Remarks by U.S. APEC Senior Official and Coordinator for Economic Policy in the Bureau of East Asian and Pacific Affairs Atul Keshap American Chamber of Commerce Luncheon

OT-1208E | Date: 09/25/2012

Tuesday, September 25, 2012
Taipei, Taiwan

(As Prepared for Delivery)

Thanks very much for your kind introduction and for inviting me to address this distinguished group. It’s a pleasure to be here in Taiwan. This is my first visit Taipei and it’s great to see first-hand the energy and innovation and free exchange of ideas that I have heard so much about. I’m especially pleased to have an opportunity to address representatives of the U.S. business community. Amcham-Taipei has an impressive track record over the past six decades in partnering with the people of Taiwan to forge an economic miracle on this island. Your members championed Taipei’s accession to the World Trade Organization and sustained cornerstones of the U.S. community here, including the Taipei American School and other international schools on the island and English language radio. You and your firms are the glue that binds the U.S.-Taiwan economic relationship and I very much look to your insights on how we can expand economic opportunities for the people of Taiwan and the United States.

My visit to Taiwan is the result of a meeting just two weeks ago between Secretary of State Hillary Clinton, and Taipei’s representative to the APEC Summit, Dr. Lien Chan, in Vladivostok, Russia. Secretary Clinton conveyed to Dr. Lien her appreciation for President Ma’s principled leadership in removing barriers to closer two-way trade, including by taking an important step toward ensuring that Taiwan’s food safety measures are based on science and are consistent with international standards on beef. She also spoke of her desire to increase the momentum and expand the scope of our economic relationship, starting with my consultations here this week with senior officials.

While we have a lot of work to do on specific trade and investment issues, my agenda this week is focused on expanding the scope of our discussions with Taiwan on our economic relationship. This relationship is complicated and involves a diverse set of actors in the public and private sectors. The bottom line, however, is that it is a relationship that serves both the peoples of the United States and Taiwan extremely well. Despite its relatively small population, Taiwan is our 10th largest trading partner -- ahead of major economies like India and Italy – and the 15th largest export destination for American products. In 2011, our bilateral trade was roughly $67 billion. Our exports to Taiwan, which reached $26 billion last year, are diverse, ranging from electronics and machinery to chemicals and food products. These exports provide high quality jobs for the American people and contribute to the growth for the American economy. Aid from the United States several decades ago and trade with the United States through the years have well served Taiwan’s economic development, too. The United States is a reliable and sustainable trade and investment partner of Taiwan.

The over $13 billion in Taiwan investment in the United States has also been a major source of employment in the United States and wealth creation in both Taiwan and the U.S.. For example, in 1996, Taiwan Semi-Conductor Manufacturing Corporation (TSMC)’s subsidiary – WaferTech invested $1.2 billion dollars in Washington State in what was the biggest start-up investment in the state’s history. Today WaferTech is the largest pure-play semiconductor foundry in the United States, producing components for cutting-edge technology products and employing 1,100 Americans. Through President Obama’s SelectUSA program, we are working to attract even more Taiwan investment to the United States in a range of fields and sectors. The United States is also the largest foreign investor in Taiwan and many of you here today represent firms at the forefront of integrating production and logistics across the Pacific.

Tourism is another area that both supports the relationship between our peoples and drives economic activity. As you know, Secretary of State Clinton in January recommended that DHS consider Taiwan for membership in the Visa Waiver Program. I know there is great anticipation for us to implement this program – I heard this message loud and clear in almost every meeting I had these past two days. I fully share that anticipation. We hosted 290,000 visitors from Taiwan last year, and I have no doubt that the ability to travel under the Visa Waiver Program would help attract many more. Liberalizing travel for tourists and business travelers will greatly enhance our already close people-to-people ties, and would send a strong signal of the strength of our two peoples’ enduring relationship.

A similarly important link between the United States and Taiwan is education. American universities have become important incubators for entrepreneurial firms, in part because they attract the best and brightest young minds from around the globe. Taiwan is number one in the world on a per capita basis in the number of students it sends to the United States and is the fifth-largest source of foreign students in the United States overall, with over 27,000 enrolled across the country in 2010. These students will graduate not only with a quality education, but also a global network of contacts that will give them a leg up in this increasingly competitive and borderless economy. Many leaders in every sector in Taiwan have spent time in America, and we are confident that future generations will strengthen these same bonds by contributing their energy and ideas to the broader relationship.

Taiwan’s success is a testament not only to the energy and ingenuity of its people and companies, but also to the far-sighted policies of its leaders that have created a vibrant democracy that is committed to free trade and open markets. Decades ago, Taiwan’s economy focused mostly on agriculture. Today, it is a global leader in everything from high technology to services. We are especially proud of the role that the United States has played in Taiwan’s economic miracle. For example, the United States actively assisted Taipei’s entry into the WTO in 2002, and more recently its accession to the WTO’s Government Procurement Agreement in 2009. Since Taiwan lowered tariffs in line with its accession, local small- and medium-sized businesses have thrived, in part due to their ability to integrate into supply chains with U.S. and third country partners. The United States has also worked closely with Taiwan over several decades to bring its level of intellectual property rights protection up to high international standards, a condition that further encourages trade and investment. I want to take a moment to particularly recognize the efforts of the American Institute in Taiwan’s offices here in Taipei and down in Kaohsiung. The advocacy of the Executive, Agriculture, Commercial, Economic and Public Affairs Sections have been instrumental to complement your efforts in addressing market access issues and legal and regulatory amendments to assist U.S. farmers, service providers and manufacturers maintain and increase trade opportunities in the important Taiwan market. As our Assistant Secretary for Economic Affairs and Business Affairs, Jose Fernandez, mentioned when he spoke to you here in Taipei last month, AIT has been among the most effective implementers of the President’s National Export Initiative.

Taiwan’s development as a vibrant, open society with a vigorous and free-spirited exchange of ideas has also created an environment conducive to innovation. Taiwan’s prosperity has also been aided by its constructive and measured approach to sensitive issues in the broader region. For example, the transformation of long tense relations with the Mainland have yielded great prosperity and reduced tensions on both sides of the Taiwan Strait.

While there is much to celebrate about how far we have come, my purpose for visiting Taiwan this week is to look for ways to take the relationship even further. We very much appreciate AmCham’s work to identify steps needed to increase two way trade and investment. For us in the U.S. government, this sort of private sector input is incredibly helpful in charting a roadmap for our negotiators. In this context, my USTR colleagues, together with many other U.S. government agencies, are working with their Taiwan counterparts to explore next steps in our bilateral trade dialogue, including with regard to our Trade and Investment Framework Agreement talks. In fact, an interagency team will be visiting Taiwan next month to conduct expert-level talks on a wide range of trade issues of interest to the both sides. We still have a lot of work ahead of us, as we both operate within the parameters of two strong democracies that have many interested stakeholders and many vigorously expressed views on economic and trade policy. I am confident, however, that we can work through these complicated and technical issues in a way that makes sense for both sides, drawing on a spirit of cooperation well-rooted in our many decades of friendship and shared prosperity.

Ultimately, progress on our trade and investment agenda will not only improve market access for U.S. and Taiwan companies, but, as AmCham’s 2012 report was so aptly titled, they will “reinforce Taiwan’s economic competitiveness” in the longer term. The expansion of global supply chains coupled with Taiwan’s success in fostering cross-Strait trade through the Economic Cooperation Framework Agreement has made Taiwan an especially attractive target for foreign investment. U.S. high-tech firms that invest large sums in research and development seek to partner with economies that have a high trust ecosystem for protecting the intellectual property invested in products and service innovations. Taiwan can be an even more effective springboard for U.S. companies that wish to expand in the region as it makes further progress in enhancing its protection of intellectual property. Enhancing IPR enforcement is something that is clearly in Taiwan’s interests as well. Since 1999, Taiwan has consistently ranked 4th in the world in the number of patents registered with the U.S. Patent and Trademark Office, and second, after the United States, on a per capita basis. Taiwan has done much to improve its IPR enforcement, with significant help from us and the American private sector, and has benefited from increased investment as a result.

This sort of capacity-building support is not only limited to IPR. Through the American Institute in Taiwan and Taipei Economic and Cultural Representative Office, the U.S. continues to support Taiwan counterparts in areas from law enforcement to public health to environmental protection. Looking to the future, we can and should plan to work together as partners with Taiwan to support capacity building in the developing world. During the Pacific Islands Forum attended by Secretary Clinton a few weeks ago, Taiwan and the United States, working with the East-West Center in Hawaii, announced the Pacific Islands Leadership Partnership to train young leaders from the region here and in the United States. This initiative was an outgrowth of the visit by USAID Administrator Rajiv Shah to Taipei last December. USAID is also participating in this week’s conference on International Development Cooperation and the Taiwan Experience, which will feature a keynote address from former Deputy Secretary of State Bob Zoellick. Taiwan has much to teach the developing world, not only about effective governance, but also the rewards of democratization.

We also look forward to working with Taiwan in multilateral forums such as APEC. Taipei has been an active and effective member of APEC since it joined in 1991. We welcome Taipei's support for the landmark agreement by APEC Leaders earlier this month in Vladivostok on an APEC List of Environmental Goods on which, according to their 2011 pledge, they will reduce tariffs to 5% by 2015. This agreement will benefit both the U.S. and Taiwan’s green growth and trade liberalization goals. As U.S. Deputy Secretary of Energy Daniel Poneman mentioned during his visit to Taiwan last December, by taking leadership in promoting a clean energy economy, the U.S. and Taiwan will benefit both the health and wealth of our peoples. We also appreciate Taiwan’s support for other key U.S. objectives in Vladivostok, including combating wildlife trafficking, cracking down on counterfeit pharmaceuticals, and launching work to begin addressing local content requirements, which distort trade and investment.

For our part, we support Taiwan’s leadership on a range of areas in the APEC arena. Taiwan has been especially effective at sharing its policy successes in fostering small and medium enterprises. Taiwan has been similarly instrumental in advancing APEC’s ambitious structural reform agenda. Next year it will lead an important initiative to help economies increase fiscal transparency and government accountability. Taiwan’s progress on budget transparency, regulatory convergence, and promoting the Ease of Doing Business not only supports APEC’s multilateral objectives, it also fosters an attractive business environment for companies big and small here in Taiwan. We were also pleased to see the enthusiastic participation from Taiwan in the Women in the Economy Forum in July in St. Petersburg, and one year earlier at the Women in the Economy Summit in San Francisco. In Vladivostok earlier this month, Secretary Clinton publicly praised Cher Wang, the Chairwoman of HTC, for her leadership within APEC on women’s economic empowerment. Taiwan has continued to show leadership in advancing women’s economic inclusion through participation in the upcoming APEC workshop to enable government procurement from women entrepreneurs and by taking the lead on integrating women’s issues into the full spectrum of APEC activities, including disaster resilience and weather risk prevention.

Taiwan’s efforts within APEC have advanced the longer-term cause of trade liberalization in the Asia-Pacific, moving the region closer to the goal of a Free Trade Area of the Asia Pacific. It has also helped prepare Taiwan for possible future entry into next generation trade agreements that will set the standard in coming years. For the United States, our current focus is on completing the Trans-Pacific Partnership negotiations. The TPP agreement will not only address core issues traditionally included in trade agreements, but also seeks to address cross-cutting issues not previously in trade agreements, such as making the regulatory systems of TPP countries more compatible so that companies can operate more seamlessly in TPP markets; addressing trade and investment in innovative products and services, including digital technologies; and helping innovative, job-creating small- and medium-sized enterprises participate more actively in international trade.

The United States and its TPP partners are committed to negotiating a high-standard, 21st century trade agreement and to expanding it out to include countries across the Asia-Pacific region. This ambitious initiative offers significant benefits to the dynamic economies of the Asia-Pacific region that are prepared to sign on to high standards of liberalization. However, trade liberalization is not a painless process, which is why visionary and sustained leadership will be crucial for any country seeking to participate in the TPP in the future.

As I said at the outset, closer economic engagement cannot simply be done by governments alone. Individual firms, local governments, and business coalitions like AmCham need to be part of the conversation. The key take away from my visit this week is the importance of expanding the U.S.-Taiwan economic discussions to involve all of these players and to cover the full scope of our broad and dynamic relationship. This is my first visit to Taiwan, but certainly will not be my last. I look forward to continuing the dialogue with all of you and with our Taiwan friends and counterparts as we chart a future that will increase the prosperity and well-being of both of our peoples. Thank you very much.