The US House of Representatives on Monday last week advanced the Taiwan Non-Discrimination Act, a bill that would require the US secretary of the treasury, who serves as the US governor to the IMF, to “vigorously support the admission of Taiwan as a member” of the UN financial agency to boost Taiwan’s financial resilience and enhance its overall defense capabilities.
It was the second time the US House had passed the bill — the first was toward the end of the second legislative session of the previous US Congress, when it was referred to the US Senate Committee on Foreign Relations. Unfortunately, the bill did not advance beyond that point due to time constraints.
As US legislative sessions are not cumulative, the bill is being reintroduced. Luckily, the current Senate has plenty of time to complete the legislative process.
If passed, the bill would help Taiwan bolster its financial resilience and improve its overall defense capabilities. The IMF can provide emergency financial assistance to its members, essentially serving as a financial safety net.
In August last year, the Taiwan Academy of Banking and Finance and the Washington-based think tank the Foundation for Defense of Democracies held tabletop exercises. Participating experts indicated that China could employ an “anaconda strategy” in which it would use cyberwarfare and disinformation campaigns followed by a blockade or other measures to suffocate Taiwan’s economy and sow social unrest, paving the way for a military invasion.
If Taiwan were to join the IMF and gain access to its global financial safety net, it would significantly contribute to bolstering its overall national defense.
Some might ask that as US President Donald Trump has indicated a desire to withdraw from international organizations, would this move not undermine that goal?
The reality is that Trump only wants to move away from international organizations that operate on a “one country, one vote” system. For example, despite that the US contributes a significant amount of funding and effort into the WHO, it still only gets one vote — equal to all of the other member states.
However, the IMF uses a complex weighted voting formula in which each member’s financial contribution, or quota, determines its voting power. Currently, the US holds the most voting power — accounting for about 17 percent of the total vote — followed by Japan, China, Germany and France. The US leads the Western democratic bloc, which maintains a position of absolute dominance within the IMF.
Furthermore, membership in the IMF is independent from that of the UN, and UN membership is not a prerequisite for IMF membership. Kosovo has long been excluded from the UN due to opposition from Russia and China. Out of 193 UN member states, only 104 recognize Kosovo as an independent state.
Nevertheless, Kosovo has been a member of the IMF and the World Bank since 2009.
If the Taiwan Non-Discrimination Act passes in the US Senate this year, Taiwan would be close to gaining IMF membership, which means there could be a great deal of preparation needed.
However, there is a lack of talent and experience due to Taiwan’s long-standing exclusion from international organizations. Thus, it is urgent that professional skills be cultivated to prepare for this emerging opportunity.
Honda Chen is a senior researcher at the Taiwan Academy of Banking and Finance.
Translated by Kyra Gustavsen
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