United Daily News: TIFA's past, present and future

After a five-year suspension, Taiwan and the United States held talks under their bilateral Trade and Investment Framework Agreement (TIFA) in Taipei on Sunday. The agreement was signed in 1994 to establish an official platform for bilateral consultations on economic and trade issues. Talks under TIFA, led by officials at the vice ministerial level, became the only channel for high-level talks, and their importance to Taiwan has always been clear. Between 1995 and 2007, when the last round of talks was held, officials from the two sides met six times. Agenda topics were supposedly subject to pre-talk discussions, but in reality most of the consultations focused on how to open Taiwan's market further to U.S. products. The U.S. side either found excuses not to respond in earnest to Taiwan's call for a Free Trade Agreement or insisted that Taiwan should first move to further open its markets. In short, the focal point of TIFA talks has been the economic interests of the United States, and whether to hold the talks at all has really been up to the United States to decide. What Taiwan sees as important is the domestic political effects of holding these consultations. To restart the talks, President Ma Ying-jeou's government made a major concession last July by deciding to allow imports of U.S. beef containing residues of ractopamine, a leanness-enhancing drug. To pacify domestic critics, the government said openly that the talks had to be resumed if Taiwan hoped to raise the issues of signing an FTA and participating in the U.S.-led Trans-Pacific Partnership (TPP) arrangement. The nature of our relationship with the United States remains unchanged, however. Taiwan faces difficult political hurdles on its way to negotiating an FTA with the United States and participating in the TPP. On the other hand, Washington's intention to use TIFA talks as a policy tool to ply open the local market also remains the same. Just before the talks, the Obama administration indicated in a report to Congress that Taiwan's failure to establish maximum residue levels (MRLs) for ractopamine in pork amounts to restrictions which "continue to disrupt primarily U.S. exports of pork to Taiwan." Taiwan's government has repeatedly declared that it will stick to the principle of treating imports of U.S. beef and pork separately, but it does not mean that the pork issue will not become an obstacle to future talks even if it is really not on the agenda this time. The current round of TIFA talks, cut short to just one day on short notice, will at most only allow the two sides to exchange views on matters of mutual concern, and formality will trump actual progress. At the very least, a consensus should be achieved on holding regular talks in the future so that they are not held at the mercy of the United States. Looking to the future, Taiwan's government should adjust its strategy and use TIFA talks to create an international environment that is good for Taiwan. Years ago, Taiwan was forced into market-opening negotiations because it enjoyed a huge trade surplus with the United States. It resulted in conditions that were conducive to Taiwan's entry into the World Trade Organization as Taiwan became a model of free market in the region. As things stand today, however, Taiwan lags behind South Korea and even certain ASEAN nations in terms of liberalization. If Taiwan increases its economic freedom with the help of TIFA talks, it will not only create favorable conditions for Taiwan's participation in the TPP but also make Taiwan more competitive by transforming its economic structure. Using TIFA talks to re-establish Taiwan's position as a model of economic liberalization can also have the effect of providing a catalyst for China to liberalize its economy. It should also help Taiwan participate in the Regional Comprehensive Economic Partnership (RCEP) initiated by China and ASEAN. (By Jay Chen)