Mon, Dec 04, 2006 page8

• Editorial: The trials and tribulations of trade

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  It is hard to tell which idea is more problematic: a free trade agreement (FTA) with the US or the establishment of a Free-Trade Area of the Asia-Pacific (FTAAP).

  Taiwan has been urging the US for years to establish a bilateral FTA, hoping it will set a diplomatic example to encourage other countries to sign FTAs with Taiwan in spite of China's constant bullying and intimidation.

  Last week, Hu Sheng-cheng (胡勝正), the chairman of the Council for Economic Planning and Development and the nation's top economic planner, flew to Washington to make the case for the government's latest push for a FTA with the US at the annual meeting of the US-Taiwan Business Council.

  The very fact that Hu's speech was given in Washington should leave no doubt about the urgency of the call for closer economic relations with the US, the nation's strongest ally. It should also leave no question about Taiwan's deeply felt concern about the potential for economic marginalization in Asia.

  But Washington's response was disappointing.

  The US side has insisted on closer ties across the Taiwan Strait as a prelude to closer economic relations with the US -- witness recent remarks by US officials, including American Institute in Taiwan Director Stephen Young and Deputy Assistant Secretary of State Thomas Christensen.

  This sort of truth-telling was not easy for Taiwan to digest. The question is, is the nation ready to face this reality and take the necessary policy steps?

  First, US President George W. Bush's fast-track authority to negotiate free-trade pacts is due to expire on June 30 next year, and with the Democrats' win in last month's elections, this power is unlikely to be extended beyond that time.

  Second, the Democrat-controlled Congress is unlikely to be as friendly a partner to Taiwan on trade issues as was its predecessor. Many of the winning candidates campaigned on domestic employment and are less liberal in their outlook on trade. It is possible that Democrats could slow down free trade talks with other countries and push for a harsher response to perceived cases of "unfair" trade.

  Taiwan-US trade negotiations will go nowhere until both sides see evidence that there are some solid gains to be made from a bilateral free-trade pact.

  Compared to a FTA with the US, the agreement reached by APEC leaders at the summit in Vietnam last month to commence work on a FTAAP is ambitious and may take years to achieve.

  The nation originally initiated the idea of an Asian Pacific free-trade zone in 2004 at the APEC Business Advisory Council meeting in Taipei, and was encouraged to see the Bush administration get behind it. Once it materializes, the FTAAP will help offset China's attempts to marginalize Taiwan.

  But as Taiwan Institute of Economic Research president David Hong (洪德生) puts it, the government must also heed the hidden political dangers of such a new APEC-wide free trade zone while working to secure Taiwan's inclusion, for even within this structure, China could remain an adverse factor to Taiwan's future participation in regional economic integration.

  While the proposed FTAAP may help jolt non-APEC members to restart stalled talks for a new global trade accord, the government must closely track its early development. The government has opened its arms to this initiative, but whether APEC's transformation into the FTAAP will bring good or bad fortune to the nation is difficult to assess.
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