Remarks by Douglas Paal, Director, American Institute in Taiwan at Opening Ceremony of the WTO Center Chung Hua Institution for Economic Research September 8, 2003

PR0343E | Date: 2003-09-08

I am very pleased to be here today to commemorate the opening of the Chung Hua Institution for Economic Research's new WTO Center. I would like to pay special tribute to you, Premier Siew, for the crucial role that you continue to play in shaping Taiwan's economic policy environment. The people of Taiwan are truly fortunate to have such a resource. Your leadership is adding to the already invaluable work CIER is doing providing support to the Taiwan government as it continues to realize its commitments as a new WTO member. This center is an important contribution to those efforts. Thank you.

Taiwan has seen a host of significant changes over the past 30 years: from martial law to one of the most open and enthusiastic democracies in the world, from a relatively underdeveloped economy to one increasingly based on high-tech manufacturing. Many of Taiwan's leading companies are now the envy of the world. These companies compete head to head with the best the world has to offer. Through all these changes, America has been a close friend to Taiwan and a strong supporter of Taiwan's political and economic liberalization.

Winston Churchill once said, "Some people regard private enterprise (and here I would add trade) as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon." For Taiwan, trade is still the horse pulling Taiwan's economy into the ranks of the developed nations. Giving that horse free rein to keep pulling is crucial to the prosperity and welfare of Taiwan's people.

If trade is the horse pulling Taiwan's economy, then the WTO is the construction crew building the road and the traffic manager making sure everything flows smoothly. Joining the WTO was recognition of Taiwan's rightful place among the world's economies. It took 12 years of hard work, but finally that hard work paid off in January 2002. Through those long years, the United States was with you all the way - helping where we could and using our influence to support Taiwan's accession to this important world organization.

Now, as Taiwan readies itself for the Fifth Ministerial Conference in Cancun this week (September 10-14), it is a good time to take a look at both how far Taiwan has come and what remains to be done.

I arrived in Taiwan to take up my post as Director of the American Institute in Taipei just over a year ago. At that time, I told a group of American business representatives that I believed Taiwan had a choice to make regarding its role in the WTO. Taiwan could choose to do the minimum necessary to fulfill its WTO commitments. Or, Taiwan could choose to embrace the WTO process and all that it stands for, to go the extra mile, and to pull down the barriers to trade that are a straitjacket to its economy. This means a paradigm shift for many. This means creating a bias in favor of less regulation rather than more. This means shifting the presumption that an activity is illegal unless approved, and encouraging the idea that activities are legal unless prohibited.

Over the past five years, Asian economies have responded to the challenges of the Asian Financial crisis by liberalizing their markets; by attacking the old ways of doing business; and by eliminating the three Cs: crony capitalism, corruption, and state control. In South Korea, Thailand, Malaysia, Hong Kong, and even the PRC markets are opening and the region as a whole is becoming much more competitive. With the help of CIER, Taiwan is also taking steps to keep pace with its Asian neighbors. Just as Taiwan changed and prospered in the 1980's, you must once again draw on your advantages - most important is your educated and flexible workforce - to meet the challenges of the new economy.

One of the key challenges to Taiwan's future prosperity is the effective protection of intellectual property rights. Simply put, the future of Taiwan's economy is knowledge based and there is no successful knowledge-based economy without adequate protection for ideas and intellectual property. The high-tech and creative industries that will create tomorrow's jobs in Taiwan - semiconductors, flat screen displays, biotech, software creation, original equipment design, and the like -as well as the recording industry and other media need IP protection to survive, much less to thrive. Creating this kind of protection is part of Taiwan's WTO commitment under the Agreement on Trade Related Aspects of Intellectual Property Rights - better known as TRIPS. Not only must the law make piracy illegal, but penalties must also be severe enough to deter would be pirates. Although Taiwan's Legislative Yuan passed a new copyright law at the end of the last session, there were some significant changes made at the last minute. These changes seriously weakened copyright protections - especially in regard to penalties for pirates. IPR protection remains a key point of concern in the US/Taiwan economic relationship. We hope that the Taiwan government will recognize that the continued lack of adequate IP protection will have serious consequences for our trade relationship and for the future of Taiwan's high tech industries.

I believe that tomorrow's economic success depends on creating the kind of environment that can unleash the creative energies and skills of Taiwan's people and attract investment in its creative enterprises.

WTO membership offers a great opportunity for Taiwan to make the most of its place in a globalizing economy. It bolsters economic confidence in the island by generating the stability and predictability that investors crave.

WTO membership also gives Taiwan power to influence the work of an important international organization. For a trade-oriented economy like Taiwan's, such influence can go a long way to protecting and expanding the prosperity achieved over recent decades.

As I said at the beginning of this speech, Taiwan has a choice. Now that you are WTO members you must decide whether to be satisfied with merely having your name listed on the roll or whether Taiwan will become an enthusiastic participant in the WTO. Because WTO membership offers so much to Taiwan, I hope that you will in turn offer not just membership but leadership. Clearly, you have both the incentives and the talent to do so. Taiwan's representatives in Geneva and your ministers participating in WTO meetings can further invigorate WTO and strengthen the global trading system, which would truly be to Taiwan's benefit.

Exercising leadership means embracing WTO principles, even when obstacles arise; that means making a commitment to promoting transparency, liberalization and openness; that means going the extra mile to demonstrate to the world that Taiwan is not just meeting WTO commitments but is dedicated to open markets, free trade, and the peaceful resolution of disputes. Joining us to work together towards an agreement on how best to implement the agenda of the Doha round would be another step in this direction.

The CIER and Chairman Siew are doing the people of Taiwan a great service by opening this WTO Center. We hope that Taiwan's government will pay close attention to the information and advice your center provides. Congratulations on the opening of the Center. We wish you the best of luck.