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EU-Taiwan: New Partners in International Trade Negotiations

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European Yearbook of International Economic Law 2017

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 8))

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Abstract

This paper examines the possible trade negotiation agendas between the EU and Taiwan in lieu of a comprehensive Free Trade Agreement (FTA). The EU and Taiwan are both important trade and investment partners to each other; trade in goods, for example, shows a strong production network relationship. A number of notable impediments also exist, arising mainly in the areas of TBT, SPS and domestic regulatory practices. Ideally, an FTA following the EU standards would underpin further enhancement of the already robust relationship, yet such an undertaking is barred by the EU’s political constrains in light of China’s likely opposition. A Bilateral Investment Agreement (BIA) has been considered as a substitution, but there are questions regarding the value of a BIA in terms of substance and timing. This paper argues that if the EU and Taiwan intend to capture the benefits of deep integration, it would require “out-of-the-box” thinking. Taking into account the nature of the bilateral barriers, this paper puts forward proposals in pursuing bilateral TBT and SPS Agreement as the priority, with collaboration in the Trade in Services Agreement (TiSA) as well as in the sectoral initiatives in the WTO.

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Notes

  1. 1.

    As of 2016, the EU has concluded or initiated FTA negotiations with most of its main Asian trading partners, namely Japan, South Korea, Malaysia Singapore, Thailand, Vietnam and India, and the discussions of a Bilateral Investment Agreement (BIA) with China and Myanmar is ongoing. This would include all except one (Hong Kong) of the EU’s top 10 trading partners in Asia. The EU’s FTA negotiation status update is available at http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf (last accessed 1 March 2017).

  2. 2.

    European Commission, Trade for all: Towards a more responsible trade and investment policy, 2015, p. 31.

  3. 3.

    WTO, World Trade Report 2011, The WTO and preferential trade agreements: From co-existence to coherence, p. 145.

  4. 4.

    WTO, World Trade Report 2011, The WTO and preferential trade agreements: From co-existence to coherence, pp. 146–148.

  5. 5.

    WTO and IDE-JETRO, Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks, 2011, p. 6. For a case study on Taiwan’s role in the global production networks, see Chen SH and Wen PC, A Longitudinal View on Global Production Network, Trade and Economic Integration. Paper presented at the Conference on Trade and Development Symposium, the Ninth WTO Ministerial Conference, Bali, Indonesia 3–5 December 2013, http://www.cier.edu.tw/public/Data/2014-2.pdf (last accessed 1 March 2017).

  6. 6.

    Copenhagen Economics, EU-Taiwan Trade Enhancement Measures: Update of the 2008 report “Taiwan: Enhancing Opportunities for European Business”, 20 September 2012, http://www.ecct.com.tw/file/userfiles/files/2012%20TEM%20Update%20Study(1).pdf (last accessed 1 March 2017).

  7. 7.

    European External Action Services, EU-Taiwan Factfile 2016, https://eeas.europa.eu/sites/eeas/files/eufactfile2016.pdf (last accessed 1 March 2017).

  8. 8.

    Taiwan Bureau of Foreign Trade, Ministry of Economic Affairs, International trade database, http://www.trade.gov.tw/Pages/List.aspx?nodeID=1376 (last accessed 1 March 2017).

  9. 9.

    Taiwan Bureau of Foreign Trade, Ministry of Economic Affairs, International trade database, http://www.trade.gov.tw/Pages/List.aspx?nodeID=1376 (last accessed 1 March 2017).

  10. 10.

    Athukorala (2010), p. 17 et seq.

  11. 11.

    Dreyer et al. (2010), p. 9.

  12. 12.

    World Trade Organization and IDE-JETRO, Trade patterns and global value chains in East Asia: From trade in goods to trade in tasks, 2011, https://www.wto.org/english/res_e/booksp_e/stat_tradepat_globvalchains_e.pdf (last accessed 1 March 2017), p. 11.

  13. 13.

    Taiwan Bureau of Foreign Trade, Ministry of Economic Affairs, International trade status and development 2015, http://www.trade.gov.tw/App_Ashx/File.ashx?FilePath=../Files/Doc/46fc1c3a-44ff-4f45-bd82-24e05970c6a3.pdf (last accessed 1 March 2017).

  14. 14.

    As Taiwan does not collect bilateral services trade data, this paper relies on the EU’s statistics from EUROSTAT for the analysis in this section.

  15. 15.

    British Caribbean, which is the second largest investor in Taiwan, accounted for 19% of FDI stock in 2014, followed by the US (17%) and Japan (13%).

  16. 16.

    Taiwan Investment Commission, 2015 Annual Inflow and outflow investment Statistics, http://www.moeaic.gov.tw/download-file.jsp?id=CSJffQHprx8%3d (last accessed 1 March 2017).

  17. 17.

    In the 2016 Economic Freedom Index published by the Heritage Foundation, Taiwan is identified as a “Mostly Free” Economy and ranked 14th out of 178 countries reviewed, before the Netherlands (16) and Germany (17). The full ranking is available at http://www.heritage.org/index/ranking (last accessed 1 March 2017).

  18. 18.

    Based on World Trade Organization (WTO) tariff profiles, the trade weighted average applied tariffs for Taiwan and the EU are 1.9% and 3.6% respectively. See WTO Tariff and Trade Indicator https://www.wto.org/english/res_e/statis_e/statis_maps_e.htm (last accessed 1 March 2017).

  19. 19.

    Copenhagen Economics, Taiwan: Enhancing Opportunities for European Business, August 2008, http://www.ecct.com.tw/file/userfiles/files/Copenhagen%20EU-Taiwan%20Study%20Aug2008%20Final.pdf (last accessed 1 March 2017), p. 27.

  20. 20.

    Foster et al., Trade in Services in the APEC Region: Challenges and Opportunities for Improvement, USC-ABAC Joint Research, University of Southern California, September 2012, p. 51.

  21. 21.

    European Commission, Overview of Potentially Trade Restrictive Measures Identified between 2008 and the End of 2015, May 2016, http://trade.ec.europa.eu/doclib/docs/2016/may/tradoc_154568.pdf (last accessed 1 March 2017).

  22. 22.

    For instance, the Commission identified Taiwan’s removal of Poland from the list of non-infected countries for African Swine Fever is inconsistent with WTO and the Organisation for Animal Health (OIE). See European Commission, Overview of Potentially Trade Restrictive Measures Identified between 2008 and the End of 2015, May 2016, p. 39.

  23. 23.

    European Commission, Overview of Potentially Trade Restrictive Measures Identified between 2008 and the End of 2015, May 2016, pp. 70 and 95.

  24. 24.

    European Chamber of Commerce Taiwan, 2017 Position Paper: Gearing up Taiwan’s Revivals, November 2016, http://www.ecct.com.tw/file/Publications/201611171256325377.pdf (last accessed 1 March 2017). The position paper is formulated by members of the ECCT’s 29 industry committees and its board of directors, representing the interests of some 400 companies and organizations and over 800 individual members.

  25. 25.

    European Chamber of Commerce Taiwan, 2017 Position Paper: Gearing up Taiwan’s Revivals, 2016, pp. 16 and 32.

  26. 26.

    Chinese (Taiwan) National Confederation of Industries, 2015 Export Barriers Industry Survey Report, 2016, http://wto.cnfi.org.tw/admin/upload/12/2015report.pdf (last accessed 1 March 2017).

  27. 27.

    The Taiwan government officially responds to most of the issues raised in each year’s Position Paper. The latest responses to the 2016 Position Paper see http://www.ndc.gov.tw/Content_List.aspx?n=D7D3AA1846E85A23 (last accessed 1 March 2017).

  28. 28.

    Taiwan Financial Supervisory Commission, Response of the 2016 ECCT Recommendations, 2016, http://www.ndc.gov.tw/Content_List.aspx?n=D7D3AA1846E85A23 (last accessed 1 March 2017).

  29. 29.

    Bureau of Animal and Plant Health Inspection and Quarantine and the Taiwan Food and Drug Administration, Response of the 2016 ECCT Recommendations, 2016, http://www.ndc.gov.tw/Content_List.aspx?n=D7D3AA1846E85A23 (last accessed 1 March 2017).

  30. 30.

    Copenhagen Economics, Taiwan: Enhancing Opportunities for European Business, August 2008, p. 5 et seq.

  31. 31.

    Copenhagen Economics, Taiwan: Enhancing Opportunities for European Business, August 2008, p. 7.

  32. 32.

    Krol and Lee-Makiyama (2012); Kerneis P, Lamprecht P, Messerlin P, Taiwan and European Union Trade and Economic Relations: The case for a Comprehensive Bilateral Investment Agreement, Report by the European Services Forum, November 2016, http://www.esf.be/new/wp-content/uploads/2016/11/ESF-Report-Taiwan-EU-Economic-Relations-Components-of-a-trade-investment-agreement-Final.pdf (last accessed 1 March 2017).

  33. 33.

    Decreux Y, Milner C, Péridy N, The Economic Impact of the Free Trade Agreement (FTA) between the European Union and Korea, May 2010, htttp://trade.ec.europa.eu/doclib/docs/2010/may/tradoc_146174.pdf (last accessed 1 March 2017), p. 22.

  34. 34.

    The Free Trade Agreement between the EU and Republic of Korea (EU-Korea FTA), OJ 2011 L 127/6.

  35. 35.

    EU-Korea FTA, OJ 2011 L 127/6.

  36. 36.

    For example, Article 2.9.4 of the TBT Agreement requires WTO members to “allow reasonable time for other members to make comments in writing, discuss these comments upon request, and take these written comments and the results of these discussions into account” (emphasis added).

  37. 37.

    EU-Korea FTA, OJ 2011 L 127/6, p. 1134 et seq.

  38. 38.

    EU-Korea FTA, OJ 2011 L 127/6, p. 1134 et seq.

  39. 39.

    As defined in Article 6 of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), zoning or regionalization is the recognition of an area (all of a country, part of a country, or all or parts of several countries) as pest-or disease-free areas and areas of low pest or disease prevalence.

  40. 40.

    Article VI of the WTO General Agreement on Trade in Services (GATS) already provides some horizontal principles relating to domestic regulations to ensure all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner. Article VI.4 also mandates WTO members to develop disciplines to ensure measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services. There are no sectoral regulatory principles under the GATS except the Reference Paper on Basic Telecom, the Annex on Financial Services and the Disciplines on Domestic Regulation in the Accountancy Sector. As of 2016, WTO members have not reached consensus on the Article VI.4 horizontal disciplines. For the progress and development of the negotiation, see https://www.wto.org/english/tratop_e/serv_e/dom_reg_negs_e.htm (last accessed 1 March 2017).

  41. 41.

    Section E (regulatory framework), chapter 7 of the EU-Korea FTA, OJ 2011 L 127/6.

  42. 42.

    European Commission, Global Europe: Competing in the world—A contribution to the EU’s Growth and Jobs Strategy, COM (2006) 567 final, 4 October 2006, p. 11.

  43. 43.

    COM (2006) 567 final, p. 11.

  44. 44.

    European Commission, Trade, Growth and World Affairs—Trade Policy as a core component of the EU’s 2020 strategy, COM (2010) 612 final, 9 November 2010, p. 10 et seq.

  45. 45.

    Kerneis P, Lamprecht P, Messerlin P, Taiwan and European Union Trade and Economic Relations: The case for a Comprehensive Bilateral Investment Agreement, Report by the European Services Forum, November 2016, p. 44.

  46. 46.

    Dreyer et al. (2010), p. 9.

  47. 47.

    Okano-Heijmans et al. (2015), p. 12. The EU has indeed either concluded or initiated the negotiation of a PCA or SPA with all FTA partners in the Asia Pacific region, including China. Information regarding the status of PCA/SPA negotiation is available at https://eeas.europa.eu/headquarters/headquarters-homepage/area/geo_en (last accessed 1 March 2017).

  48. 48.

    Taiwan National Development Council, The 2014 National Development Masterplan, 2013, http://www.ey.gov.tw/Upload/RelFile/26/706546/43d04638-5ca6-4e33-9e68-408986b28764.pdf (last accessed 1 March 2017), p. 81.

  49. 49.

    European Commission, EU and China begin investment talks, Press release IP/14/33, 20 January 2014.

  50. 50.

    European Commission, Trade for all: Towards a more responsible trade and investment policy, 2015, p. 32.

  51. 51.

    Statement made by Trade Commissioner Malmström indicating that the negotiations with Taiwan would be launched “only once the talks of the BIA with China would be done”. See http://www.europarl.europa.eu/ep-live/en/committees/video?event=20151015-0900-COMMITTEE-INTA (last accessed 1 March 2017).

  52. 52.

    Ewert (2016).

  53. 53.

    For the status of China’s BIA’s, see http://tfs.mofcom.gov.cn/article/Nocategory/201111/20111107819474.shtml (last accessed 1 March 2017).

  54. 54.

    Ewert (2016), p. 4.

  55. 55.

    China insisted that, in accordance with section 15(a)(ii) of its accession agreement, the 15-years “transitional” clause that allows other WTO members to use a surrogate price in light of an anti-dumping investigation expired after 11 December 2016.

  56. 56.

    Article 206 and 207 TFEU.

  57. 57.

    European Commission, Towards a comprehensive European international investment policy, COM (2010) 343 final, 7 July 2010.

  58. 58.

    COM (2010) 343 final, pp. 5–9.

  59. 59.

    See European Commission, Public Consultation on the Trade in Services Agreement (TiSA), http://trade.ec.europa.eu/consultations/index.cfm?consul_id=177 (last accessed 1 March 2017).

  60. 60.

    The TiSA is currently being negotiated by 23 WTO members (50 countries, with the EU representing all 28 Member states), including Australia, Canada, Chile, Colombia, Costa Rica, the European Union, Hong Kong China, Iceland, Israel, Japan, Korea, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Taiwan, Turkey and the United States. TiSA members account for around 70% of the world trade in services. For the latest update on the progress, see http://ec.europa.eu/trade/policy/in-focus/tisa/ (last accessed 1 March 2017).

  61. 61.

    European Commission, Report of the 21st TiSA negotiation round, 2–10 November 2016, http://trade.ec.europa.eu/doclib/docs/2016/november/tradoc_155095.pdf (last accessed 1 March 2017).

  62. 62.

    This is one of the primary rationales underpinning the EU’s Digital Single Market (DSM) policy. For further elaborations on the background and implications of the DSM, see https://ec.europa.eu/priorities/digital-single-market_en (last accessed 1 March 2017).

  63. 63.

    Information regarding EU’s MRA coverage and status is available at https://ec.europa.eu/growth/single-market/goods/international-aspects/mutual-recognition-agreements_en (last accessed 1 March 2017).

  64. 64.

    See www.bsmi.gov.tw/bsmiGIP/wSite/public/Data/f1369367729015.doc (last accessed 1 March 2017).

  65. 65.

    Council conclusions of 26 June 1997—Communication from the Commission on Community external trade policy in the field of standards and conformity assessment, OJ 2001 C 8/1.

  66. 66.

    This is the general conclusion made in a report commissioned by the DG Trade and Enterprises. See Hogan and Hartson LLP, The Economic Impact of Mutual Recognition Agreements on Conformity Assessment—A Review of the Costs, Benefits, and Trade Effects Resulting from the European Community MRAs Negotiated with Australia and New Zealand, 9 May 2003, http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_131416.pdf (last accessed 1 March 2017).

  67. 67.

    WTO, The Ministerial Declaration on the Expansion of Trade in Information Technology Products (WT/MIN(15)/25), 16 December 2015, para. 10.

  68. 68.

    European Commission, The Expansion of the Information Technology Agreement: An Economic Assessment, 2016, http://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154430.pdf (last accessed 1 March 2017).

  69. 69.

    The global shares of export of the products covered by the ITA Expansion for EU and Taiwan are 14.7% and 7.1% respectively. See WTO, Information Technology Agreement—an explanation, https://www.wto.org/english/tratop_e/inftec_e/itaintro_e.htm (last accessed 1 March 2017).

  70. 70.

    See https://ec.europa.eu/food/safety/international_affairs/agreements_en (last accessed 1 March 2017).

  71. 71.

    WTO, Work Programme on Electronic Commerce, Trade Policy, the WTI and the Digital Economy, Communication from Canada, Chile, Colombia, Côte d’Ivoire, the European Union, the Republic of Korea, Mexico, Montenegro, Paraguay, Singapore and Turkey (JOB/GC/97/Rev.3), August 2016.

  72. 72.

    For a summary of the rules and obligations covering digital trade related issues, see United States Trade Representative, The Digital Two Dozen, https://ustr.gov/sites/default/files/Digital-2-Dozen-Final.pdf (last accessed 1 March 2017).

  73. 73.

    WTO, Handbook on Accession to the WTO: chapter 5, Substance of Accession Negotiations, https://www.wto.org/english/thewto_e/acc_e/cbt_course_e/c5s3p1_e.htm (last accessed 1 March 2017).

  74. 74.

    WTO, Handbook on Accession to the WTO: chapter 5, Substance of Accession Negotiations, https://www.wto.org/english/thewto_e/acc_e/cbt_course_e/c5s3p1_e.htm (last accessed 1 March 2017).

  75. 75.

    The 14 sectors are: automotive and related parts; bicycles and related parts; chemicals; electronics/electrical products; fish and fish products; forestry products; gems and jewellery products; raw materials; sports equipment; healthcare related products, pharmaceutical and medical devices; hand tools; toys; textiles, clothing and footwear; and industrial machinery. See WTO, Annex 6 on Sectoral Proposals, the Fourth Revision on the Draft Modalities for Non-Agricultural Access (TN/MA/W/103/Rev.3), 6 December 2008.

  76. 76.

    In the case of the ITA, the critical mass threshold is set at 90% of world trade in IT products. See Para. 4, Annex of the WTO Ministerial Declaration on Trade in Information Technology Products (WT/MIN(96)/16), 13 December 1996.

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Authors and Affiliations

  1. Taiwan WTO & RTA Center, Chung-Hua Institution for Economic Research (CIER), Taipei City, 106, Taiwan

    Roy Chun Lee

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Editors and Affiliations

  1. Faculty of Law, Saarland University, Saarbrücken, Germany

    Marc Bungenberg

  2. Faculty of Law, University of Erlangen-Nürnberg, Erlangen, Germany

    Markus Krajewski

  3. School of Law, University of Glasgow, Glasgow, United Kingdom

    Christian Tams

  4. Competition and Regulation Institute, Leuphana University of Lüneburg, Lüneburg, Germany

    Jörg Philipp Terhechte

  5. Faculty of Law and Criminal Sciences, University of Lausanne, Lausanne, Switzerland

    Andreas R. Ziegler

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Lee, R.C. (2017). EU-Taiwan: New Partners in International Trade Negotiations. In: Bungenberg, M., Krajewski, M., Tams, C., Terhechte, J., Ziegler, A. (eds) European Yearbook of International Economic Law 2017. European Yearbook of International Economic Law, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-319-58832-2_18

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