Issues: WTO: Who needs it?

With the ink barely dry on Taiwan's WTO accession documents, the government is fostering expectations for a Free Trade Area between Taiwan and the United States. But it looks like early days yet.

 

Imagine a world in which customs procedures are streamlined, visa applications are approved quickly, investment restrictions are removed, and trade tariffs are eliminated. Establishing a Free Trade Area (FTA) between Taiwan and the United States would achieve all of this, according to Taiwan government officials.
Wonderful, say their counterparts in Washington. But isn't that what WTO was supposed to have brought about?

Yes and no, seems to be the answer. Taiwan has been meeting the letter of its WTO obligations, but lags in many areas on the "spirit" side. This has led U.S. trade officials to shake their heads -- for now -- at the idea of an FTA. When Commerce Undersecretary Grant Aldonas visited Taiwan in April, his response to Taiwanese overtures was quite blunt: Deliver on your WTO commitments first, and we will talk about an FTA later.

This has not, however, stopped the Taiwan side from trying. Peter Kang, head of the Ministry of Economic Affairs' FTA Task Force, says there is nothing strange about the idea of establishing an FTA in conjunction with Taiwan's commitments under the WTO: more than 220 of them have been signed by WTO members over the past decade. In fact, he says, the WTO provides a legal framework that had previously not been available to Taiwan in order to negotiate with Washington on an FTA.

It's easy to see why the government has a sense of urgency on this issue. China and ASEAN have already launched official negotiations about forming an FTA, and reports say a joint "trade negotiation committee" expects to have an FTA framework finalized by the year-end. Establishing an FTA with the United States -- still the biggest export destination for Asian producers -- would more than make up for Taiwan's exclusion from such a gigantic trade bloc. In particular, it would boost Taiwan's attractiveness as an R&D center for both U.S. and Taiwanese hi-tech companies.

It would also be good for many American companies, which is why the U.S. International Trade Commission (which reports to Congress) sent a fact-finding team to Taiwan this month. "WTO plus-plus" is how one observer has described the proposed FTA.

The real question, it seems, is whether the U.S. administration will go for it. Judging by Taiwan's current track record in WTO implementation, it is too early to tell.