The raft of economic agreements between Australia and Taiwan has been an effective framework for facilitating trade and investment flows. This framework is comparable in its scope and depth to agreements Australia has in place with its other major trading partners. However, the expanding list of agreements and growing dialogue between Australia and Taiwan has pointedly not included a free-trade agreement (FTA).
Former president Chen Shui-bian (陳水扁) called for an FTA with Australia in September 2002, urging all the countries in the Asia-Pacific region to sign free-trade agreements to protect their common interests, saying that democracy, security and economy are the three pillars of the region’s stability and prosperity.
Australia ignored this reasoning and consistently rebuffed Taiwan’s approaches. According to a leaked US diplomatic cable, Australian Commerce and Industry Office Deputy Representative Ben Gray told the American Institute in Taiwan in June 2005: “Australia had so adamantly refused to discuss the issue with Taiwan interlocutors over the past two years that in the outgoing Australian Trade Representative’s courtesy calls on the Taiwan Minister of Economics, the head of the Council for Economic Planning and Development, the National Security Council and the Council of Agriculture, none of them dared to raise the possibility of an FTA. Australia’s ongoing preparatory FTA negotiations with China are in a delicate stage now and the [Australian] Foreign Ministry would not want anything to upset that process. Australian Foreign Minister [Alexander] Downer is very focused on improving Australian relations and increasing trade with China and has little patience for Taiwan’s political gamesmanship.”
After assuming office, President Ma Ying-jeou (馬英九) tried to assure Canberra that China would not stand in the way of an Australian FTA with Taiwan. He argued that the Economic Cooperation Framework Agreement (ECFA) his government signed with China had cleared the way for Taiwan to enter into FTA agreements with other countries.
Australia has nevertheless continued to refuse to discuss the issue, despite its FTA negotiations with China going nowhere.
One reason for this is the perception within the Australian government that Taiwan is still primarily interested in the political symbolism of an FTA and not the economic benefits of further opening its market. This may be true, but it could now work in Australia’s favor.
If China is truly not opposed to third countries signing FTA agreements with Taiwan, then this focus on symbolism over economics would assist Australia in securing a good trade outcome. Whatever protectionist tendencies Taiwan may have would presumably be significantly overcome if it meant securing a high-profile agreement with a country as important as Australia.
Clearly, the idea of not negotiating an FTA with Taiwan has developed considerable inertia within the Australian government. This has to change. The current friendly atmosphere between the Chinese and Taiwanese governments cannot be taken for granted and Australia should make the most of the opportunity to improve access to Taiwan’s market for Australian products and companies.
If Australia waits until several other major economies have signed FTAs with Taiwan, it may find that its market share of key commodities such as beef has been permanently damaged. Just last month, New Zealand and Taiwan announced that they would formally explore the feasibility of an economic cooperation agreement. Australia should do the same as soon as possible.
Joel Atkinson is a researcher in Taiwan Studies at Monash University, Australia.
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