As regular readers of this publication are well aware, the American Chamber of Commerce in Taipei is convinced that Taiwan’s participation in the emerging regional trade grouping known as the Trans-Pacific Partnership (TPP) will be absolutely essential for the future well-being of this economy.
Exclusion from the TPP in the years ahead will diminish the competitiveness of Taiwan-made products in many important markets, decrease Taiwan’s attractiveness as a destination for investment, and induce many export-oriented domestic manufacturers who still produce on the island to shift operations to offshore locations covered by the TPP in order to enjoy tariff breaks and other benefits.
Until fairly recently, AmCham was growing concerned that Taiwan was not moving rapidly enough to prepare its candidacy for inclusion in a second round of TPP negotiations. To gain necessary support for their bid from the 12 current negotiating parties, would-be new candidates will need to take concrete steps to show that they are fully committed to broad-based liberalization of their economies. For that case to be convincing, moreover, they will also need to demonstrate that they have mobilized wide support from influential domestic constituencies, providing assurance that particular interest groups will not be able to shut down the accession process.
Lately there have been positive signs that the government is starting to take appropriate action. A recent forum sponsored by the Ministry of Economic Affairs with help from the Chung-Hwa Institution for Economic Research, for example, provided members of the business community and other interested parties with valuable information on the importance of TPP membership for members of both the manufacturing and service sectors. Many more such events are planned. The National Development Council has also been continuing its efforts to bring regulatory activity throughout government in line with international standards and practices.
These initiatives are coming at a crucial time. Just a few months ago, given the sharp political differences in the United States on trade policy and the many remaining points for the 12 negotiating teams to reach agreement on, there was still some reason for skepticism about the chances for the TPP to actually come to fruition.
But the situation has now changed significantly. Bills are moving forward in both houses of Congress to provide President Obama with Trade Promotion Authority (TPA) – the fast-track channel considered vital for TPP to win ultimate approval by U.S. legislators. While passage of TPA is still by no means assured, its proponents have been increasingly optimistic that it will take place within the coming several weeks.
Enactment of TPA would then change the entire environment for the TPP negotiations. Countries that have been reluctant to show their hand until the end-game is in sight would suddenly become more flexible and willing to compromise in the interest of bringing about a final agreement. And once that agreement has been concluded, the 12 current players will be able to start thinking about who else deserves to join the group.
The likely timetable is beginning to take shape; 2016 – which now seems just around the corner – could be the make or break year for Taiwan’s TPP participation. Will this country be ready?