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January 14, 2014

Taiwan in Tough Fight to Join Regional Trade Blocs

by Ralph Jennings

Taiwan is mounting a campaign to join two key Asia-Pacific trade blocs. To stay competitive economically, it wants a place in the U.S.- led Trans-Pacific Partnership (TPP) and Asia’s 16-member Regional Comprehensive Economic Partnership. However, Taiwan’s old rival, China, is likely to forbid membership in both.
 
Taiwan President Ma Ying-jeou has said he will push for membership in the two regional trade blocs to open major markets for local companies. Taiwan wants more trade integration so its exporters can enjoy lower tariffs in other countries, like its peers from South Korea and Southeast Asia. Raymond Wu, managing director with political risk consultancy e-telligence in Taipei, said the president is now marshaling support.
 
“Government would like to make it sort of like a rallying point to get all the partisan differences behind them and try to focus on getting Taiwan to become more regionally integrated economically,” said Wu.
 
Taiwan has signed trade deals with China, New Zealand, Singapore and five tiny diplomatic allies. That hardly compares to Taiwan’s export competitors, some of which have deals throughout Asia, in Europe and with the United States. Beijing normally uses its economic power to stop other countries from signing agreements with Taiwan and from allowing it to join international bodies that require statehood as a precondition.
 
China also insists that other governments avoid formal relations with the government in Taipei. China-Taiwan ties have improved since 2008, but Taiwan has avoided the discussion of political issues. Jeffrey Wilson, politics lecturer at Murdoch University in Australia, said that other countries may be willing to let Taiwan, the world’s 26th largest economy, join a regional bloc, but would not want to risk upsetting China.
 
“The stakes would be considered so high and the benefit to everyone of letting them so low, as it would aggravate China so significantly, it might not be worth an issue,” said Wilson.
 
The Trans-Pacific Partnership would particularly irk China by admitting Taiwan. This group has asked China to join, but Beijing is staying out because it fears too much influence by the United States and its allies. China is pushing the Regional Comprehensive Economic Partnership as an alternative.
 
Taiwan has taken its campaign to heads of state around the Pacific Rim, using a regional economic forum in October to let the other parties know about its ambition to join the TPP. Foreign Ministry spokeswoman Anna Kao said that Taiwan has been heard. She reported that Taiwan has already made contact with TPP members on many related occasions because Taiwan is an Asia Pacific Economic Cooperation member, as are many parties to the TPP.
 
China allows Taiwan in the 21-member APEC group because the island has agreed not to send heads of state. Beijing also occasionally lets it observe United Nations-backed agencies. However, experts say China’s goodwill is wearing thin because Taiwan will not discuss political issues that could lead the two sides toward Beijing’s goal of eventual reunification.