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March 11, 2013

US, Taiwan Resume Trade Talks

by Ralph Jennings

Taiwan and the United States have resumed trade talks, after a five-year suspension. Taiwan had banned a range of U.S. beef imports until about half a year ago, when the last key ban was lifted. Now, the two sides are talking about trade liberalization that could help put Taiwan’s export-driven economy on a level with its rivals in Asia.

Deputy U.S. Trade Representative Demetrio Marantis and Taiwan’s Vice Economics Minister Cho Shih-chao met behind closed doors Sunday to discuss liberalization of exports and investments. The Trade and Investment Framework Agreement talks that end on Monday are meant to move the two sides closer to removing barriers.

Taipei wants the United States to sign a free-trade agreement, which would raise Taiwan's competitiveness in Asia. The island also wants to join the 11-member Trans-Pacific Partnership, a regional trade pact that is under negotiation.  Marantis told a news conference on Sunday that the talks with Taiwan went well but that it is too early for landmark agreements.

“We look forward to continued work with Taiwan in terms of building upon our already-strong trade and investment relationship and taking it to the next level.  Now, we recognize that Taiwan has interests in a free-trade agreement, has interests in the TPP. It was a very fulsome and robust conversation that we were able to have on all of these issues today,” Marantis stated.

Taiwan would face a tough fight getting a free-trade agreement with the United States. Admission to the Trans-Pacific Partnership -a pact that is being formulated with heavy American influence - would require consent not just from the United States but also from other members.

But those accords would lift Taiwan’s $466 billion economy as it competes with Japan, South Korea and parts of Southeast Asia.

Taiwan, which depends on exports of machinery and high-tech products, lags behind its peers because the United States cut off the trade talks in 2007 because of bans on American beef.  Marantis told the news conference that agricultural issues remain between Taiwan and the United States, but he did not elaborate.

The United States is Taiwan’s second-biggest export destination after China, and the United States is its largest source of foreign investment capital.  Taiwan is the 11th largest American trade partner overall, and was already importing about $128 million of U.S. beef per year before the most recent ban was fully lifted in mid-2012.

Liu Yi-jiun, an international affairs professor at Fo Guang University in Taiwan, says the island’s public is looking for strong returns from its Nationalist Party leadership, after Taipei's concession to Washington on beef imports.

“Beef is a fact, and people think that we have to accept it. On the part of the ruling party, the KMT, maybe the U.S. can offer something beyond people’s imaginations, for example, more advanced aircraft," said Liu Yi-jiun. "I think that would give the ruling party tremendous leverage to convince the local people here.”

U.S. officials say returns on such a scale are a long way off. On Sunday, the two sides issued joint statements in support of open trade in information technology services and fairness in two-way investment. They also set up working groups to continue discussions on American priorities such as investment in Taiwan and intellectual property rights. Negotiators hope to meet once a year.