To counter China’s Regional Comprehensive Economic Partnership (RCEP) trade agreement, Japan has pushed other countries in the Indo-Pacific region, as well as the UK, to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Taiwan is also seeking to join the CPTPP, and the result of its application will be crucial to its position in international trade.
To ascend to the bloc, Taiwan must strive for international support and recognition, and might need to change its approach to international trade.
Due to the difference in size of the Taiwanese and Chinese markets, countries around the world have made concessions regarding Beijing’s unreasonable threats and become accomplices to its bullying of Taiwan.
NEW CIRCUMSTANCES
However, with the Chinese economy slowing down, its currency in crisis, and its trade disputes with the US and Australia, the situation has gradually started to shift.
For the soccer World Cup in November, host country Qatar last month listed Taiwan as a province of China. After Taiwan objected, Qatar did what was right and changed the listing to “Taiwan.”
This shows that the Chinese market has become less attractive internationally, and its ability to bully Taiwan has weakened.
IMPORTS KEY
A country’s voice in the international community is linked to the size of its import market. In the past, Taiwan’s main goal in terms of trade was to expand its foreign currency holdings.
However, further growing its already sufficient holdings would put pressure on the New Taiwan dollar, making exports less competitive. If the central bank were to try to rein in that exchange rate increase, it would expose Taiwan to accusations of currency manipulation.
Export-oriented policies have over the past decades caused domestic demand to shrink.
GROWTH POTENTIAL
Beijing last year imposed high anti-dumping tariffs on Australian wine, leading to a drastic decline in the country’s wine export volume to China to A$200 million (US$136.32 million), which forced the state-run regulatory body Wine Australia to close its office in China.
Taiwan’s wine market is worth about NT$8 billion (US$268.86 million) and has significant potential for growth.
If Taiwan were to cut tariffs on Australian wine imports and people were to buy more of its wine, the wine trading volume between the two countries would grow significantly and Australia might start considering the Taiwanese market more significant than China’s.
Export-oriented policies usually include heavy tariffs on imports, as that encourages people to buy locally produced goods.
CREATING BALANCE
It is much more expensive to purchase a vehicle in Taiwan than abroad, and automakers often do not offer all features to customers in the nation. This is unfair to Taiwanese.
Taiwan should adopt a new concept of balanced trade, trying to encourage Taiwanese to buy imported goods and expand the domestic market.
Taiwan’s foreign exchange holdings earned from exports should be used to improve the quality of life of Taiwanese. This would relieve pressure on the NT dollar’s appreciation and boost exports.
Moreover, the international community would pay greater attention to the Taiwanese market.
Tommy Lin is the director of the Wu Fu Eye Clinic and president of the Formosa Republican Association.
Translated by Eddy Chang
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