TPP, trade-off and eco-system establishment in Taiwan

Abstract

The Trans-Pacific Partnership (TPP) is a free trade agreement with high standards, affecting multiple industries, and imposing tremendous economic impacts. The TPP accounts for 36% of world GDP and its significance and impacts are profound, specifically affecting tariff reduction in the manufacturing sector, market entry in the service sector, and rules of origin requirements, as well as currency valuation, intellectual property rights, and even immigration. This means that Taiwan cannot view the TPP lightly. Taiwan’s economy is export-focused, so not being able to partake in regional economic integration will exert an unfavorable impact on Taiwan’s trade expansion and investment attractiveness. Taiwan’s government should therefore actively seek to engage in the second round of TPP discussions. Although President Trump has announced that the US will be withdrawing from the TPP, Japan is seeking further consolidation so that the remaining TPP member countries can continue to make progress. Taiwan cannot exert much control over international opposition to Taiwan’s membership of the TPP on the part of other countries, so this paper focuses mostly on the challenge of overcoming domestic opposition. A review of the literature reveals that the benefits of joining the TPP outweigh the harm; however, despite continuous efforts to promote the TPP and the reaching of consensus within governmental organizations, there has still been a considerable backlash against the idea of TPP membership from many groups in society. This is because TPP membership would directly disadvantage thousands of domestic-orientated businesses, small and medium enterprises (SMEs), and the younger generation. This means that TPP promotion needs to be more considerate of the interests of all related parties and be undertaken in an ‘eco-system’-like manner, focusing on helping traditional industries, SMEs, the agricultural sector, and young people. In addition, the government should work on strengthening the skills of existing workers, and work to develop a system that keeps capital and skilled labor within the country. Foreign investment should ideally help to stimulate domestic economic growth, create more employment opportunities, and drive wages up. If these benefits can be emphasized, then the promotion of the TPP or other FTAs is likely to encounter less resistance and receive more support from Taiwan’s citizens.