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Taiwan’s Ma seeks to join Trans-Pacific Partnership

Asia Sentinel | Wednesday, 25 January 2012

Taiwan’s Ma Seeks to Join Trans-Pacific Partnership

Written by Jens Kastner

Ma would like to be in both camps
But China says no way, Jose

US President Barack Obama’s promotion of the Trans-Pacific Partnership multilateral free trade agreement, put forward in November at the Asia-Pacific Economic Cooperation meeting in Hawaii, is seen as a strategic tool to drive a wedge between the US and its Asia-Pacific friends on one side and China on the other.

Now Taiwan’s newly-reelected President Ma Ying-jeou, who in his first term steered the island toward unification with China, says he wants to join as well. Ma labels the quest for membership a part of his “golden decade plan” although there are other, more pressing reasons for Taiwan’s wish to join. Without tariff cuts and the other benefits of free trade agreements, Taiwan risks losing out to its major competitor, South Korea, which has signed free trade agreements all over the planet.

However, it is difficult, given the island’s relationship with Beijing, to believe that Ma would be able to steer Taipei under the TPP even if the pact comes to fruition.

As envisioned by the Obama Administration, the pact excludes China and would likely be comprised of the US, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and Japan. If the latter are included, the trade pact would create a regional economic group about 40 percent bigger than the European Union. But it is abundantly clear to Beijing that the push to create the grouping is not about the economy but about strategy.

With US co-operation already in place with the Association of Southeast Asian Nations countries, Japan and Australia would supplement American forces already stationed in the region. That extends their reach into the straits of Malacca, Sunda and Lombok, where most Chinese crude oil, cargo and ore pass through. Thus the agreement is regarded by the Chinese leadership as a hidden military alliance.

Needless to say, Beijing does not wish to see Taiwan, an island it claims its own, anywhere near that.

“Are you sure that you want to join the negotiations?” Wang Yi, director of China’s Taiwan Affairs Office, the organ responsible for Taiwan-related policies, mockingly responded to queries by Taiwanese journalists.

Sun Zhe, director of the Sino-US Studies Center at Beijing’s Tsinghua University, made Beijing’s stance clearer.

“Taipei must reconsider the idea of forming closer political ties with the US and Japan through the negotiations. Taiwan’s participation in the Trans-Pacific Partnership would be harmful to its trade pact with China," the Economic Cooperation Framework Agreement, or ECFA, Taipei and Beijing signed in 2010.

Sun subsequently hinted even more broadly that for Taiwan, ECFA and TPP would be mutually exclusive.

“Taiwan may be attempting to tread the fine line between China and the US, but which flavor of alphabet soup will the island choose in the end, ECFA or TPP?”

Apart from helping Ma deflect domestic criticism that Taiwan is becoming too dependent on China economically, Taiwanese aspirations for TPP membership must be regarded as a means to counter South Korea’s proactive free trade agreement strategy. The island’s main trade rival already has signed FTAs with Asean, the European union and the US, among others, and is to begin talks on an agreement with China shortly. If all goes smoothly for the Koreans, within the next two years 60 percent of their exports will enjoy tariff concessions, mostly in key markets where they compete head-to-head with the Taiwanese — in electronics, steel, machinery, petrochemicals, plastics and textiles.

Possibly on Beijing’s behalf, Taiwan’s staunchly pro-unification media already pointed at a route other than via TPP for Taiwan to stay competitive.
“Beijing is leading economic integration in East Asia,” said an editorial in the Want Want China Times. “Therefore, Taiwan and China should collaborate on a strategy to jointly promote regional economic integration through the ECFA, and establish a greater China free trade zone, which would include Taiwan, China, Hong Kong, Macau and Singapore.”

Making Ma’s plan appear even more unrealistic, Washington has already shown him somewhat of a cold shoulder, either to pressure Taipei to ease restrictions on the import of US beef or to appease Beijing, or both.

“The Taiwan economy and Taiwan has been really protectionist. It remains very protectionist," said Raymond Burghardt, chairman of the American Institute in Taiwan (AIT), the US de facto embassy. "Taiwanese officials have made it clear publicly and privately that Taiwan is not ready for a TPP kind of agreement.”

Nonetheless, Taiwan’s attempt to join the trans-Pacific partnership is not entirely implausible, according Liou To-hai, a professor of diplomacy at National Chengchi University and an expert on FTAs interviewed by Asia Sentinel. Liou acknowledged that it is going to be a very long way but insisted that it should be so, as Ma had indicated by talking of a 10-year timeframe.

“As Beijing doesn’t want Taiwan to join the TPP, Taiwan has to be very careful in dealing with the issue," Liou said. "Taiwan’s rushing to join the TPP might end up with either slowing down or suspending negotiations to conclude the ECFA.”

He emphasized that four agreements crucial for Taiwanese interests remain on the ECFA negotiation table, namely on trade in goods, trade in services, investment and IPR.

“Also, TPP is against Taiwan’s grand strategy to economic survival in terms of priority, mainly because China is both a primary manufacturing base and major market for Taiwan enterprises. That is why we should focus on concluding the four agreements of ECFA first and get it done ASAP due to the mounting threat from South Korea.”

Liou warned that as two of Taiwan’s three largest export markets – EU and the US – have already been threatened by South Korea’s FTAs, it is of great importance for Taiwan to conclude the pact with China before South Korea reaches an FTA with Beijing. If not, Taiwan would be in a very disadvantageous position vis-à-vis both Beijing in future ECFA negotiations as well as with Seoul in the global trade competition, Liou said
He echoed doubts raised by US officials, who said the Taiwanese economy might not be ready any time soon.

“TPP is a very high quality FTA, covering trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy. If Taiwan rushes to join, Taiwan’s domestic sectors would have tremendous negative impacts, the agricultural sector in particular.”
Liou concluded with a cautionary note, warning that the version of the TPP Obama produced for his Asia-Pacific allies could turn out a mirage.

“TPP’s feasibility is questionable. Obama does not have the mandate to sign it now. [Former] President George W. Bush’s fast track negotiating authority [for trade agreements] expired on July 1, 2007. It is unlikely that Obama can get one in a short period, given rising protectionist sentiment in the US.”

A US academic supported this Liou’s assessment. John F Copper, a professor of international studies at Rhodes College in Memphis, Tennessee, cautioned that the US has not explained itself very well on the trans-Pacific partnership.
“There are other ways to manage trade issues and accomplish free trade and other organizations to promote US relations with Asia," Copper said. "APEC is supposed to do this. Perhaps Obama wants to go beyond FTAs, but I see protectionism too strong among Democrats for this to go anywhere.”

 source: Asia Sentinel