LOHMAN/HAMMOND-CHAMBERS: Ideal free-trade candidate

By Walter Lohman and Rupert Hammond-Chambers | Wednesday, November 12, 2008

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Regrettably, trade agreements with Colombia, Panama and South Korea are stalled. But that doesn't mean President-elect Barack Obama should get out of the free-trade business.

He can jump start his trade agenda with a bang - and Congress can restore its free trade credentials - by setting America on the path to a Free Trade Agreement (FTA) with Taiwan. And why not? It's a bipartisan cause, and it would be an easy win for American trade and foreign policy. It may be just what we need to put momentum back on the side of free trade and bring pending agreements to final passage.

The idea already has a critical mass of support on Capitol Hill. Resolutions calling for a U.S.-Taiwan FTA are introduced every Congress. Senate Finance Committee Chairman Max Baucus is a consistent supporter and chief sponsor of the current Senate resolution. Companion legislation in the House has 43 co-sponsors.

There is good reason for this wide-ranging support. A U.S.-Taiwan FTA would give a big boost to American exports of manufactured goods. Exports of autos and auto parts would gain. It would be a boon for our financial services sector. And it would help American ranchers and farmers too. Taiwan is already one of the largest markets for our agricultural goods. An FTA could boost these exports - including rice and beef - by a half billion dollars a year.

But these gains in the "traditional" trade markets pale in comparison to what can be achieved in the high-tech sector. Taiwan is the United States' principal strategic partner in the global technology supply chain. Taiwanese companies are partnered with almost every leading American technology company and help produce many of the affordable technology products that enhance our workplace productivity and personal welfare. An FTA would maximize this benefit and distribute it across the economy.

Yet Taiwan stands as the near-consensus favorite for an FTA with America for a reason that transcends even these powerful economic incentives: a shared love for freedom.

Our love of freedom has endeared Americans to Taiwan. These are a people who have cherished freedom from the days of struggle against communists on the mainland to their successful establishment of freedom, with American encouragement, on the island itself.

Yes, Taiwanese today profit from China's growth - and hope to benefit even more. But so do Americans. That doesn't mean we are any less protective of our freedom. And neither are the Taiwanese.

Our special relationship with Taiwan, enshrined in the Taiwan Relations Act (TRA), is championed by large caucuses in both houses of Congress. The House Taiwan caucus counts more than a third of all representatives as members, while a quarter of all senators participate in the upper chamber's caucus.

As for the TRA, there is really no other law like it. It binds U.S. concern for Taiwan's security and well-being in the Asia Pacific. And while the TRA does not speak to the need for free trade with Taiwan, it does brightly underscore our common interest in blunting the menacing side of China's rise as a global power.

We have recently watched an emboldened Russia use military and economic tools to undermine political and economic liberalization in Georgia. China's leadership feels no less threatened than Russia's autocrats by bordering nations exercising both economic and political freedom. Beijing is concerned about what a confident, democratic and economically liberal Taiwan may mean for its own legitimacy and regional power ambitions.

Taiwan's staying power rests nearly as much on economic as on military strength. And economic strength in today's world is about integration into global networks. China has entered into free-trade agreements with Pakistan, New Zealand and others, including the nearly 600 million people in the Association of Southeast Asian Nations. It is negotiating with Australia and studying FTAs with Japan, South Korea and others.

This is no time for the United States to call a time out on free-trade agreements. While we're catching our breath, the rest of the world is playing on. Countries that rely on us for their very survival - such as Taiwan - are getting nervous. A free-trade agreement with Taiwan would anchor it in a world that is otherwise moving on without it. And it would give America the second wind it needs to stay in the global trade liberalization race.

Congress has a lot of hard work ahead of it. How about keeping the easy stuff easy? Free trade with Taiwan is a bipartisan cause. Congress would do the trade agenda a world of good by giving the president the go-ahead to negotiate a U.S.-Taiwan FTA.

Walter Lohman is director of the Asian Studies Center at the Heritage Foundation (heritage.org). Rupert Hammond-Chambers is president of the U.S.-Taiwan Business Council (www.us-taiwan.org).

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