In post-TPP world, Taiwan ‘must reach new trade deal with US’

TPP’s demise will pose big challenges for island’s export-reliant economy if island does not foster new links with Washington, analysts say

PUBLISHED : Wednesday, 23 November, 2016, 7:00am
UPDATED : Wednesday, 23 November, 2016, 9:18am

Taipei must forge a new deal with Washington to tackle the economic challenges posed by US plans to scrap a Pacific Rim trade deal, analysts said on Tuesday.

US president-elect Donald Trump declared this week that the United States would pull out of the 12-member Trans-Pacific Partnership (TPP) during his first 100 days in office.

Trump’s announcement immediately triggered concerns in the Asia-Pacific, with Japan saying the Pacific Rim trade pact would be meaningless without US ­involvement.

WATCH: US president-elect Trump announces he will cancel the TPP agreement

Analysts said Taipei must quickly build ties with the incoming US administration by signing either a bilateral investment deal or a free-trade pact, or risk economic fallout.

With cross-strait ties at an impasse over President Tsai Ing-wen’s unwillingness to publicly acknowledge the “1992 consensus”, Taipei had hoped to join the TPP to ease the island’s reliance on the mainland.

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Analysts said Trump’s protectionist approach and decision to ditch the TPP would pose great challenges for Taiwan, which depends on exports.

“In terms of global deployment, it means we might come to a dead end if we can no longer access the TPP,” said Kan Kamhon, director of the Institute of Economics at Academia Sinica.

Beijing has viewed Taiwan as a part of the mainland since the end of a civil war in 1949. It has suspended communication and exchanges with Taiwan to try to pressure Tsai, of the independence-leaning Democratic Progressive Party, to accept the consensus and its “one China” principle since she took office in May.

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Edward Chen I-hsin, professor of American studies at Tamkang University, said the government could improve ties with the mainland in a bid to join the Beijing-led Regional Comprehensive Economic Partnership (RCEP) of 16 Asian and Pacific countries.

“Without the TPP or RCEP, it would be difficult for Taiwan to ... diversify its trade and develop its economy, given that Taiwan does not have a huge domestic market like those of the US and the mainland,” Chen said.

What Asia-Pacific trade pacts could replace the TPP?

But Kung Ming-hsin, deputy director of the Cabinet’s National Development Council, was optimistic about prospects for private-sector cooperation between Taiwan and the US, saying ­Taiwan should work out new strategies to reconnect with Washington.

Kung also said the government would step up efforts to sign a bilateral investment agreement with the United States and, if possible, join the Free Trade Area of the Asia-Pacific, a deal proposed by Apec.

Taiwan’s Liberty Times quoted Tsai as saying that in addition to the US and the mainland, there were other players with major economic clout and influence in the region.

She said her administration would strengthen economic links with Asean countries, South Asia, New Zealand and Australia to offset uncertainties in the future.