Moving Toward an FTA

The AmCham Taipei CEO Mission that visited Washington, D.C., this June found growing interest among American government officials in seeking ways to strengthen bilateral relations with Taiwan. As reported in this issue of TOPICS, there now appears to be greater understanding and appreciation in Washington of Taiwan’s strategic value in the Indo-Pacific as a staunch proponent of democracy and human rights. On the economic front, as the United States calls China to task over its chronic violations of international trading rules and fair play, Taiwan stands out in clear contrast as a reliable trading partner.

In the opinion of many of the political observers that the AmCham delegation spoke to, the atmosphere has never been more favorable for attempting to put the U.S.-Taiwan relationship on an even sounder footing. In Congressional offices and think tanks in particular, it was frequently suggested that the time has come for Taiwan to push for a free trade agreement (FTA) with the U.S. as the best way to solidify those ties.

Unfortunately, some key officials in the U.S. executive branch seem to disagree.  The CEO Mission was told that Taiwan is currently not included on the list of countries even being considered for eventual FTA negotiations, despite its standing as America’s 11th largest trading partner.

To be sure, Taiwan is off the radar screen partly because U.S. trade negotiators are busier than they’ve ever been before. They’re trying to resolve the U.S.-China trade tensions while also dealing with a full pipeline of trade deals with the United Kingdom, European Union, and Japan.  

Considering the vital importance of the U.S. relationship for Taiwan’s security and economic prosperity, the challenge for the Taiwan government will be to convince the American side that Taiwan would be an ideal partner for a trade agreement. AmCham believes that the quickest way for Taiwan to get positive attention in Washington would be to show its determination to resolve all nagging outstanding trade issues. Taiwan needs to better position itself as a country that adheres to high standards.

Taiwan recently took a major first step in that direction when it opened the way to establishing an effective pharmaceutical patent-linkage system to keep infringing drug products from getting to market. The issue had been a key item on the bilateral trade agenda for many years. Two years ago, Taiwan enacted the necessary legislation to create patent linkage, and this summer it finalized appropriate implementation rules that are expected to soon go into force.

The Taiwan government deserves commendation for smoothly carrying out this process. In addition to the direct significance for the pharmaceutical industry, the achievement underscores Taiwan’s dedication to intellectual property protection in general.

Some of the other still-unresolved trade issues – particularly those involving food products such as pork and beef – have been more politically sensitive domestically. But even if those issues cannot be fully resolved immediately, evident progress in moving toward a solution could contribute to changing minds about the feasibility of an FTA with Taiwan. 

The Taiwan election cycle may complicate the ability to move ahead quickly. But AmCham hopes that both the incumbent government and the opposition will recognize the need for Taiwan to take full advantage of any potential opportunities while they are available. Given its potential boost for Taiwan both strategically and economically, an FTA with the U.S. should be a goal that all elements on the political spectrum can rally around.