President Ma Ying-jeou (馬英九) has said that entering the Trans-Pacific Strategic Economic Partnership Agreement (TPP), which he would like to see within eight years, is the answer to Taiwan’s economic woes. He has also said this policy goal concerns Taiwan’s very survival.
Yes, Taiwan faces considerable competition from abroad, but Ma has yet to take concrete action or make proposals for joining the TPP. So it seems the idea of TPP membership is more about politics than it is about the resolve to join.
First, in eight years Ma will no longer be in office. We will not be able to assess his progress on this on the basis of its eventual results, only on how far he managed to get. So far, the government has done nothing substantial, nor officially informed existing members of the TPP of its intention to join or to enter negotiations, and neither has it come up with concrete proposals. People are beginning to doubt Ma will make any progress on this within his next term.
Second, Ma has said the signing of free-trade agreements (FTAs) with Singapore and New Zealand now will facilitate our joining the TPP — in eight years’ time. Actually, our trade with these two countries represents only 3.8 percent of our total trade volume, and given the degree of difficulty in entering the TPP, it makes little sense to talk of the two in the same sentence. The US government has made it quite clear that if Taiwan wants to join the TPP we still have much to do regarding intellectual property rights and protection of the environment, as well as liberalization of trade, the service industries, investment and the labor market. It will also require Taiwan to respect some rigorous FTAs.
The government really does need to take concrete action and propose some comprehensive plans now to address the economic problems that Taiwan faces given the way the international economic climate is developing. Some 155 Economic Integration Agreements (EIA) were registered with the WTO in 1999, compared to 199 in 2007 and 319 so far this year. The number of EIAs increased by an average of 5.5 per year during the time the Democratic Progressive Party (DPP) was in government, with another 30 added during Ma’s first term. Regional economic integration has been growing at an astonishing rate, especially within the past four years. In East Asia alone, there were 24 EIAs in 1999, rising to 70 in 2007 and 98 by July last year. One of Taiwan’s main international competitors, South Korea, has already signed eight FTAs and is currently in talks with eight economic entities to sign more, including negotiations started on July 2 with China.
Taiwan, on the other hand, has not signed one FTA with a single East Asian country, and neither have we signed one with a major trading partner anywhere in the world. According to statistics for 2010, the total value of Taiwan’s tariff-exempt exports to five Central American countries and those on the early harvest list of the Economic Cooperation Framework Agreement (ECFA) signed with China accounted for only 6.9 percent of our total export volume. Compared to those of many countries in East Asia, and especially South Korea, only a very small proportion of Taiwanese products enjoy bilateral free trade, placing Taiwan’s exports in a very unfavorable position in terms of international competitiveness.
The time is ripe for the government to be taking concrete action and proposing comprehensive plans, not coming on like a broken record about how our failure to join the TPP is seriously damaging our economy.
First, it should be broaching talks on joining the TPP with member nations. Second, it ought to be doing more to promote economic deregulation, not just in trade of commercial products but also in the services industries, investment and other fields. Finally, the government needs to, as soon as possible, consolidate a national consensus on what is in the national interest, and make positive moves toward talks on joining the TPP. Only then can we join the TPP before the eight years are up.
Tung Chen-yuan is a professor at National Chengchi University’s Graduate Institute of Development Studies.
Translated by Paul Cooper