20111114 Why APEC is crucial for Taiwan

Why APEC is crucial for Taiwan

By Eric Chiou 邱奕宏

Leaders and ministers from 21 Asia-Pacific economies gathered in Honolulu over the weekend under the theme of “Toward a Seamless Regional Economy,” set by the host, the US. While media largely focused on US President Barack Obama’s conclusion on the progress of the Trans-Pacific Partnership (TPP) and Japanese Prime Minister Yoshihiko Noda’s announcement that Japan would participate in TPP talks, few paid attention to the substantial development of APEC’s three priorities this year: strengthening regional economic integration, promoting green growth and expanding regulatory cooperation and regulatory convergence. This negligence not only discounts APEC’s actual achievements, but also downplays the significance of Taiwan’s participation in APEC.

Few people in Taiwan remembered that this year’s APEC meeting signified Taiwan’s 20th anniversary of joining APEC. Apart from the group photograph of APEC leaders wearing traditional costumes and the handshakes across the Taiwan Strait, Taiwan’s participation in APEC has profound meaning and there are several crucial reasons why Taiwan must continue to take part.

First, APEC is one of the few international forums in which Taiwan has equal membership with other participants. Although it is still difficult for Taiwan’s president to attend the APEC leaders summit, it is indisputable that our APEC delegation enjoys full rights and is fairly treated under the APEC framework.

Owing to this equal membership, we can host numerous APEC working meetings, seminars and workshops in Taiwan, and our officials, academics and executives can take part in various APEC meetings abroad to voice our interests.

Second, APEC serves as an important platform for Taiwan to cultivate relations with neighboring economies through regular face-to-face meetings. In addition to the official APEC meetings, many countries fully take advantage of the occasion to hold formal or informal bilateral or multilateral meetings.

Taiwan is no exception. Our officials have held many informal talks with interested parties to further understand other countries’ stances and the latest developments on various issues. In fact, many free-trade discussions actually take place on the sidelines of APEC meetings. Without our APEC participation, Taiwan’s officials would rarely have the opportunity to meet their counterparts from other economies.

Third, APEC is an influential international stage on which Taiwan can exercise its soft power. Being a participant, Taiwan has vigorously taken the lead to play to its advantages.

For instance, with the superiority of Taiwan’s robust small-and-medium enterprises (SME), our initiative to establish the APEC SME Crisis Management Center (SCMC) was welcomed by APEC members and this center is located in Taiwan. Additionally, SME Administration Director-General Lai Sun-quae (賴杉桂) currently chairs the APEC SME Working Group.

Similarly, one of Taiwan’s three APEC Business Advisory Council (ABAC) representatives, HTC chairwoman Cher Wang (王雪紅), chaired the ABAC Women’s Forum this year and will co-chair the ABAC Small, Micro and Medium Enterprise and Entrepreneurship Working Group next year. By wisely using Taiwan’s information-technology strength, Taiwan’s previous initiative, the APEC Digital Opportunity Center, proposed by Acer founder Stan Shih (施振榮), has helped many APEC economies to narrow the digital gap and earned region-wide applause.

Without participating in APEC, Taiwan’s talents and achievements would hardly be recognized. Furthermore, with its non-binding and voluntary principles, APEC has operated as an open arena for competing ideas and new proposals. Taiwan’s keen participation in APEC helps our government and industries to prepare early for new challenges and the latest trends in the global economy.

For instance, the US has advocated green growth and regulatory cooperation this year. This is because the newly emerging industries, like smart grids and environmental goods and services, involve a multitude of business opportunities. If APEC can effectively reduce the technical obstacles caused by divergent standards and regulations between economies, it will significantly boost the trade of green products in the region, which is in the US’ interest. With Taiwan’s participation in APEC, not only can we be more aware of major economies’ industrial strategies, but we can also join the rule-setting to maximize our industrial strengths.

Finally, APEC can be used as a strategic springboard to reinforce our economic integration and international engagements. Despite signing the Economic Cooperation Framework Agreement with China, Taiwan is still kept out of regional economic frameworks, such as ASEAN Plus Three. However, Taiwan can join the TPP because of its APEC membership.

It remains unclear which economic integration proposal, the ASEAN Plus Three or TPP, will conclude first, but Taiwan can ultimately count the realization of APEC’s Bogor Goals: namely, the establishment of the Free Trade Area of the Asia-Pacific, promising to achieve free and open trade and investment in APEC by 2020. On the other hand, Taiwan has used APEC as a lever to strengthen our engagements with international organizations.

For instance, by keenly following the APEC Ease of Doing Business Action Plan, Taiwan has not only increased contact with the World Bank, but also substantially improved its business environment and advanced its ranking under World Bank criteria.

APEC is crucial to Taiwan for numerous reasons and the preceding points are only a few of them. In the future, Taiwan’s APEC strategy could become more ambitious. Hosting an APEC annual meeting could be one consideration. Russia and Indonesia will host APEC meetings next year and in 2013 respectively, but no member has yet volunteered to host the 2014 meeting.

Of course, political obstacles from China would be likely and the upcoming presidential election in Taiwan and change of power in China make cross-strait relations more uncertain. Nevertheless, the real challenge may lie in what vision Taiwan can offer to APEC and how we can lead APEC in the direction of progress and prosperity for APEC as a whole, which may face serious challenges in the future.

Eric Chiou is an associate research fellow at the Taiwan Institute of Economic Research.