Remarks by AIT Director Stephen M. Young to the 2007 Hsieh Nien Fan of the American Chamber of Commerce in Taipei March 20, 2007

OT0703E | Date: 2007-03-21

President Chen, Amcham President Hwang, distinguished guests; I am honored by the opportunity to speak to you this evening.  It is genuinely inspiring for me to see so many influential individuals from President Chen's administration, the Legislative Yuan and the American Chamber of Commerce gathered together, because I see these institutions, along with AIT, as essential pillars in the strong U.S.-Taiwan relationship.

We are gathered to celebrate the achievements of the last year and look forward to the new year with hope and expectation.  Preparing for this evening, I thought about some of the characteristics I've heard ascribed to those who are born in the Year of the Pig, such as honesty, straightforwardness, patience, and loyalty.  These same characteristics could well describe the U.S.-Taiwan relationship.

Every spring the American Chamber of Commerce in an honest, straightforward and loyal fashion prepares its annual White Paper with recommendations on how Taiwan can further improve the island's already strong business environment.  Its message is important.  This dynamic economy has successfully sent forth its companies, products and talent around the world to prosper.  But to fully realize the benefits of globalization, you must keep going: Taiwan should itself transform into a truly international center and invite the world to come to visit this beautiful island.  You should not only expand your presence abroad but should also attract people, products, capital and ideas to Taiwan from around the globe.  You should develop your tourism industry to allow the world to experience firsthand your natural and manmade wonders and the friendliness of your people.

I urge you to utilize the expertise and talents of individuals and organizations like the members of Amcham and other international associations here.

Thanks in part to close cooperation with Amcham, Taiwan already is an attractive place to invest and do business.  Last year saw record foreign direct investment with 14 billion dollars flowing into the island, a remarkable 230 percent increase from 2005.  But Taiwan needs to expand this trend to include more areas such as health, education and financial services.  As the White Paper recommends, you should make it easier for firms to make their own hiring decisions, enhance efforts to create a world-class infrastructure, and move forward on an agenda of financial reforms.

I've heard some people suggest that Taiwan's economy is hollowing out as manufacturing moves overseas.  But I don't see this economy hollowing out.  I see it moving up.  Taiwan is progressing farther up the supply chain, developing more advanced technologies, and becoming more competitive in finance, logistics and other services.  That's where the future is.  These are the sectors that will drive vigorous growth even as labor-intensive manufacturing of necessity moves elsewhere, just as it is doing in my country and many other advanced economies around the world.  Taiwan should expand and restructure its economy to meet these challenges and to develop these prospects.  The American Chamber of Commerce has been honest and straightforward about how to achieve these goals.  It has also been a patient and loyal partner throughout this process of upgrading Taiwan's economy.

The U.S.-Taiwan Trade and Investment Framework Agreement, or TIFA process, shows these same qualities. This past year, we reinvigorated the TIFA process, beginning with Deputy U.S. Trade Representative Bhatia's visit to Taiwan last May and registering steady progress in our bilateral trade agenda ever since.  The process will continue with another round of meetings in Washington later this year.  Together Taiwan and the United States have already accomplished a great deal.  For example, the inauguration of the Consultative Committee on Agriculture in coming months will take our relationship to a new level.  Agricultural trade is an important component of our overall bilateral relationship and market access is a high priority for the United States.  This new mechanism for engagement will allow both sides to enter into real policy commitments that expand trade, investment, and growth opportunities for both our peoples.

Our dialogue on strengthening protection for intellectual property rights is another TIFA priority that has been marked by an honest and straightforward exchange.  We appreciate Taiwan's hard work in this area.  The legislation earlier this month creating the Intellectual Property Court is an important step, and we have a constructive agenda for further progress in the coming year.  We look forward to the passage soon of legislation on peer-to-peer file exchanges and Internet service provider liability.

As we continue our dialogue on these and other trade issues, the United States acknowledges Taiwan's quest for a bilateral free trade agreement.  This remains an option for the future, if Congress extends fast-track authority this summer.  However, this is not the only solution to what some perceive as the threat of Taiwan's economic marginalization.  There are other important steps we can take to energize our economic relationship, including bilateral agreements on investment, tax and government procurement.  But more importantly, as I noted earlier, Taiwan should take on the challenge of transforming itself into a regional and global center.  I urge you to adopt international standards and corporate best practices, reinforce the rule of law and further develop your remarkable young democracy on the road to a more prosperous tomorrow.

In this connection, AIT has also been honest and straightforward with Taiwan about the importance of further opening its economic relationship with China.  This is critical if this island is to become a regional and global center.  The last year has seen important progress.  Passenger charter flights were institutionalized for four major holidays.  Amcham members benefited from measures that increased the number of Mainland employees that can travel to Taiwan for business meetings.  However, more needs to be done.  We look forward to progress soon on expanding cross-Strait charter flights and further opening of Taiwan to tourists from the Mainland.  For this place to prosper, people, goods and capital should be able to move more freely across the Strait.

The United States understands and appreciates concerns here that Taiwan's economy may be vulnerable because of its economic exposure to Mainland China.  However, I believe that kind of influence runs both ways.  Closer economic relations with you will expose PRC firms and executives to higher standards of corporate governance and best practices.  Taiwan firms can do even more, for example by applying this island's rigorous environmental standards to your operations in China, thereby making an important contribution in an emerging battleground against global warming.  In addition, closer economic relations, especially with the influx of more PRC tourists, will hold the potent example of Taiwan's democracy up for the people of China.

The events in global stock markets a few weeks ago plainly demonstrate that Taiwan is not the only economy in the world affected by exposure to Mainland China.  Taiwan and the United States have a shared interest in ensuring stability and prosperity in China and facilitating its emergence as a responsible international stakeholder.

The United States wants to see cross-Strait differences resolved peacefully by the two sides in a way that reflects the free will of the people of Taiwan.  For that to happen, this island must be in a position to defend its own security.  America has been loyal in providing the tools for Taiwan's defense.  We have been honest in our suggestions about your needs, and we have been very patient.  Let me now be straightforward.  Many of Taiwan's friends in the U.S. administration and in Congress are increasingly frustrated that excessive partisanship here has become an obstacle to Taiwan's security.  The time has come for all political parties to realize that security is too important to be treated in this fashion.

In summing up, honesty, straightforwardness, loyalty and patience -- these qualities will continue to characterize the U.S.-Taiwan relationship in the Year of the Pig.  Let us reflect upon the achievements of the last year, and use that to motivate us for the work ahead.  By combining our considerable talents, I am confident we can make 2007 a year of accomplishment and success.  Thank you.