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TPR of Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
July 5, 2010

Trade Policy Review of Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
Statement of the U.S. Ambassador Michael Punke
July 5, 2010

Thank you, Mr. Chairman. The United States welcomes Deputy Minister of Economic Affairs, Lin, Sheng-Chung, Permanent Representative Mr. Lin Yi-fu, and the Chinese Taipei delegation to Chinese Taipei’s second WTO Trade Policy Review. We are pleased to have the opportunity to participate in this important event. We also want to express our appreciation to the Secretariat for its comprehensive report, which provided a thorough update on recent developments in Chinese Taipei’s economic and trade policy. We thank Chinese Taipei for its responses to our written questions, which we will examine carefully. Finally, we would like to thank the discussant, Mr. John Clarke, for providing an insightful context for our deliberations.

We recognize that the period since Chinese Taipei’s last Trade Policy Review has been a challenging one. After growing an average of 4% a year between 2005 and 2008, Chinese Taipei suffered significant negative effects from the downturn in global demand, as a result of its heavy reliance on exports, which were equivalent to 72% of GDP in 2008. The United States commends Chinese Taipei’s implementation of significant fiscal and monetary stimulus in response to the crisis, while avoiding protectionist trade and investment policies.

To ensure sustained recovery from the global financial crisis and to establish a strong foundation for future growth, Chinese Taipei continues to pursue policies aimed at strengthening and diversifying its economy, building value-added industry, human capital and knowledge-based industry and services. Continuing these efforts, particularly to strengthen domestic demand and to liberalize and develop service industries, would help enable Chinese Taipei to reduce its dependence on manufactured exports in the future.

The United States welcomes Chinese Taipei’s accession to the WTO Agreement on Government Procurement (GPA) in July of 2009, and looks forward to working with Chinese Taipei in implementing the obligations of GPA membership in a full and comprehensive manner.

In recent years, Chinese Taipei has undertaken significant new efforts to improve enforcement of intellectual property rights, a critical underpinning for Chinese Taipei’s dynamic and increasingly knowledge-based economy. Bilateral cooperation on IPR enforcement has been a major focus of our bilateral economic dialogue, and we congratulate Chinese Taipei on the important progress that has been made since the last Trade Policy Review. This includes the establishment of a specialized intellectual property court in 2008 and the passage in 2009 of an amendment to Chinese Taipei’s Copyright Law to provide limitations on Internet Service Provider (ISP) liability if ISPs establish and follow certain procedures, including an expeditious notice-and-takedown regime to reduce online infringements. The United States encourages Chinese Taipei to continue these efforts and looks forward to continuing our cooperation on these important issues.

Chinese Taipei also has taken steps to liberalize its trade and investment, seeking to enhance its competitiveness and to put its economy on a path of high and sustainable economic growth. Recent steps to increase Chinese Taipei’s economic integration with the Asia Pacific region by reducing impediments to trade, investment, and transportation will also serve to enhance the economy’s attractiveness as an investment destination and production location. We understand that there has been significant progress in cross-strait economic cooperation, including the signing of an Economic Cooperation Framework Agreement (ECFA) on June 29. The United States strongly supports continued progress in this area, and we look forward to learning more about the status and detailed provisions of the ECFA. The United States notes the importance of transparency and consistency with WTO obligations with regard to bilateral and regional trade agreements for all WTO members.

Chinese Taipei has long recognized the importance of global trade to economic growth and development. As the Secretariat Report notes, Chinese Taipei is an increasingly open economy, and an active participant in the WTO, with a strong commitment to the multilateral trading system. In most areas, Chinese Taipei has shown leadership in embracing responsibilities with regard to the global trading system that are consistent with its role in the system. Notably, Chinese Taipei has implemented a number of Uruguay Round tariff cutting zero for zero agreements such as those for civil aircraft; pharmaceuticals; paper; and agriculture and construction equipment. Chinese Taipei is also a participant in the Information Technology Agreement and has taken on many of the obligations in the Chemical Tariff Harmonization Agreement and Medical Devices UR agreements. The United States notes that Chinese Taipei has supported trade liberalization through APEC and through bilateral trade agreements with a number of trading partners. We also note the active efforts of Chinese Taipei in the Doha Round, and we look forward to working even more closely together to ensure an ambitious and balanced outcome of the Round, which includes contributions that are commensurate with Chinese Taipei’s advanced level of development. In this regard, we would like to remind Chinese Taipei that Paragraph 6 of its Working Party Report (WT/ACC/TPKM/18) includes the following sentence: “The representative of Chinese Taipei stated that his government would not claim any right granted under WTO Agreements to developing country Members or to a Member in the process of transforming its economy from a centrally-planned into a market, free-enterprise economy.”

We have a strong trade and investment relationship. In 2009, Chinese Taipei was our tenth largest trading partner with more than $46 billion in two-way goods trade. As of 2009, the stock of U.S. foreign direct investment in Chinese Taipei had reached $19.5 billion. In turn, Chinese Taipei had a stock of $4.2 billion in foreign direct investment (FDI) in the United States in 2009.

The Trade and Investment Framework Agreement (TIFA) signed by the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office (TECRO) in 1994 is the main mechanism for enhancing our bilateral trade relationship. Our TIFA process has enabled us to make progress on a range of important economic issues in the past, including many of the issues we will be discussing during this week’s Trade Policy Review. We look forward to working with Chinese Taipei through the TIFA process to further deepen our bilateral economic cooperation.

Despite Chinese Taipei’s solid record on economic reform and trade liberalization, there are a number of areas where there could be further improvements, particularly with respect to measures affecting trade in agricultural products. For certain agricultural products, tariffs are high and public sector support for agriculture continues to be a fiscal burden. We also remain concerned with some of Chinese Taipei’s overly restrictive sanitary and phytosanitary (SPS) measures as they apply to U.S. exports.

The United States is concerned that Chinese Taipei has not provided access for the full range of U.S. beef and beef products in a manner consistent with the bilateral protocol agreed to in October of last year. This protocol was carefully negotiated by both sides and is consistent with both the World Organization for Animal Health (OIE) guidelines for Bovine Spongiform Encephalopathy (BSE) as well as with Chinese Taipei’s own risk assessment on U.S. beef. In addition, Chinese Taipei has undertaken a variety of inspection and quarantine measures for U.S. beef and beef products, creating uncertainty in the market and disrupting trade. The United States has also raised questions about new import licensing procedures for beef and beef products.

Further, the United States continues to have concerns about other SPS matters, including the establishment of permanent maximum residue limits (MRLs) for horticultural products and grains, avian influenza restrictions on imports of poultry meat and related products, and the continued delay in implementation of Chinese Taipei’s proposed MRL for ractopamine, which was notified to the WTO in August of 2007.

Chinese Taipei is one of the world’s great fishing powers, fishing in the Atlantic, Pacific and Indian oceans. According to the Secretariat report, Chinese Taipei provides grants for vessel buy-backs, vessel reduction, fishing season closures, marine insurance for fishing vessels, fishmarket price stabilization, and aquaculture. However, a Chinese Taipei Council of Agriculture report also noted that the 2008 National Fisheries Conference closed with an agreement to incorporate fuel for fishery vessels into the coverage of government subsidies and to provide subsidies to cover the related operational costs for deep-sea fishing vessels. We would appreciate a description of the nature and amounts of these subsidies. The United States expects Chinese Taipei, commensurate with its fishing status, to make a significant contribution in achieving an ambitious outcome in the Doha fisheries subsidies negotiations.

The United States has also raised questions with regard to Chinese Taipei’s Country Specific Quota for importation of U.S. rice.

We look forward to discussing these important issues with the delegation from Chinese Taipei during this Trade Policy Review.

Mr. Chairman, Chinese Taipei is a valued partner of the United States. We share a common interest in its strong and stable long-term growth and development. We hope that this Trade Policy Review will draw Chinese Taipei’s attention to the importance of consistently implementing science-based sanitary and phytosanitary measures, as well as the benefits of further market opening and liberalization of its economy, encouraging trade and investment and boosting its drive for global competitiveness.

Thank you for the opportunity to present our observations. We wish Chinese Taipei a productive Trade Policy Review.