Though some skepticism remains, Washington observers are beginning to see signs that Taiwan is ready to tackle some longstanding economic issues.

At the time of last year's AmCham "Washington Doorknock," postponed to September because of the SARS epidemic in the spring, the state of U.S.-Taiwan trade relations was at a low ebb. "Not the Most Upbeat Doorknock" was the headline over the TOPICS article reporting on the trip, and the article went on to describe U.S. frustrations over what was seen as Taiwan's unwillingness to engage seriously on a host of important outstanding issues. Heading the list of those issues were effective intellectual property rights (IPR) protection, World Trade Organization (WTO) commitments regarding rice imports, and fair treatment for multinational players in Taiwan's pharmaceutical and telecommunication markets.

This year the full seven-member AmCham delegation met from June 13 to 16 with some 25 U.S. government agencies, Congressional offices, think tanks, and other economic/political observers (a few delegates stayed for an additional seven meetings over the following few days). The group found a somewhat more heartening mood than was encountered last year. Despite some lingering doubts among U.S. officials about Taiwan's genuine readiness to grapple with the key issues on the table, there now seems to be increased hope that the second Chen Shui-bian administration -- with the 2004 presidential elections behind it -- will be more inclined to refocus on salient economic concerns.

The team was led by AmCham President Andrea Wu. It also included two past presidents -- Paul Cassingham and Gus Sorenson -- as well as Pharmaceutical Committee Co-chair Ross Underwood, Executive Director Richard R. Vuylsteke, Director of Publications Don Shapiro, and Director of Government Relations Ting-Ting Yang. The Doorknock is conducted annually following publication of the Taiwan White Paper, the Chamber's detailed recommendations for means of improving the overall investment climate and for solving the problems faced by members of its individual industry committees. Meeting with U.S. officials and others knowledgeable about U.S.-Taiwan ties is a chance both to apprise them of the Chamber's views and to hear their assessment of the current state of play in the bilateral relationship.

In addition, the delegation met with C.J. Chen, the outgoing Taiwan representative to the United States, together with members of his economic staff at the Taipei Economic & Cultural Representative Office, thanking him for his dedicated diplomatic work over the past four years. And it conducted a news conference with members of the Washington-based Taiwan press, where Vuylsteke described the tone of this year's White Paper and Doorknock as "upbeat, with qualifications" -- the qualifications being the assumption that Taiwan follows through with actions as promised.

During its calls on U.S. government agencies, the group heard repeatedly that the U.S. side is anxious to see some early substantive progress made on one or two of the unresolved trade issues as a concrete sign of Taiwan's goodwill. One important test is due to take place in the latter part of July when Charles Freeman, an assistant U.S. Trade Representative, visits Taipei for meetings with his Taiwan counterparts. The results of that visit are certain to undergo close scrutiny in Washington. If Freeman reports satisfaction that Taipei is prepared to move forward with meaningful discussion of the items on the U.S. agenda, the door can be opened to even higher level visits by American officials. Such visits have been on hold for about two years because of disappointment that they were producing little more than photo opportunities.

A second indicator that U.S. officials said they would be watching carefully is whether the Legislative Yuan passes further amendments to the Copyright Law, restoring elements that were dropped from the executive branch's bill when a revised law was enacted last year. Among the missing portions -- considered necessary by the U.S. government and optical-media industry to provide adequate IPR protection -- are minimum sentences for infringers and measures to protect anti-pirating devices on optical media from tampering. Officials in Washington indicated that if the additional amendments are passed, a mid-term assessment could be undertaken to review Taiwan's place on the U.S. "Special 301 Priority Watch List" for egregious IPR offenders.
For its part, the AmCham delegation, in its briefings to its Washington interlocutors, painted a more optimistic picture than it did last autumn about prospects for progress on longstanding White Paper issues. An important reason for the change in attitude was a meeting convened by Premier Yu Shyi-kun with members of the Doorknock team on June 11, the last working day before their departure for Washington. Also in attendance were cabinet ministers responsible for economic affairs, finance, health, public construction, and transportation and communications. Regarding a chronic issue that has troubled the multinational pharmaceutical companies, the premier announced for the first time that the government was willing to propose a "data exclusivity" law protecting the confidentiality of companies' proprietary information. Yu also instructed the various ministers to pay close personal attention to the Chamber's issues, and he volunteered to help arrange meetings with the heads of other relevant branches of the government -- with the Judicial Yuan on the need for tougher sentencing for IPR offenders and with the Legislative Yuan on legislative priorities for the coming lawmaking session.

As was clear from the premier's remarks in the June 11 meeting, a central motivation for the government in trying to remove the trade irritants with the United States is to open the way for negotiation of a U.S.-Taiwan Free Trade Agreement (FTA). Because of China's determined opposition, most other countries have been unwilling to consider entering into FTAs with Taiwan or permitting Taiwan to participate in new multilateral regional groupings that are being proposed. The start of discussions with the United States on an FTA, Taiwan believes, would break the ice, allowing other countries to follow suit.

In Washington, the Doorknock delegation was told that "there is no political impediment" for the U.S. to sign an FTA with Taiwan. Although Beijing would certainly protest, the United States would be able to point to the WTO framework as fully authorizing the negotiation of bilateral trade pacts between member entities. Rather, the main obstacle to considering such negotiations has been what one U.S. official called "the poor performance on Taiwan's side" toward resolving the current issues. Why, he asked, should the United States create a new agreement with Taiwan when it is not satisfied that Taiwan is living up to its existing commitments? Even "talk of an FTA at this point is not helpful," said another official, who suggested that the two sides "first get results on the issues." At yet another office, it was recommended that Taiwan concentrate on "bite-sized pieces" -- tackling one specific problem, solving it, and then moving on to another -- instead of aiming immediately for the grand prize of an FTA.

Among the first of those bites should be IPR, one official suggested, since "people on the priority watch list don't get FTAs." Although there was appreciation in Washington that Taiwan has already done a lot to crack down on IPR violations, with particular credit given to the work of the Intellectual Property Office under the Ministry of Economic Affairs, U.S. officials stressed the importance in this regard of strengthening the Copyright Law. They also raised concerns about the role of Taiwan businessmen in selling counterfeit products in markets all around the world. "Everywhere else, the IPR problem seems to link back to Taiwan," said a high-ranking Washington source. "You can be in the jungle in Paraguay and find a box [of pirated goods] labeled 'Taiwan.'"

On pharmaceutical-industry issues, Ross Underwood explained the difficulties that arise for the research-based drug companies due to the financial structure of Taiwan's national health insurance system, which creates pressures for hospitals to select drugs based on profit rather than effectiveness. The system also discourages innovation, with the side-effect of hindering Taiwan's hopes to developing a strong biotech industry. Covering inequities in the government-procurement sector, Paul Cassingham outlined such problems as impractical contract terms and conditions, inconsistent bidding procedures, and the "Byzantine licensing system."

Other issues affecting the broad context of U.S.-Taiwan bilateral relations also came up during the Doorknock visits. It was evident that strains in the political relationship earlier in the year -- due to U.S. unease about President Chen's plans for calling national referendums and rewriting the Constitution -- had been greatly relieved by the assurances included in Chen's inaugural address on May 20. But concern remained in Washington about national security issues -- specifically a question mark about Taiwan's willingness to bear the burden of financing its own defense. Congressman Steve Chabot, a co-chair of the House Taiwan Caucus, said Taiwan's supporters in Washington would be "very, very concerned and quite upset" if the Legislative Yuan failed to pass a special budget to fund the purchase of an arms package from the United States.

Following the Doorknock delegation's return to Taipei, further contacts with Taiwan government officials have reinforced the sense that a new determination to remove the backlog of problems is taking hold, perhaps as a direct result of the premier's June 11 meeting. At the Public Construction Commission, for example, a new willingness was evident to address obstacles to greater multinational participation in Taiwan's public tenders. Progress on that and other areas will be tracked in future issues of TOPICS.

American Chamber of Commerce in Taipei -- 2004 Doorknock Trip
Dates: June 13-16, 2004 Place: Washington, D.C.

The 2004 Doorknock mission was led by AmCham president Andrea Wu, general manager, Taiwan, of United Airlines. Other delegation members were Paul Cassingham, senior legal consultant with Yangming Partners; Gus Sorenson, vice president, Taiwan, of Lockheed Martin Global, Inc.; Ross Underwood, managing director, Merck, Sharp & Dohme Corp., Taiwan branch, and three AmCham staff: Executive Director Richard R. Vuylsteke, Director of Publications Don Shapiro, and Director of Government Relations Ting-Ting Yang.

GOVERNMENT MEETINGS
U.S. Department of Commerce U.S. Department of State Office of the U.S. Trade Representative National Security Council AIT Washington Congressional Executive Commission on China House of Representatives International Relations Committee House of Representatives Taiwan Caucus Senate Committee on Foreign Relations

THINK TANKS
Brookings Institution Center for Strategic and International Studies Heritage Foundation Institute for International Economics International Assessment and Strategy Center

OTHER ORGANIZATIONS
Taipei Economic & Cultural Representative Office U.S. Chamber of Commerce U.S.-Taiwan Business Council

MAIN ISSUES DISCUSSED
* IPR enforcement and sentencing of violators
* Data protection and pricing issues for research-based pharmaceuticals
* Government procurement policies and regulations
* U.S.-Taiwan Free Trade Agreement
* Resumption of U.S. senior-official visits to Taiwan
* Direct transport links and other aspects of Cross-Strait relations

MESSAGES FOR TAIWAN
* FTA: This is a worthy and achievable goal for the future, but it is impossible to act on while Taiwan is still on the "Special 301 Priority Watch List" for IPR offenders and progress has been stalled on many other problems. Instead of focusing now on an FTA, target some specific major issues and resolve them.
* IPR: A key litmus test will be whether the Legislative Yuan passes, without dilution, a new bill to revise the Copyright Law.
* High-Level Visits: The U.S. government is willing to reconsider the moratorium on sending senior officials to Taiwan -- provided it has assurances that real progress can be made on outstanding issues.
* National Defense: Failure by the Legislative Yuan to approve a special budget for arms purchases from the United States would raise doubts about Taiwan's seriousness in providing for its own security.