Greg Hands MP
…with Dennis, Lord Rollo, and others, and saw the incredible success of that economy, and also a vibrant democracy today, which I think is really setting the pace in Asia. GDP per capita this year – on a PPP basis – has just overtaken Japan, and Taiwan recorded economic growth last year of around 11%, and is projected this year to be somewhere between 4,5-5%, experiencing a slight slowdown that I think we are all suffering from. Although we would actually love to have economic growth rates closer to 5%, of course.
Now in terms of UK-Taiwan links, we have incredibly strong links. We have bilateral trade of about 5.2 billion pounds. A couple of years ago Taiwan was granted visa-free status; we have, I think, 15.000 Taiwanese students in the UK. Also I would strongly recommend to anybody, who wants to break into markets – in mainland China as well – Taiwan, if you’d like, as a stepping stone, as a spring board, to be able to do that. I’m told that there are now 580 weekly flights from Taiwan to the mainland, and I calculate that that’s about a plane every fourteen minutes taking off between the two parts of China.
So I think doing business in Taiwan can act as a springboard for UK companies in entering the mainland China market. So that’s, if you like, the setting and the scene for today. We have, I think, 5 speakers. We have Siao-Yue Chang, ambassador Chang, who is the representative of the Taiwan Representative Office here, in the UK. Then we have our keynote speech, by Mr. Sheng-Chung Lin, who is the deputy minister for economic affairs, of Taiwan. And then we are going to hear from four others briefly: the case for a free trade accord, by Mr. Hosuk Lee-Makiyama, who is the director of the European Centre for International Political Economy(ECIPE) in Brussels; and then we are going to hear about the economic cooperation agreement, and its implications for European companies, again from the ministry of economic affairs; and thirdly the opportunities for the UK services industries by Mr. John Cooke, who is the chairman of the Liberalisation of Trade in Services Committee of the very excellent body of the City, UK; and then finally, in terms of the Taiwan-EU-ECA, the benefits to Taiwan-EU industries, by Mr. Fritz Jang, who is the general secretary, or secretary-general, of the Chinese National Association of Industry and Commerce. And then, when we’ve done all that, they’ll be pretty short and sharp a lot of these presentations after the keynote, we will go to have lunch next door in the Jubilee room, which is being kindly organised by the Henry Jackson Society.
Can I briefly say something about the Henry Jackson Society, which does an enormous amount of work in promoting understanding in this country, of both international relations, security relations, and also aspects of international relations, which I think is very very important here to understand better.
So at that point, I think I’m going to pass over to ambassador Chang, who is going to say a few words on behalf of the Taiwan Representative Office.
Mr. Chairman, Vice-minister Lin, my Lords, Excellencies, distinguished ladies and gentlemen, thank you for joining us today. The TRO is de-facto embassy representing Taiwan, Republic of China, here in the United Kingdom. Our purpose is to strengthen the bilateral economic trade, cultural ties, between our two sides. I appreciate very much Henry Jackson Society to make this event possible. Also, we are very much honoured and pleased that vice-minister Lin is with us today. There are so many happenings in Taiwan, all very positive – especially the signing of the ECFA, between Taiwan and the Chinese mainland, that offers a lot of new opportunities for international businesses, who would like to expand their business into the Chinese mainland. And Taiwan services as the very best springboard for that, so we very much look forward to Mr. Lin’s remarks. Mr Lin is quite experienced in trade talks, he was very much behind when Taiwan became a member of the WTO, and he was also involved in all the bilateral talks between Taiwan and other countries. Currently, Taiwan is the 16th largest global trader in the world. There are new opportunities. I welcome you to explore where the new opportunities in Taiwan and Asia are. Thank you, and a big round of applause!
Greg Hands MP
Right, and can we have a warm welcome to Mr. Sheng-Chung Lin, who is going to speak from the podium here, who is the deputy minister of the Ministry of Economic Affairs of Taiwan. Dr. Lin!
Thank you Mr. Chairman, and Mrs. Chang, distinguished guests, ladies and gentlemen. It is indeed my great honour and pleasure to be invited to attend this seminar hosted by our friends in the Henry Jackson Society, as well as the Taipei Representative Office here in London. We are gathering in this historical room today to discuss the Taiwan-EU economic cooperation agreements. In recent times, in the early 19th century, David Ricardo, English political economist, and member of the parliament, taught us that all countries should benefit by free trade under the law of comparative advantage. The past 20 years have borne this out. International trade can help a country accumulate foreign exchange reserves, encourage technological innovation, and sustain economic development. It can also create job opportunities for millions of people. I believe that a free trade policy is one of the best ways to increase trade and investment, and to resolve the more complicated economic issues, such as the current debt crisis.
As you are aware, in terms of economic development by international trade a lot is happening right now in East Asia. Not only are the East Asian economies rising its trades, they are also becoming more and more integrated. According to the EU Commission’s trade policy announcement last year, East Asia plays an important role in trade and in helping Europe’s economic strengths. I am very pleased to see our European friends today discussing EU trade policy towards Asia, and more importantly redefine the role of Taiwan in East Asia. It’s integration at this critical moment. Taiwan is the EU’s fourth largest trade partner in East Asia. So we believe that now is the right time to evaluate and redefine the role that Taiwan can play in EU’s trade policy towards East Asia, and to find out what Taiwan can do to complement EU trade policy in a mutually beneficial manner.
Allow me first to point out that Taiwan is a very robust economy, it has strong foundations, just like Mr. Hands mentioned a few moments ago. Taiwan has managed to sail through the turbulent waters of the global financial and economic crisis with quite impressive economic figures. We had a 10.88% economic growth in the year 2010 and the World Bank expects that Taiwan should have a growth rate of around 5% this year. On the investment front, the amount that Taiwan invests in China surpasses each and every EU member state, so Taiwan is also among the leading foreign investors in Asian countries. This is related to the fact that Taiwan’s trade with China and other East Asian accounted for 44% of Taiwan’s total foreign trade. Strong economic ties have existed for a long time between Taiwan and Asian trading partners.
Another point I would like to make is the critical role that Taiwan plays in the world’s information and communication technology production and supply chain. Taiwan has been successfully integrated into the heart of the world supply chain. Not only because of its professional and high quality manufacturing and R&D capabilities, but also because of its niche location in East Asia, which makes Taiwan an important regional hub, through which you can access other East Asian markets very easily. Hence, Taiwan surely be a very good partner if the UK intends to build a strong economic presence in this vibrant and energetic part of the world.
Like the EU, Taiwan is committed to free trade. We have huge potential, because of our cross-straits long-term economic and trade relations with China and East Asia. Over the past three years, direct air and maritime transportation across the Taiwan straits has become a reality. And we have secured numerous trade-related agreements with China. Most important among them is the Economic Cooperation Framework Agreement – or ECFA – which was signed in June 2010. This is a landmark year, demonstrating the way for the next phase of more dynamic economic integration with China. ECFA, and its four follow-up agreements, if completed, can be considered a full-fledged FTA between Taiwan and China, and will secure Taiwan’s huge business interests and competitiveness in Chinese markets. Moreover, this preferential agreement will provide a solid foundation for Taiwan and China, together to trade with Japan, South Korea, and other Asian countries. It not only strengthens our competitiveness in the Chinese markets, but also establishes Taiwan as a strategic stronghold for our trading partners.
Another strategic goal, that the rapprochement policy has helped to realise, is the creation of an atmosphere favourable to Taiwan’s participation in regional economic integration. For your information, not long after the signing of ECFA, Taiwan and Singapore initiated talks on economic partnership agreements at the beginning of this year. Moreover, Taiwan is conducting FTA feasibility studies with both India, Indonesia, and the Philippines. It is also worth mentioning that Taiwan and Japan just signed an agreement for mutual cooperation and Liberalization, Promotion and Protection of Investment only last month.
Likewise, considering the existing close trade and investment relations between the EU and Taiwan, we believe it would be also in the EU’s and the UK’s interest to seriously consider Taiwan as its next partner in East Asia for closer economic integration. On May 11, 2011, The European Parliament passed a resolution to express its full support to the formalizing of EU-Taiwan economic ties and the signing of an EU-Taiwan Economic Cooperation Agreement. We are grateful for the European Parliament’s full support, and we believe that this resolution provides the impetus for us to continue seeking support for the Taiwan-EU ECA. The UK is one of Taiwan’s most essential trade partners in Europe. The bilateral trade volume, and investments, between Taiwan and the UK is substantial and steady. Therefore, we look forward to hearing more participants from the UK on this important issue.
Mr. Chairman, ladies and gentlemen, before I conclude allow me to express, again, my heartfelt appreciation for being able to be part of today’s discussion. As we have all now witnessed the strong roles and dynamic prosperity of East Asian economies, this is surely the right time for my British friends to pay more attention to this region and to forge a more effective and productive trade policy towards East Asia. Next year, the Olympic Games in London will focus billions of peoples’ attention on the UK for a few weeks. And after the games conclude, and all the spectators return home, I would love to see, over the long time, Taiwan-EU ECA bring in more lasting trade and investment opportunities to England, North Ireland, Scotland and Wales, from my country. I thank you again for your attention, and I am also glad to see today’s seminar is a great success. Thank you very much!
Greg Hands MP
Thank you very much indeed Dr. Lin! Now there will be a short opportunity to ask questions at the end after all of our speakers have spoken. But next we’re going to hear from Mr. Hosuk Lee-Makiyama, who is the director of the European Centre for International Political Economy in Brussels. Mr. Hosuk Lee-Makiyama, over to you!
Mr. Hosuk Lee-Makiyama
Thank you Mr. Chairman, gentlemen, ambassador, deputy minister and distinguished guests. Thank you for letting me address you today. My name is Hosuk Lee-Makiyama. I work for a Brussels-based think tank which focuses on international economy and trade in Brussels. Unfortunately, we are the only one to do so in Brussels, which says a lot about how Brussels works these days. ECIPE – European Centre for International Political Economy – has also very strong links to [inaudible] here, and I would also like to repeat the significance.
Anyway, to start, I have followed many free trade accords, and especially with focus on Asia given my background. And I am one of the co-authors of our report which we concluded a year ago on EU-Taiwan relations and on its possible trade accord between the EU and Taiwan which was titled ‘Beyond Geopolitics’. That report, I should state at the onset, came out very positively in favour of a possible FTA through the EU-Taiwan [inaudible] generally favourable of the ever growing [inaudible] of EU engagement. But this one is particularly different; it is also a rather unique, and, especially if you know the current politico-economic climate, the crisis. But also given the fact that you cannot talk about it without talking about the large elephant in the room, which is geopolitics. When we talk about Taiwan we are also talking about one of the large…[interruption]
Greg Hands MP
I think, we seem to be having a problem with the microphone. What I would suggest that we do, why don’t you and I swap places? If that is alright with you? Because I know this microphone seems to be working absolutely fine. Is my impression correct? So why don’t we swap places? We can swap back once we’re finished.
Mr. Hosuk Lee-Makiyama
I do however make no claim of the chairmanship of this meeting. Thank you very much, I will try to continue. Where was I? Yes, I was talking about “Beyond Geopolitics”. The thing is that we kind of talk about Taiwan and the EU-Taiwan relationship without talking about the great elephant in the room – which is the great outstanding issue of the cold war, which is the status of Taiwan.
However, the realities, especially the economic one, are vastly different from the political reality, especially if you take into account where the EU and Brussels is today. So, where we have seen, as we have heard, a rapprochement between the mainland and Taiwan – basically a normalization of relations – we have not yet seen that taken into account from the side of Brussels. This is one of the reasons why we did this report. And also, if you look at the European Commission, and its 27 member states, we are now looking at a situation where the common commercial policy is at its worst. After the crisis we have seen, well, if not a full right reclination towards protectionism, we have seen tendencies towards soft mercantilism where basically exports are good and imports are bad, and where we find it increasingly more difficult to gain market access and conclude free trade agreements, because we are basically stuck with a construct which consists of 27 vetoes with 27 different sensitivities.
In the last years we have concluded an FTA with Korea, and that was barely, and we are talking about an economy which is 1/12th of our size, and if you can’t see a trading partner which is 1/12th of our size then there is no way we can see further liberalization for instance on a Transatlantic axis or better improved accords with an economy like China. So, having said that, we see that trade policy in the EU is extremely weakened. But I would like to start to take into account the fact that Taiwan, despite all of this, is very different from all other FTA negotiation partners and trading partners we have in Asia, for a few reasons.
First, it’s fairly liberal. And, if you can measure such a thing, if you compare by WTO commitments, Taiwan has about 56% commitment in WTO. That doesn’t sound much, but if you compare that to the EU, which is at 49, which is supposed to be the, well, believe it or not, but it’s supposed to be the bearing light of trade liberalization in the world. So it’s actually more liberal than us. It’s not only richer, it’s actually more liberal. And if you compare that to, for instance, to a Korea or Japan, which is around 35-38, it seems to me that it’s a fairly liberal economy. And despite the fact that we have seen export-led growth in Taiwan as well as we’ve seen in many Asian economies and the tiger economies in the 70s and 80s, Taiwan is quite different because you don’t find any Taiwanese Toyotas or Hyundais. Taiwan’s economy, if you look at the industrial structure, is largely based on original equipment manufacturing. Which means for instance, I am actually a Swedish citizen, and Swedish telephone manufacturer, Ericsson, they let their Taiwanese partner design and construct the phones while Ericsson concentrates on R&D. So, in many cases, especially in IT products, you can see that Taiwan is where the production starts, and it very often ends on mainland China. This is how it has also achieved a remarkable market presence on especially IT goods, but also high value-added components. Something along the lines of 60% of Taiwan’s trade is actually components, that our technology companies, or even textiles industries, what have you, need, in order to for ourselves to export, on our terms. So it’s basically supplying us with know-how on IT. And furthermore, it’s quite remarkable that this small country has actually achieved to create 19 of the world’s 250 largest IT firms and ICT firms. And while we have seen companies such as HTC and ASUS coming up lately, we don’t see any Sonys, because they basically supply our IT firms. That’s how it works.
So they have the largest part, they have the largest share, of component trade in the world. It’s actually even larger than Germany, so somewhere along the lines of 60% is actually components, not finalized goods. So given the fact that we should not have any sensitivities towards Taiwan, if it was, let’s say, the relations were normalized, if we didn’t have the mainland issue. So, why was Taiwan still not chosen? The official explanation is that their trade barriers were quite low. And the size is about half of Korea, it’s not large enough. And the third explanation is also that we tend to, in terms of EU trade policy, follow where the US has stepped before us. In theory there is no reason for us to go into trade negotiations with Vietnam, but we do it anyway, because the US has what they call a TIFA, a Trade and Investment Framework Agreement, with Vietnam, so we are bound to catch up.
So, since nobody has taken the first step, we have passed up on Taiwan. And as we know this is not the, as I’ve already mentioned in the first sentence, we are also talking about the large elephant in the room, which is the mainland. Let’s face it, this is the main reason why we haven’t talked about it. And this says actually quite a lot about EU trade policy. And if you know something about our Common Commercial Policy you would say that there is no way, under normal circumstances, that we would say no to an Asian economy, with double digit growth, which has championed more than any other market access in China, where one third of world growth will happen in the coming 10 years. One third of the GDP growth will happen on mainland China, and there is one economy that has the best market access to that growth, and that is not the European Union, that is Taiwan.
Finally, we are talking about an Asian double digit growth economy which has no agricultural sensitivities, and who do not export cars. Tell me that we would not do an FTA with this country under normal circumstances. I would even go as far as saying that now that we have seen a global production network in manufacturing establish itself all over the planet, but mostly around Asia; there are three entry ports to that production facility and network that is worth doing a trade deal with. First, is Singapore, which we are actually talking to. Korea. And number three, Taiwan. They all represent different aspects and different entry ports to that huge building, this huge manufacturing house, which we need for our own growth.
And it is true, as I mentioned, that Taiwan has an unprecedented – even before the ECFA, or the FTA-in-everything-but-its-name, that Taiwan has now concluded with mainland china – Taiwan enjoys basically an investment hegemony on the mainland. It is estimated that about 10-20% of all the exports from mainland China to the EU is actually by Taiwanese firms. And if you take into account what i said earlier about components, which has the highest value of all manufacturing, it’s the processors or these gizmos of phones and computers that has the value. Assembling it has no real value. Then you can probably talk about double that digit. So when we talk about trade with Taiwan we are actually talking about tapping into all of Asia.
So where does that leave us? As I said ECFA, which stands for Economic Cooperation Framework Agreement, is indeed nothing but a Free Trade Agreement of full recognition in anything but name. There is one other thing which is unique with Taiwan and mainland relationship and it is ECFA. There is a strong focus on regulatory issues, for instance intellectual property and service barriers, especially in financial sector and banking and telephones. And these are the areas which are our highest market access interest towards Asia. So, for instance, just to take an example, Norway is negotiation, was negotiation an FTA with mainland China until the talks stopped exactly one year ago when they announced the Nobel prize winner in Oslo parliament, and the talks came to a halt.
But, nevertheless the industrial structure of Norway, if they have one, it couldn’t address these issues that the Taiwanese has managed to do towards mainland China. This is not only about FTAs, you can also talk about Taiwan where the Taiwanese firms would have a success rate of 78% on the mainland china, while the EU firms which typically invest in China would have about a success rate of about 10%. There is a huge difference. This is a reason also why it’s very strange that we are disengaging now from Taiwan, while countries like Japan and the US are moving in and stepping in. Of course they have other interests, in the case of Japan I would even go as far as to say that it is part of their survival following the Fukushima catastrophe. Of course, the US has long-term strategic commitments to the island. However, our, if you compare our investment in Korea vis-a-vis Taiwan, the investment in Korea is still four times larger than it is in Taiwan. So it is quite interesting that we are going in the other direction, and I think that says quite a lot about the economic climate and the competitiveness of our firms in the globalized age.
So we are standing in the best position to actually fully leverage from the free trade agreements that Taiwan has negotiated. But here are some elements that we need to address with Taiwan, although it is a quite liberal economy, as I have said. Some of them relates to government procurement, minor issues in intellectually property. There are a couple of foreign equity caps; there are some non-tariff barriers which are basically related to technical standards. Here I should perhaps add that, for instance, in cars, we insist on UN standards for cars which are called UNEC which stands for Economic Commission of Europe. I happened to serve on the board of this UN body once upon a time, and I happen to know that we don’t let the Taiwanese in because they are not a member of the UN and it is very difficult to insist that Taiwan would follow standards when they are not even allowed to have technical consultations with you. So we do have an obligation, in terms of the multilateral system, but also in terms of spreading our own standards around the world.
Here is where, actually, to conclude, I would like to just briefly say that… I talked about the elephant in the room and, of course, it probably comes as no surprise that EU-China relations are at its worst. The agenda is overburdened by the question of the market economy status, we have an arm sales ban against the mainland, we have Tibet and third country issues like Syria, but basically it’s our biggest policy failure in terms of geopolitics. It’s the biggest policy failure of Brussels, I should add. There is, China is an extreme realist power, while the EU tends to be something of an idealist, or a hopeless French romantic.
This allows, actually, the mainland to basically play divide-and-conquer with us. If we cut short of our own policy options, this is Finlandization in the economic area. If we don’t pursue FTAs, especially given that Taiwan has actually the right to conclude FTAs, as a member of the WTO. If we take Chinese concerns into play, then it is de-facto Finlandization; and that argument is actually not even valid anymore, because we have seen Japan, who is an adversary, the traditional adversary to china, actually concluding a full-fledged bilateral investment treaty, and that would not happen without green light from Beijing. So this question is actually strategically important, the question is, I should perhaps also add that from the perspective of mainland China, the key important thing is status quo – to maintain things as they are. Disengagement is not status quo. They need to have, for their own economy, they need to have a prosperous Taiwan. Otherwise we would set too difficult political powers into motion.
I will end at this note. It is very important to avoid a failure of European trade policy. Given that the common commercial policy was actually designed to actually overcome policy failures like this, to actually go beyond geopolitics. The EU will for a foreseeable time be an economic union that drives economic interest using economic instruments like FTAs. And that’s what this is about, going beyond geopolitics, for the sake of economics. Thank you very much!
Greg Hands MP
Thank you very much indeed Mr. Lee-Makiyama. Now we’re going to come back to the Ministry of Economic Affairs, for a short presentation by its deputy director-general Mr. Ming-shih Chen. Mr. Chen!
Mr. Ming-shih Chen
Thank you Mr. Chair, ambassador Chang, Vice-minister Lin, distinguished guests. It is my honor to have a presentation about ECFA and its implications for European countries. Taiwan – the size is only 36.000 square kilometres, with a population of 23 million. Last year our total trade reached 526 billion US dollars. We are number 16 of exporting countries, number 17 of importing countries in the world. Taiwan has very strong trade and investment relations with mainland china. Last year bilateral trade totalled 152 billion US dollars. We have a surplus of 77 billion US dollars. Until last August, Taiwan had invested in mainland China a total of 107 billion US dollars. Meanwhile, mainland China invested in Taiwan 163 million us dollars. Since 2008, December, we have established a direct airline with mainland China. Now there 9 airports in Taiwan, 41 airports in mainland China, which have direct flights. There are more than 80.000 Taiwanese investors in mainland China. Of the top 20 exporters in mainland China, 7 are Taiwanese firms.
In the early harvest list of goods and services of ECFA, mainland China offered 539 products in 11 service sectors to Taiwan. Meanwhile, Taiwan offered to China 267 products in 9 service sectors. Four follow-up agreements are undergoing negotiations, which include trade in goods, trade in services, investment protection, dispute settlements and agreements. On this January this year we set up a cross-straits economic cooperation committee to further strengthen our economic relationship with mainland China. The tariff of early harvest goods will be reduced to 0% within two years. In service sectors there are ten Taiwanese banks which have received permission to establish a branch in mainland China, and they have already set up six bank branches in China.
The advantage for the Taiwanese economy: firstly, we have six well-developed industrial clusters; including semi-conductors, ICT products, precision machinery, biotechnology, optoelectronics, [inaudible], etc. To improve our investment climate, we have lowered the corporate income tax from 25% to 17%. Taiwan has excellent innovation, R&D, and also design capabilities. Since 2003, to 2010, Taiwan has won 1071 awards of top international design competitions. 43% of the work-force are university graduates. Taiwan now is a shipping hub of Asia, and the One-day Asian Business Circle.
Since January to August 2011, foreign investment in Taiwan totalled 2.94 billion US dollars. Number one is US, then Japan, and then the Netherlands. Why initiate with Taiwan matters. Taiwan’s earlier tariff rate, which is 6.3%, the EU will lower to 0%; barriers to trade in services will be removed, resulting in a prosperous market. After the EU-Taiwan ECA, the EU will increase GDP by 2 billion euros, and export increase of 11.8 billion euros.
Taiwan and Japan signed an arrangement of mutual cooperation on Liberalization, Promotion and Protection of Investment on September 22nd this year, including national treatment, and most-favoured nation. The UK and Taiwan’s total bilateral trade is 5.3 billion US dollars. Among those five principal exports to Taiwan, including whiskeys, medicaments, electrical machinery, [inaudible], air or vacuum pump machinery. Taiwan has invested in the UK a total of 536 million US dollars. It has generated more than 10.000 jobs. Meanwhile, UK has invested 6.7 billion US dollars…
Greg Hands MP
Could we, I’m sorry to interrupt you, but we’ve got a bit of a problem in that we have to be out of this room by 1 o’clock. We’ve got two others speakers, could we – I do apologize – if we can draw to conclusion?
Mr. Ming-shih Chen
Taking into account the impact of ECFA, Taiwan-EU ECA, and ongoing Asia-pacific region economic integration; doing business with China, soon Taiwan is bound to create a win-win-win situation. We do hope that the UK could support, lend its voice, for the EU-Taiwan ECA in the European Commission and the European Council, to further strengthen our mutual trade and investment relationship. Thank you very much!
Greg Hands MP
Thank you Mr. Chen! And now we are going to hear from Mr. John Cooke, who is the chairman of the Liberalization of Trade in Services Committee, of the City, UK. I think it might be easier if you and I swapped places?
Mr. John Cooke
Chairman, ambassador, friends, colleagues – thank you very much! I know that our time is short, and I will not take a great deal of it. I think this is a very important and interesting moment to be looking at this subject. Interesting because, thinking of what my ECIPE colleague Hosuk said not long ago, we’ve got a… at the end of last month we saw a statement of the official viewpoint from the Commission in the European Parliament, which was, if I can say so, a very carefully balanced statement of the Commission’s view of the relationship with Taiwan in answer to a question from a number of MEPs – including Robert Sturdy – who, people will remember, was the European Parliament’s rapporteur on the EU-Korea agreement. It was a very carefully balanced statement that really said almost nothing; it certainly did not say anything about a forward, closer relationship with Taiwan. So that I think is interesting as the ongoing official statement of the position, and it is very much in line with Hosuk’s interesting comment that the Common Commercial Policy was designed to remedy policy failures but does not necessary do so.
I think also that this is a very important moment to be looking at this subject, because we are obviously faced with challenges of new thinking on trade policy. The Doha development agenda is immobile and that reflects a lack of political will to make the old system work. But also new problems with global supply chains, the relationship between trade and investment. Changes in the perceived value of bilateral and global agreements, and I think it was very interesting that the WTO’s annual report on world trade this year focused so strongly on the role of bilateral agreements in the global system, instead of the usual WTO statements favouring multilateral agreements.
We’ve also got lots of new thinking on trade in services, and that is my particular concern. Trade in services involves new and different questions that need to be settled in trade agreements. Regulatory questions, of regulation behind the barrier. Differing objectives; and these are the problems that there are of trade negotiators and domestic regulators, and we need to overcome those differences. And I think from that point of view bilateral agreements are going to increase enormously in importance, and we’ve seen yesterday’s very significant vote in the US congress in favour of the US-Korea agreement. That’s very significant not only for itself but I’m also aware that it is significant for our Taiwanese friends and colleagues, because it adds to the change that there is in the terms of trade between the United states and also between Europe and the region, and Taiwan is rightfully interested and concerned about the need for a bilateral agreement, to even up those terms of trade.
Well, what about an agreement between the EU and Taiwan? I would say that from the point of view of my organization, the City, UK, that of course we were very much in favour of the agreement between the EU and South Korea. And the reasons we were are quite relevant to Taiwan. We valued a closer relationship with a leading economy; we valued an overall increase in trade; we saw direct benefits to EU services business; we valued regulatory transparency and the removal of trade barriers; we valued investment guarantees; we valued dispute resolution.
In particular, those of us in financial services valued the guarantee of freedom of movement for data flows and data storage. This is a very important point, when you think that trade in services is very often about flows of data: commercial data and other data. I just make this point because the EU-Korea agreement has, I think, become a template for the way any other agreement between the EU and countries in the region will work. Freedom of data flows will be very important from that point of view.
Well, I’m coming to an end of what I have to say. I think this is a very important subject for us to be discussing at this time. We have, on the one hand, the European Commission’s entirely careful and traditional statement about the relationship. We have on the other, all the trade policy challenges to which we need to rise if we are to create wealth and have a growth agenda in Europe. If we are to do that, we have to look for these new trading partnerships, and to support them. Thank you very much!
Greg Hands MP
Thank you very much indeed, Mr. Cooke! And now I’m going to come to our final speaker, who is the secretary-general of the Chinese National Association of Industry and Commerce, Mr. Fritz Jang, who is going to talk about the benefits to Taiwan and EU industries of the agreement. Over to you, Mr. Jang.
Mr. Fritz Jang
Thank you! Mr. Chairman, deputy minister Lin, Mr. Chen, distinguished ladies and gentlemen. I think, since we are very much behind schedule, I will make my presentation very short. Allow me to introduce our organization. Our organization’s name is Chinese National Association of Industry and Commerce, but in Taiwan. In Taiwan, we are one of the leading business organizations. Up to now we have 1500 members, covering large, small, and medium sized enterprises, from the industrial sector, the commercial sector, as well as financial sectors. One of our major functions is to promote international trade and business organizations’ cooperation as well as the exchange of visits between Taiwan and China.
And talking about our investment in China, I will give you just the figures. Until December last year, we estimated that Taiwanese investment in China has reached more than 200 billion US dollars, with around 80 solvent Taiwanese companies in china. Following the conclusion of ECFA, our government has taken the initiative in concluding the ECA – Economic Cooperation Agreement – with the EU. As one of the leading business organizations in Taiwan, our association strongly supports our government’s initiative. We fundamentally believe that this move will benefit both Taiwanese industries and European industries. As soon as the ECA is signed, tariff barriers will be removed, and two-way trade will be more facilitated.
We do believe this initiative will be in favour of the European industries who export to Taiwan, and further provide European industries with opportunities to getting access to the dynamic Asian markets, particularly at the critical moment that Europe is facing – the debt crisis; while the US may experience a double dip recession by the end of this year. On the other side, ICT quality products and other high value-added goods, such as Giant Bicycles, that penetrate the global market, as a result of the Taiwan-EU Economic Cooperation Agreement. I think the European industries and consumers must certainly enjoy high quality products made by Taiwan, at a low price.
In terms of investment, the signing of the Taiwan-EU ECA will also create a favourable environment for European industry to invest in Taiwan. And this stands as a springboard to export to the China market by sharing benefits resulting from ECFA. Just as deputy minister Lin mentioned, in September this year, our government signed an Investment Agreement with Japan, and before my departure from Taiwan, our organization received a 100-member Japanese visiting delegation in Taipei. And Japanese industry has regarded Taiwan as a shortcut to China in a business sense.
And we also promoted the so-called triangle cooperation between Taiwan, EU, and China. I, in conclusion, at this crucial stage, our government is prepared to sign this ECA with the EU. As secretary-general of the leading business organization in Taiwan, I formally believe that this initiative is very significant and timely. It will certainly be conducive to trade and industrial cooperation between Taiwan and EU member states, on a mutually beneficial basis. The business sector of Taiwan fully supports our government’s initiative in signing the ECA with the EU. I believe that EU ECFA, plus Taiwan-EU ECA, is already a very big plus, even generating a multiple effect. We look forward to sharing our fruit with EU industries by jointly exploring the markets in China as well as in South East Asian countries. I thank you very much for your attention. Thank you!
Greg Hands MP
Right, well thank you very much indeed! I hope everybody found it fascinating, that set of presentations on the Taiwan economy and the opportunities that will be afforded in the future. We are now bang on schedule. Can I just ask everybody to just remain seated while the madam ambassador, speakers and the minister leave. And everybody will be invited to join us for lunch in the Jubilee room which is next door. Unfortunately we not have time for question and answers, but it may be possible to catch our speakers, over lunch shortly. So can I have a final round of applause for all of our panellists today?