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EDITORIAL: Trade
blocs threaten marginalization
Following his re-election, the focus of US President Barack Obamaˇ¦s foreign
policy strategy will be the countryˇ¦s ˇ§pivotˇ¨ to Asia. This is a policy that is
bound to lead to competition with China. In such a situation, Asian nations will
have to choose sides, with only the lucky ones being able to be close to both.
Taiwan, currently latched on to China, will have to quickly study its options.
On Monday, Obama met with the leaders of the 10 ASEAN states and signed an
economic cooperation initiative that promised to strengthen investment and trade
cooperation. Beginning this year, a summit between US and ASEAN leaders will
become an annual occurrence to pave the way for a strategic partnership. The
US-led Trans-Pacific Partnership (TPP) is already moving along and the US is
hoping that it will be expanded and create an Asia-Pacific free-trade area that
would help connect Asia with Latin America through the US.
China is also making a great effort to co-opt the ASEAN countries, and at an
event at the ASEAN summit to mark 15 years of cooperation between China, Japan
and South Korea, Chinese Premier Wen Jiabao (·Ĺ®aÄ_) said that China was in favor
of holding Regional Comprehensive Economic Partnership (RCEP) talks. This
arrangement is aimed at establishing a free-trade area and reduce the dependence
of Asian countries on the troubled West.
The RCEP framework includes 16 countries in the Asia-Pacific region ˇX the 10
ASEAN countries plus China, India, Japan, South Korea, Australia and New Zealand
ˇX and hopes to create the worldˇ¦s largest free-trade area. The economies of
these 16 countries total almost US$20 trillion, and their trade and economic
production makes up one-third of global production.
It is quite odd to see two such economic entities in the Asian region.
Membership is largely overlapping and there are only minor differences in
entrance requirements. The difference between the TPP and the RCEP is that the
TPP does not include China, the worldˇ¦s second-largest economy, although China
is seen as playing the main role in the RCEP. This makes these two organizations
the main focus of economic competition between China and the US.
The problem is that Taiwan is not a member of either organization. When these
organizations take shape, Taiwan ˇX whose economy revolves around exports ˇX will
be marginalized. These organizations are just getting started and are still
wrestling with each other, which means that we will have to wait and see what
happens next. If Taiwan is able to join one of the two organizations, the impact
on its trade will be mitigated. Membership of both would bring a further level
of security.
Taiwan has expressed a willingness to join the TPP and Trade and Investment
Framework Agreement negotiations with the US have been resumed. The two
countries are making progress toward signing a free-trade agreement, although
there is still a long way to go.
Taiwan and China have signed the cross-strait Economic Cooperation Framework
Agreement, but the relationship between the two sides can be both friendly and
antagonistic: China may at any time change its mind and use its economic
strength to pressure Taiwan. This is of course why Taiwanˇ¦s policy of putting
all its eggs in Chinaˇ¦s basket is not very clever.
Since the TPP and the RCEP still have not been able to come to terms with each
other, Taiwanˇ¦s government and opposition must act now to find a way to break
through its economic marginalization in the region.
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