taiwan is really intent on improving its IPR position."
A move recognizing foreign powers of attorney would instantly raise Taiwan's international standing, Inman said.
The enforcement of IPR protection is still not "adequate," the ECCT said in its report.
"Being result driven is more important than having these measures in place," said ECCT CEO Guy Wittich.
The free movement of people across the Taiwan Strait is another issue on which the ECCT says it has seen no improvements in the last year. European companies with investments in China find it difficult to bring their Chinese employees to Taiwan for conferences and seminars due to restrictions on Chinese nationals traveling here.
"The government wishes Taiwan to be an R&D center, but if we can't bring people who are working with us regionally into Taiwan, it causes a problem," Inman said. It has been 16 months since Taiwan joined the WTO and there still isn't "complete clarity" on the rules for Chinese nationals to come to Taiwan.
Taiwan also bans 2,000 kinds of products from China, which is a direct violation of WTO rules, the ECCT said yesterday.
"The European Commission has no plans to file a complaint in Geneva [with the WTO over the ban], but I can tell you there is a lot of pressure on the Taiwan government to comply with the rules," Wittich said.
Taiwan risks marginalizing itself in Asia if it doesn't address these major areas of WTO compliance.