From a European, US or overall Western perspective, the planet is nowhere near overcoming the COVID-19 pandemic. Whether referring to the possibilities of virus mutations or the transformations, reactions and perhaps resistances of populations who are being continuously coerced or persuaded into adhering to often dubious and motley official regulations, most commentators and analysts think the world is either in or entering a strong second cycle of contagion and mortality.
For Taiwan and a few other nations, the small extent and seeming stability of their COVID-19 experience to date means that there is a real sense that recovery policies should not only be planned, but begun. This presents two obvious limitations.
First, these nations live, trade, invest or borrow among the more deeply entrenched, highly affected COVID-19 world, with dependent or gainful relations with countries that have the highest numbers of infected people, such as Brazil, Germany, France, the UK or the US. Taiwan’s third-largest trading partner is the US. This requires planning and care over appropriate protective measures in a trading world.
Second, the continued slowdown of activity in large, highly affected COVID-19 countries directly inhibits trade and economic recovery in nations such as Taiwan.
This is the underlying reality that at times pops up in media discourse: the absurdity of European nations and the UK excluding visitors and students from Taiwan from their “safe list” of nations whose citizens are safe to travel to and from countries within the eurozone, while their own nations had and retain much higher levels of contagion and mortality.
This is the time for Taiwan to be proactive in a world that is forging — mostly for protective reasons — a new economic and trading regime.
With a new US Democratic government about to enter the White House, it is difficult to forecast reactions to new international trading arrangements. It is reasonable to assume there would be more considered and diplomatic approaches to relations with Europe and China.
With this in mind, it is unfortunate that the US had earlier dropped out of developments, such as the proposed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which might have linked together in more cooperative trading arrangements the US, China and Japan among a large group of nations.
The more cohesive agreement, the Regional Comprehensive Economic Partnership (RCEP), was signed by videoconference on Nov. 15 at an ASEAN summit. It included ASEAN’s 10 member states — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — as well as the six countries with which ASEAN has free-trade agreements — Australia, China, India, Japan, South Korea and New Zealand. India dropped out for technical trade reasons, leaving a total of 15 members.
This is generally a group that has been less affected by COVID-19 accounting for almost half of the world’s population, a quarter of all exports and a faster rate of GDP annual growth since 2008 than the highly affected COVID-19 nations such as the US or Germany.
It is unfortunate that Taiwan is excluded from this group because of Chinese opposition and possibly due to its country status. The latter fact makes it easier for otherwise quite disinterested nations to agree with Chinese opinion.
The irony, of course, is found in the political economy rather than political ideology — China is by far Taiwan’s biggest trading partner.
Rather than continue to pursue the CPTPP, which could well fade away or fail to have the recovery generating potential of RCEP now that the US has withdrawn, the better strategy for Taiwan might be to whittle away at altering the perspective of RCEP more generally.
Given the natural economic advantage that Taiwan could argue as being the fundamental reason for joining the pact, the Ministry of Foreign Affairs’ position that RCEP membership involves too much “practical difficulty” might at least be questioned and returned to.
If the RCEP is to follow its own opening statements about “commitment to economic recovery” and, “an open, inclusive, rules-based set of trade and investment agreements,” it surely is time to revisit joining the agreement, especially as the much bigger case of India’s status within the deal would be under debate in the coming months.
Rather than seek full membership of what might be a moribund CPTPP, or place trust in a US alliance that has wavered dangerously in the past few years, it might be better to seek a form of associate membership in the RCEP in a complex post-COVID-19 world where group pragmatism might win over brute ideology.
This could be the best long-term use that the Democratic Progressive Party (DPP) could make of the brilliant COVID-19 control record that Taiwan has accrued. There might yet be a window of opportunity.
Taiwan sits at an advantageous situation for economic recovery. Compared with other significant capitalist trading and investing economies, Taiwan has a running start. The nation’s exceptional control of COVID-19 has been a result of speedy and confident government interventions to test, isolate and trace the virus, with subsequent efficiency in identifying and caring for those few who have contracted the disease.
Taiwan’s overall rate of annual GDP growth, although not spectacular, has since 2012 been above that of the largest capitalist industrial systems, such as Germany, Japan, the UK and the US.
An analysis, if correct, shows that trade growth will be paramount for Taiwan. Its exports represent 63 percent of its economy, compared with 29 percent for the world at large, 12 percent for the US, 30 percent for the UK, 43 percent for South Korea and 47 percent for Germany.
Expanding trade with the large economies of the RCEP seems to be its best strategic option for growth through a new opening of the world economy. Three of Taiwan’s major trading partners — China, Japan and South Korea — are leading RCEP members, potentially themselves on the verge of a new and hopeful partnership.
However, the standing disadvantages for Taiwan are its high levels of air pollution and its need to turn more definitely toward urban improvement and environmental technologies, which will seemingly require syphoning government funding away from growth toward social welfare. These two elements are compounded by international problems in trade, investment and commercial negotiation associated with its fractious relationship with China and consequent lack of full country status.
This creates two problems; one of these requires highly focused internal government policy, while the other depends upon a strenuous and ingenious process of commercial diplomacy.
First, government policy should focus on urban building and rejuvenation that emphasizes new environmental technologies, material and designs. This requires the DPP to persuade the public and big business that environmental industries can be profitable and lead to a new range of high-tech exports.
The government must argue that funding, contracting with and guiding environmental industries should be seen by the public as a pathway to efficient economic recovery.
Second, as already forecast, the DPP should use the opportunity of continuing COVID-19 confusion elsewhere, a new more sensible US government, relatively low public debt and its increasing reputation as a free and productive capitalist system to use a combination of soft and commercial power in a concerted effort to either join the RCEP as a full member or to push for the creation of an associate membership — one that might interest India and other nations.
Taiwan has performed remarkably as a society and economically during the COVID-19 months. For this reason alone it is in a much better position than most nations to begin a full recovery. This would be better attained through the new world trading system that is beginning to form.
This, in turn, depends on a combination of sound economic guidance and a process of international diplomacy — which would be more stable in the years following US President Donald Trump’s exit from the White House — that depends less on public rhetoric than on determined, rational persuasion.
Ian Inkster is a professorial research associate at the Center of Taiwan Studies at SOAS University of London; a senior fellow in the Taiwan Studies Program and China Policy Institute at the University of Nottingham; and a historian and political economist, who has taught and researched at universities in Taiwan, Australia, Britain and Japan.
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