American industrialists and businessmen carne to Taiwan, they saw the market and the production, and they expressed belief that the Republic of China will advance still farther from its present position as the eighth ranking trade partner of the Republic of China. Some 130 of them attended the second ROC-U.S. Trade and Investment Forum in September. All 50 of the American states were represented plus the Virgin Islands. At their head was David Kennedy, the former secretary of commerce, and in their ranks were two governors, three lieutenant governors and a number of state legislators. The third Forum will be convened in 1981.
President Chiang Ching-kuo told the visitors that the Republic of China is a free and democratic country with a market which will always be open to the free world. He pledged that free China will continue efforts to strike a balance in U.S. trade. Four purchasing missions have been sent to the United States in the last two years and another is going early next year. Premier Sun Yun-suan has said that the procurement teams seek to make purchases in alI 50 American states.
Sponsors of the five-day Forum were the Board of Foreign Trade of the Republic of China, the ROC-USA Economic Council and the USA Roe Economic Council. William Morell, one of the moving spirits in the USA-ROC Council, said a trade mission from all states will visit the Republic of China early next summer to promote the sale of American products.
Minister of Economic Affairs Chang Kwang shih told the Forum that in the fast-growing Taiwan economy, import levels of energy, minerals and agricultural products are rising rapidly. The steady increase in per capita income assures that the people will be able to afford more and better consumer goods.
First and foremost," Minister Chang declared, "we are in need of energy resources, of which sorne 80 per cent have to be imported. Although the Middle East is our principal source of petroleum, about 60 per cent of it is supplied through American companies. There are six nuclear power units in Taiwan, and these depend on the United States for over 90 per cent of their fuel. To alleviate the increased dependence on imported oil, we are going to build within the next ten years an additional thirteen 550,000- kilowatt coal-fueled thennal plants and more nuclear power plants. The United States is the most logical source of supply for the equipment required, and this will cost billions of dollars. Besides looking to the United States for additional nuclear fuel, we also plan to import coal from the United States. In fact, the Taiwan Power Company has already sent a team to the United States to look into the availability of coal.
"Equally important is our import of agricultural products. We have to buy about 5,000,000 tons of grains annually, mostly from the United States. The limited supply of arable land makes this country a steady market. The quantity required is not dependent on the domestic market.
Although accurate figures are not yet available for our rapidly increasing expenditure on the licensing of modern technology (which is not shown in bilateral trade statistics), there is no doubt that the United States is by far our most important licensor. The development of tech nology-intensive heavy and precision industries calls for more and more transfers of sophisticated technology in which we consider the United States far superior to any other industrialized country.
New industries must import various types of modern and sophisticated equipment in large quantities. I understand most of our entrepreneurs and high-level technical personnel lean to America and maintain frequent contacts with members of the US-ROC and ROC-US Economic Councils. I recommend that full advantage be taken of the services of these two organizations for business infonnation which may lead to mutually profitable transactions. I also see the advantage of suppliers making frequent visits to Taiwan for direct contacts with us so as to be familiar with our projects as early as the gestation period. This will give them ample opportunity and sufficient time to prepare for the competition with suppliers from other countries.
It is only natural for developing countries to discourage import of consumer goods in their initial stage of development. As our people are becoming more and more affluent, the ROC is a promising market for quality consumer goods. However, much promotion, merchandising and advertising needs to be carried out by suppliers.
While U.S. manufacturers and businessmen are usually ahead of other countries in this respect, they have paid less attention to Taiwan than to many of the others. I believe it is time for American businessmen to catch up."
American investment in the Republic of China amounted to US$634 million as of last July, or 44 per cent of the total, Minister Chang said. He cited the US$100 millionjoint venture between the Taiwan Power Company and General Electric, and said, "For this type of heavy machinery, the cost of manufacturing in the United States is much higher than in sorne other industrialized countries. This eliminates any chance of the United States winning in competition for the Taiwan market. The joint venture takes full advantage of the fact that a domestic company can sell locally produced equipment to its customers on mutually agreeable terms without involvement in competitive bidding. However, in the manufacture of sophisticated equipment, the local contribution is comparatively low. The majority of components and parts supplied by General Electric come from the United States. This gives a big piece of business to the American company and creates many jobs for American workers."
Trade between the Republic of China and the United States is expected to reach US$10 billion this year compared with US$5.6 billion in 1977, Minister Chang said. He noted a prediction that the trade level of the two countries will exceed US$100 million in the years from 1980 through 1985. "Foreign trade has been growing at a rate of about 30 per cent annually," he said. "With exports of US$12.7 billion in 1978, the Republic of China was the 16th largest exporting country in the world. For the first time, our exports exceeded 1 per cent of the world's total."
H. K. Shao, director general of the Board of Foreign Trade, called attention to the efforts of the Republic of China to reduce the favorable balance of its commerce with the United States. The government has imposed limitations on import sources so as to increase the opportunities of American suppliers. A. U.S. Trade Center has been established in Taipei to sponsor exhibitions of American products. In 1976, the government lowered the tariff on household appliances. On December 29, 1978, an agreement was signed under which each country is making tariff concessions. Contracts have been signed with nine U.S. grain suppliers for 10 million metric tons of wheat, soy beans, maize and barley to be delivered over a period of five years. The ban on the import of passenger automobiles was lifted in March solely for the benefit of North American manufacturers. Buying of the four purchasing rnissions sent to the United States since 1978 has exceeded US$2.5 billion. In the January-July period of 1979, exports to the United States increased by only 11.8 per cent while imports were rising by 36 per cent.
Delegates exchanged views on what each country might expect from the other. Chinese business men expressed particular interest in machinery equipment, and Americans showed interest in joint ventures for producing machinery in Taiwan for export to Southeast Asia. Buying and selling lists were exchanged. Promising products for sale in Taiwan aside from machinery and grains are lumber, cotton, beef, pulp, dairy goods, telecommunications equipment and computer and IC equipment. Americans also mentioned harbor equipment and anti-pollution equipment. They expressed an interest in setting up more Taiwan offices. David S.L. Chu, president of the Taiwan Power Company, said purchases of sorne US$20 billion worth of facilities are in prospect from the United States in the next decade. He estimated Taipower will need 8 million pounds of uranium for four nuclear power plants annually by 1991. Coal purchases are expected to reach 15 million metric tons annually by 1988.
Benjamin C. Lu of the Board of Foreign Trade said the government expects to increase grain imports by 10 per cent annually. Purchases of maize, wheat, barley and soybeans are estimated at 6 million tons in 1980 and 9 million tons in 1985. Increased imports of cotton, tobacco, newsprint, pulp, beef and leather are also expected. He suggested that each state should set up a representative office in Taipei.
Dr. H.C. Fang, president of the Industrial Technology Research Institute, put Taiwan's needs for imported electronics, computers, telecommunications equipment and integrated circuits and components at US$200 million for1980.
K.H. Wu, secretary general of the China External Trade Development Council, said the American states should make more detailed investment proposals and thereby attract more Taiwan capital. T.C. Yuan of the Keelung Harbor Bureau asked for such products as multipurpose cranes and anti-pollution equipment. T.L. Yu, director of the Industrial Development Bureau, recommended that the U.S. chemical and petrochemical industries supply facilities and equipment for rapidly developing Taiwan plants.
Americans attending the Forum were optimistic about the future of U.S.-Taiwan trade. AlI were impressed by the Taiwan economic prospect.
Governor John V. Evans of Idaho said that the United States has un favorable trade balances with many countries but that if all were working as hard to correct them as the Republic of China, the United States would not be so concerned about rising oil prices and recession. His state has sold wheat and barley to Taiwan. He said Idaho can supply other agricultural products and lumber.
Governor Robert F. List of Nevada expressed regret that the United States had suspended diplomatic relations with the Republic of China. Nevada can export agricultural products and electronics to Taiwan, he said. The mainstays of the state's economy are tourism, entertainment, farming and electronics. The program "Vegas" is shown on Taiwan television along with many other serial dramas that are popular in the United States.
Bud Thar, staff director of International Trade and Foreign Relations of the U.S. National Governors' Association, said the Forum has helped to focus U.S. trade attention on the Republic of China. There is a strong commitment by the American people to maintain healthy commercial relations with Taiwan, he added, and said that the effort of the ROC to buy from the United States "is actually helping us to be salesmen."
Wayne Sanstead, lieutenant governor of North Dakota, observed that "there is honest talk on both sides." Each under stands the other's position, he added, and urged the ROC to reduce tariff barriers. North Dakota wants to sell barley, hide and seeds. Walter Miller of the North Dakota House of Representatives expressed confidence that his state will be shipping more to Taiwan.
Jack Craig, Oklahoma commissioner of agriculture, said the meeting produced many new contacts and enabled his state to make known its products. Laurie Lawson of South Carolina noted that Taiwan had bought grain from his state and said the two sides had learned more about each other's needs.
Lenn Hannon, a state senator from Oregon and chairman of the Trade and Economic Develop ment Committee, said Oregonians want to sell meat, grain and pulp. He was impressed by the pig raising of the Taiwan Sugar Corporation and said Oregon could provide technology in veterinary medicine.
Fred Copeland, a legislator from Missouri, said the United States was satisfied with its sales to the Republic of China. He was pleased with Taiwan's efforts to balance trade between the countries.
Oscar Mauzy, a state senator from Texas, expressed interest in the free Chinese system of education. He said his state could offer technological know-how in offshore drilling for oil. He expressed interest in imports of agricultural products and eel fry.
Lieutenant Governor David S. Monson of Utah offered his state's energy resources and electronic equipment. Utah universities can supply technical know-how, he added.
California wants textiles and can provide fruit, food products and electronics and machinery, said S. Floyd Mori, a Japanese-American legislator. American businessmen are not so aggressive in international trade as they should be, he said, and called attention to California's exports of aircraft and motion pictures. He advocated lower tariffs on both sides.
John C. Pritzlaff Jr., a state senator from Arizona, admitted that his state didn't know so much about the Republic of China. "I hope I can improve relations," he said. A sunshine state, Arizona may interest Taiwan in solar energy generation, he said.
Amadeo I.D. Francis from the Virgin Islands said Taiwan exports to his homeland but buys Iittle there. New industries may change this, he said, and expressed hope for investment by Taiwan businessmen.
James KIein, vice- president of General Instrument of Taiwan, told his compatriots about doing business in the Republic of China. GIT, a wholly owned subsidiary of General Instrument Corpora tion of New York, was the first foreign~apitalized electronics company to establish a plant in Taiwan. Operations began in 1964.
Klein cited the good investment climate and favorable laws of the Republic of China, together with competent government and skilled labor. "You will need your very best to succeed," he said, "but if ever there was a nation with the desire, the will and environment for capable busi nessnren to work together, it is the Republic of China.
''The ROC wants to grow, and the Statute for the Encouragement of Investment is a well written document that makes it possible for a businessman to evaluate investing in Taiwan and plan for the future with confidence that there will be no adverse surprises." Investors' ideas are listened to, respected and often heeded, he said. "The government is accessible. All levels are in most cases only a telephone call away. When we need advice, it is offered freely."
Americans are liked and respected, he said, despite the severing of diplomatic relations with the Republic of China.
GIT employs more than 12,000 technicians, managers and other workers at three plants, compared with 200 when the first factory was established. ''the workers in our plant are attentive, diligent and hard working," Klein said.
"Productivity is very high and the learning time for very complex things is 30 to 40 per cent shorter than we experience at other plants throughout the world. Investment is about US$50 million and will be increased by US$20 million in the next four years."
GIT has trained more than 65,000 workers in Taiwan. The payroll accounts for about US$20 million a year. Forty-five per cent of parts and components for rectifiers, TV tuners and def1ection components, IFT coils, integrated circuits and mercury relays are purchased from Taiwan subcontractors, Klein said. "Needless to say, we are frrrnly cornmitted to Taiwan as a place to do business not only now but in the foreseeable future. We like Taiwan."
Delegates to the Forum saw the GIT operations together with the plants of Ford Lío Ho, Zenith, Far Eastern Textile and others. They also saw sorne of the state-owned plants at Kaohsiung, the heavy industrial center in the southwest. They went to the Taipei Blood Donation Center to malee donations for the surgery that separated Siamese twins for the frrst time in the Republic of China's medical history.
David Kennedy, chairman of the USA-ROC Economic Council, predicted that trade between the countries may exceed US$200 billion in the decade of the 1980s. Judging from the success of the Forum and from the third joint business conference of the USA-ROC Council in Los Angeles, attended by 250 Taiwan representatives and 750 American businessmen, that forecast may not be overly optimistic. The trade fit between the U.S. and ROC is obviously a very good one, and those concerned have every intention and interest in reaching the goals they have set.