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Remarks by Douglas H. Paal, Director, American Institute in Taiwan to the 2005 Hsieh Nien Fan of the American Chamber of Commerce in Taipei

BG0502E | Date: 2005-03-10

(As Prepared for Delivery)

It is a great honor and pleasure for me to join you this evening.  I extend my thanks to the American Chamber of Commerce, particularly to their President Tom Johnson and Executive Director Richard Vuylsteke, for the opportunity to address you once again this year.

This evening, President Chen continues a tradition of Taiwan's leaders honoring the American Chamber of Commerce with an address on the occasion of its Hsieh Nien Fan. I am sure that everyone here joins me in expressing gratitude to President Chen for this gesture of friendship to the AmCham, and by extension to all Americans on the island.  Thank you, Mr. President.

For my part, I would like to assure you and the people of Taiwan that as this new year dawns, we at AIT look forward to continuing to work with you to realize the many goals shared by our two peoples, goals which are supported by many others throughout the region and around the world.

Every year, the AmCham's Hsieh Nien Fan is an occasion for remembering that trade and investment, the exchange of goods, services, ideas, and culture, and the movement of people, are among the most important threads in the fabric binding peoples and nations.  When we talk about international relations, we often focus on treaties, negotiations, conventions, and the other rituals and paraphernalia of diplomacy.  These are, of course important.

But on the day-to-day, person-to-person level, we are knit together by the ability we now have to shop around the world on our computers; by the hundreds of millions of minutes of international phone calls that circle the globe daily; by airline services and tourism that allow us to experience foreign lands firsthand with an ease unimaginable even a generation ago; by burgeoning international alliances among companies not merely to exploit cost differentials, but also to bring creative diversity to design and marketing; and by legions of students going overseas to learn (inevitably enriching their hosts as well as themselves and their homelands).  It is little wonder that we often feel that the world is growing smaller, and that we are all becoming more closely linked to everyone else - whether we wish to, or not.

Taiwan is a case in point.  Over the past few years the political situation across the Strait has been anything but smooth.  Yet, as you know, all the threads of the increasingly tight-knit global fabric which I just mentioned have caused Taiwan's economy to become ever more integrated with that of the Mainland, just as that of the Mainland is becoming ever more integrated (through trade, investment, the Internet, telecommunication and travel) with the rest of the world.  The politics matter, but even politics can't turn this integration off.  In English, John Donne said that "no man is an island."  In today's world, even an island can't be an island.

We believe that this ever-increasing integration presents Taiwan with a challenge.  Will it rise to the challenge by continuing economic reform?  Will it strive to create a world-class environment for businesses from all over the world that want to take advantage of the opportunities here?  Will it have the services, the physical infrastructure, and the legal and regulatory fairness and transparency that will make it stand out from dozens of other places around the globe that compete for each investment dollar?

We have faith in Taiwan - faith in its young democracy, faith in its highly skilled population, faith in its technological prowess, and faith in its rich culture.  AIT and the AmCham have worked together for many years to help Taiwan rise to the economic challenges it faces.  Our help may sometimes sound like complaining, but it is actually frank talk from concerned and well-intentioned friends, who have our own interests, too.

In that spirit, I would like to turn to some of the economic issues on which we will all be focused in the coming year.  Most of these are matters that we have tackled jointly with the Chamber for some time.  Last year there was notable progress in some areas.  We hope for more progress in the year to come, and look forward to cooperating with Premier Hsieh and the new cabinet to resolve outstanding issues.

Dinner will soon be served, so I must lead off our by mentioning the ongoing exclusion of U.S. beef from this market.  Taiwan has completed its risk assessment, and we hope that the authorities will move quickly to allow U.S. beef imports to resume.  We have been impressed by the diligence and rigor of the Department of Health in evaluating the measures adopted in the United States to assure the safety of U.S. beef.  The assessment has been completed.  Now it is time for action, so that I once again will be able to offer fine U.S. beef to President Chen and other Taiwanese guests.

Last November in Washington, Taiwan and America held their first meeting in six years under the Trade and Investment Framework Agreement, or "TIFA."  We look forward to continuing a productive dialogue through this and other channels.

But while we have resumed work on liberalization under the TIFA, we regret Taiwan's participation in the Group of 10, a WTO grouping opposed to agricultural trade liberalization.  As a major trading economy, Taiwan's interests lie in open trade, not in protectionism.  Taiwan's agricultural sector is modernizing to produce more value-added products in order to prosper in today's global markets. We hope that Taiwan will reconsider its support of the G-10 and play a more positive role in the Doha Round of negotiations.

I spoke of progress, and nowhere was this more evident than in one of our areas of greatest concern - the protection of intellectual property rights.  Taiwan's executive and legislature have recognized that intellectual property piracy is not a victimless crime, but rather one that does harm both to foreign rights holders and to Taiwan itself.  Consequently, seizures of pirated goods went up, and offenders faced stiffer - more appropriate - sentencing.  The Legislative Yuan passed long-needed amendments to the Copyright Law.  In recognition of this progress, the U.S. Trade Representative recently upgraded Taiwan to the Special 301 Watch List.  But we believe that Taiwan can and must continue to improve IPR enforcement; it must resolve the increasingly widespread problem of Internet-based piracy in Taiwan.  We also look for continued judicial reform so that IPR cases can be prosecuted expeditiously through the courts.

Another area where I am pleased to note progress is the recent LY passage of a Data Exclusivity law for pharmaceuticals.  This was an important step by Taiwan to fulfill its WTO accession commitments.  Other important questions remain to be resolved, however, before U.S. manufacturers of pharmaceuticals can receive fair compensation for their products in Taiwan.  AIT and the U.S. government will continue to work with Taiwan's authorities to resolve outstanding problems in this sector.

Taiwan has also made noteworthy progress in its financial reform program, especially toward reaching the goals it set in 2003 for reducing the ratio of non-performing loans and raising capital adequacy ratios in the commercial banking sector.  Building on that, Taiwan should move ahead, especially to facilitate consolidation and further opening to foreign ownership.  A world-class financial services sector is absolutely vital if Taiwan wishes to compete for foreign investment and become a business hub.

Taiwan has targeted biotechnology in its national development strategy and as a way to assist farmers.  Taiwan possesses a strong research infrastructure, abundant human capital and modern infrastructure, which could position it as a world leader in this sector. Unfortunately, a cumbersome and uncertain regulatory environment threatens further progress.  We look forward to joining AmCham in working with Taiwan as it strengthens its regulatory system.

Finally, we know that many U.S. firms have encountered difficulties competing for public procurement in Taiwan.  The Government Procurement Law does not provide the transparency and predictability called for in the WTO Agreement on Public Procurement.  We urge Taiwan to conform to the letter of the WTO Agreement without waiting until such time as accession may be possible.  This is another issue, which is not only important to American firms, but is critical to Taiwan's international competitiveness as well.

This is an ambitious agenda, but I believe it is one both possible and well worth pursuing.  Over the years, The American Chamber of Commerce in Taipei and its individual members have proven with action and hard work their commitment to Taiwan.  We are proud to join and support them.

May I wish everyone here health, happiness, and prosperity in the coming year.  Thank you.