Frequent asked questions about US-Taiwan Free Trade Agreement.

Q: What is a free trade agreement (FTA)?

A: An FTA is a trade agreement between the signatory countries to remove trade barriers that restrict the free flow of goods and services. Such an agreement harmonizes signatory countries' trade policies and contributes to global trade liberalization.

Q: How many bilateral free trade agreements has the United States concluded thus far?

A: In alphabetical order, they are:  

(1) Andean Trade Promotion Agreement - Colombia Trade Promotion Agreement*

(2) Andean Trade Promotion Agreement – Peru Trade Promotion Agreement*

(3) Australia Free Trade Agreement since 2005

(4) Bahrain Free Trade Agreement since 2004

(5) Chile Free Trade Agreement since 2003

(6) Central American-Dominican Republic Free Trade Agreement since 2005

(7) Israel Free Trade Agreement since 1985

(8) Jordan Free Trade Agreement since 2004

(9) Morocco Free Trade Agreement since 2004

(10) Oman Free Trade Agreement since 2006

(11) Panama Free Trade Agreement*

(12) Republic of Korea Free Trade Agreement *

(13) Singapore Free Trade Agreement since 2003

* Pending approval from Congress

Q: Is Taiwan qualified to conduct free trade agreement negotiations and conclude a free trade agreement with the United States?

A: Absolutely! Especially considering that South Korea, the U.S. 7th largest trading partner has recently concluded free trade negotiations with the U.S. Also, Malaysia, the U.S. 9th largest trading partner is aggressively seeking free trade negotiations.

We strongly argue that Taiwan being the U.S. 8th largest trading partner that ranks between South Korea and Malaysia should also be on the USTR's priority list of potential free trade agreements.

Q: What are the merits for both Taiwan and the U.S. for such an FTA?

A: Such free trade agreement will bring merits in two categories for both countries.

(1) In terms of trade and economic benefits:

IT IS A WIN-WIN FOR BOTH TAIWANESE AND AMERICAN BUSINESS, FARMERS AND WORKERS.

A. Current bilateral trade of USD$60 billions dollars only will continue to increase. (The purchasing power of Taiwan is bigger than that of all CAFTA nations combined.)

B. According to a report by the International Trade Commission released in 2002, the U.S. exports to Taiwan would grow at a rate of approximately 16% per year if a US-Taiwan FTA were concluded.

C. According to the same report, the biggest anticipated gains from a US-Taiwan FTA would be in the auto and agricultural sector.

D. In Nicholas Lardy and Daniel Rosen's 2004 publication entitled "Prospects for a US-Taiwan Free Trade Agreement" for the Institute for International Economics, the overall welfare gains from a US-Taiwan FTA would be modest in absolute terms. Taiwan ranked THIRD in terms of relative importance in a comparative study of 12 prospective FTAs, including Australia, Chile, Singapore…etc.

E. US-Taiwan FTA will provide new opportunities for a diverse array of American industries, and boost trade exchanges ranging from mom-and-pop owned businesses to big corporations like Dell, HP, IBM..etc.

F. With US-Taiwan FTA, American businesses can expand their presence through Taiwan. US-Taiwan FTA is the gateway to Asia for U.S. businesses and firms.

(2) In terms of non-trade benefits:

A. A US-Taiwan FTA will solidify U.S. support for and strengthen U.S. ties with Taiwan, a democratic ally.

B. A US-Taiwan FTA will help break the international isolation Taiwan is facing and accelerate trade liberalization in the region.

Q: Does Taiwan have good labor standards?

A: Yes! Taiwan ranks high amongst top U.S. trading partners in hourly wage levels, and is second in Asia only to Japan. Taiwan ranked first among Asian nations in the Gender Empowerment Measure ranking according to the United Nations’ Human Development Report.  Although Taiwan is not a member of the ILO because of the Chinese obstruction to prevent Taiwan from joining the organization, Taiwanese government implemented law that reflects core ILO labor standards.  Even the foreign workers in Taiwan receive the same protection as local workers.

Q: Does Taiwan have a good environmental standard?

A: Yes! Taiwan has a good track record on the international environmental standard. In 2006, Taiwan was ranked 24th out of 133 countries in the 2006 Environmental Performance Index released by Yale University. The United States was ranked 28th.

Q: But isn't the United States not happy with Taiwan's intellectual property rights protection record and has therefore put Taiwan on the so called ‘301 Watch List".

A: It is true that Taiwan is on the "301 Watch List" released by the USTR in 2007. Nevertheless, Taiwan has made substantial improvements in protecting intellectual property rights. And such improvements have led to Taiwan being moved from the "301 Priority Watch List (a more serious offender)" to the "301 Watch List." It is worth noting that countries such as Chile and Israel that are on the "301 Priority Watch List" have free trade agreements with the U.S. Needing to improve intellectual property rights SHOULD NOT be an excuse to block any US-Taiwan FTA efforts.