Special Report

Fair Trade for Taiwan — and America

An idea that should appeal to U.S. automakers and Democratic congressmen alike.

By 11.16.09

Send to Kindle

Detroit could have sold an additional 600,000 more cars each year since 2004 if the U.S. had agreed to a "Free Trade Agreement" with Taiwan. 

How? The Institute for International Economics looked at Taiwan's auto market and judged that a tariff-free FTA with Taiwan would have netted U.S. automakers that many more sales annually because Taiwan was willing to abolish its auto imports tariff quotas. 

U.S. office equipment makers, rice farmers, pork and poultry producters would have netted similar sales jumps. 

Taiwan's leaders in 2004 were desperate to get a formal trade pact with the U.S. because they were being slowly strangled by China and begged for a formal FTA link with the U.S. to counter Chinese pressures. The Bush Administration rebuffed Taiwan in a misguided "favor" to China.

Taiwan doesn't need an FTA with Washington to remain competitive in our market. Rather, it is fighting for its diplomatic life. Much like Germany's claims in 1938 that Austria and Bohemia were "German," China demands international recognition of its territorial demands on Taiwan, which has been independent of China since 1949 and never ruled by Communist Beijing. China's diplomatic "blockade" of Taiwan has grown tighter as China's economic power swells. 

Taiwan's population is bigger than Australia's; its economy bigger than any other Southeast Asian country's. It's America's tenth-largest export market; and a strategic supplier of semiconductors and information technology equipment. It makes no sense for the U. S. to allow China to absorb Taiwan. To do so would tell the world we can no longer defend our interests in Asia. 

In this dangerous environment, Taiwan's leaders sought an FTA with us in 2004 -- at any price. Taiwan would open all its markets, and we didn't have to do much, for it already had nearly free access to our markets.

Bush trade experts, not considering Detroit's problems, said the U.S. didn't need an FTA. Besides, the Bush people claimed they were "working on" other key trade agreements and didn't have time for Taiwan -- the "partners" being Jordan, Morocco, Colombia, Central America, sub-Saharan Africa, whose combined trade with the U.S. totaled less than a quarter of Taiwan's. 

Now, as Taiwan's economy becomes more tightly bound with China's, the U.S. has one last chance to make openings in Taiwan's market for U.S. autoworkers, office equipment manufacturers, and agricultural products before Beijing manages to turn one of America's top export markets into a colony.

This doesn't involve opening our market more to Taiwan imports; it doesn't give Chinese products a duty-free "backdoor" into the U.S. Actually, Taiwan's wage structures, organized labor laws, environmental and social security laws are as tight -- or tighter -- than ours.

Can a Democratic Congress, skeptical of "Free Trade Agreements," warm to yet another "FTA"? Yes. Democrats aren't against "free trade," but unfair trade which, like the ill-negotiated U.S.-Korea FTA, offered lopsided tariff benefits to foreigners.

Congressional Democrats would support an "FTA" that was a "Fair Trade Agreement," leveling the playing field in labor, environment, and global warming competitiveness, while opening a foreign market to as great access as that market has here. 

They can have one with Taiwan. Congress should look into a U.S.-Taiwan "Fair Trade Agreement" that does all the things Democrats need to protect U.S. workers and farmers, in return for which Taiwan gets an enhanced strategic relationship with the U.S. to serve as a bulwark against a Chinese stranglehold on Asian economies.

Democrats can then point to this new fair-trade FTA as the "gold standard" by which all future U.S. FTAs will be measured. 

No Obama Administration trade official, and no future U.S. administration, would then dare bring another FTA to Congress or the public that did not meet this standard. It would serve notice that the U.S. isn't going to be pushed around on trade; that all must meet these new standards in order to compete unfettered in the U.S. It would enhance U.S. export sales and give a small democracy in Asia a new lease on life. 

Like this Article

Print this Article

Print Article
About the Author

John J. Tkacik Jr. is a retired U.S. diplomat. He was Chief of China Intelligence in the U.S. Department of State during the Clinton Administration.