With Taiwan set to become a signatory to the WTO Government Procurement Agreement (GPA, 政府採購法), which will give local businesses access to global government procurement, experts said the move would also pose great challenges to the country politically and economically.
After President Ma Ying-jeou (馬英九) signed the instrument of accession to the GPA on June 8 following the legislature’s endorsement on May 15, the agreement will enter into force 30 days after it was sent to the WTO Secretariat to complete the procedure.
The government sent the documents to the WTO on June 15.
When Taiwan entered the WTO in 2002, it said it would join the GPA within a year, but it took more than six years for the world trade body’s Committee on Government Procurement to accept the accession of Taiwan to the plurilateral accord, which it did on Dec. 9.
The objective of the GPA is to encourage government procurement among its members based on the principles of reciprocity and national treatment.
Aside from a series of bilateral negotiations with the other GPA signatories, “the main reason for [the] delay [in Taiwan’s accession] was resolution 87 made by the WTO Committee on Government Procurement on June 2, 2006,” Democratic Progressive Party (DPP) Legislator William Lai (賴清德) said.
Lai said the DPP government refused to compromise on the country’s sovereignty because of a clause in the resolution that he said amounted to a demand for Taiwan’s “de-sovereignty.”
In the resolution, the GPA parties said the nomenclature and other terminology used in a decision on accession to the agreement — including in appendices and annexes — by any delegation representing a separate customs territory are provided for the purpose of clarity in defining commitments in the framework of the accession of the agreement and that none has implications for sovereignty.
The resolution was widely believed to be aimed at Taiwan, adopted as a member of the WTO under the name “Separate Customs Territory of Taiwan, Kinmen, Penghu and Matsu.”
Beijing has expressed strong opposition to Taiwan’s accession to the GPA, largely because terminology found in documents hinted at Taiwan’s sovereign status. Another point of contention was the accession of Hong Kong and Aruba — two entities that like Taiwan joined the WTO as separate customs territories — as they are considered autonomous regions rather than countries.
The Chinese Nationalist Party (KMT) considered it a victory when the WTO agreed to allow Taiwan to list the names of the central government’s Cabinet-level bodies and the Office of the President as “The Entities which Procure in Accordance with the Provisions of this [GPA] Agreement.”
The KMT has made no mention of existence of the still valid resolution on the country, not to mention of its possible impact on the country’s sovereignty, while it boasted that the accession to the GPA was attributed to improved cross-strait relations after it came to power.
Deputy Minister of Economic Affairs John Deng (鄧振中) is the top GPA negotiator. He said the resolution was not targeted at Taiwan as “not even a word in the resolution was about the Separate Customs Territory of Taiwan, Kinmen, Penghu and Matsu.”
”The KMT buried its head in the sand when it looked at the problem in this manner,” said Lo Chih-cheng (羅致政), director of the of political science department at Soochow University.
Lo said China had exerted its influence at the WTO’s Committee on Government Procurement to push for the resolution, as Taiwan’s entry into the organization could be interpreted as a symbol of Taiwan’s sovereignty.
“The DPP government tried to discourage GPA members from formulating the resolution over the years, but to no avail,” said Lo, who previously served as chairman of the Ministry of Foreign Affairs’ Research and Planning Board in the DPP administration.
“It would be a very bad model if Taiwan’s entry into the GPA was not an isolated case but rather served as a precedent, as it would mean that Taiwan would not be allowed to accede to any international accord or join international bodies unless it agreed to deny the existence of its sovereignty,” he said.
On the economic aspect, specialists on public projects called on the government to come up with measures to help businesses explore foreign markets and increase their competitiveness as they vie with global manufacturers for local government procurement programs.
The Ministry of Economic Affairs said the government procurement market among the 40 GPA signatories amounts to US$960.3 billion annually, 150 times Taiwan’s potential market.
Under Taiwan’s accession to the GPA, government procurement contracts for goods and services above NT$5.45 million (US$166,000) and for construction projects above NT$250 million will all be open to international bidding.
Su Ming-tong (蘇明通), director of the Department of Planning at the Public Construction Commission (PCC), said Taiwanese firms stood to benefit the most from GPA accession by gaining access to other signatories’ government procurement markets.
Taiwan has already opened up its bidding process for government projects to foreign firms. Over the past years, about 27 percent of contracts were awarded to foreign bidders.
“That number could rise after Taiwan’s accession to the GPA, but local businesses should still be more competitive than their foreign counterparts in securing local contracts because of language issues and the fact that foreign technician certificates are not recognized here,” Su said.
Hsieh Yu-shan (謝玉山), director of the Business and Engineering Department of the RSEA Engineering Corp (榮民工程公司), said the country’s accession to the GPA could have both a beneficial and detrimental impact on local businesses.
“We expect to see an increase in the number of foreign firms in the country after the accession, while there will be giant hurdles to overcome for local businesses eyeing overseas government procurement markets,” Hsieh said.
The GPA members would more or less set up measures to protest local firms against foreign bidders, Hsieh said.
“For most local businesses, the thorny issue would be the amount of security deposits required. The US, for example, stipulates that the performance guarantee of a single construction project shall be 100 percent of the cost, which many Taiwanese businesses simply cannot afford,” Hsieh said.
He said the association of building and construction businesses hoped the government would establish a fund to help local businesses raise security deposits for their foreign construction bids.
Chief secretary of the PCC Wu Kuo-an (吳國安) said the government should provide significant logistical support for local business as they seek entry into foreign markets.
“We need a collective effort to help local firms enter government procurement markets. Local firms need the MOEA to gather business information, the Ministry of Finance to consult with tax issues, the Ministry of Education to train professionals with expertise in languages and other skills,” Wu said.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS