EDITORIAL
Guidance from the WTO and World Bank
As a member of the World Trade Organization since 2002 (under the awkward but politically acceptable name of the “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu”), Taiwan periodically undergoes a review of its trade policies and practices by the WTO’s Trade Policy Review Board (TPRB).
As a member of the World Trade Organization since 2002 (under the awkward but politically acceptable name of the “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu”), Taiwan periodically undergoes a review of its trade policies and practices by the WTO’s Trade Policy Review Board (TPRB).
The report of the most recent such review, released this summer, outlines the significant progress Taiwan has made since the only previous review was completed in 2006. The TPRB chairman congratulated Taiwan on its successful outward-oriented development strategy, and for the considerable economic growth and prosperity that strategy has helped to create.
Among the various positive developments cited in the 33-page report were:
• Better protection of intellectual property rights, particularly copyrights and patents, through revised legislation and intensified enforcement.
• Implementation of tax reform to streamline the tax structure, broaden the tax base, and reduce corporate income tax rates.
• Improved regulatory transparency, including the posting of most laws and regulations through government publications and website.
• Continued deregulation in such areas as services, investment, and customs.
• Strengthened cross-Strait economic relations through negotiation of the Economic Cooperation Framework Agreement (ECFA), as well as liberalized trade and investment regulations.
At the same time, the report takes note of areas in which Taiwan will need to bolster its international competitiveness in order to better attract inbound direct investment so as to continue to spur its economic development. It advises Taiwan to undertake further structural reforms, remove “remaining informal barriers to investment,” and adopt international best practices. The review board observes, for example, that in 2009 only 18% of the product standards applied in Taiwan were aligned to international standards, which actually represents a drop from the 25% level recorded in 2005.
Like the results of the World Bank’s annual Doing Business survey discussed in the Issues section of this magazine, the WTO report constitutes a valuable reference – clearly demonstrating Taiwan’s steady advances in building a more favorable business environment, but also pointing out the economy’s continued shortcomings, especially in terms of regulatory efficiency and harmonization with global best practices.
The findings of the WTO review board, in fact, bear out the conclusions drawn by AmCham Taipei in its 2010 Taiwan White Paper published this June. In that document, the Chamber also credited Taiwan with making impressive strides in forging a favorable investment climate. But in line with the White Paper theme of “Aspire to Greatness,” AmCham urged the Taiwan authorities not to be satisfied with a merely “good” business climate. In the face of intensifying international competition, Taiwan needs to stand out as truly exceptional.
In addition to the detailed recommendations given in the White Paper by AmCham’s various industry committees, the contents of the WTO Trade Policy Review and the World Bank’s Doing Business report provide concrete advice on the steps Taiwan needs to take to attract increased investment from both domestic and foreign sources.
We urge the government to act swiftly on these suggestions to assure Taiwan’s continued economic momentum.
