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.