Foreign and Defense Policy, Asia

Taiwan’s early entrance into the TPP supports US interests

Image Credit: shutterstock

Image Credit: shutterstock

Although the US has its hands full keeping the Trans-Pacific Partnership (TPP) moving forward, it shouldn’t neglect opportunities to expand the agreement. Taiwan’s participation in particular deserves a closer look. Drawing Taiwan into the TPP soon after its ratification would increase the island’s substantial trade, enhance supply chains running through Taiwan, and advance American security interests in East Asia.

Despite a population of only 23 million, Taiwan punches well above its weight in the global economy. According to the IMF, Taiwan was the world’s 18th richest country in terms of per capita GDP (adjusted for purchasing power parity), coming in ahead of both Japan (22nd) and South Korea (26th).  Moreover, Taiwan’s competiveness ranks 4th in Asia and 12th overall, according to the Global Competitiveness Report 2013-14.

These rankings underscore the fact that Taiwan’s participation in the TPP would benefit current member nations more than its size suggests. For instance, Taiwan could leverage the Economic Cooperation Framework Agreement (ECFA) to become a gateway for investment into China. And if it joins the TPP, its exports are estimated to increase by around 6.5% — and its GDP by around 2%, thereby expanding Taiwan’s overall trade with TPP members.

Moreover, Taiwan’s inclusion in the TPP would allow the US to reach a strategic goal in Asia. Because China has used its political clout to exclude Taiwan from over 40 regional free trade agreements, Taiwan is struggling to stay in regional markets and could require longer than the 8-year timeframe set by President Ma to meet TPP standards. Left on the outside, Taiwan will by necessity increase economic reliance on China (already, 40% of its exports go to China). As Claude Barfield mentions, this will cause other nations to “increasingly consider Taiwan as an appendage…of the PRC.”  If the TPP is to be the economic embodiment of the US ‘pivot’ to Asia, Taiwan’s marginalization could be read as the relegation of a long-term ally to China’s sphere of influence.

The obvious implication: the TPP agreement should make Taiwan’s inclusion as simple as possible. At the same time, the US should encourage Taipei to accelerate economic reform using TTP standards as guidelines. In Washington, pressure should remain high on this issue since Taiwan’s economic exclusion could sink the unsinkable aircraft carrier that is Formosa faster than Chinese missiles ever could.

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