A. INTRODUCTION
1. The TPP is of critical importance to Taiwan. Its importance and implications are reflected in three major aspects. First is the economic implication if Taiwan joins (or failed to join) the TPP bandwagon. Second is the implication on domestic reforms, i.e. using TPP as a driving force for Taiwan to undertake reform initiatives. Last but not least is the political implication for Taiwan as a policy ‘insurance’ in dealing with cross-Strait relationship with mainland China.
2. TPP is a Preferential Trade Agreement (PTA) in nature. PTAs provide more favorable market access treatments for participating members, thus offering competitive advantages over those non-members. For a heavily trade-dependent economy like Taiwan, it has to date only a handful of PTAs that covers less than 6% of total trade. With major competitors such as Korea, Japan, Singapore, Malaysia, Vietnam and even China mainland that are all accelerating their PTA undertakings, the lagging behind in PTAs obviously create a genuine anxiety among government and industries in Taiwan to join the TPP, especially the number of countries joining the TPP is growing over time.
3. In addition, one of the salient features of TPP and other recent PTAs is that they tend to go beyond traditional tariff and services trade liberalizations to include new trade regimes addressing barriers created by Non-Tariff Measures (NTM) and harmonization of domestic regulations. These so-called ‘deep integration’ elements offer longer-term benefits for TPP members that are perhaps even larger than tariff concession. This is because deep integration elements reduce costs and uncertainty in cross border transactions in a consistent manner, make investments less risky, and more importantly improve the efficiency of the reforming countries. This is the under-estimated long term impact and disadvantage if Taiwan fails to join the TPP. Certainly Taiwan can unilaterally undertake reform initiatives that mimic TPP obligations, yet experiences in the past (e.g. WTO membership) demonstrate that external pressure such as TPP negotiations and obligations tends to be a more effective way to push for domestic reforms.
4. As for political importance, many in Taiwan felt uncomfortable if Taiwan is only engaged (and thus locked-in) in PTAs with mainland China. This is reflected in the economic security concern voiced during the debate over the cross-Strait services trade agreement in recent months, with many oppose the agreement and any further advancement without participating at the same time in TPP and other regional integration mechanism. This indicates that TPP membership can also play as a safety buffer that facilitates further development of cross-Strait trade relationship.