Taipei Times: With respect to the US-Taiwan free trade agreement (FTA) currently under discussion, what would you say the US' attitude is toward it?
Bruce Stokes: I think the issue is not at all on the public radar screen in Washington yet. It has begun to be advocated by some conservatives in Washington, DC, who are long-time friends of Taiwan. It is an issue some security or diplomatic people brought up. There is no official position [held] by the US Trade Representative Office. But, when you privately ask them, they say "Taiwan is not living up to its World Trade Organization [WTO] commitments, and until they do that it is premature to talk about FTA." We have yet to hear from the American business community. I think the business community would be very worried about whether China would object and whether this would somehow cause trouble for them within the Chinese market. Generally speaking, the problem of any FTA for the US is that the economic benefits to the US are small. For example, we are going to [sign] free-trade agreements with Chile and Singapore, and the economic benefit from those agreements are almost zero. But, we are going to do it, and we are doing it for symbolic reasons.
TT: Why not sign an FTA with Taiwan for symbolic reasons?
Stokes: There is no downside ... for doing a free-trade agreement with either Chile or Singapore. The problem with an FTA with Taiwan would be a potential political downside. Even for the FTA that has made the most sense for the US, the North American Free Trade Agreement (NAFTA), the real motivation was political. There was this fear that there could be a resurgence of left-wing politics in Mexico if we did not help their economy. There was this fear of even more illegal immigration from Mexico if we did not create jobs in Mexico.
TT: Some say that Taiwan's over-dependence on the Chinese market will only speed up the process of unification with China and, therefore, an FTA with the US would create trade and investment diversification to help preserve the cross-strait status quo. This would obviously be something the US would like to see. What is your view of that argument?
Stokes: I think the theory is right. It is possible the US should think more about this. But, there is almost no one in the US thinking about this. It is not an issue that has been engaged yet. Nor have people ... recognized ... [or] decided this is the way to solve the problem. Moreover, when America says that the status quo is the best for America, my sense is that means we (America) don't have to do anything. The status quo means two things. One, nothing in Taiwan or the Strait changes. Two, it means the US is not called to do anything. To do an FTA would mean the US is called to do something. That would be at least initially a difficult psychological step. It is true in many ways we do a lot of things to maintain the status quo here. We periodically sell weapons to Taiwan. We periodically stand up for Taiwan versus the mainland. We periodically make statements. But, a free-trade agreement would involve a certain political engagement with Taiwan, a need to sell the idea in Congress and to the American people, which would be an expenditure of energy and political capital in support of Taiwan, which an administration may or may not be willing to make. While the argument is theoretically and intellectually correct, whether politicians would accept it when they have to do something, that is a different question. From Taiwan's perspective, if Taiwan wants to sell this to the US, it has to find in the US a couple of big companies who can stand to benefit a great deal from a FTA with Taiwan. Because, given the political process in the US, it is easier to sell the idea if there are a couple of companies who stand to make a lot of money from this, so that they will spend a lot of money and political capital to push the Congress and the administration to make it happen.
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