If there were ever a time and place to reverse the saying “keep your friends close and your enemies closer,” it would be Taiwan, August 2022. As pressure mounts from across the Strait, let’s invite back some four million visitors – sellers, buyers, investors, investment suitors, free-spending tourists, caregivers, activists, and students – between now and the end of this year! That’s about the flow Taiwan enjoyed pre-border closure and could have again if 2019’s visa policies were reinstated and the weekly arrivals cap increased. The assumptions about Taiwan’s healthcare capacity versus its capacity to indefinitely prevent the introduction of future SARS-Cov-2 sub-variants must be questioned. Why?
Perception. A Taiwan that keeps friendly voices at bay for too long will cede the narrative to sensationalist, fact-neutral bloggers or, worse, disinformation. Taiwan is calm and stable. As far-away investors let their imaginations run wild with scenarios of blockades and invasion, shouldn’t we allow first-hand witnesses to bring back an accurate picture to associates around the world?
Reality. The strongest argument for opening the borders is not to tweak the perception of stability but to increase it. Circulating goods, talent, and money with friendly partners is the best way to strengthen Taiwan, and that requires moving people. And while more trade through travel will make Taiwan more prosperous, diversifying into less dependency on China is more important. After all, China is not so much leery of Taiwan’s growing prosperity (its GDP grew faster than China’s in 2021) or its big lead in semiconductors as it is of its potential growing trade diversification and integration with countries other than China. Xi rues his own zero-COVID policy – but must love Taiwan’s modified version.
Soft power. Taiwan’s brand of late is a winner for many reasons, so this is an awful time to retract the welcome mat. A sales point for Taiwan has been its differentiation from pandemic prevention with “Chinese characteristics,” namely the lock-down/lock-up model. Yet it almost feels like there is an unspoken cross-Strait linkage on border policies. When Japan shortly loosens its gates, Taiwan will be in very uncomfortable company. Delaying the warm welcome of Mandarin training programs endeavoring to relocate from China is particularly shortsighted.
Beyond restoring normal international travel links, here are six ways the Taiwanese government can strengthen its economic security.
Sign a Digital Trade Agreement (DTA) with the United States. Digital trade is a driving force of global commerce and technology, but the rules and relationships that can allow it to flourish have not yet been codified. No two partners are better paired to write the playbook than the U.S. and Taiwan. And no readier format exists than the U.S.-Taiwan Initiative on 21st Century Trade, set to begin negotiations this fall. A model DTA is ambitious but achievable with a year of focused work – and might even offer a backdoor into the IPEF talks from which the U.S. excluded Taiwan in late May. It would galvanize attention on the importance of Taiwan as a partner and might lead to the “holy grail” of our trade agenda, namely:
Sign a Bilateral Trade Agreement (BTA) with the United States. Taiwan built the foundation for economic integration with its friends by generally opening its market over the last 20 years. At this sensitive juncture, it should accelerate economic deals by making itself an irresistible partner to the free-trade reluctant U.S. and potential partners in the CPTPP and beyond. But first Taiwan needs to act upon the recommendations in AmCham Taiwan’s 2022 White Paper by streamlining regulations and internationally harmonizing others.
Avoid any mixed signals. Taiwan should resolve cases that could lead to foreign disinvestment for reasons extraneous to the tensions. No “own goals” should be made at such a sensitive time. It needs to mobilize full political weight and practical resources to intensively and decisively negotiate the Initiative on 21st Century Trade. Taiwan should also clear away trade irritants, such as those lingering in agricultural trade.
Secure Taiwan’s “juice.” To ensure economic growth – and resilience – Taiwan needs to invest in a secure, stable, and reliably fueled electrical power system. The current energy supply is not resilient enough to manage any major import disruption.
Leverage Taiwan’s advantages. Third, Taiwan should exercise its leverage in semiconductor fabrication and emerging technologies, from batteries to quantum cybersecurity, by judiciously investing and partnering inside and, especially, outside Taiwan. Many firms need to do just this for cost and future competitiveness reasons, independent of geopolitics: a happy coincidence of corporate and economic security interests.
Boost human capital. Talent, language, and immigration policies must align with the campaigns listed above to cement Taiwan’s position as an innovation engine.
