Wednesday, February 5, 2020 from 12:00 PM – 1:30 PM
Taiwan is the United States’ 11th largest good trading partner and according to the Department of Commerce, US exports of Goods and Services to Taiwan support an estimated 208,000 jobs (2015). Despite robust bilateral economic ties, advocates for the bilateral relationship point out that the United States and Taiwan do not currently have a free trade agreement with one another. To be sure, the United States has FTAs with 20 countries, many with smaller economies and arguably less strategic importance than Taiwan. Yet, the last Taiwan Investment Framework Agreement (TIFA) talk was held in 2016. Against the backdrop of the ongoing US-China trade war, a group of 161 members of Congress issued a public letter to the executive branch expressing their support for negotiating a bilateral trade agreement (BTA) with Taiwan. Moreover, the American business community and the president of Taiwan—who was recently re-elected for a second term—expressed support for a bilateral trade agreement (BTA) between the two countries. Is there a favorable tailwind for deepening US-Taiwan economic cooperation in 2020? What are the challenges and opportunities?
Panelists include: Robert Wang, Georgetown University; Derek Scissors, American Enterprise Institute; Shihoko Goto, Wilson Center, and Riley Walters, The Heritage Foundation. The panel will be moderated by Executive Director Russell Hsiao of the Global Taiwan Institute.
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Robert S. Wang is a senior associate with the Center for Strategic and International Studies (CSIS) and an adjunct professor at the Georgetown University School of Foreign Service (SFS). He was a career foreign service officer in the US Department of State from 1984-2016. Bob last served as the U.S. senior official for the Asia-Pacific Economic Cooperation (APEC) from 2013-2015 and as the deputy chief of mission at the U.S. Embassy in Beijing from 2011-2013. He was a senior adviser at Covington & Burling LLP from 2016-18 and a visiting fellow with the Freeman Chair in China Studies at CSIS from 2009-2010. Wang is also a member of GTI’s Advisory Board.
Derek Scissors is a resident scholar at the American Enterprise Institute (AEI), where he focuses on the Chinese and Indian economies and on US economic relations with Asia. He is concurrently chief economist of the China Beige Book. Dr. Scissors is the author of the China Global Investment Tracker. In late 2008, he authored a series of papers that chronicled the end of pro-market Chinese reform and predicted economic stagnation in China as a result. He has also written multiple papers on the best course for Indian economic development. Before joining AEI, Dr. Scissors was a senior research fellow in the Asian Studies Center at the Heritage Foundation and an adjunct professor of economics at George Washington University. He has worked for London-based Intelligence Research Ltd., taught economics at Lingnan University in Hong Kong, and served as an action officer in international economics and energy for the US Department of Defense.
Riley Walters is policy analyst for Asia Economy and Technology in The Heritage Foundation’s Asian Studies Center. He specializes in Northeast Asian macroeconomic issues as well as foreign investment, emerging technologies, and cybersecurity. Riley is a former Penn Kemble Fellow with the National Endowment for Democracy and George C. Marshall Fellow with The Heritage Foundation.
Shihoko Goto is the Deputy Director for Geoeconomics and the Senior Northeast Asia Associate at the Wilson Center’s Asia Program. She is a leading expert on economics and politics in Japan, Taiwan, and South Korea, as well as U.S. policy in the region. A seasoned journalist and analyst, she spent ten years reporting from Tokyo and Washington for Dow Jones and UPI on the global economy, international trade, and Asian markets and politics. A contributing editor to The Globalist, Goto previously worked for the World Bank and has been awarded fellowships from the East-West Center and the Knight Foundation, among others.
Russell Hsiao is the executive director of GTI and adjunct fellow at the Pacific Forum. He previously served as a senior research fellow at the Project 2049 Institute, National Security fellow at the Foundation for Defense of Democracies, and Penn Kemble fellow at the National Endowment for Democracy. Prior to those positions he was the editor of China Brief at The Jamestown Foundation from October 2007 to July 2011 and a special associate in the International Cooperation Department at the Taiwan Foundation for Democracy. While in law school, he clerked within the Office of the Chairman at the Federal Communications Commission and the Interagency Trade Enforcement Center at the Office of the U.S. Trade Representative. Mr. Hsiao received his J.D. and certificate from the Law and Technology Institute at the Catholic University of America’s Columbus School of Law where he served as the editor-in-chief of the Catholic University Journal of Law and Technology. He received a B.A. in International Studies from the American University’s School of International Service and the University Honors Program.
On February 5, GTI held a public seminar on the prospects for US-Taiwan economic and trade cooperation in 2020. GTI Executive Director Russell Hsiao introduced the topic by giving a brief overview of the current state of US-Taiwan trade relations with the backdrop of the US-China trade war. Hsiao noted that Taiwan’s recently reelected President Tsai Ing-wen has expressed support for a bilateral trade agreement (BTA) with the United States, while a recent letter from members of the US Congress also showed support for a BTA with Taiwan.
Robert Wang at the Center for Strategic and International Studies started off the discussion by speaking about how US-Taiwan relations are at a very good place compared to the past. Wang cited Taiwan’s strong democracy and the Tsai administration’s handling of cross-Strait relations as key factors for the improvement. This has created a positive momentum that could lead to a BTA between the two countries. Wang then went on to highlight the importance of distinguishing between US-Taiwan trade and investment relations and a BTA. He explained that while they are two separate things, both promote and reinforce each other. Wang cited the American Chamber of Commerce in Taipei (AMCHAM) White Paper to show that strong economic ties with the United States also have support among Taiwanese officials. Wang sees a window of opportunity for a US-Taiwan BTA, however, other factors could come into play: a Phase Two trade deal between the United States and China and whether a Taiwan BTA would be a priority for the United States; and Taiwan’s economic reform.
Riley Walters at the Heritage Foundation’s Asian Studies Center asserted that a US-Taiwan trade agreement is long overdue and that there are dynamics that necessitate a US-Taiwan BTA. Most notably, China continues to prevent Taiwan from joining international organizations, and limits other countries from seeking trade agreements with Taiwan. Walter believes that while US relations with Taiwan in areas such as defense are strong, economic ties between the two are weak. Looking at how trade talks should begin, Walters said that the United States needs to move away from low-level staff talks with Taiwan and move on towards high-level talks. Higher level talks will help strengthen relation and get the trade agreement negotiations moving.
Derek Scissors at the American Enterprise Institute looked at how the current trade war between China and Taiwan has potentially put Taiwan in a relatively better position. Scissors believes that the “trade condlict” will force Taiwan to liberalize its economy to pursue an FTA with the United States. By liberalizing its economy, Taiwan will need to diversify away from China. Scissors said that a sharper trade conflict between China and the United States could help push positive reform in Taiwan’s economy. He noted that trade agreements between China and Taiwan are more political than economic; they are merely generous trade deals from China aiming to gain more political influence in Taiwan.
Shihoko Goto at the Wilson Center’s Asia Program focused on trade relations between Taiwan and Japan. She first pointed out that Taiwan can benefit from the trade war as Taiwanese firms relocate back to Taiwan. Goto said that Taiwan now has a very good relationship with Japan; however, China comes first when negotiating trade agreements. Goto believes that it is difficult for Japan to pursue any action with Taiwan because of China. Goto suggested that Taiwan should focus on its Southbound Policy and continue to promote relations with ASEAN nations.
The panel discussion concluded with a Q&A session, which included additional important points.
Responding to a question, Scissors noted that the US Trade Representative (USTR) will not pursue a US-Taiwan FTA unless it receives direction from President Trump. And since Taiwan has not been an economic priority for the United States, USTR is not likely to take action. Goto pointed out that President Tsai has the ability to encourage the USTR to move forward on an FTA by enacting reforms. Walter noted that multiple actors in the US government have sway when it comes to the prioritization of Taiwan. Wang closed off the discussion by emphasizing that security is currently the center of the United States’ Taiwan policy and thus it could be a key consideration with regard to a US-Taiwan FTA.
This summary was written by GTI Spring 2020 Intern Eric Bouchard Siddiq.
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