The Trans-Pacific Partnership (TPP) is now in the ratification phase after 12 Pacific Rim countries formally signed the free-trade deal in New Zealand earlier this month. While these member states face their respective domestic issues to complete their ratification processes, time is pressing for Taiwan — currently not part of the nascent trade bloc — as there are still many things that need to be done if the nation wants to join the pact in its second stage of expansion.
The US-led TPP is the biggest free-trade agreement (FTA) in history, as it represents almost 40 percent of global GDP and more than 25 percent of global trade. The signing of the deal in Auckland on Feb. 4 indicates that all 12 countries — a mix of advanced and emerging economies — have accepted the outcome of more than five years of negotiation and are willing to move forward with domestic legislation before the TPP can be implemented within the next two years at the earliest.
However, domestic ratification might not be easy, notably in the US during an election year, as plenty of criticism has been leveled at the trade deal. The presence of many protesters outside the signing venue in Auckland early this month is a clear demonstration of displeasure by some over concerns about job opportunities, public health interests, environmental protection and national sovereignty.
Even in the US the leading presidential candidates of both the Republican and Democratic parties have openly expressed their opposition to the TPP. The 12-member FTA has also faced opposition from many Democrats in Congress, while several Republican heavyweights have already advocated delaying the deal until after the November elections.
Despite the uncertain prospects for the trade deal’s ratification by its members, Taiwan has reached a point where there is no time to waste to improve its economic structure and upgrade its industrial sector. While the nation has made progress by signing FTAs with Singapore and New Zealand over the past few years, the formation of the TPP has exposed Taiwan’s vulnerability to being marginalized by the rise of regionalism in global trade.
The signing of the TPP also raises concerns over the long-term impact on Taiwan’s external trade, as the nation has lagged behind its major trade rival — South Korea — in securing bilateral FTAs with TPP members to cushion the potential impact of being excluded. According to an analysis by Credit Suisse Group AG, of the 12 TPP member countries, Taiwan has only signed FTAs with Singapore and New Zealand, which represent 20.8 percent of the nation’s exports to Pacific Rim nations. In contrast, South Korea has signed FTAs with the US, Singapore, Australia, New Zealand and four other TPP members, representing a much higher 72.8 percent of its exports to the group.
Late last month, the Ministry of Economic Affairs opened a TPP office to establish a platform to improve the government’s communication beyond the executive branch and help collect feedback from local governments, lawmakers, business groups, academics and the general public. The ministry has identified 12 pieces of legislation that require amendments and plans to submit the first draft of revisions to the caretaker Cabinet for approval by the end of next month, along with assessment reports and follow-up measures relevant to Taiwan’s TPP bid.
President-elect Tsai Ing-wen (蔡英文) also sees negotiations on the nation’s accession to the TPP as one key focus for the new government. While the TPP would help boost Taiwan’s foreign trade, it would also mean the opening up of domestic markets and services, which would require a capable negotiating team amid the political tussle in the international arena. Moreover, the new legislative body must supervise the executive branch’s bid to join the TPP and allow the negotiation process to be transparent, so that a well-informed public has no need to struggle between the idealism and reality of the deal.
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