To secure Taiwan’s economic future, Tsai needs to find a way for Taipei to join transpacific trade pact
Steven Keithley says it is easy to detail the benefits of the Trans-Pacific Partnership for the island, but achieving membership will be much more difficult, not least because of Beijing’s opposition
In 1999, Charlene Barshefsky, a divisive American attorney, negotiated China’s ascension to the World Trade Organisation, ensuring the survival of the post-second-world-war international trade consensus. Her success garnered acclaim, including that of a soft-spoken former Taiwanese law professor and bureaucrat who would later describe the lawyer as the leader she most admired.
Seventeen years later and that academic – Tsai Ing-wen – is now Taiwan’s first female president, and she must ensure Barshefsky’s legacy returns to prominence. For the sake of Taiwan’s future, Tsai needs to channel the woman she admires so much and achieve her own monumental trade accord: the Trans-Pacific Partnership.
After all, Tsai’s victory came from a single domestic issue, the economy, which lies at a dangerous crossroads. GDP shrank in the final quarter of 2015, and many of the island’s best and brightest have left for mainland China. The TPP offers a solution, as membership could rebuild trade relationships and revive fading industries.
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Although the Economic Cooperation Framework Agreement created opportunities in cross-strait trade, the proliferation of agreements among Taipei’s neighbours has put Taiwan in a weak position outside the mainland with respect to its main competitors in Pacific trade, Japan and South Korea. For instance, following the US-Korea Free Trade Agreement, Taiwan’s share of trade with the US, its third-largest trade partner, fell noticeably. Similar reductions are starting to be seen with other participants in Korean or Japanese free trade deals or preferential trade agreements, which now include eight of Taiwan’s 10 largest trade partners. And who can blame them? Few governments and businesses are willing to accept higher barriers when similar opportunities without tariffs exist elsewhere. The TPP could reverse this trend.
It would also facilitate the resumption of Taiwan’s position as the destination for high-quality added value in regional supply chains. Through minimal or non-existent tariffs with the developing nations which serve as sources of raw materials and the developed countries, which serve as markets for Taiwan’s intermediate goods and components, the TPP would mitigate the cost and lack of opportunity that has weakened Taiwan’s key industries.
Achieving membership will be difficult. The issues Tsai would face, such as Beijing’s opposition, cannot be understated. Even Barshefsky acknowledged the “China first, Taiwan next” principle in international trade. But, to address the concerns which made her the Chinese-speaking world’s most powerful woman, Tsai must find a way.
Steven Keithley is the executive editor of the Virginia Journal of International Law