At the start of 2009, among the items high on AmCham Taipei’s wish-list for the year were the launch of formal U.S.-Taiwan negotiations on a Bilateral Investment Agreement (BIA) and substantial progress toward conclusion of a Bilateral Tax Agreement (BTA). Work on those agreements, considered building-blocks toward an eventual Free Trade Agreement (FTA), was proposed by the U.S. side when it became clear that the U.S. President’s “Fast-Track” authority was expiring before there would be any hope of considering an FTA with Taiwan. Officials from the relevant agencies on both sides then conducted a number of preparatory discussions by video digital conference.

But for various reasons (see “Mixed Signals from Doorknock 2009” in the July issue of this publication), the prospects for these two would-be stepping stones also appear dim as this year draws to a close. Although AmCham would not wish to see the BIA and BTA abandoned, we have come to doubt that a way forward for them can be found in the very near future. So as to instill new vigor and momentum into the U.S.-Taiwan bilateral economic relationship in the meantime, the Chamber therefore encourages the two sides to look for alternative means of bolstering the trade and investment ties between them.

Ideas for possible substitutes can be found by examining the chapter headings of the Korean-U.S. FTA, which was signed in June 2007 but not yet ratified. Many of these same subjects could also be dealt with as independent agreements – facilitating business by helping to resolve immediate problems but also serving the building-block function for a later FTA.

The types of agreements that might be considered include Transparency, Technical Barriers to Trade, Intellectual Property Rights, Competition, and Cross-Border Trade in Services, among others. Our understanding is that none of these would require Congressional approval – one of the obstacles (for internal U.S. government reasons) facing the BIA and BTA ¬– but rather could be implemented through an exchange of letters between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office.

Although the various subjects mentioned above all have merit, AmCham would like to suggest starting with a Transparency Agreement. Reading through the Taiwan White Paper and considering other business issues reported by the Chamber’s various industry committees, it is clear that lack of sufficient regulatory transparency is a major hurdle undermining Taiwan’s ability to achieve greater competitiveness as an international investment location. Such difficulties have been reported in numerous industry sectors, including financial services, telecommunications, pharmaceuticals, and medical devices.

Negotiating a bilateral agreement could help by setting standards of transparency – requiring consultation with industry before policies are set, for example, and assuring that the procedures and principles governing the policymaking are made clear – and then creating a mechanism for reviewing the degree of progress.

The United States and Taiwan are expected to hold the next round of Trade and Investment Framework Agreement (TIFA) talks in the near future. TIFA would be a good opportunity to select a suitable new topic on which to negotiate a bilateral agreement.