More on Trade

Courtesy of Taiwan Image.

We assume that, by now, every English-language Taiwan blog out there has the scoop on R.O.C. the Boat when it comes to American Enterprise Institute and Armitage International's much welcome report released last week, by Dan Blumenthal and Randall Shriver. The report is a product of the work of the Taiwan Policy Working Group, which a joint project by the two Washington foreign policy organizations. The report makes many solid recommendations for ways in which the Taiwan-U.S. relationship can be strengthened for the good of their alliance as well as for the health and stability of cross-Strait relations in general. Not surprisingly, trade was part of the recommended agenda:

The United States and Taiwan can strengthen their economic ties to the benefit of both economies. The two economies already share a strong partnership, but as Taiwan's leadership in computer components and next-generation telecommunications technology indicates, there is much room for further growth.
. . . .

A U.S. Taiwan FTA would have bilateral economic and strategic benefits, and it could also provide economic benefits to the region by fostering inter-Asian trade liberalization. U.S. action could have a positive domino effect on other countries, such as Japan, that do not want to see Taiwan excluded from the Asian economic arrangements for both economic and political reasons.

Just a brief excerpt from the good deal that the report had to say about the benefits of trade between Taiwan and the U.S. and the greater benefits a bilateral free trade agreement would bring.

Taiwan's Chief Negotiator, Mr. John Deng from the Office of Trade Negotiations in the Ministry of Economic Affairs (MOEA), is ready to talk turkey with the office of the USTR to get an agreement hammered out. Unfortunately, there are three other bilateral FTAs pending in Congress and public sentiment towards free trade is beginning to cool (to use a gentle term). In the following short piece by Chief Negotiator Deng, "Looking Forward to a U.S.-Taiwan FTA," provided by the MOEA's office in Washington, D.C., Mr. Deng concisely lays out the case for such a trade agreement and calls on American voters to voice their support for a Senate Concurrent Resolution designed to nudge the process along:

Looking Toward a U.S.-Taiwan FTA
Mr. John Chen-Chung Deng
Chief Negotiator, Office of Trade Relations
Ministry of Economic Affairs, Republic of China

In late December, Senators Max Baucus (D-MT) and Jon Kyl (R-AZ) introduced Senate Concurrent Resolution 60, thereby demonstrating continued support in the U.S. Congress for the negotiation of a Free Trade Agreement (FTA) between the United States and Taiwan. Taiwan is grateful to these Senators for their action, and for the longstanding support and friendship of the United States. A U.S.-Taiwan FTA would ensure continued prosperity for Taiwan, and would bring with it many economic benefits for U.S. exporters as well.

Taiwan and U.S. Trade

In recent years, Taiwan has worked with the United States and the World Trade Organization to develop world-class labor standards, environmental safeguards and strong protections for intellectual property rights. Trading with Taiwan means supporting the values of a responsible member of the world community.

Despite a comparatively large level of trade, the U.S. and Taiwan feature different and largely complementary manufacturing bases. For instance, Taiwan produces almost three-quarters of the world’s laptop computers and LCD monitors, as well as four-fifths of the world’s PDAs, often incorporating U.S. technology and design specifications. Taiwan is also a major customer for U.S. exporters and is the largest per capita buyer of several important U.S. farm products including corn, soybeans, meat and wheat. A recent study shows that the FTA would increase U.S.
exports to Taiwan by an estimated $ 6.6 billion annually.

A U.S.-Taiwan FTA, however, would enhance economic opportunities far beyond our
two economies alone. With the strong American business presence in Taiwan, the FTA would encourage U.S. businesses to use Taiwan as a base of operations in Asia, and establish bilateral alliances with Taiwan’s entrepreneurs to explore business opportunities in third markets. Such trends would help to enhance U.S. trade relations with other Asian economies, while also ensuring a strong U.S. economic presence in the region.

Why a U.S.-Taiwan Free Trade Agreement?

Competition among Asian economies is fierce. In order to stay competitive, Asian nations are pursuing FTAs with their key trading partners. These FTAs are often sought not only for their economic benefit, but also for their political and security
significance. Taiwan, however, continues to be excluded from these FTAs as a result of China’s intention to isolate Taiwan from the global trade community. With both the U.S. and Taiwan being members of the World Trade Organization, the reality is that no impediment exists to their establishing closer economic relations through a mutually beneficial trade agreement.

The U.S. and Taiwan have a longstanding friendship stretching back over 60 years. As a result of U.S. engagement and influence, Taiwan was able to emerge as a democracy late last century. Democracy, however, requires economic prosperity. An FTA with the United States would ensure that Taiwan continues to remain prosperous, and that its democracy remains healthy. With this in mind, I wish to call on our friends in the U.S. to support the Concurrent Resolution as introduced by Senators Max Baucus (D-MT) and Jon Kyl (R-AZ).

More Food for Thought

Exerpt from 12/20 article, "Blind in Beijing" by Dan Blumenthal
published in The American, an AEI publication

If economic growth and “peace and development” are China’s main goals—as the Communist Party states, and as many Chinese surely desire—then why is China engaged in the most significant military buildup in the world? The PRC enjoys a secure external environment: East Asia is more stable today than it has been in decades. Chinese protestations that the military buildup is “all about Taiwan” are less than reassuring. For one thing, the very idea that China would prepare for war with a de facto sovereign nation over which it has had no official control since the late 1800s is totally inconsistent with modern notions of sovereignty. There are many English-speaking countries that are no longer part of the British Empire; nor are all German-speaking countries part of Germany. Both England and Germany are doing just fine without their former colonies. And should China’s intentions change as its strength increases, the same military capabilities that could be used against Taiwan could also be deployed against American forces in a range of scenarios.

U.S.-Taiwan Free Trade Agreement Roundtable

Photo of the aircraft carrier U.S.S. Kitty Hawk, which became the centerpiece

of a Sino-U.S. diplomatic tussle when it was not allowed to carry out a planned

visit to the port of Hong Kong this past Thursday and was forced to return to its

home port in Japan. Many family members of the sailors had traveled to

Hong Kong, looking forward to celebrating Thanksgiving with the crew.

Yesterday at the Sigur Center, the Asian Studies center within the international affairs school at the George Washington University, a panel discussion was held that featured guests from the Taipei Economic and Cultural Representative Office (TECRO, Taiwan's officially 'unofficial' embassy in Washington) as well as the Heritage Foundation and the American Enterprise Institute for Public Policy Research, two eminent Washington policy think-tanks.

The issue of the day was whether the United States and Taiwan should enter into serious negotiations and eventually finalize and enact a free trade agreement. The event began with a rather informative presentation by the director of TECRO's economic division, Mr. Francis Liang, who highlighted the many reasons why a Taiwan-U.S. FTA would be beneficial to the economies and populations of both countries involved. Thanks to the provision of extra copies of this presentation in paper form for audience members at the event, we are able to forward some of the more interesting facts and figures to you:

• Taiwan has experienced an average annual growth in GDP of 7.8 % over the past half century, and currently engages in foreign trade to the tune of $437 billion U.S. dollars and is the second largest holder of Foreign Exchange Reserves in the world ($266 billion).


• Taiwan produces 72% of the world's laptops, 79% of PDAs and 68% of LCD monitors. In the cover article of a May 2005 issue of Business Week, Bruce Einhorn referred to Taiwan as "the hidden center of the global economy."
  
• In 2006, Taiwan was the United States' 9th largest trading partner, 11th largest export market, and the largest importer per capita of U.S. agricultural products. In the same year, the United States served as Taiwan's 3rd largest trading partner, second largest export market, and Taiwan's largest source of foreign direct investment. Taiwan-U.S. bilateral trade was worth $62 billion dollars last year.

In addition to hard facts and figures, Mr. Liang helped explain the current trade situation in the Pacific Rim and how this adds to the need for an FTA. Currently, major Pacific Rim players such as Japan, China, Korea, Singapore, and Australia are vigorously signing and seeking new free trade agreements in the region. If the United States doesn't work to improve its trade relations and hammer out agreements with its top East Asia/Pacific allies, it may get edged out of the trade game in the Pacific.

This is just a sampling of what Mr. Liang had to say. On the other hand, Philip Levy, a resident scholar at AEI, was rather hesitant about the prospects for TUFTA. Mr. Levy's major hang-up when it comes to this topic is the "China factor." To put it simply, he, like many other academics, government officials, and 'China hands' in the United States, is simply fraught with worry at the prospect of 'antagonizing' the government of China in any way whatsoever.

Levy argues that whatever benefit Taiwan gains by formalizing an FTA with the United States will be cancelled out by the drop in foreign investment that would presumably follow if the PRC government stepped up its threats, military activity, and the familiar sabre-rattling routine in general in response. According to his hypothesis, Taiwan would then be unable to reap the benefits of TUFTA and would only have caused greater threat to its very existence.

What we believe is overlooked in Levy's line of reasoning, is why the very idea of a Taiwan-U.S. Free Trade Agreement raises the hackles of any PRC government official or general in the PLA. By engaging in deeper trade relations with Taiwan, the United States would be affirming in a practical way its values-based alliance with Taiwan's government. Rather than increasing the likelihood of Chinese acts of aggression against Taiwan, this step would make it more difficult for China to recklessly threaten Taiwan without thereby antagonizing the United States!

Humanists and 'starry-eyed idealists' in the U.S. are already more likely to favor Taipei over Beijing due to our countries' common interests in democracy, human rights, civil freedom, etc. More cynical observers of American foreign policy on the other hand—who were probably thinking yadi-yadi-yada by the time they got to the end of the last sentence—would also be more unlikely to tolerate PRC aggression against Taiwan, as American economic interests would become increasingly tied to Taiwan's national interests.

Besides, as Mr. Tkacik touched upon in his usual fire-and-brimstone manner, what with all the recent news concerning ongoing Chinese involvement in human rights violations, faulty Chinese commercial imports and the snubbing of the United States Navy with the recent U.S.S. Kitty Hawk Thanksgiving Day incident (just to name a few), maybe its high time that the United States did engage in a little diplomatic antagonizing towards the PRC government.

Summarily, at the conclusion of a free trade agreement between Taiwan and the United States, American officials would perhaps reasonably be a bit on edge for fear of economic and political backlash from Beijing. More important however is that, from that point onward, every time officials in Beijing contemplated the forceful unification of Taiwan with China, they would worry more than ever about the prospects of antagonizing the country that represents China's largest export market and the world's sole remaining superpower.

It seems to us that, in terms of American foreign policy vis-a-vis Taiwan and the People's Republic of China, improving American trade relations with Taiwan using the vehicle of a Free Trade Agreement is one of the best moves that can be made within the even the most conservative definition of the status quo.

President Chen at AEI, Presidents Bush and Hu at APEC

Initially, reports coming out of the bilataral meeting between American and Chinese Presidents George Bush and Hu Jintao suggested that the two leaders had sidestepped the issue of Taiwan while speaking on the sidelines of the APEC meeting in Sydney. Major topics of discussion were initially reported as Chinese product safety (graciously brought up by President Hu without any prodding from the U.S. side), artificially low valuation of the yuan, North Korea and -- 'oh yes, Mr. President, would you be so kind as to attend the Beijing Olympics next summer?' (Bush is reportedly planning to leave international politics in the States and attend the Games as a sports fan).

Yet a second wave of news coverage published this morning brought to light for us two new aspects of the Bush-Hu bilateral talks: an agreement to establish what sounds like a Cold War-style military hotline between Washington and Beijing and President Hu voicing his concern over Taiwan.

The hotline strikes us as good news, instantaneous and direct dialogue is the best way to prevent misunderstanding during times of heightened tensions between global powers (unfortunately, Beijing has a past record of mysteriously not answering Washington's phone calls when Sino-U.S. tensions are high -- just because Mr. Bush no longer has to "dial" when he reaches for the reciever doesn't mean that Beijing is going to pick up).

Not so good news from yesterday's meeting comes in the form of President Hu's ominous remarks on Taiwan, reported this morning in the Washington Times:

"This year and next year are a period of high danger for the Taiwan situation," Mr. Hu told Mr. Bush in bilateral talks, according to a Chinese Foreign Ministry spokesman.

"We must give stronger warnings to the Taiwan authorities," Liu Jianchao quoted the Chinese President as saying. "We cannot allow anyone to use any means to split Taiwan from the motherland."

We ask readers to take into account two aspects of President Hu's language:

1) Hu speaks of the "period of high danger" as though he is a weatherman reporting a high frequency of thundershowers over the weekend -- it can't be helped, that's just the way it is! In other words, President Bush, feel free to forget that China is the physical source of all this heightened danger.

2) We may be going out on a limb here, but refering to your country as the "Motherland" while speaking with the President of the United States (often referred to as the 'Leader of the Free World') -- probably not the best idea. Such lingo tends to reboot your average American brain and fill it with memories of our former adversary, the Soviet Union, bringing to mind stereotypical McCarthy-era images of vodka-swilling generals behind the Iron Curtain extolling the virtues and immortal greatness of 'Mother Russia' while grinding the liberties of the Common Man into the dirt with their patent leather boots.

In condensed form: refering to your country as the Motherland; Fatherland; Parental Gaurdianland . . . not the best way to ingratiate yourself with any American leader.

Meanwhile, back on the ranch (ie: back in the virtual ether, where the image and words of President Chen were being beamed via satellite into the top-story conference room at the American Enterprise Institute, which held an event on Taiwan's bid for UN membership yesterday), President Chen was refusing to give any ground on UN membership or the referendum, laying out clearly and concisely at the well-publicized event Taiwan's rational for persisting in the pursuit of both of these. Fairly well-timed, the AEI event seems to have stirred up a new round of public discourse over cross-Strait relations during a period when coverage of the issue seemed to be flagging.

For video of the conference, you can visit this page on AEI's website. Click the video link on the right of the page.

We poked around for some web video coverage of the APEC bilateral meeting (found plenty on the security-flaunting stunt put on by the cast of Chasers yesterday) but were unable to come up with anything so far. We'll take another shot at it soon.

Chris Nelson attended the AEI conference yesterday and, as perhaps Washington's top non-governmental Asia-Pacific insider, was hounded by reporters after the session. Nelson tips his hat in yesterday's Nelson Report to many of the hard-to-argue-with-both-legally-and-morally points made by Chen at the conference, but (Congressman Rohrabacher's effusive support nothwithstanding) seems to think things are going to get rougher between Taipei and Washington before they get better:

Taiwan's president Chen delivered an emotional but legalistic explanation and defense of why he will continue to pursue a national referendum on whether to pursue UN membership under the name "Taiwan", despite firm US opposition.

Chen seems to calculate that if there is a large enough public vote for the referendum next March, as planned, then a ground swell of pressure will be created on the Bush Administration to, at a minimum, stop criticizing Chen's various efforts to redefine Taiwan's international space.

No serious observer of US-Taiwan and US-China relations thinks such a plan has any chance of success, regardless of the vote, so a continued rise in tensions between
Washington and Taipei seems inevitable...with clear risks for all involved.

. . .

We'll discuss all this below, but will briefly note that it looks to us as though the US, China, and Taiwan are now locked into very different definitions of the "status quo" which increasingly conflict, and which by their very structure make maintaining the peaceful status quo increasingly difficult.

. . .

We thought there were many aspects of President Chen's presentation this morning which, from a strictly legal or strictly moral, or even strictly logical point of view, you couldn't argue much.

Who in this country is opposed to the legitimate exercise of democracy? Who doesn't
wish more democracy, more respect for the rule of law in China?

But we thought that the potentially most revealing thing Chen said and did...something which the AEI panel gamely tried to pass off with mild jokes about alternative song titles...was to actually recite word for word as his "credo" in this
matter, the lyrics from "Man of LaMancha" in which the doomed hero, Don Quixote,
says he is prepared to end up in Hell, so long as he fights the good fight and
dies with a clean conscience.

So that's about all we have for you at the moment. Yesterday was a big day in cross-strait relations and for Taiwan's UN bid -- surely there will be more news on the subject to come.

On a side note: Rest in peace, Luciano Pavarotti -- you touched the world with your voice and persona, and you really knew how to bring an audience to its knees. Nessun dorma 4 Life!

"I think a life in music is a life beautifully spent, and this is what I have devoted my life to." -LP