Taipei Times: You told "Taipei Times" in April 2003 that you [saw] a migration of business from Taiwan to China. Taiwan's government recently said that more and more China-based Taiwanese businesspeople have decided to return to invest in Taiwan. Do you see any changes over the past two years?
Rupert Hammond-Chambers: I think how I would answer that question today is to say that the migration of business has slowed down.
It's clear that a lot of Taiwan manufacturing that was going to move to China has moved. Now there's a new face in the Taiwan-China economic relationship. I think here Taiwan has some distinct advantages.
The Taiwanese government has improved its enforcement of Taiwanese law in prohibiting certain industries from going into China. The second is that Taiwan has improved a lot in intellectual property rights (IPR) enforcement. This is the perception and it's also the reality.
China is terrible. China's task in improving IPR perception is huge. I think that will ensure that at least in the medium term of the next three, four or five years, and maybe a few more years than that, Taiwanese businesses operating at the highest technology level will stay in Taiwan.
TT: Even for the US companies as well?
Hammond-Chambers: No, I think the foreign direct investment flow is still pretty significant into China. But not all US companies have decided that China is the right place for them to be. Increasingly we will hear more about India as an alternative to China, particularly in technology areas for US companies with IP concerns.
TT: Taiwan has expressed its hope that a US-Taiwan FTA can be signed as soon as possible, but it seems that this isn't a US priority.
Hammond-Chambers: I believe that the Bush Administration has been very careful in not saying "yes" and not saying "no" to a Taiwan FTA, and it should be commended for that.
We only realistically have 20 months for Taiwan to secure [an FTA] with the US as the Trade Promotional Authority will end in June 2007. There's lots of pressure now ... to create a more compelling argument for why a US-Taiwan FTA should happen now.
TT: Can you foresee that happening before June 2007? What are the principle obstacles?
Hammond-Chambers: It's possible. I hope it happens. I would argue that really the ball is in Taiwan's court. It's not enough simply to say that we want an FTA. Taiwan must build a compelling argument not just at the strategic level but at the business level, and gain the support of US industries and demonstrate to US industries that the market access that will come from the FTA is in their interest. Those are the decisions that the Taiwanese government needs to make and articulate.
And, yes, progress has been made after [talks] last year and that is encouraging. But have we reached the agreement that they have gone far enough? No. It's an ongoing process. But I think more significantly, Taiwan has demonstrated its willingness to compromise and to improve what it is offering in the context of those talks.
The progress on intellectual property rights protection has improved the environment for the possibility of an FTA. A new issue is beef. I hope that the Taiwanese government will return to importing US beef in the next two to three months.
TT: Are there any political obstacles to an FTA, such as China's objections?