AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2006 arrow Vol.36- No.7 arrow Commentary: Joining the GPA ? a Small Step Toward Rebuilding Confidence in Taiwan
Commentary: Joining the GPA ? a Small Step Toward Rebuilding Confidence in Taiwan PDF Print E-mail

BY PAUL J. CASSINGHAM

 

When Taiwan joined the World Trade Organization (WTO) in 2002, it also agreed to join the Government Procurement Agreement (GPA). The GPA is a WTO-related treaty that sets standardized international rules for government purchasing. Countries that are members of the GPA must allow companies from other GPA members to bid on their government contracts. They also must follow specified procedures designed to give companies from all GPA members a fair chance to bid. By setting basic rules, the GPA reduces opportunities for corruption by helping assure that companies wanting to sell to governments are treated fairly and that bidders on those contracts are not subject to discrimination.

Although Taiwan agreed to sign the GPA back in 2002, it hasn't been allowed to do so. For the past four years, China has blocked Taiwan's membership application. When a country joins the GPA, it agrees to a list of its government agencies whose purchasing will be subject to GPA bid requirements. China says that because it does not accept Taiwan as a sovereign country, it cannot accept a list of Taiwan government purchasing agencies identified by government name. Of course, without such a list, there is no easy way to identify which Taiwan government contracts would be subject to the GPA.

Last month the United States and the European Union made a proposal that may solve this problem. They agreed to a provision stating that a list of government agencies in a membership application does not imply recognition of sovereignty by other GPA members. This provision opens the way for Taiwan's GPA application to move forward.

Taiwan should seize this opportunity by pressing ahead with its GPA application as quickly as possible. When AmCham met with U.S. Government officials in Washington this past June, they stressed how important it is for Taiwan to move ahead with its GPA application immediately. They stated specifically that Taiwan should take action without delay.

Membership in the GPA is extremely important to Taiwan for several reasons: First, Taiwan made a commitment to the United States, the European Union, and other countries to join the GPA when it acceded to the WTO. It is crucial for Taiwan's reputation in the international community that Taiwan fulfill its WTO commitments, and that other countries see that it is doing so. Taiwan owes its prosperity to its strength in international trade. It should always protect the credibility and reliability of its trade commitments.

Second, Taiwan has expressed interest in signing free trade agreements with the United States and with other countries. Trading partners will be more interested in signing FTAs with Taiwan if they see that Taiwan is trying to participate in the international economy as fully as possible. GPA members are a rather exclusive group. Only 37 of the world's most advanced economies have joined. In this region only Japan, South Korea, Hong Kong, and Singapore are GPA members. China is not (its objections to the sovereignty implications of Taiwan's list of government agencies were voiced through Hong Kong's representation). Membership in the GPA makes Taiwan a more attractive candidate for FTA negotiations. It tells the world that Taiwan is a major advanced economy, not a developing nation.

Third, it is vital to rekindle the sense of excitement that other countries formerly felt about the economic opportunities in Taiwan. At one time, U.S. and European companies were highly enthusiastic about making investments in Taiwan. That enthusiasm benefited Taiwan, both economically and politically. Taiwan has a US$26 billion government procurement market, yet every year more foreign companies simply give up trying to participate in that market. If Taiwan opens the market up to broader foreign participation, other countries will consider that they have an important stake in Taiwan's economic future. Taiwan should wish to make itself "too important" economically for others to ignore politically.

Fourth, if Taiwan wants to enjoy a new wave of industrial growth, companies here need access to the best design, engineering, and construction talent in the world. Taiwan's industry needs to be able to take advantage of the best new materials and techniques. It cannot afford poor quality, so-so construction. Taiwan needs to sharpen its competitive edge as a world-class industrial power. It cannot just "make do" and "get by" with low-quality, overpriced industrial infrastructure.

Finally, Taiwan needs to build its own world-class engineering and construction industries, capable of competing in new markets in China, the Middle East, and other places. Taiwan will achieve that goal by pushing its domestic design, engineering, and construction companies to compete and to excel against the best in the world. The industries that have made Taiwan strong have always been those that were forced to compete in the world market. Industries sheltered by protectionism at home lose their edge, their hunger, and eventually even their willingness to adapt in order to survive. Taiwan has a chance to push its GPA application ahead right now, within the next few weeks. Taiwan should seize this occasion to demonstrate that it remains a reliable trading partner, a major industrial power, and an economy with too many opportunities to ignore.

- Paul J. Cassingham, an attorney with the firm of Yangming Partners, is a past president of AmCham Taipei.
 
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