- The Washington Times - Thursday, June 10, 2004

TAIPEI, Taiwan — Negotiations toward a Taiwan-U.S. free trade agreement is a priority of the second administration of Chen Shui-bian, but the chances of its materializing depend on whether Taipei can muster the political will to first implement outstanding global commercial obligations, sources said.

The United States is not likely to discuss a free trade agreement until Taipei shows compliance on its World Trade Organization obligations that helped secure its entry to the global oversight body in January 2001, say sources close to the Bush administration who spoke on condition of anonymity.

Top government officials in Taiwan and private-sector executives said Washington wants to see concrete action on protecting intellectual property rights and concerted steps to further open Taiwan’s rice market and resolve differences over pricing of pharmaceutical products.

Also high on the list for both the United States and the European Union are demands that Taiwan lower market barriers to its telecommunications sector and its lucrative government tender market.

The United States estimates that it exported $17.5 billion in goods to Taiwan and imported $31.6 billion in goods from the island last year.

The U.S.-based International Intellectual Property Alliance estimates that Taiwan’s weak protections and enforcement of intellectual-property rights last year caused trade losses of about $382 million, not counting losses from business software piracy.

Counterfeit pharmaceuticals and agro-chemicals are other problem areas.

Western business executives said Taiwanese authorities have made concerted efforts to strengthen mechanisms against infringements of intellectual-property rights, but complain that the judiciary needs to be tougher with offenders.

“The penalties imposed by the judiciary against counterfeiters, smugglers and other violators are far too lenient to serve as deterrence — effectively undermining the efforts of the legislative and executive branches,” the American Chamber of Commerce in Taipei said in its 2004 Taiwan white paper.

Michael Kau, deputy foreign minister of the Republic of China (Taiwan), said the United States indicated several steps were needed to move toward a free trade agreement.

He noted that negotiations on a trade and investment framework agreement — normally a precondition for a free trade agreement — need to be improved and outstanding trade issues such as intellectual-property rights protection and access to the rice market must be resolved.

Mr. Kau said Taiwan is willing to make the improvements and noted that influential members of the congressional Taiwan caucus such as House Majority Leader Tom DeLay, Texas Republican, support a free trade agreement.

Steve Ruey-Long Chen, deputy minister of economic affairs, said a free trade agreement would be mutually beneficial but “China is trying to boycott our efforts in this area.” Mr. Chen said the United States has been fair and has indicated it can enter into a free trade agreement with Taiwan, but does not see it as a political priority.

Completion of a Free Trade Area for the Americas and WTO member negotiations begun in Doha, Qatar, are higher on the U.S. priority list, he said.

Suspicions have arisen in some quarters that the urgent pursuit of a free trade agreement might be inspired more by political than commercial considerations, as well as Taiwan’s campaign to counter China’s growing diplomatic clout and renewed efforts to isolate its adversary on the international stage.

Richard R. Vuylsteke, executive director at the American Chamber of Commerce in Taipei, said a free trade agreement with the United States has to have economic content. “It can’t be a political ploy, a political achievement,” he said.

Trade analysts have criticized Taiwan’s agreement with Panama as politically inspired.

The United Nations expelled Taiwan in 1971 when it formally recognized the communist government in Beijing. China considers Taiwan a rebel province and has managed to exclude the island from international organizations for which statehood is a requirement.

In the past year, Beijing has sought to downgrade Taipei’s diplomatic status from “mission” to “office” in the World Trade Organization, where Taiwan is a full member under the designation “separate customs territory.”

“We are pragmatic and flexible, but we don’t want to be discriminated against,” Mr. Kau said.

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