Trade negotiations chief wants new US investment pact

Closer trade ties with the US could help lessen Taiwan's international isolation, according to the nation's top trade negotiator.

Taiwan is currently the 16th largest trading nation in the world, according to the WTO.

John Deng (鄧振中), the head of the newly created Office of Trade Negotiations who took the position at the end of March, hopes talks next month with the US will provide a basis for a bilateral investment treaty, which in turn could be a component of a future free-trade agreement (FTA).

"We call it a building block," Deng told Dow Jones in an interview last week. "One day, we will have a house."

However, a free-trade agreement with the US remains a distant goal, at least partly because of legal considerations.

At the end of next month, US President George W. Bush will lose his "fast track" authority to sign trade deals, under which the US Congress can only approve or reject a trade deal, but not amend it.

After that, an FTA would be much less likely to pass through US legislative hurdles.

Yesterday Stephen Young, the director of the American Institute in Taiwan told a trade gathering that the US would not forge an FTA with Taiwan anytime soon.

"We are not in a position to consider new FTA partners at this time," he said.

Deng said free-trade agreements can take the edge off political opposition to economic policy changes.

"People recognize the need for more liberalization," he said. "But an FTA can significantly reduce the pain for the government."

Deng said an FTA with the US might help Taiwan conclude similar deals with countries that, wary of Beijing, are waiting for a "precedent."

The nation recently added El Salvador and the Republic of Honduras to its list of free-trade partners. Taiwan also has free-trade agreements with Panama, Guatemala and Nicaragua. The next FTA planned is with the Dominican Republic, Deng said.