In The Media

Why Taiwan belongs in the TPP 

by Hugh Stephens and Douglas Goold

March 20, 2014

As the Trans-Pacific Partnership (TPP) approaches its potential conclusion this year, other countries — including South Korea, the Philippines, Thailand and Taiwan — are expressing interest in becoming members.

Taiwanese President Ma Ying-jeou had said he wanted to achieve membership by 2020 but is now pushing for earlier entry. In January he asked a group of Canadian parliamentarians, led by Senate Liberal leader James Cowan, for Canada’s help. But would inviting Taiwan’s into the 12-nation group be in Canada’s interest?

Our conclusion is a strong but qualified ‘yes’. The qualifications relate to the need to complete a robust TPP, and to get it implemented among the current members before new members are admitted. For this to happen, the administration of U.S. President Barack Obama needs to obtain Trade Promotion Authority, which is facing opposition from key Congressional Democrats. We also need a demonstration by Taiwan that it is ready to take on the high-level disciplines of the TPP.

The final requirement — the most delicate — is ensuring China doesn’t object to Taiwan’s entry.

Most countries, including Canada, do not recognize the international status of the government in Taipei because of China’s ‘one-China’ policy. Still, Taiwan and Canada have made progress in building robust bilateral relations. Taiwan is Canada’s fourth-largest export market in Asia and a significant source of immigration and tourism.

But Taiwan has proved to be a difficult trade partner. Canadian beef exporters have fought a long battle to be treated fairly in Taiwan. Canada also faces barriers there to exports of pork treated with the feed additive ractopamine.

Despite this, Taiwan and Canada have been able to successfully conclude a number of bilateral arrangements. What we really need, however, is a bilateral trade agreement — something that will be difficult to achieve.

Such an agreement would live in the shadow of Canada’s relations with China — and at the end of the day relations with China are far more important to Canada than relations with Taiwan. While we don’t know whether China might hinder Taiwan’s desire for TPP accession, there is a way around that challenge. A decision by all 12 TPP partners to admit Taiwan would help diffuse any pressure China might bring to bear on individual members. It’s also possible that China itself might, at some future date, aspire to TPP membership — which would help remove political obstacles for Taiwan.

The whole equation has changed dramatically in the last few years under President Ma because of the huge improvement in relations between Taiwan and China. In February, Taiwan and China held their first official direct talks since 1949.

The TPP is a complex agreement that thrusts into new areas. Japan’s late entry in July 2013 significantly complicated the negotiations by adding a large economy that maintains many non-transparent, non-tariff barriers. Taiwan has many of the same issues. The addition of Taiwan now would be a step too far. The TPP 12 first need to complete the negotiations and proceed with the difficult task of ratification.

Unfortunately, Taiwan has a lot to do to meet the standards of the TPP, such as significant services liberalization and weaning agricultural producers off high protective tariffs.

Taiwan is a vibrant, effective, functioning democracy — one of the few in Asia — but that democracy brings with it the need to mobilize public opinion. President Ma’s approval rating plunged to single digits last fall and there is no certainty that he and his pro-China policies will survive the May 2016 elections (the DPP, the main opposition party, adheres to a high-risk independence policy). By making progress with Canada on a Foreign Investment Promotion and Protection Agreement, which is under consideration, Taiwan can demonstrate that it can meet TPP standards — and it can do so by committing to science-based standards when temporary agricultural barriers are necessary.

It is in Canada’s interest to encourage this movement, both to have greater access to Taiwan’s market and to ensure that Taiwan is not excluded from the benefits of regional trade liberalization, thus distorting supply chains and creating new barriers for business. Taiwan can help its case by committing to science-based CODEX standards for food imports and to opening its services markets.

Canada’s support for Taiwan’s membership at the appropriate time — and in consultation with China — would not only make trans-Pacific trade more open, it also would be an important symbol of our support for a lively democracy. It would be a felicitous combination of Canadian interests and values. With China and Taiwan now talking directly with each other, promoting Canadian interests with Taiwan does not have to be a zero-sum game.

In fact, Taiwan offers a platform for Canadian businesses to expand their business with China, using the provision of the China-Taiwan Economic Cooperation Framework Agreement — a win-win scenario for all parties. Reaching this outcome is an important goal — which is why Canada should (once the conditions are met) support Taiwan’s ultimate entry into the TPP.

Hugh Stephens is executive-in-residence at the Asia Pacific Foundation of Canada and a Fellow of the Canadian Defence and Foreign Affairs Institute. Douglas Goold is director of the National Conversation on Asia and senior editor at the Asia Pacific Foundation of Canada.

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