The Magazine

Taiwan Gets No Respect

From the December 27, 2004 issue: Why is Washington pushing Taipei into the arms of Beijing?

Dec 27, 2004, Vol. 10, No. 15 • By GREG MASTEL
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TAIWAN'S ECONOMICS MINISTER, HO Mei-yueh, visited Washington in early December with a simple message: The United States and Taiwan should negotiate a free trade agreement to deepen and expand their economic ties. Given that Taiwan is already a major U.S. trading partner and has lately resolved most of its pressing trade tensions with this country, one might expect Washington to take up the offer eagerly.

Instead, the administration has been noncommittal, while in some quarters the response is positively cool. A new study by the Institute for International Economics, a Washington think tank, suggested that Taipei's first priority should be expanding trade with China, not the United States.

It is difficult to see how this advice makes sense for either the United States or Taiwan, though it is obviously a good suggestion from Beijing's perspective.

In recent years, China's growing economic might, which already qualifies it as one of the world's largest economies and trading powers, has greatly enhanced its international influence and prestige. Particularly in Asia, every country--with the exception of Taiwan--kowtows to Beijing in hopes of gaining favor. China has shrewdly offered to negotiate free trade arrangements with other Asian countries.

Soon this web of Beijing-centered free trade agreements could effectively exclude Taipei from expanding its own trade with the rest of Asia. Unfortunately for Taipei, its Asian neighbors simply see China's colossal market as more attractive than Taiwan's smaller one, preventing the island country from expanding trade with its neighbors and so stifling its economy.

Some suggest that Taiwan could pursue enhanced trade ties with China directly, but many in Taiwan rightly fear that increasing their economic dependence on the mainland would effectively strip Taiwan of its political autonomy. Could Taipei stand up to China if it were dependent on Beijing for its livelihood? Probably not. So China's opportunistic Asian trade strategy could succeed in fulfilling Beijing's longstanding ambition to control Taiwan, an objective it has so far been unable to achieve by military means.

It would seem obvious that the United States as the world's leading democracy would want to continue to offer Taiwan an alternative to dependence on totalitarian Beijing. Just as the threat of invasion secures U.S. military support for Taiwan, so the threat of economic domination should prompt this country to extend an alternative economic opportunity to Taipei.

But the case does not end with preserving democracy and freedom. Taiwan is already the United States' eighth largest trading partner and the fifth largest economy in Asia--a much more promising partner for a free trade agreement than any of the two dozen countries with which the United States is currently negotiating such arrangements. No less a source than the U.S. International Trade Commission concluded that a U.S.-Taiwan free trade agreement would benefit U.S. farmers, manufacturers, and the economy as a whole. Beyond that, the United States has an obvious interest in ensuring that it is not economically shut out of Asia by new Chinese free trade agreements, which is why the United States is now negotiating with Asian countries that have less to offer than Taiwan.

Against all these considerations, it is strange indeed that it would be left to Minister Ho to carry the message that a U.S.-Taiwan free trade agreement is good policy--and stranger still that she should be met with the suggestion that she look instead to China. They must be delighted in Beijing.

Greg Mastel is chief international trade adviser at Miller & Chevalier.