AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2003 arrow Vol.33- No.8 arrow Interview: AIT's Paal Reviews a Year in Office
Interview: AIT's Paal Reviews a Year in Office PDF Print E-mail

Douglas H. Paal, director of the Taipei office of the American Institute in Taiwan, took up his duties as the chief U.S. representative in Taiwan in July, 2002...

Douglas H. Paal, director of the Taipei office of the American Institute in Taiwan, took up his duties as the chief U.S. representative in Taiwan in July, 2002. In this interview with TOPICS editor-in-chief Don Shapiro, he looks back on some of the main issues that arose during his year in office.



TOPICS: What are some of your main overall impressions from your first year at AIT?

Paal: Jobs like this are really good jobs, but you don't really get a sense of how good they are until you have them -- and you see the complexity of the intellectual and the political and the economic and the organizational challenges and opportunities that they give you.

TOPICS: Last fall, you chose economic policy as the topic for your first major public speech (to an AmCham luncheon meeting). One issue you emphasized was the importance of Taiwan's compliance with the terms of WTO (World Trade Organization) accession. At this stage how would you rate the degree of compliance?

Paal: We still have an issue on WTO compliance on rice importation. The Taiwan side rewrote the rules on rice importation -- different from what they were in our agreed accession document for Taiwan's accession to the WTO. And we've also had continuing problems with the methods used internally in Taiwan for setting a price ceiling and thereby determining the price for their tenders for imported rice. We're continuing to work on this issue.
[At the same time] we have an abiding interest in keeping Taiwan properly represented in the WTO as well, and not seeing anything happen to diminish Taiwan's participation.

TOPICS: There was some discussion recently about the nomenclature that would be used in the WTO to refer to Taiwan. [Beijing has pressed the WTO to make changes that Taiwan believes would downgrade its status.]

Paal: Our government is very much on Taiwan's side in this matter. We don't think there should be any change in nomenclature or any other aspects of the agreement that was reached internationally to bring Taiwan into WTO.

TOPICS: Also in your speech last fall, you urged Taiwan to regard its economic dealings with the mainland as more of an opportunity than a threat. How does the cross-Strait economic relationship look to you at this point?

Paal: Trade and investment [between Taiwan and the PRC] have continued to grow dramatically. In the first six months of this year we've seen a 29% increase in the volume of trade according to the Bureau of Foreign Trade here in Taiwan. That shows that even with the economic overhang of SARS, the syndrome that impeded cross-Strait travel and investment this past spring, the volumes continue to grow. So there's obviously a very powerful dynamic.

It's not unique to Taiwan. All the participants in the global marketplace are seeing the PRC as a place to invest, now that the PRC is being subjected to the disciplines of World Trade Organization membership.

I noticed recently that former premier Vincent Siew made a speech that was very similar to mine -- and he received no controversy in making the point that as part of Taiwan's globalization of its economy, its natural to see the PRC as a place that has unique advantages and there's a normal need to participate in the opportunities presented there.

TOPICS: IPR is clearly a point of trade friction between the United States and Taiwan. Is the situation improving?

Paal: I went back to the United States recently for consultations and a little bit of leave, and as I departed I thought the Legislative Yuan was about to pass a pretty good bill. The government had worked in good faith with us and with industry to try to establish a good strong piece of legislation to back up enforcement of intellectual property rights in Taiwan. In the final analysis, however, the legislation that emerged is not as strong as had been recommended by the Executive Yuan. I don't know what happened, but we have to say that there's still a difficult lack of legal backing for prosecutors to go after the small-scale vendors and traders who in their totality add up to a very substantial amount of IPR violations.

So the questions remain: does Taiwan have the enforcement legislation necessary, does it have the enforcement means necessary, does it have the will to enforce, will it follow up with prosecution? These are all big questions for industry.

And of course Taiwan has its own interests in this. If you go out to Taoyuan, there are big R&D centers being built, and [Taiwan is getting] new science parks. Research and development depends vitally on protection of intellectual property. Taiwan has its own incentives to do this, and we want to be helpful, for our own sake but also in terms of our relationship with Taiwan -- to help them get the right mechanisms in place so they can protect their own intellectual property production as we try to protect ours.

TOPICS: If that Copyright Law revision was a bit disappointing in its final version, what do you think the next step should be?

Paal: The next step of course is to take advantage of what there is available to the Taiwan authorities to enforce existing laws, and then we hope at the next reasonable opportunity to come back to the legislature and ask them to put more force in it. I'm a little bit surprised at how local media have not really explored the legislation. Most people in Taiwan understandably think that a tough piece of legislation got through the legislature and they wonder why we're raising questions about it.

TOPICS: Overall, what is your assessment of how the U.S.-Taiwan economic relationship stands at the moment, and what needs to be done to make it even stronger?

Paal: It's a big booming relationship. We've had ups and downs that go with economic cycles, but basically we have a very broad and strong economic relationship. There are a couple of issues that we would like to see resolved. They've gotten a little bit stuck in the throat over here for the last some months, but in the context of a broad and successful trade relationship you can resolve those problems that will inevitably emerge. Then we can move to implementation of the Trade and Investment Framework Agreement, which would allow us to broaden and deepen other aspects of our trade relationship that are not quite as well developed as the ones that exist today.

TOPICS: Aside from the things we've already talked about -- IPR and the rice importation system -- what other issues need resolution?

Paal: Pharmaceuticals remain an issue here. It's a difficult issue because it's tied up with financing of the health system, and every country's medical system financing is very complex and highly political. But if we could resolve the pharmaceutical aspect of this, so that American firms or any international firms really feel they can operate in this market on a fair basis, that would be a big step forward.

TOPICS: Is the U.S. relationship with China -- including the increased need for diplomatic support from Beijing with regard to North Korea and the anti-terrorism campaign -- likely to have any impact on American policy toward Taiwan?

Paal: I keep hearing this in Taiwan, and because I keep hearing it I went back to Washington with a view to see what's the source of this -- is there someplace in Washington that's giving them the sense that this may be the case -- because certainly at the policy level, the U.S. has no intention and no track record of sacrificing Taiwan's interests for this kind of cooperation from the People's Republic of China. And I really could find no evidence of any proclivity toward putting Taiwan on some kind of an auction block. That's not in Washington's interest. Our policy is very firmly set on the three communiques, the Taiwan Relations Act, and our promise to keep our relationship with Taiwan solid.

TOPICS: Another matter that's come up recently is the question of Taiwan holding referendums on public issues. Could you explain U.S. policy in this regard?

Paal: The U.S. takes no broad position on referendums, other than to say that every democracy has the option to use referendums. Some do, some don't. Some have had more success, others less. So we're not in a position to say that here in Taiwan you shouldn't think of having referendums.

On the other hand, what the referendums are used for and what effects they have on the regional situation is a matter of concern to us. Our Congress has declared its interest in regional stability through the Taiwan Relations Act. It's been a basic element of American policy for decades, and we'll express our concern if domestic developments in any country are going to lead to a disturbance of peace and stability in the Western Pacific. So it's on that basis that Washington has expressed its concern. Washington has also said, and I'll repeat here, that President Chen assured everyone in his Inaugural Address on May 20, 2000 that he would not promote a referendum on independence or changing the name of Taiwan's official designation, and we take him at his word and take that reassurance seriously.

TOPICS: Do you feel that Taiwan has been moving forward expeditiously enough in response to President Bush's 2001 offer of advanced military equipment sales?

Paal: You have to look at the situation from a broader context -- a context in which the PRC is rapidly developing its military capabilities. Taiwan is obviously moving at a pace much slower. The PRC does not have to worry about the niceties of a democracy, where the ministry proposes a certain budget to the Executive Yuan, and the Executive Yuan carries that budget to the legislature, and the legislature goes through due process in examining it and holding hearings, and ultimately voting on the budgets and on the projects themselves. So there's going to be a time lag between the two sides. To repeat myself, our concern arises when the gap between the potential threat and the capacity to resist it becomes so great that it itself could become a source of instability. And therefore we have been providing as much in the way of advice and support as we can to meet the requirements under our Taiwan Relations Act to maintain peace and stability through providing defensive articles and services for Taiwan's self-defense.

TOPICS: And in terms of Taiwan's response?

Paal: I don't want to characterize Taiwan's response in broad strokes because there are different organizations and different personalities that take different positions. I don't believe you could say there's a settled view in Taiwan on each of those arms acquisitions on the list. Each one has strengths and weaknesses behind it, and they'll be discussed and debated for some time.

TOPICS: There have been reports that the U.S. has made some adjustments in the priorities on the list of what would be offered to Taiwan. Is that the case?

Paal: The U.S. on a number of occasions has tried to express where we think the greater risk of a gap opening up exists, and the broader the gap in capabilities, the more opportunity there is for the aggressor to [take advantage of] the weakness. So of course we spend some time saying there are priorities, but that's not something I can get into much detail on.

TOPICS: Do you see any prospects for Taiwan being able to expand its participation in the world community, including gaining observer status in the World Health Assembly?

Paal: The U.S. will continue to support the membership of Taiwan in international institutions -- we've done that for quite a few years, and I personally was involved with [Taiwan's entry into] the Asian Development Bank and the APEC back in the 1980s and 90s. The question of Taiwan's participation in WHO is in front of us because of SARS, though Taiwan had been working on it for several years beforehand. We've been working very closely with Taiwan to try to build support for their case for observership in the World Health Assembly and for the WHO to give to Taiwan's citizens the same services in terms of promoting public health that it would give to citizens anywhere else in the world. [Taiwan] certainly shouldn't be discriminated against.

Having said that, there's a lot of work that goes into this. Most countries in the world don't recognize Taiwan, and would be unwilling in the face of pressure from the mainland to support Taiwan. So it's a question of going out and persuading people, and getting the health officials in various countries to see the benefit of Taiwan's participation. If the Knights of Malta and if the Palestinian Authority can be represented, certainly the principle has been established for Taiwan to fit in as well as an observer.

TOPICS: Is there anything further that Taiwan, or the U.S., could do to further that cause?

Paal: There's always more you can do. I think if Taiwan follows the rhetoric that it's been issuing at official levels about developing biomedical technologies and spreading information technologies, Taiwan will have a natural role in raising global health standards, and Taiwan can in part parlay that into greater support from the international health community and try to get them to weigh over against those people who represent purely diplomatic considerations. Our view is that it shouldn't be seen as a diplomatic issue. It should be seen as a health and welfare issue.

TOPICS: In looking back over the past year, what have been the most satisfying and the most frustrating parts of your job?

Paal: In terms of satisfying, I've taken as my objective in Taiwan turning AIT into an institution that most effectively represents America's interests here. Taiwan, the context in which AIT operates, has changed. It's become democratic, with wide open debate on every subject. In the past the AIT office used to keep an extremely low profile and it was effective when you had a government that was controlled by a small number of people. Today the government has a great contention for authority -- it's split in the legislature, with four parties that are active -- and AIT has got to be out and representing American interests in that context. So adjusting the way we operate means we've been more open. I've been making more public appearances than my predecessors. It's going to take time for people to get used to that here in Taiwan. They'll think of this as unprecedented or disturbing the past pattern. But Taiwan has changed and we've got to change with it.

That's the satisfying part. Of course, coming back into government I've been reminded of the slow pace with which bureaucracy moves -- and that of course is the source of some frustration.
 
[ Back ]