If No TPP, Then What?

Watching from the sidelines, Taiwan had cheered the efforts of the 12 countries negotiating to create the Trans-Pacific Partnership (TPP) in hope that this economy would be able to enter the multilateral trade agreement in a second round. Now, with the declaration of U.S. President-elect Donald Trump that he will announce the United States’ withdrawal from TPP on his first day in the White House, it seems unlikely that even a first round will come to fruition – at least for a long time to come.

Where does that leave Taiwan and its determination to upgrade its economy, diversify its trade and investment relations, and reduce its reliance on exports to China through more international engagement? Although that question will certainly be provoking a great deal of thought in Taiwan and among Taiwan’s friends and supporters in the United States, no definitive answers can be expected until the personnel make-up and policy directions of the Trump administration are better known.

At the same time, it is possible to make some educated guesses about trade-policy directions in the months ahead. Trump has made clear that his administration’s trade policy will emphasize enforcing commitments and understandings under existing trade relations – in line with his priority of ensuring fair practices that do not put American goods and manufacturers at a disadvantage. In this respect, Taiwan has the benefit of already being part of a well-established mechanism with the United States – the Trade and Investment Framework Agreement or TIFA – that permits close monitoring of the bilateral economic relationship and regular discussion of any trade irritants.

Once a year, most recently in October this year in Washington, D.C., high-level delegations from the two sides convene a TIFA Council meeting. Those sessions have generally been quite productive, and with the exception of a few sensitive issues – mainly related to agricultural products – the TIFA process has been characterized far more by cooperation and collaboration than by any discord.

Taiwan, in fact, may now have an excellent opportunity to build a close and cordial relationship with the incoming administration by making further concrete progress on any outstanding TIFA issues, clearly demonstrating that Taiwan fully shares U.S. principles about fair trade and deserves to be regarded as one of America’s most reliable trading partners.

Another likely development under the Trump administration will be decreased emphasis on multilateral platforms such as TPP in favor of more bilateral activity. Substantive progress in the TIFA channel – as well as continued strides on Taiwan’s part to make its regulatory regime more transparent, accountable, and fully in line with international standards and practices – would give Taiwan a strong case for consideration by the U.S. government as a prime candidate for selection as a negotiating partner for trade and/or investment agreements.

Donald Trump has stated that he is not anti-trade or anti trade-agreements – only against trade agreements that treat the United States unfairly. And many commentators have observed that Trump will find that fulfilling his promise of spurring U.S. economic growth and job creation will be impossible without promoting international trade.

Although the political environment may be changing, Taiwan needs to be ready to take full advantage of whatever opportunities may arise.

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