President Chen Shui-bian and other ranking government officials recently have emphasized their intention to seek Free Trade Agreements (FTAs) with Taiwan's leading trading partners, including the United States.
That desire is a commendable indication of the ROC's dedication to the principle of open markets. Taiwan's motivation is understandable from both economic and political perspectives. Its economy can only benefit from facilitating the flow of goods and services without artificial barriers. And given Taiwan's exclusion from many organizations in the world arena, improved ties with other countries are always of value.
But now is not the time to push for discussions with the United States on an FTA. First, Taiwan has only been a member of the World Trade Organization (WTO) -- possibly the most significant international body of which it is a member -- for less than a year and has yet to fully implement its commitment to that organization. As part of its accession package, Taipei made a number of important commitments, including the liberalization of imports of agricultural goods and tightened protection of intellectual property rights.
Also, WTO participation is a challenge because of Taiwan's lack of familiarity with the organization's internal practices and procedures. Beijing's longstanding efforts at isolating Taiwan have been all too successful -- too few Taiwan officials have sufficient practical experience in operating within an international agency. By rights, as the world's 14th largest trading economy, Taiwan should be among the countries in the WTO inner circle, helping to determine the organization's policies and directions. But to play that kind of role, Taiwan's government will need to devote serious attention to acquainting itself with the organizational dynamics of WTO -- an effort that deserves far higher priority than the pursuit of FTAs.
In addition, Taiwan needs to recognize that the negotiation process for an FTA is an extraordinarily complicated endeavor, particularly if the negotiators are new to the game. Rather than starting with giant economies such as the United States or Japan as prospective targets, a more practical approach would be to first gain experience through negotiations with smaller countries (such as Singapore and New Zealand) that have also been mentioned as likely candidates for FTAs.
In sum, we are potentially optimistic about the prospects for an eventual Taiwan-U.S. FTA. But Taiwan's priority should be to tackle more pressing trade-related matters before pursuing that undertaking.