Opinion

What Taiwan should get for concessions on US beef

(Courtesy of MOEA)

• Publication Date：06/20/2012
• Source： Taiwan Today

U.S. Trade Representative Ron Kirk and William A. Stanton, director of the American Institute in Taiwan’s Taipei office, have both said that if the issue of beef imports can be resolved, talks under the Trade and Investment Framework Agreement can be resumed. Local politicians have interpreted their statements to mean that once the matter is settled, negotiations can begin on a free trade agreement.

But the U.S. has never made this connection, and TIFA has no necessary relationship to an FTA. Instead of tying the beef question to TIFA, the Taiwan government should link it directly to a comprehensive FTA.

TIFA merely provides a platform for regular talks between Taipei and Washington on economic and trade issues. Although it was signed in 1994, there have only been six rounds, in 1995, 1997, 1998, 2004, 2006 and 2007, and the topics discussed have never been designed to lead to an FTA.

In other words, if Washington really wants to negotiate an FTA with Taipei, it can be done even if TIFA discussions are not restarted. But if the U.S. has no such desire, it will not matter how many TIFA talks are held.

The confusion is probably due to analogy with the Cross-Straits Economic Cooperation Framework Agreement (ECFA). Although both ECFA and TIFA are called framework agreements, they are very different in nature. ECFA provides reduced tariffs on hundreds of products and a mechanism for talks on trade in goods and services, investment protection and settlement of disputes, with the goal of quickly establishing a cross-strait free trade zone.

High-ranking Taiwan officials have spoken of a building-block approach to an FTA, this year holding talks on goods, next year on trade and the year after on investment and taxation. Supposedly, as the agreements pile up, the resulting structure will eventually be a Taiwan-U.S. FTA.

But the U.S. is now most interested in bilateral investment and double taxation deals, while what Taiwan needs most is an agreement under which its goods could enter the U.S. tariff free. It is clear that the blocks Washington is interested in stacking up are not necessarily advantageous to Taipei, and since Washington is the stronger party, Taipei’s bargaining chips would soon be used up.

Whether bilateral or multilateral, recent FTA negotiations around the world have tended to take a package-deal approach, rather than adopting the single-block-at-a-time strategy. When multiple issues are dealt with simultaneously, it is easier to accommodate differing positions.

If one country makes concessions regarding investment, for example, the other may reciprocate when it comes to goods, so the two may work out the best mutual arrangement. Making agreements piecemeal, in the building-block fashion, cannot achieve this.

Clearly, the government should tie U.S. beef imports directly to an FTA, rather than to TIFA talks, so that this unique bargaining chip will not be wasted. For its sacrifices regarding beef, Taiwan should get a written U.S. promise that negotiations on an FTA will begin forthwith. Moreover, a building-block approach orchestrated by the U.S. should be replaced with an umbrella design encompassing goods, services, investment and taxation, to give Taiwan more room to maneuver. (THN)

(This commentary originally appeared in the Commercial Times June 6, 2012.)

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