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Commercial Times: The TIFA is not a precursor to a free trade deal

2012/06/06 12:03:28

U.S. officials have repeatedly said that as long as the beef trade issue with Taiwan is settled, the two sides can resume talks under the Trade and Investment Framework Agreement (TIFA).

Taiwanese officials, on the other hand, have said that only if TIFA talks resume can Taiwan further work to sign a free trade agreement (FTA) with the United States using a building-block approach.

The fact is that the resumption of TIFA talks is not necessarily connected with the signing of a free trade deal. The purpose of the TIFA, signed in 1994, is to provide Taipei and Washington a platform to discuss bilateral economic and trade issues. Over the past 18 years, only six rounds of talks have been held, in 1995, 1997, 1998, 2004, 2006 and 2007, respectively.

The key to whether Taiwan and the United States can begin FTA talks lies in Washington's intent, and the U.S. government has so far not made any commitment to discuss a free trade deal with Taiwan.

In addition, the building-block negotiating approach is not necessarily favorable to Taiwan, given the different priorities of the two countries. While the United States has focused on investment and double taxation issues in recent years, what Taiwan needs the most are market access and zero-tariff treatment for its exports. The more the blocks are built, the more bargaining chips Taiwan may lose.

Instead of allowing TIFA talks to be linked to the beef issue, our policy-makers should use the beef issue as a bargaining chip and seek Washington's promise to begin FTA talks with Taiwan. Instead of adopting a building-block strategy, Taiwan should work toward negotiating issues related to goods, services, investment and taxation with the United States as a package to obtain more maneuvering room. (Editorial abstract -- June 6, 2012)

(By Y.F. Low)