The annual delegation found an encouraging atmosphere for U.S.-Taiwan economic relations.
When an AmCham Taipei delegation made the rounds of Washington, D.C., for a week in mid-June, it had three main requests for the U.S. government:
- Restore the former practice of holding high-level trade negotiations with Taiwan under the Trade and Investment Framework Agreement on a regular, preferably annual, basis. Such “TIFA talks,” have not been held since October 2016.
- Resume periodic visits to Taiwan by U.S. Cabinet-level officials to ensure that the bilateral relationship continues to develop in a positive direction. Only one such visit – that of Environmental Protection Administrator Gina McCarthy in 2014 – has taken place since 2000.
- Include Taiwan among the countries to be considered by the U.S. as prime potential negotiating partners for a bilateral Free Trade Agreement (FTA).
“On all of these points, our group had thoughtful and constructive exchanges with key U.S. government officials, as well as members of Congress and influential scholars,” said AmCham President William Foreman, who led the delegation together with Chamber Chairman Leo Seewald. “While there were no dramatic breakthroughs, the overall atmosphere was much more positive than in the past few years. We came away quite encouraged.”
Formerly known as the “Doorknock,” the annual trip was rebranded this year as AmCham Taipei’s “CEO Mission to Washington” to stress its strategic and high-level nature. The delegation consisted of five executives from member companies of the Chamber and four members of the AmCham staff.
Regarding resumption of the TIFA talks, the AmCham representatives made the case that these meetings are needed to help push for progress on issues of importance to American companies operating in the Taiwan market. It was noted that in the Chamber’s 2019 Business Climate Survey, nearly three-quarters of the respondents said it was important for their business for TIFA talks to be resumed.
The discussions in Washington about TIFA gave the AmCham delegation “the feeling that things are moving in the right direction,” Foreman said. But a number of factors are likely to affect the timing, particularly the status of American trade negotiations with China, since many of the same U.S. personnel cover trade relations with both China and Taiwan.
If the TIFA process can move forward – and especially if it results in significant progress toward resolving outstanding bilateral trade issues – the idea of concluding an FTA with Taiwan might gain a more favorable hearing in Washington. At present, the AmCham CEO Mission was told, Taiwan is not being mentioned as one of the countries that the U.S. is likely to consider when it is ready to enter into additional FTA negotiations.
Because of its relatively small staff, the Office of the U.S. Trade Representative (USTR), which is responsible for trade negotiations, can undertake only a limited number of negotiations at any given time. It is currently engaged in negotiations with Japan and the European Union, while preparing for the possibility of interaction with the UK should Brexit occur. Also uncertain is whether the U.S.-Mexico-Canada Agreement (USMCA), the proposed replacement for NAFTA, will be concluded without the need for any further negotiation.
Although the official U.S. position is that its decisions on entering into trade agreements are made on their merits without regard to the opinion of third countries, it has long been assumed that China’s almost certain vehement objection would also pose an impediment to Taiwan’s inclusion on the list of FTA candidates. Now the prolonged, increasingly testy tariff war between Washington and Beijing may be changing that calculus, in the view of some informed observers in D.C.
Given the cooling in the U.S.-China relationship, numerous sources on Capitol Hill and in think tanks suggested to the AmCham delegation that this might be an ideal time for Taiwan to push for an FTA with the U.S., so that Taiwan at least starts to be mentioned as part of the conversation on future American trade policy.
As these observers see it, the Indo-Pacific strategy being undertaken by the Trump administration reflects renewed U.S. determination to play an active role in the Asian region, and there seems to be growing awareness in Washington of the ways in which a secure and prosperous Taiwan can assist the U.S. in that role. By creating another firm tie between the two countries and reaffirming their longstanding friendship, a U.S.-Taiwan FTA would be a boost to the island’s self-confidence at a time when Beijing, under Xi Jinping’s leadership, seems more intent than ever on undermining Taiwan’s resolve.
Until now, however, that strategic view of the Taiwan relationship has often been eclipsed by the continuing stalemate over unresolved trade issues, particularly those involving Taiwanese restrictions on the import of certain U.S. beef and pork products. U.S. trade negotiators consider that Taiwan has failed to live up to its commitments as a World Trade Organization member to base its trade decisions on established scientific evidence, and they are unwilling to negotiate what they believe should be matters of principle.
The crux of the beef issue is Taiwan’s prohibition on the import of ground beef and offal from the United States. The ban was instituted by the Legislative Yuan in 2009 despite a protocol that the Ma Ying-jeou administration had signed with the U.S. fully opening the market. The legislators voiced continuing concern about the impact of mad cow disease.
The pork issue is Taiwan’s zero-tolerance policy for traces of ractopamine, a leanness-enhancing feed additive used by most U.S. hog ranchers. Since 2012, Taiwan has accepted a maximum residue level (MRL) for ractopamine in beef set by the Codex Alimentarius, the international food standards body. It has not accepted the same standard for pork because of strong objections from consumer groups arguing that Taiwan needs to impose heavier restrictions because of the large consumption of pork in the Taiwanese diet.
Given the long impasse over the beef and pork issues, AmCham has proposed that the two sides commit to resolving the dispute as part of broader negotiations for an FTA. So far the American position appears unchanged: beef and pork need to be resolved as preconditions before the U.S. is willing to enter into new negotiations for a full-fledged trade agreement. On the other hand, in what has been called the “building block” approach, there have been hints that the Americans could consider negotiating with Taiwan on the equivalent of a chapter or two in the standard FTA. “Digital Economy” and “Transparency” are examples of themes that have been suggested.
As AmCham always does during its trips to Washington, each meeting included the presentation of a two-page handout entitled “Why Taiwan Matters.” It serves to inform – or remind – the Chamber’s American contacts of the many reasons why Taiwan is important for the U.S. Some of the key points include Taiwan’s rank as America’s 11th largest trading partner, its open and vibrant political system sharing American values of democracy and human rights, and close collaboration with American industry as a key part of their global supply chains.
In its Washington meetings, the delegation also reported on the highly encouraging progress achieved over the past two years through AmCham’s White Paper process. “We repeatedly made the point that the Taiwan government has been cooperating very closely with the Chamber to make concrete improvements in the business environment,” Foreman says. “As a result of that serious effort, we set an all-time record in 2018 for the number of White Paper issues resolved, and last year we came very close to duplicating it. We believe the U.S. would find the same sincerity on Taiwan’s part as an FTA negotiating partner.”
Following the CEO mission, the AmCham team will report on its findings to prominent leaders in the Taiwan government as well as to the American Institute in Taiwan.
American Chamber of Commerce in Taipei
2019 CEO Mission, Washington, D.C.
June 17-21, 2019
Office of the Vice President
National Security Council
Office of the U.S. Trade Representative
Department of State
Department of Defense
Department of Commerce
American Institute in Taiwan/Washington
Senator Todd Young
Senate Foreign Relations Committee staff
Representatives Steve Chabot, Mario Diaz-Balart, Ted Yoho.
Offices of Senators Marsha Blackburn, Chris Coons, Kevin Cramer, Mike Crapo, Josh Hawley, James Inhofe, Jeffrey Merkley, Pat Roberts, Chuck Schumer.
Offices of Representatives Gerry Connolly, Mike Kelly, Guy Reschenthaler, Kim Schrier, Mikie Sherrill, Albio Sires.
C & M International
DC International Advisory
DPP Liaison in Washington
National Foreign Trade Council
National Pork Producers Council
Taiwan Economic and Cultural Representative Office in the U.S.
U.S. Chamber of Commerce