U.S. Domestic Opposition to the Trans-Pacific Partnership

Estelle Ou

       Since 2012, President Barack Obama has called for the renewal of Trade Promotion Authority (TPA) from Congress in order to support U.S. negotiators in FTAs (including Trans-Pacific Partnership, TPP). The TPA, or Fast-Track Authority (FTA), is a key element of defining U.S. congressional authority and providing credibility of legislative implementation of negotiated free trade agreements. With Presidential TPA, TPP provisions will pass through the U.S. Congress without being subject to filibuster in the Senate or further Congressional amendments (United..., 2014). In other words, the TPP provisions will not be hindered in procedural delays or blocked by U.S. lawmakers after negotiations have been completed with other member nations. However, as of now, the President has not been able to acquire TPA from the 113th Congress, which consists of a Republican-Led House of Representatives and a Democratic-Led Senate. Many members of the Democratic Party are concerned with the opinions of lower- and middleclass income individuals, for they consist of the majority voting bloc for the Democratic Party, hence the reluctance of the Democratic-led Senate to approve TPA. Consequently, countries such as Japan have used the absence of TPA as an excuse to prolong TPP negotiations, causing uncertainty in further development


       This paper identifies the main sources of concern and skepticism from lower- and middle- income class individuals about the non-transparency of TPP negotiations, limited participation of U.S. states' representatives, and potential distraction from mainstream issues through the lens of American values such as faith in democratic participation, federalism, and prioritization of domestic issues.

Non-Transparent Negotiations

       Although TPP negotiations are no more non-transparent than any other FTA negotiations, the scope of the TPP, involving 12 other countries across the Pacific Rim, has caused more anxiety among uninformed public than previous FTAs. Democratic values, particularly in the United States, amplify the negativity that is associated with ambitious trade deals negotiated without public input. Therefore, there may be inevitable assumptions that the Obama administration's call for TPA, instead of regular legislative procedures, may be related to fear of extreme public opposition and pressure to amend the agreement once proposed provisions are revealed. As the American people already have limited influence on trade policies, the granting of TPA would further undermine the ability for citizens to monitor negotiations, hindering the treasured practice of democracy. Thus, as elections approach, Congressmen cannot afford to ignore the interests of their constituencies.

Limited Participation from Individual States

       Official participation from individual states has been limited in TPP 19 negotiations. The limitation might cause dilemma for state governments to legitimize the negotiated outcome, as TPP provisions may conflict with the existing state legislations governing local businesses. There have been leaked TPP texts in which analysts claim that U.S. states and the federal government would be obliged to bring existing and future policies into compliance with expansive norms set forth in 26 proposed TPP chapters (Wallach 2012). Particularly, if any state currently has laws that are inconsistent with TPP provisions, foreign corporations may have the right to file lawsuits against the state government for violating the agreement. Furthermore insufficient states' participation in TPP negotiation, on the other hand, might suggest less responsibility for states to implement provisions that benefit the welfare of state residents, challenging the purpose of a state government that is more sensitive to the well-being of its residents. Therefore, granting TPA without defining states' participation might undermine the principle of U.S. federalism and result in backlash from conservative citizens and consumer advocacy groups.

Distraction from Domestic Issues

       Although President Obama came into his second-term with an agenda of boosting the economy, which the push for free trade agreement fits right in with, several challenges have emerged and hindered him from focusing efforts on the TPP in the past two years. Recently, with policies addressing the rise of the Islamic State of Israel and Syria, and increasing fear of the Ebola virus, the Obama administration has received countless criticism, from both Congress and the public, for its incompetence in confrontingforeign issues. As a result, President Obama's foreign policy approval ratings and popularity are at a record low (Nelson 2014). Furthermore, as the 2016 Presidential election approaches and political parties seek to boost their credibility, domestic issues, such as immigration reform, health care reform, and income inequality have become priority issues among both the Democratic and Republican parties, not to mention mainstream media. Although the TPP is a potentially significant issue for the United States, however, since the beginning of TPP negotiations in 2010, U.S. news media have not covered it as frequently as other domestic issues, resulting in lack of public knowledge about its existence. Therefore, the passing of TPP will neither likely be a mainstream topic on news media for the 2016 Presidential elections, nor, for the majority of citizens and voters, a major means of evaluating the efficiency of the newly elected Congress. Thus, many Congressmen may see a push for foreign trade policy as unnecessary for President Obama's time remaining in office and even a distraction from mainstream issues.

Conclusion

       Despite the Democratic-led Senate's non-approval of TPA, the results of the 2014 November midterm elections might suggest a different approach. Results show the Republican Party winning the majority of seats in the Senate. Thus, as the Republican Party has been known to favor free trade agreements more than Democratic Party, the possibility of granting TPA might be higher. However, the aforementioned major domestic oppositions could still prevent the Obama administration from acquiring the sixty votes needed to approve the TPA in the new Senate and House as the newly elected Republican Congress has indicated that domestic issues such as health care reform, immigration reform, and energy resource investments are priority issues to tackle with. Thus, despite increased discussion on the benefits of a Republican-led Congress for TPP negotiations, actual approval remains to be observed.

Reference 

United States Senate. November 19th. 2014, http://www.senate.gov/reference/glossary_term/filibuster.htm


Wallach, Lori . ''A Stealth Attack on Democratic Governance.'' The American Prospect.
March 13th. 2012. http://prospect.org/article/stealth-attack-democratic-governance


Nelson, Colleen McCain . ''Obama Foreign Policy Approval Rating Hits Low-
Water Mark.'' The Wall Street Journal. October 15th. 2014. http://blogs.wsj.com/washwire/2014/10/15/obama-foreign-policy-approval-rating-hits-low-water-mark/?KEYWORDS=Obama+approval+rating

Realignment of Global Value Chains under TPP and RCEP

Eric Chiou

        In recent years, the significance of global values chains (GVCs) with regard to regional economic integration has drawn much attention. The rapid expansion of GVCs has broadly spread around the world and its importance has also been widely recognized. Since the initial study conducted by the collaboration work between the OECD, the WTO, and the UNCTAD, the positive effects of GVCs in terms of boosting economic growth and development, helping job creation have been highly anticipated.


        As a result, policy-makers in many economies have adopted various policies to enhance their GVC participation in hope of stimulating economic growth, fostering job creation, and facilitating industrial upgrading. They hope that through actively participating in GVCs, many promising advantages, such as accelerating the catch-up process of developing countries, facilitating convergence between different development levels of economies, and upgrading production capabilities could be fulfilled.


        Over the past decades, the Asia-Pacific region has been one of the most successful cases in harnessing GVCs. The robust economic development in the Asia-Pacific region has lied in the intertwined networks of supply chain connectivity, which allow different economies to base on each comparative advantage and partake in GVCs for mutual benefits.


        Some studies even suggest that active participations by APEC members in GVCs in the past decades have allowed most them to enjoy lasting economic growth and business resilience in the ups and downs of unpredictable global economy. As the most important regional economic forum in the Asia-Pacific region, while acknowledging the importance of GVCs, APEC has initiated several action plans to facilitate the development of GVC in this region. Specifically, APEC has launched two Trade Facilitation Action Plans (TFAPs) to lower related trade transaction costs within the region.


        While the above two plans had reached significant achievements, APEC decided to shift its focus to the broader issue of supply chain performance and launched the Supply Chain Connectivity Framework Action Plan (SCFAP). This Action Plan sets a target of a 10 percent improvement in supply chain performance in terms of time, cost and uncertainty by 2015. On the other hand, while the soundness of supply chain connectivity may affect multinational corporations' decisions on where to invest and where to locate their production bases, the arrangement of regional economic integration exerts overwhelming weight on the performances of supply chain connectivity.


        Since different designs of regional economic integration provide varied incentives for multinational corporations to reconsider their strategies of GVCs in terms of where to produce and where to sell, one can expect that the consequences of regional economic integration are likely to alter existing comparative advantages, change business calculation of multinational corporations, influence supply chain connectivity, and reshape regional production networks.


        Given that TPP and RCEP have represent the major two blueprints of regional integration in the Asia-Pacific region, it is important to explore possible impacts of TPP and RCEP on supply chain connectivity and how these influences will affect some industries. Particularly, the importance of supply chain is likely to vary by different industries, while the impacts of different regional integration on different sectors also tend to be dissimilar. Hence, the consequences of regional integration may change the existing status of comparative advantages in different sectors across economies in the region, while the changed comparative advantages among economies are likely to affect multinational corporations' calculation of GVC arrangement in the region, so as to lead to the possible shift of GVCs.


        Based on the outcomes obtained through utilizing the Global Trade Analysis Project (GTAP) analysis on three selected sectors, electronics sector, machinery sector, and automobile sector, which are heavily dependent on regional supply chain connectivity, the following findings are noteworthy.


        First, a state's increased economic welfare due to participating in regional integration and GVCs does not mean that the state's each sector will gain benefits equally. Based on the principle of international division of labor and comparative advantage, regional economic integration is likely to benefit originally competitive sectors, but to further devastate vulnerable sectors in an economy. On the other hand, while regional integration may level the playing field by eliminating tariffs, it can accelerate the speed of industrial relocation to some economies with lower labor cost or more convenient access to markets, which may further erode the existing output of industries.


        Second, different routes of regional integration initiatives will not only pose different impacts on each economy's sectors, but may also shape and alter the sectoral competitiveness of each economy. In other words, based on the assessments of its industrial interests under different regional integration initiatives, an economy may prefer one route of regional integration over the others. On the other hand, if an economy does not make a prudent assessment before participating in regional integration, it may unintentionally let its relatively competitive sectors encounter more intense competition after joining regional integration.


        Third, the findings also suggest that both trading camps, TPP and RCEP, do not have a significant gap in terms of their development of regional supply chain connectivity. Although TPP may have the upper hand now, it also means that RCEP has huge room for improvement if RCEP can be concluded as a high-quality regional integration.


        At the sectoral level, the findings do indicate that some developing economies could generate remarkable growth of output in some sectors after the implementation of either TPP or RCEP. But this is not true for some developed economies. In other words, one of consequences of the formation of TPP and RCEP is to alter industrial comparative advantages in different sector across countries in the Asia-Pacific region, while this changing configuration of comparative advantages across economies seem to be more favorable to developing economies in these selected industries in terms of their domestic industrial outputs, rather than to developed economies.


        Although these changes of domestic industrial outputs in individual economies may reveal some important signs of the possible shifts in GVCs, this indicator is hardly the only and decisive factor in suggesting the shift of GVCs, since many factors would affect multinational corporations' consideration of global strategies and production arrangements.


        Despite the limitations of sketching the picture of changing GVCs under TPP and RCEP, one of important policy implications revealed from the above analysis is that leaders of individual economies should be cautious and foresee the possible shift of regional supply chains after the formation of any regional integration initiatives. They should be prepared with prudent and welldesigned strategies to alleviate negative impacts, while maximizing positive benefits from upcoming challenges of the realignment of global value chains in the aftermath of varied versions of regional economic integration.

Implications of Taiwan to Become a Member of Trans-Pacific Partnership

Darson Chiu

            It has long been discussed and stressed how important it is for Taiwan to join the Trans-Pacific Partnership (TPP) agreement. Main arguments by Taiwanese governmental and academic circles were about how Taiwan would be seriously marginalized without a TPP membership due to the fact that Taiwan was a heavily external trade oriented economy. However, those arguments were derived from the perspective of this island but others. I doubt and wonder how these Taiwan-centered arguments can even be convincing to existing TPP members. It is noted that to become a member of TPP will take a consensus from existing members. That simply means it only takes one vote to exclude Taiwan out of the integration process. Therefore, in order to convince all members to receive Taiwan, how Taiwan's membership can bring economic benefits to the entire region would be the key.





            There are actually several major reasons why the existing members of TPP agreement should invite and welcome Taiwan to join this multilateral trading process. Taiwan's participation in the TPP can indeed add to their national interests.

            First, Taiwan's membership in TPP can help strengthen the supply value chains in the region of Asia Pacific. Taiwan has been intensely and deeply integrated in the value chains of Asia-Pacific region. The most obvious evidence would be Taiwan's exports structure. Above 70% of Taiwan's annual exports to other regional destinations would be intermediate goods. In addition, more than 50% of Taiwan's exports orders have been produced overseas, mostly in economies of Asia-Pacific region. If Taiwan is not joining the TPP, the process will very likely make the supply value chains to shift and eventually push Taiwan away. Why does it even matter to other TPP members? A new set of supply value chains generated by economic policies or treaties will not be able to create as much economic welfares for the entire region as the origin set of chains caused by the natural rules of supply and demand by economic theory. For that reason, Taiwan's status in supply value chain and its membership in TPP will benefit the region and help more optimally allocate regional resources.

            Second, TPP as the trading rules charted and set mainly by the United States of America would be used to supervise and manage US's East Asian trading partners. Before the formation of TPP, the US had been stressing the significance and consequences of Trans-Pacific imbalances (TPI). Some US trade experts believed that the reason why US had to suffer from huge trade deficits only because some East Asian counterparts that did not play fair. Issues such as protection in intellectual property rights (IPR) and vested interest of state-owned enterprises (SOE) would be the cases in point. When the US paid its attention to the so called "high quality" TPP, it is sensible that the US seized the chance and used the original P-4 agreement as a mechanism to take care the long-lasting matter. In a nutshell, the purpose of TPP is to deal with the problem of TPI. For that reason, main contributors to TPI such as China, Japan, South Korea, and Taiwan should all be included in the high quality process. Japan has already attended the negotiations of TPP. The US has also extended its welcome for South Korea to join in. China has announced in public that it will not rule out the possibility to take part in the TPP in the future. With the inclusion of Taiwan, the TPP can better be utilized to manage TPI. This is more of a US based reason. However, the US is now leading the TPP negotiations. Although a TPP membership requires a consensus, a solid support from the US will certainly make a difference.

            

            

            

            

            

            

            

            

            

            

            

            

            

            

            

            

            Third, TPP members will gain further access to the market of Taiwan with Taiwan's participation in TPP in the future. According to the 2013 WTO Tariff Profiles database, the simple average most favored nation (MFN) applied tariffs in Taiwan stands at 6.1% in general, 16.4% for agricultural goods and 4.5% for non-agricultural products. By comparison, the simple average MFN applied tariffs of current 12 TPP members on average would be 4.4% in general, 8.4% for agricultural goods and 3.8% for non-agricultural products. Therefore, Taiwan's TPP membership will come with the function of peer pressure that can help speed up Taiwan's pace in liberalizing its market and lower the barriers for TPP members. In other words, Taiwan's TPP membership will help Taiwan to speed up its economic reform for sure. As most TPP members are Taiwan's close economic partnership, they probably are more willing to work with an open economy.

            Fourth, Taiwan's membership in TPP will certainly help other TPP members to access to the market of Mainland China. Taiwan is the Asian economy that understands the Chinese market better than any others. Taiwan shares the same language, customs, and cultures, etc with China. Taiwanese businessmen have long been investing in China and doing business with the Mainland Chinese public as well as private sectors. Although the Taiwanese market implies a rather small size one with a population of only 2,300 million, it's actually a gateway to the world potentially biggest market with 1.3 billion populations. The cross-Strait Economic Cooperation Framework Agreement (ECFA) will also help Taiwan to better serve as the role as a platform to conduct economic activities with the world's second largest economy. This reason only sustains if Taiwan becomes a TPP member and China does not or both China and Taiwan join the TPP together. We shouldn't discard the likelihood of China and Taiwan becoming TPP members at the same time. Both sides of the Taiwan Strait joined the WTO, APEC, and even PECC in chorus could be good models to duplicate

            

            

            

            

            

The Dynamics of Multilevel TPP Negotiations

Eric Chiou

          International trade negotiations have been characterized by a model of so-called "two-level game." This model highlights a challenging predicament in which a chief negotiator faces pressures from both external trading counterparts and domestic interest groups when undertaking international trade pact negotiations.

          Nevertheless, it is noteworthy that the complexity and development of Trans-Pacific Partnership (TPP) negotiations among 12 members may have gone beyond the traditional two-level game model and can be depicted as a new form of "multilevel game." The latest TPP development regarding the US-Japan trade talks provides an intriguing case to illustrate the characteristics of this newly emerging trade negotiation.

          To boost momentum to TPP trade talks and to reassure its allies in Asia, US President Barack Obama paid a week-long visit to Asia by visiting Japan, South Korea, Malaysia, and the Philippines in April. Many believe that this trip signaled US determination to implement its "pivot-to-Asia" policy with concrete action.

          In addition to strengthening strategic alliances with its existing allies, on economic front, the most important task for Obama was to increase impetus on TPP talks with Japan. Nevertheless, it seemed that Obama had failed to achieve this goal, since in the US-Japan Joint Declaration in April, it only stated that the two "have identified a path forward on important bilateral TPP issues," and that "this marks a key milestone in the TPP negotiations."

          Since the US began taking a lead in TPP talks in 2009, the complexity and intricacy of this multilateral negotiation process have been broadly recognized, given its wide range of coverage on various issues. Thus, even after more than 20 rounds of negotiations, there is no explicit sign to see the conclusion of TPP treaty.

          For the United States, TPP serves as a multi-functional tool to achieve its national interests. Strategically, it plays a crucial economic element in support of US pivot-to-Asia policy, for bolstering US economic involvement and relevance in the region. Economically, TPP is viewed as an effective policy instrument to accomplish Obama's economic objectives of creating more US jobs, boosting US exports, and eventually stimulating its economic growth.

          However, Japan's entry to TPP has dramatically increased difficulties in TPP negotiations. Furthermore, TPP negotiation has transcended the traditional sense of multilateral trade talks, since TPP allows its members to settle their differences via bilateral negotiations, while undertaking multilateral talks simultaneously. These features imply that a chief negotiator in each TPP member has to adroitly make an accurate assessment of ongoing multifaceted negotiations and aptly utilize leverage to boost bargaining power for maximizing profits while minimizing costs on both bilateral and multilateral negotiation tables.

          In other words, this chief negotiator is also forced to engage battles on both domestic and external fronts. On the one hand, the negotiators might want to transform domestic opposition against the trade deal into bargaining chips for asking few concessions from other negotiating counterparts. On the other hand, they might also want to strategically translate external pressures on opening domestic market during the negotiation process into positive momentum on undertaking critical economic reforms.

          As a result, the TPP negotiations have been undertaken through this multi-level, intertwined, and dynamic interaction. For example, on the USJapan bilateral trade talk, Washington's primary goal has been persuading Japan to open up its market for American agricultural products, while Tokyo has persisted in protecting five sensitive agriculture categories intact from foreign competition, including beef and pork, dairy products, sugar, rice, wheat and barley.

          To break up Japan's resistance, the US Trade Representative (USTR) has utilized multiple strategies. The chief of USTR, Michael Froman, argued that all TPP members expected Japan to allow market access on agricultural products, in order to move TPP negotiation forward. On domestic front, several US Congressmen across the aisle signed on a letter to USTR and the US Department of Agriculture, urging them not to make a TPP deal with Japan, if the latter refuses to eliminate tariffs and non-tariff barriers on agricultural goods.

          Moreover, Obama and US senior trade officials announced on different occasions that any breakthrough in TPP negotiations will send a positive signal to Congress on granting the Trade Promotion Authority (TRA) to the Obama administration. In other words, Washington has tried to transform its domestic discord on TPP into pressure on other TPP members, especially Japan, to obtain more concessions. Finally, Washington has attempted to take this window of opportunity through Obama's visit to finalize this trade deal with Japan by imposing political and diplomatic pressures. Nonetheless, it has failed.

          Facing mounting pressures from Washington, Japan has strived to set a bottom line for its tolerable concession by concluding the Australia-Japan Economic Partnership Agreement (EPA) in early April. Tokyo's strategy is to provide Australia, a US competitor on agricultural products, with an early and acceptable range of market access to Japan, in order to persuade Washington to consent to its terms as Australia did. By doing so, Tokyo intended to sabotage a possible coalition gathered by TPP agricultural exporting members to jointly push Japan for more comprehensive market access on a multilateral TPP negotiation table. The strategy of "divide and conquest" gives Japan with more leeway to focus on demands from the US and New Zealand, respectively, while not severely damaging the core political support of Abe's ruling party.

          As for Australia, its strategy is to get "two bites of the cherry" by negotiating with Japan through a bilateral EPA and a multilateral TPP. In other words, signing an EPA with Japan does not mean that Australia has submitted its right to request Japan for additional market access in TPP negotiation. Furthermore, it is reported that the Australia-Japan EPA also covers a most-favored nation (MFN) clause for cheese products, which would ensure Australia to obtain the same treatment, if Japan provides more access to other counterparts in the same sector in future trade treaties.

          Additionally, the formation of Australia-Japan EPA is partly derived from Canberra's political calculation. Despite Japan's rejection to expand agricultural market access in the EPA, Australia's assent to Japan's terms might be attributed to following reasons. First, the Abbott administration has been eager to make tangible achievement in distinction with the former Labor Party government. Second, the Abbott administration has publicly declared its policy objectives of concluding free trade agreements with South Korea, Japan, and China by the end of 2014. Hence, it is crucial for Australia to sign an EPA with Japan before the deadline. Finally, Australia-Japan EPA provides Australia's agricultural products with a first mover advantage in Japanese market, favoring Australia's products over others while not sabotaging its future claims for more market access from Japan.

          The above case on US-Japan agricultural goods negotiation shows the intricacy and complexity of ongoing TTP negotiations. The dynamic process of TPP talks, coupled with both bilateral and multilateral bargaining approaches, requires relevant negotiating members to devote enormous time and resources to vigilantly observe other counterparts' each step, in order to generate sagacious and foresighted decisions. Undeniably, the demanding features of TPP process have posed a critical challenge to existing TPP members and significantly raised the level of uncertainty regarding the future success of TPP.

         

         

         

         

         



Joining REI and Securing a Fair Game

Darson Chiu

In the year of 2009, Taiwan's real GDP growth went down by 1.8%. Before then, nobody had seriously expected the global financial crisis could have hit Taiwan's economy so badly. When the sub-prime crisis began in the second quarter of 2007, the markets did not see it coming at all. They even claimed that economies in Asia would be resilient enough to be decoupling from the western economies and immune from the crisis. After the "wrong guess", woe betided. Before the crisis, we had never stopped stressing how globalization would be an inevitable trend. How could we be so naive for even buying said decoupling horse feather?

Significance of Trade for Taiwan's Economic Growth

Nevertheless, Taiwan's growth bounced back in the year of 2010 with a surprisingly 10.8%. How did Taiwan make it? The answer would be trade. In 2009, Taiwan's exports growth declined by 8.7% and imports down by 13.1%. However, Taiwan's exports grew by 25.6% and imports mounted by 27.7% the next year. From the readings, we note that international trade is simply a two-edged sword. The crisis hit Taiwan's economy through trade, whereas trade is also a solution for Taiwan to recover from the ditch.

The 2010 momentum actually lasted for one year as Taiwan had a fine economic performance in 2011 with a 4.2% GDP growth and a 4.5% exports growth. However, it is noteworthy that imports and gross fixed investment of Taiwan both grew negatively by 0.5% and 2.3% in that order. The next two years, 2012 and 2013, the Taiwanese government received more blames than praises. The GDP growth rates of 2012 and 2013 were only 1.5% and 2.2% respectively, and exports failed to serve as the most powerful engine for Taiwan with respect to sluggish imports and fixed investment then.

On top of that, the growth of 2012 and 2013 were both lower than the world average. In exploring potential reasons for Taiwan's economic slowdown, one eye catching explanation pops up, Taiwan have had not enough free trade agreement (FTA) coverage. Many argued that Taiwan had been losing market shares overseas to South Korea due to the fact that South Korea owned FTA coverage of nearly 35%, and Taiwan barely came up with 5%. If that is the case, the solution is pretty much there. That indicates that Taiwan need to join as many as regional economic integration (REI) processes as it can to regain the market shares and push forward its critical exports.

Striving for REI Processes

Because joining the processes of REI has been recognized as the key to revive Taiwan's economy, eyes are on major processes such as the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP). A more visionary way to put it would be it is so essential to join TPP and RCEP; both tracks might lead to the ultimate Free Trade Area of Asia Pacific (FTAAP) that includes all APEC member economies.

Besides those multilateral processes, Taiwan has also been working hard to strike bilateral deals besides those existing ones with El Salvador, Honduras, Guatemala, Nicaragua, and Panama. The Cross-Straits Economic Cooperation Framework Agreement (ECFA) between Taiwan and China was signed in June 2010. The bilateral agreement for Taiwan with New Zealand (ANZTEC) was signed in July 2013. Another bilateral treaty with Singapore (ASTEP) was also signed in November 2013.

The 5 Central American allies actually do not have very close trade and economic relations with Taiwan. By comparison, China, New Zealand, and Singapore are way more significant trading partners for Taiwan. Therefore, the Taiwanese government did make certain accomplishment in terms of bilateral deals. However, what really matters when it comes to regaining market shares would be multilateral; 4 out of Taiwan's 5 major trading partners are with TPP or RCEP. Does Taiwan stand a chance to become a member of either one?

When TPP was still P4, an agreement between Brunei Darussalam, Chile, Singapore and New Zealand; it is also the very first multilateral FTA linking Asia, the Pacific and the Americas. The P4 came into force in 2006, before the sub-prime crisis taking place. At that time, Taiwan did not pay attention to its great potential until the US decided to attend and dominate it. The first round of TPP negotiation was launched in March 2010. It now has 12 members including Taiwan's major trading partners such as the US and Japan. As part of competitive liberalization, the RCEP was initiated in November 2012 and started its first round negotiation in May 2013. The RCEP also comprises of Taiwan's important trading partners, namely China and ASEAN. It does not take a wise man to even be aware of that both TPP and RCEP are vital for Taiwan's economy.

The Cross-Straits ECFA has not yet been concluded. And we are not sure if joining TPP will compromise the conclusion of ECFA. Joining RCEP requires China's support as it is very obvious that China has been dominating this process. In a nutshell, Taiwan needs a green light from China to become part of both TPP and RCEP. For that reason, a feasible strategy for Taiwan would be to conclude ECFA first. Second, try to utilize the FTA natures of enlargement, docking and merging to join RCEP. Third, use the same format of joining PECC, APEC, and WTO to attend TPP. That is both sides of the Taiwan Straits join TPP in concert.

Will REI Guarantee Economic Growth?

International trade is nothing more than a game of comparative advantage. It will not be a fair game when Taiwan has to play it by facing certain barriers while other players do not need to. However, playing a fair game does not guarantee winning a game. The European Union used to be a role model of REI. Certain EU members even went one step further to forge a monetary union. In terms of depth, EU or Euro zone are more integrated than all FTAs. However, it is very clear that EU or Euro does not assure all members to grow and prosper.

Joining REI processes is not a sufficient condition for Taiwan's economic growth. However, Taiwan will certainly lose exports competitiveness without enough FTA coverage. Taiwan needs to make sure the game will be played fair; nevertheless, trying to win the game should be the next agenda item. And that's another story.