EUROPE ASIA FOUNDATION - INSIGHTS
Supporting Taiwan to boost Trans-Pacific Trade
Taiwan applied to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a significant commercial partnership made up of 11 nations dispersed over both sides of the Pacific Ocean, in late 2021. But due to political pressure from China, which is not a member of the CPTPP but has also applied to join, Taiwan's application has been delayed. The second largest economy in the bloc, Canada, might be a powerful proponent for Taiwan's admission, but it has opted to remain impartial. That needs to change.
The Trans-Pacific Partnership (TPP), a trade plan spearheaded by the United States, was in the process of being completed until being scrapped by American President Donald Trump in 2016. The TPP was replaced with the CPTPP. Since the TPP was created to oppose China's economic clout, the United States' decision to reject it was largely regarded as a grave geopolitical error.
Japan, however, saved the deal and re-released it under the CPTPP moniker in 2018. The main difference between the bloc and the TPP was the removal of a few sections that narrowly suited U.S. trade interests. The bloc kept all of its members with the exception of the United States. Since then, for compelling political and economic reasons, Taiwan has been keen to join the CPTPP.
Due to a lack of natural resources, Taiwan's export-oriented economy depends on its highly educated populace to produce higher-value industrial goods. The Taiwanese economy would benefit from lower trade barriers through cheaper imports of raw materials as well as better access to overseas export markets.
Taiwan is worried that China, which is becoming more assertive under Xi Jingping's leadership, may try to subjugate the island nation at some point in the coming ten years. Taipei is frantically trying to lessen its political isolation and integrate itself into critical global supply networks in order to avert this catastrophe. In this case, the semiconductor sector is extremely significant. Many high-tech devices require semiconductors, and Taiwan is the world's second-largest producer of them (only behind the United States).
Taipei appears to be betting on the fact that friends will be more likely to support it if they believe Beijing's jingoism poses a danger to international high-tech manufacturing. By strengthening these commercial ties, the CPTPP would aid Taipei's security objectives. Additionally, it would give Taiwan a fresh platform for international collaboration and diplomatic involvement, enhancing its visibility and political stature. This would send a message to the rest of the world that Taipei cannot just be shunned and ignored, despite Beijing's opposition.
The benefits of the CPTPP are similar in many aspects to those of the World Trade Organization (WTO), of which Taiwan is currently a member. Some experts, including Taiwan, have asserted that the WTO is currently particularly beneficial for both present and prospective members because of the malaise and dysfunction brought on by the China-U.S. trade war.
Although the CPTPP is generally good for Taiwanese security, it poses a risk in one specific but crucial area. Taiwan would have to allow competition into its existing duty-protected agriculture industry if it were to be admitted as a member. Even though this industry barely contributes 3% of Taiwan's GDP, it is essential for the country to have food security. The tiny, hilly island cannot aspire to be self-sufficient in agriculture and must rely on imports. However, if Beijing tries to embargo and starve the island country, some kind of local food production is essential.
This month, the federal ethics commissioner of Canada came to the conclusion that Mary Ng, the country's trade minister who was in charge of negotiations with Taiwan, had broken the law by giving a job to a friend in the spring of 2020. Despite requests for her to do so from opposition parties and the media, Ng has subsequently apologised but, at the moment of writing, has not resigned her position. It is unknown how this incident would affect Canada's trade talks, notably those with Taiwan.
Canada must continue the positive work it has done with Taiwan this year, regardless of what happens with Ng. Without the assistance of trade agreements, Canada-Taiwan commerce is already booming, indicating that there is a lot of untapped trade potential waiting to be realised. For instance, according to the MacDonald Laurier Institute, enabling Taiwan to join the CPTPP would increase Canadian agricultural exports by lowering tariffs. The CPTPP would make it possible for Taiwanese businesses to bid for government contracts in Canada, which would benefit both the federal and provincial governments of that country.
In order to capitalise on the momentum of the productive CFTG visit in October, Canadian authorities should expedite bilateral trade discussions with Taipei and increase their support for Taiwan's CPTPP application. The possibilities for commerce are obvious. What are the risks of greater cooperation, given that China already despises Canada? Canada may easily claim that it is implementing the CPTPP's membership standards impartially, which Taiwan obviously meets and China plainly does not, if required.
If Japan, Australia, and Canada can unify in their support of Taiwan, perhaps it will be able to persuade the smaller nations in the CPTPP to alter their minds. And the UK and the EU should encourage these nations to work together in their strategic support of Taiwan. China's economic pressure can only be resisted by the combined pressure of rival states. A concerted strategy would also make it harder for China to respond against supporters of Taiwan. Beijing cannot possibly be involved in many CPTPP nations' economic and diplomatic disputes at the same time