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Taiwan Summary

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GTN Global Trade Negotiations. Taiwan Summary Last Updated June 2004 Introductionmong the most successful of the East Asian Tigers - countries espousing a model of export-oriented growth since the 1960s and exhibiting phenomenal success - Taiwan's growth today is concentrated in its semiconductors, electronic components and information technology (IT) sectors. Since 2000, the Taiwanese government has sought to stimulate the national economy, particularly with efforts to improve the investment environment: removing bidding restrictions on infrastructure development, strengthening intellectual property protection, and addressing transparency and corruption concerns within the public and private sectors. Taiwan's transition towards a knowledge-based economy is among its leaders' top priorities, and present policy-making reflects that. APiracy and Intellectual Property ProtectionTaiwan has rebuked the alleged criticism by the United States that it has failed to fulfill its commitments to the WTO in terms of protecting intellectual property. In June 2003, Taiwan amended its copyright law which addressed some U.S. concerns. Furthermore, Taiwan's business software piracy rate declined to 43 percent in 2003 from 53 percent in 2002, the second lowest figure in Asia behind only Japan, and the biggest improvement in the world.1However, Taiwan remains on the US's "primary watch list" of countries subject to close monitoring for IPR infringment. It is largely because of piracy of audio and video products, however, that Taiwan has failed to convince the US to sign a bilateral free trade agreement. Furthermore, the level of copyright infringment in the country remains high and poses a primary obstacle to growth in foreign investment. Rice QuotasTaiwan is working jointly with Japan and Israel to maintain restrictions on rice imports into the three countries to 5% of national consumption levels. Taiwan's official Council of Agriculture considers the interests of domestic rice farmers an important issue, since rice is one of the country's staple foods. As Taiwan remains a leading market for U.S. rice exports, the US has made consistent efforts to dismantle this quota system and improve its market access. In January 2003 the US, joined by Australia and Thailand, submitted a formal objection to Taiwan's rice import system to the WTO Dispute Settlement Panel.2Anti-dumpingTaiwan is party to a 17-member group (including Canada, Hong Kong, Japan, Singapore and South Korea) attempting to revise the WTO's anti-dumping agreement, which it considers unreasonable. The 1Taiwan vows to improve IPR protection. Asia Pulse. 5 May 2004. 2The President's 2003 Annual Report on the Trade Agreements Program - Bilateral and Regional Negotiations: TaiwanGTN group contends that the US and the EU have used anti-dumping measures to prohibit imports from other countries, such as textiles and semiconductor products from Taiwan. The review and possible amendment of investigation procedures and assessment of damages pertaining to anti-dumping, as well as regulations regarding which country is at fault for dumping in cases under the agreement, are acknowledged as key issues of the new round of global trade negotiations. TelecommunicationsTaiwan's telecom service market has been opened to both local and foreign investors to the extent that foreign investors may now directly hold up to a 49% stake in a local telecom service enterprise. With additional indirect investment, up to a majority-level 60% stake can now be secured, and all restrictions on indirect investment by foreigners will be removed entirely in the next few years. Along with concentrated public investment in telecom infrastructure, these policies reflect Taiwan's determination to bring the performance of its telecom sector up to par with that of its semiconductor and biotech sectors.3Cross-Strait RelationsDespite the fact that the WTO is one of the few international organizations to admit both Taiwan and mainland China as independent members, their political differences remain a major barrier to bilateral engagements through the WTO framework. Because of the "one China" principle, Beijing has refused to treat Taiwan as an equal member since it entered the WTO one day ahead of Taiwan on Jan. 1, 2002. China claims trade ties with Taiwan are part of its internal affairs. The WTO has postponed updating its directory for two years due to a dispute between Taiwan and China over the English title of Taiwan's Geneva-based "permanent mission." China wants the WTO to reduce the status of Taiwan's permanent mission to the same level as the economic trade offices of Hong Kong and Macau in Geneva. More recently, as China started a number of bilateral consultations with the US on the application of value-added tax on imported semiconductors. Beijing has again notified other related member states that due to its problem with the title, China refused to have Taiwan participate as a third country.4In December 2002, Taiwan and China sat down at the WTO to hash out differences over steel tariffs, marking the first time the two sides consented to use the WTO to settle trade arguments. January 2003 saw the first civilian flights between Taiwan and the People's Republic of China (PRC) in the half-century since direct links between the two were severed at the end of a civil war.5Despite these advancements and the hope that Beijing and Taipei, with a closer economic and trade relationship upon their accession to the WTO, would be able to resolve their political standoff and initiate new and benign political interactions, present disputes suggest the primacy of politics in economic relationships. ConclusionTaiwan considered the WTO Secretariat's decision to use Taipei for an Asia Pacific region senior officials' meeting in March 2003 to be representative of the importance the organization attaches to Taiwan in the region. Regional integration in Asia continues to deepen with Taiwan pursuing a free trade agreement with Vietnam, as well as the status of dialogue partner in the ASEAN. An East Asian economic bloc 3Taiwan's telecom sector to receive government boost. Asia Pulse. 10 May 2004. 4The Myth of the 'apolitical' WTO. Taipei Times. 10 May 2004. 5BBC Monitoring. China says political disputes no excuse for blocking three direct links. 17 December 2003. 2GTN formed around either China and/or Japan now seems plausible; though much would remain contingent upon improved relations

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