Remarks by AIT Director Christopher J. Marut at the 2015 American Chamber of Commerce in Taipei “Hsieh Nien Fan”
April 9, 2015
AIT Official Text #: OT-1505E
Thank you for your kind introduction.
President Ma, Former Vice President Siew, Foreign Minister Lin, Minister Duh, AmCham Chairman Fann, members of the American Chamber of Commerce Board of Governors, distinguished guests and friends:
On behalf of the United States and the American Institute in Taiwan, it is my great honor to join you all tonight to celebrate our economic and commercial relationship. I would like to especially thank President Ma for his attendance and his efforts to advance the strong relations the United States and Taiwan have enjoyed for generations.
I also want to thank the AmCham Taipei for your steadfast belief in Taiwan, and your tireless efforts to promote U.S.-Taiwan trade and investment. Your efforts serve to remind both Washington and your respective headquarters throughout the United States, that Taiwan is a like-minded economic partner of ambition, opportunity, and entrepreneurship, a partner who is an integral part of the global supply chain that encourages and protects innovation and values a level playing field.
I’d like to note that coincidentally today, April 9, at the State Department and at U.S. missions around the world, we recognize what we call “Economic Leadership Day.” It is a day on which we recognize what Secretary of State John Kerry stressed at last month’s SelectUSA Summit in Washington, DC: Economic policy lies at the heart of U.S. foreign policy.
So as we focus on the economic partnerships that are at the heart of our efforts to improve lives through shared prosperity, let me again recognize the AmCham membership for all that you do here in Taiwan and around the world, that goes far beyond the numbers and statistics. It’s job creation, skills development, corporate responsibility and good works. It’s the bridges you build with colleagues, clients, and customers, that draw our world closer together.
Nuts and bolts
I want to lead off tonight [as did President Ma] with two simple numbers that capture the importance and positive trajectory of the U.S.-Taiwan economic relationship. Last year, Taiwan rose to reclaim its position as the United States’ 10th-largest trading partner. The United States also reclaimed its position as Taiwan’s second-largest trading partner. “Ten” and “two” – these rankings affirm what all of you in this room already know: economically, we matter a lot to each other.
What is behind these recent rises? Let me start to answer that question with an interesting data point – last year alone, Taiwan exported US$1.5 billion worth of threaded nuts, bolts, screws, and washers to the United States. Consider the limitless technical application of these fundamental units of hardware – from computing to surgical instruments – and the importance of manufacturing them to precision, and it is no surprise why Taiwan is the world leader. I would like to take that remarkable statistic as an inspiration to say a little bit about the foundation that undergirds our economic relationship, the fundamental economic principles of comparative advantage – doing what we each do best – and complementarity.
In some cases comparative advantage is abundantly clear – look no further than the US$1.5 billion in corn, wheat, and soybeans U.S. producers exported to Taiwan last year; or US$800 million in Taiwan-made bicycles and bike parts that were shipped across the Pacific to the United States last year. And while we are considering record sales, last year Taiwan consumers re-affirmed their belief in the safety, high quality, and superior taste of U.S. beef, to the tune of over US$290 million.
But beyond comparative advantage, what sets our trading relationship apart is the degree to which our industries and businesses have developed horizontally linked supply chains Our economies’ individual strengths serve to complement and boost each other’s global positions. I am talking about the multi-billion dollar story of the Taiwan companies who manufacture some of the world’s most advanced integrated circuits, and of the U.S. companies who create and integrate the designs, precision machinery, state-of the-art chemicals, and industrial processes used to manufacture them. It is the story of Taiwan airlines carrying record numbers of passengers from Taiwan – many traveling under the Visa Waiver Program – to and from the United States, aboard a record US$2.8 billion in U.S. aircraft exports, and the Americans who travel on those same planes to visit and experience Taiwan’s unique culture and scenery. It is the story of the Apple iPhone, components of which are largely manufactured by Taiwan companies. And it is the next chapter, which has yet to be written, in which we may all soon be wearing supercomputers on our wrists and powering our homes and offices with ever greater amounts of clean, alternative, renewable energy…
The outlook is good
While I’m on the topic of economic principles, let’s talk a little bit about supply and demand. Right now we are seeing a steady improvement in demand from the United States, which Taiwan companies – in their proven, nimble fashion – are jumping in to supply. I have to say, the mood in the United States has improved markedly. We gathered strong momentum in 2014, during which U.S.-Taiwan trade grew a robust six percent in goods trade alone. Across the past twelve months, U.S. businesses have added an average of over 250,000 jobs per month, and wages are beginning to rise. One thing is clear: As the United States completes its emergence from one of our toughest economic periods since the Great Depression, we will identify new sources of innovation and economic vitality that will ensure that we will be the most valuable consumer market in the world for the foreseeable future.
A strong U.S. economy is good for the global economy, and it looks like Taiwan companies have already gotten the memo. Just two weeks ago, I was delighted to join TAITRA Chairman Francis Liang in leading an all-star Taiwan delegation to the second SelectUSA Summit. Over 2,600 people representing nearly 80 countries and economies attended the Summit, established to promote and facilitate greater investment in the United States. Taiwan again rose to the occasion, sending 88 representatives from 65 companies and associations. Taiwan’s delegation was among the largest in attendance, proving once again that Taiwan punches well above its weight on the global stage.
But as you know, the U.S. recovery remains incomplete – look no further than the remaining slack in our labor market. And in Taiwan, domestic and foreign direct investment is well below its potential; in fact, last year, U.S. FDI flows into Taiwan sank to their lowest level since 1986, back when I was a consular officer at AIT, if you can imagine that.
Helpfully, AmCham – through its annual White Paper and Business Climate Survey – highlights the structural weaknesses that imperil the sustainability of recent growth trends, and offers solutions. At the top of the list is improved regulatory coherence in Taiwan and harmonization with international standards, which could go a long way towards improving the attractiveness of Taiwan as an investment destination.
We were pleased to work with AmCham and Taiwan’s Financial Supervisory Commission last year in securing public commitments regarding Taiwan’s openness to U.S. private equity investment. We hope this will open the doors to new capital flows, transform traditional industries, and unleash the next wave of innovation. As Secretary Kerry stated in his closing remarks at the SelectUSA Summit: Capital chases confidence and opportunity; investment, innovation and trade are not just the principal engines of a strong economy; they are the principal engines of a strong society.
Taiwan has a golden opportunity to institutionalize and implement clear and transparent regulations that foreign investors are seeking, and that would bring Taiwan practice into line with other developed economies. Such a step would offer compelling proof that in the face of intensifying economic competition in Asia and the world, Taiwan is moving forward with confidence and unleashing its substantial resources and capabilities.
At last year’s Hsieh Nien Fan, President Ma issued a bold call for Taiwan to pursue a process of economic reform that would help position it for possible accession in the next round of the Trans-Pacific Partnership. Taiwan is among the economies that have expressed interest in potentially joining the TPP and we continue to welcome this interest. One of the criteria to evaluate potential new TPP candidates is their ability to live up to the high standards of an ambitious free trade agreement. To be competitive, Taiwan is going to need to come together and make some choices about how to take reform forward from here, including working toward resolution of some longstanding bilateral trade complaints. In preparing itself for greater economic integration, Taiwan’s people are going to need to demonstrate the same agility, drive, and creative pragmatism as they have time and time again, to the great benefit of Taiwan’s economy, the U.S. economy, and the global economy.
Taiwan is a vibrant democracy. With elections scheduled next January, politics will remain on everyone’s mind. It is my sincere hope that this campaign season will see an informed debate about what reform and liberalization will mean for Taiwan’s future.
One message I hope gets through is that the U.S.-Taiwan economic partnership – for all the ways in which it has supported our people’s mutual prosperity, for all of its upside potential, and for all that our cooperation has contributed to global development – is well worth our continued investment of time, money, and attention. I believe that Taiwan’s people, if presented with the debate in fair terms, will have the courage, intellect, and strategic vision to discern what has to be done to safeguard Taiwan’s economic future.
Friends, thank you, good evening, and gan bei!