Taiwan looks to Canada for support for TPP seat 

by Chris Plecash

Embassy
November 19, 2014

The Trans-Pacific Partnership deal continues to face obstacles to completion, but the ongoing wrangling hasn’t deterred Taiwan, which aspires to be among the first economies to join the prospective regional trade bloc when current negotiations conclude.

“We have the momentum. As an important trading partner, there’s no reason not to support Taiwan’s membership or participation in TPP,” Bruce Linghu, Taiwan’s representative to  Canada, said in a recent interview. “We hope that Canada, already a member of TPP negotiations, supports Taiwan’s invitation to the TPP in the near future.”

Taiwan is notably absent from the ongoing TPP talks, despite its status as a major economic power. With a GDP of nearly $490 billion, it ranks as the 27th-largest economy in the world with a population of only 23 million people.

It’s emerged as a powerhouse exporter of manufactured goods over the last 50 years, carving out a comparative advantage in producing electronics and IT products. Two-way trade between Canada and Taiwan reached $6.2 billion last year, although Canada imported three times as much in valued goods as it exported to the “customs territory.” By comparison, Canada’s two-way trade with India totalled only $5.8 billion in 2013.

Trade has flourished, but Taiwan’s official diplomatic ties have not. The one obstacle to Taiwan’s entry into TPP and other bilateral and multilateral agreements is a One-China Policy that many countries, including Canada, hold. It effectively forces countries to choose between diplomatic relations with the the mainland People’s Republic and Taipei’s own self-styled Chinese government in exile, which calls itself the Republic of China.

As a result, many countries tread lightly in dealing with Taiwan. Canada does not recognize Taiwan’s sovereignty or have an official relationship with the government in Taipei, but it does maintain a trade office there. On the other side, there are Taipei economic and cultural offices in Canada.

The icy dynamic between Taipei and Beijing is changing though, said Mr. Linghu, who pointed to the four-year-old China-Taiwan Economic Cooperation Framework Agreement as evidence of improving relations between the two sides.

“Right now, the situation...is not such a flashpoint anymore,” he said. “The cross-strait relationship is stable compared to 10 or 20 years ago; the tension has eased.”

Last year, Taiwan successfully concluded negotiations with New Zealand on an economic co-operation agreement that aims to gradually scrap tariffs between the two countries across the board. Taiwan went on to sign a similar trade liberalization pact with Singapore before the end of 2013. Both New Zealand and Singapore are TPP members.

This has led to hopes that Taiwan will be able to secure entry to the Trans-Pacific Partnership regional trade bloc currently being negotiated by Canada, the United States, Mexico, Chile, Peru, Japan, Vietnam, Singapore, Malaysia, Brunei, Australia and New Zealand.

A joint statement by the 12 leaders of TPP member states earlier this month announced “significant progress” towards finalizing a deal. But many observers say the agreement hinges on the ability of the US and Japan—the TPP’s two largest economies—to reach a mutual agreement on agricultural and automotive trade barriers. Another concern has been the lack of Trade Promotion Authority in the US, a legislative measure that would help prevent delays in Congress.

The comprehensive agreement would go beyond market access and standardize a wide range policy domains affecting trade and investment, including intellectual property law, e-commerce, financial services, investor-state dispute settlement, foreign investment regulations and government procurement.

Taiwan’s inclusion in the TPP would require compliance with the agreement’s final conditions, and consensus support from the current members.

“My perspective is, right now the 12 members want to finish the negotiation first, and then the model, TPP, opens to the Asia-Pacific members who want to join,” said Mr. Linghu, who noted that Taiwan has so far found support from the US and Japan, and hasn’t heard objections from any of the other 10 members currently at the bargaining table.

Canada has been cautious in making pronouncements on the issue as the Harper government continues to work on improving relations with mainland China.

“Canada, like our TPP partners, views the TPP as a living agreement that is intended to grow to include other Asia-Pacific countries that share our common vision for what we are seeking to achieve in the TPP,” Caitlin Workman, a spokesperston for the Department of Foreign Affairs, Trade and Development, stated in an email. “That said, the process for new membership is based on consensus and the current focus of all TPP countries is on concluding an agreement with existing parties as soon as possible.”

Mr. Linghu acknowledged that China, as Canada’s secondlargest trading partner, holds a lot of influence over how the Canadian government addresses Taiwan’s TPP aspirations.

“So far MPs, senators and business leaders that we’ve talked to are supportive. The government doesn’t say that it doesn’t support us, but they say they want to finish the TPP negotiations among the 12 countries first.”

'A springboard' for the region
Conservative MP John Weston, chair of the Canada-Taiwan Parliamentary Friendship Group, said in an interview that Canada's relations with Taiwan must be consistent with its One-China Policy, but he noted that Taiwan's inclusion would benefit its own economy, as well as the economies of current TPP members.

"Any consideration of encouraging Taiwan's participation in the TPP should be consistent with Canada's best interests," said Mr. Weston, who recently returned from an economic and cultural exchange delegation in Taiwan. Mr. Weston met with President Ma Ying-jeou and discussed a forthcoming Double Taxation Avoidance Agreement between Taiwan and Canada.

"Both parties would benefit economically and in terms of measurable GDP advances [from the TPP]. Beyond that, Taiwan can be considered an economic springboard for China and the rest of the region, but also a democratic springboard," he said.

Cautious support, urges ex-diplomat
Canada shouldn’t push for Taiwan’s entry to TPP, but it should be open to it, said Hugh Stephens, a former Canadian diplomat.

Mr. Stephens, now a senior fellow with the Asia Pacific Foundation of Canada, said that it’s “accepted practice” that
countries need to establish trade and investment agreements with mainland China before they broach the subject of formal trade agreements with the government in Taipei.

“Precedent seems to suggest that once you’ve reached an agreement with China it becomes easier to do an agreement with Taiwan,” Mr. Stephens observed. “Canada would have to be extremely cautious in doing this before it had fully explored improving relations with China.”

TPP negotiations will need to conclude before Taiwan can truly be considered for membership. South Korea has also expressed interest in joining the trade pact, which, as with Taiwan, may only take place after the initial 12-member deal.

Mr. Stephens isn’t overly optimistic about a quick conclusion, describing the odds of a successful agreement as having improved from under to 50-50 to slightly “more than 50-50” following the recent leaders' declaration.