The Trans-Pacific Partnership (TPP) could give Taiwanese businesses an opening to “move further up the value chain and develop more of [their] own branded goods and services,” a new analysis by the Brookings Institution says.
However, in the view of Brookings Taiwan studies director Richard Bush and economics expert Joshua Meltzer, the reasons for Taiwan to join the TPP go beyond the potential market openings with major trading partners and are “more strategic in nature.”
They say that the TPP’s liberalization agenda will require Taiwan to undertake a range of economic reforms that will have a “significant and positive impact” on Taiwan’s productivity, competitiveness and economic growth.
“Joining TPP can become a driver of domestic economic reform in Taiwan and in this respect could have a similar impact as the World Trade Organization,” Bush and Meltzer say in the analysis.
The TPP was built on a free-trade agreement between New Zealand, Chile, Singapore and Brunei.
In 2008, the US joined what became the TPP negotiations. Australia, Peru and Vietnam joined soon after, followed by Malaysia. Canada and Mexico joined the TPP last year and Japan joined the TPP negotiations a few months ago.
The negotiations are likely to be finalized early next year.
President Ma Ying-jeou (馬英九) has committed Taiwan to joining the TPP by 2020.
The analysis notes that the parties to the TPP represent 650 million people and comprise a third of world trade.
One aim is to phase out tariffs on more than 11,000 products, with the most controversial being textiles, apparel, footwear and agriculture.
Taiwan’s membership in the TPP would allow other members to take advantage of the Taiwan-China Economic Cooperation Framework Agreement (ECFA) and use Taiwan as a platform for trading and investing with China, the analysis says.
Meeting the goals of an agreement will not be an easy policy task for Taiwan, the analysis says.
“The US has a perception that Taiwan does not adopt science-based regulations for food safety,” it says.
“Some American officials and business representatives feel that regulators instead respond to public sentiment whipped up by a sensationalist media by adopting regulations that do little for food safety and a lot to protect local agricultural producers,” it says.
Bush and Meltzer cite Taiwan’s ban on imports of pork treated with ractopamine as an example.
The Ma administration should start developing policies aimed at liberalizing its agricultural sector while also providing policies to retrain and support those harmed economically, they say.
Joining the TPP would also require Taiwan to liberalize its services sector, but this would “drive innovation and reduce costs.” It would also help Taiwan become an international financial center and give Taiwanese businesses access to world-class legal, consulting, financial and engineering services, the analysis says.
South Korea, Thailand and the Philippines have also expressed interest in joining the partnership.