Services and Taiwan’s International Competitiveness
Dale W. Jieh, Deputy Chief Negotiator,
Office of Trade Negotiations, MOEA, Taiwan (R.O.C)
President Allgeier of CSI, Director General Su of CSI, Taiwan, Vice Chairman San of TAITRA, Assistant USTR Bliss, Senior Advisor Chiang of TECRO, Dr. Liang, Distinguished guests, ladies and gentlemen, good morning.
I am really pleased to return this beautiful city to attend the Global Service Summit yesterday, and meet with you this morning to jointly explore the subject of Taiwan’s economic future in the aspects of services and investment. My first posting in the U.S. was in 1989-93, and I had the privilege of returning to Washington D.C., and then Kansas, in 2005 for another 4 years. As I look back over the past two decades, I am struck by how much the United States, world economy, as well as our daily lives, has experienced tremendous changes. For example, we now type e-mails more than write letters, and our kids prefer swiping tablets to reading books, magazines, and newspapers. Although few people saw all these changes coming, one thing in hindsight is clear: the U.S. has always taken the lead in driving these technological changes.
However, the United States has not brought about these sweeping changes alone. During the process, leading U.S. companies found it vital to partner with producers elsewhere to bring new devices to market quickly and at an affordable cost. Examples of this trend are all around us -- just look at the back of IPhone, and you can see “Designed by California, assembled in China.” The story doesn’t end here. The biggest manufacturer that assembles IPhones is actually a Taiwanese company. High-tech supply chains of this sort have developed rapidly across the Asia-Pacific, and we can expect this cross-border, inter-connected production model to play an even more important role for global business in the future. And in this particular venue, I’d like to stress that special attention should be paid to the cross-border services and investment opportunities generated by the emergence of these supply chains.
For the past 60 years, United States has played an important role in Taiwan’s economy. We are very glad to see that U.S. -Taiwan economic relations remain dynamic and the value of our two-way trade has increased over the years, but it is also true that the U.S. share of Taiwan’s trade is smaller today than that in the past. In the 1980s, the U.S. was Taiwan’s biggest trading partner, accounting about 30 percent of Taiwan’s foreign trade. Now mainland China has become our largest trading partner – while the volume of U.S-Taiwan bilateral trade decreased to about 10 percent of Taiwan’s foreign trade in recent years.
In order to restore our global trade balance, we highly anticipate to reinvigorate and expedite our trade relations with the United States. We think a new form of partnership of trade should be established between Taiwan and the United States, and the services and the investment should take the center stage in this new trade partnership.
You might be more familiar with the Taiwanese brand name companies, such as HTC, ASUS, Acer, etc., and see Taiwan more as a manufacture-oriented economy. However, similar to most OECD countries, the services sector nowadays accounts for about 70% of Taiwan’s GDP and provides almost 60% of the jobs in our labor market. In the meantime, Taiwan’s companies are also important investors in Asia and many other parts of the world. We constantly rank among the top five foreign investors in countries like Vietnam, Malaysia, and Indonesia. And, in the United States, we are the 24th largest source of incoming foreign direct investment- with total investments of 13.1 billion USD through 2012. Investors from Taiwan such as HTC and Formosa Plastic are expanding their operations in the United States, and as a result are creating a great number of job opportunities in the United States.
We aware and respect that United States is the largest, most competitive and most innovative suppliers of services internationally. We are happy to see that our trade in services with the United States totaled 17 billion USD in Taiwan, of that total, U.S. exports of private commercial services to Taiwan was 10.7 billion USD, an increase of 15% over the 2010 level. In the mean time, United States has long been the top investor in Taiwan’s market. U.S. foreign direct investment in Taiwan was 21.9 billion USD in 2012.
Realizing of the importance and potential of services and investment in our economic relationship, the most recent TIFA trade meeting held in Taipei this march yielded a joint statement on principles of international investment, and a working group on investment was also launched. The newly launched TIFA working group on investment held its first meeting in September, there was a discussion on promoting transparent and predictable regime, and exchange of preliminary views on a potential U.S.-Taiwan bilateral investment agreement.
Investment is a lowly codified sphere in the WTO multilateral trade law system. Countries nowadays mainly rely on bilateral or regional instrument to safeguard and promote cross-border investments.
We recently completed an investment agreement with Japan, and that has promptly stimulated and increased the two-way investment between Taiwan and Japan. We firmly believe a bilateral investment agreement between Taiwan and the U.S. will serve the immediate interests of both of our business communities.
Few months ago, we signed an ECA—a very high standard and comprehensive preferential trade agreement with New Zealand, and a service trade agreement with Mainland China has also been signed. Furthermore, the ECA with Singapore, another high standard and comprehensive preferential trade agreement, has completed the substantial negotiation, and pending the final legal scrubbing.
We think there is no reason not to move forward our trade and economic relations with the U.S. We are ready for a high standard and ambitious bilateral investment agreement with the United States, and are very much convinced that with such an important instrument in place, we can definitely open a new chapter of economic cooperation between Taiwan and the U.S.