Sun, Apr 27, 2003 page4

• Taiwan no closer to trade agreement

  QUID PRO QUO If Taiwan thought that support for the US over Iraq would speed up implementation of a free trade pact between Taipei and Washington, it should think again, say leading experts on Taiwan's economy

  • By Charles Snyder / STAFF REPORTER IN WASHINGTON
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  A US congressional researcher and a leading Taiwan economist have agreed that politics, particularly opposition by China, may be more important than economic disputes in determining whether the US agrees to consider a free trade agreement (FTA) with Taiwan.

  "China is the most important factor for the US to consider if the US wants to negotiate an FTA with Taiwan," said Wu Rong-I, the president of the Taiwan Institute of Economic Research, at a Washington seminar on prospects for a US-Taiwan FTA.

  But the congressional economist, Dick Nanto, of the US Congressional Research Service, also noted that countries that have supported or aided the US in its invasion of Iraq seem to be getting better treatment in their bids for FTAs than those that have not.

  Chen Shui-bian's (陳水扁) administration has given strong support to Washington's military action and has offered to help with the reconstruction of Iraq.

  Despite the political aspects of the issue, Christine McDaniel, an economist with the US International Trade Commission which last year conducted a study of the economic impact of an FTA, noted that a number of important trade issues remained before any FTA negotiation with Taiwan could be considered by the US.

  And John Tkacik, a China scholar at the Heritage foundation and a long-time student of Taiwan affairs, doubted that Chinese opposition would be the deciding factor, since the Bush administration will likely disregard Beijing's wishes.

  "There are people in the State Department who don't think of the ramifications for mainland China because our [the US'] Taiwan Relations Act says we will carry on commercial, cultural, economic and other relations with Taiwan and this is clearly economic and commercial," Tkacik said.

  "Any complaint from mainland China would simply be met with a shrug of the shoulders," he added.

  "So I do think you can diffuse the political ramifications quite easily, even if there was some effort on the part of the Chinese government to try to link an FTA with China's cooperation elsewhere in the world," Tkacik continued.

  "The US relationship with China is still not what I would call `warm and fuzzy,'" he said.

  Over the past year, the Bush administration has signed, or has started negotiations, on a series of FTAs with countries around the world. Several members of the US Congress have urged an FTA with Taiwan, but the Bush administration has refused to entertain the suggestion.

  The US Trade Representative's office has complained about a number of trade issues it wants Taiwan to resolve, mainly involving intellectual piracy, agriculture, rice and telecommunications, before entertaining any FTA negotiations.

  That stance is expected to be underscored next week, when the US Trade Representative's office releases its `Special 301' list of countries with rampant intellectual property piracy. Taiwan has been on the Priority Watch List of leading offenders under US trade laws and is widely expected to be retained on the list for another year.

  "The main hurdle for Taiwan in getting the US to start negotiations," Nanto said, "is largely power politics and US relations with Taiwan and with the PRC. For it is clear that China will vigorously oppose a US-Taiwan FTA."

  "Now, China is considered to be a partner in the war on terrorism," he said. "So China is becoming more of a factor to achieve US security goals. So the question is, will the US risk the support of mainland China to improve ties with Taiwan?"

  One way Taiwan can improve its chances, Nanto said, is to negotiate FTAs with several other countries.

  "If the United States sees another country out there negotiating FTAs with a lot of other countries, there is pressure in the United States to get in on the act and not be left .behind. So, the more FTAs Taiwan has with other countries, the more likely it is that the US will also want to join in," he said.

  However, the Taiwan Institute's Wu noted that China has been successful in pressuring other countries, notably Japan, into not negotiating FTAs with Taipei.

  He quoted one Japanese official as saying, "the political pressure from China is so high so far that Japan thinks it's premature to negotiate with Taiwan," until the US negotiates an FTA.

  He also noted it has been two years since Singapore's Lee Kwan-yew and Chen Shui-bian agreed to negotiate FTA, but that Chinese pressure has stymied that and other FTA negotiation attempts by Taiwan.

  Wu's institute sponsored the recent seminar along with the Taiwanese-American-led Institute for International Development Studies in Virginia and the Friends of Taiwan in Los Angeles, California.
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