Two think-pieces on how Taiwan should position itself in response to RCEP and the CPTPP
One of the first things I did when I was newly installed as the Director of the University Pelita Harapan’s Center for International Trade and Investment (CITI) in late 2014 was to land some contract research from the local Taiwanese governments unofficial representation in Jakarta, the Bureau of Foreign Trade. They asked us to explore the question of Taiwan’s interests in the broader framework of Asian regional economic integration, which at that time was undergoing some fundamental re-alignments in the form of both the Regional Comprehensive Partnership Agreement (RCEP) and the Trans-Pacific Partnership Agreement (TPP). The results are the two publications that are featured below.
The first of these, which appeared in November 2014, focusses on the TPP, then being negotiated among 12 countries, with Japan being the last to join, in 2012. Negotiations on the TPP were concluded in 2015 but before it could enter into force, Donald Trump, as one of his first acts as president, withdrew the United States from the agreement. See here for a nice timeline of the TPP/CPTPP negotiations.
At the time of our analysis, these events all lay beyond the horizon. We nevertheless recognized that this was something new and important and that Taiwan should do everything in its power to either join or (failing that) align its internal policy frameworks with whatever outcomes emerged.
RCEP, although not yet in force at the time of writing this post (April 2021), was ultimately signed without India, who continiously dogged the negotiations and limited their ambition and then decided that even the limited outcomes the agreement culminated in were too much for it to stomach.
In our analysis of RCEP, we very preciently predicted that it would not serve to achieve any new trade or investment liberalization but simply to harmonize the existing noodle bowl of FTAs that existed at the time between ASEAN and its regional FTA partners. This is ultimately what happened.
The question of Taiwan has, in the interim, taken on much more salience as the divisions between China and the West have deepened and sharpened. In our research, we make the point that Taiwan represents something very important, namely an alternative articulation of what a modern Chinese society can look like. The differences between Mainland China and Taiwan are of course very stark, and are immediately discernible to anyone who has lived in or travelled to both countries.
I spent my fair share of time in Mainland China, and also had the opportunity to spend a little over two months in Taiwan training government officials on their post-WTO accession implementation in October and November 2004.
What people tend to overlook or forget or at least under-appreciate when dealing with or thinking about Taiwan, is that it is a liberal democracy in every sense of the word, meaning it has a free press, an independent judiciary, free and fair multi-party elections and a functioning rule of law. As such, it is among a very small group of countries. As Harvard economics professor Dani Rodrik has written:
The real puzzle is not that liberal democracy is so rare but that it exists at all.
Dany Rodrik, Straight talk on trade: Ideas for a Sane world Economy
Taiwan also dealt very competently with the crisis brought about by COVID-19 (as did China) although like other economies that did a good job dealing with the outbreak, Taiwan has been slow to rollout vaccines to its 23 and a half million residents.
One important question the world is dealing with now, even if only at a theoretical and hypothetical level, is just how far the West and particularly the United States is willing to go to defend Taiwan as a liberal democracy, even while recognising it as part of Greater China, which is governed from Beijing.
Of course, liberal democracy is not the only way to govern a given polity, although many consider it probably the best model we have developed so far. Other models of governance have long existed and some of them have proven quite effective at achieving a limited set of goals, such as, say, rapid economic growth. Taiwan, South Korea and China all achieved breakneck economic growth and propelled themselves from largely agrarian to industrialized economies under governance models that were not liberal democracies. And although Taiwan and South Korea ultimately evolved into liberal democracies, China today profers an alternative to this model which many refer to as authoritarian capitalism.
Whether China can truly join the ranks of advanced industrialized nations under this model remains to be seen. Many forget just how big the urban-rural divide is in China as well as how many people still live in conditions that are far from those enjoyed in the big tier 1, 2 and 3 cities. In their excellent book, Invisible China, Stanford’s Scott Rozelle and Natalie Hell discuss this and the implications of this on the narrative that China is destined to become a global superpower or even a regional hegemon. In November 2020, the National Committee on US China Relations actually held a discussion of this book which included Scott Rozelle and can be viewed below.