Taiwan's trading barriers targeted. McDonald's French fries become congressional hot potato
Taiwanese hit by a ``Big Mac attack'' can find the Golden Arches of McDonalds without any problems. But the French fries they munch, says Sandra Kristoff, a United States trade representative, are not the same old spuds they would find in America, because Taiwan restricts the importation of US fruits and vegetables.
Such barriers to trade will become ``hot potatoes'' with Congress this year, because Taiwan's trade surplus with the US surged 15 percent to about $15 billion in 1986. This surplus was third only to Japan's and Canada's.
Taiwan, which used to be known for its low-quality textiles and toys, now ships computers, machine tools, telecommunications equipment, yachts, and other expensive goods to the US.
Ms. Kristoff, deputy assistant US trade representative for Asia and Pacific, said at the Asia Society that the US agenda this year is to open up Taiwan to US fruits, vegetables, and processed food products and to get the Taiwanese to include US manufacturers in the six-to-eight major projects announced by the Taiwanese government for this year.
``We think there are some areas where our firms are competitive in price,'' she says. Some of the projects include nuclear and coal power plants, a transit system, a hospital, and a telecommunications system.
In addition, the US wants Taiwan to reduce its tariffs, which average about 25 percent. Comments Kristoff, ``That's the centerpiece - that's the biggest hurdle. In an economy as dynamic and growing as Taiwan's is, that level of tariffs is not acceptable.'' The US also wants Taiwan to open up its service sector to greater competition from the US in insurance, shipping, and banking.
If Taiwan does not act soon, Kristoff said, ``I think Taiwan is going to come under intense scrutiny from Congress.''
Opening up Taiwanese markets to US farm goods is going to be tough because of political opposition from Taiwanese farmers. The US, however, has some leverage: 54 percent of Taiwan's gross national product, its total production of goods and services, is tied to exports. Half of its exports are to the US.
It will take a long time to make changes. For example, Taipei has a labyrinth of customs rules and an entrenched bureaucracy. Robert Parker, a partner in the law firm of Kaplan, Russin, Vecchi & Parker, in Taipei, says the red tape can be formidable. ``We've had situations in Taiwan with shipments that required as many as 2,000 chops in order for the shipment to be cleared through customs.''
Mr. Parker points out, however, that the Taiwanese are not the only hindrances to trade. US officials are slow to approve some exports because of defense concerns. ``A Taiwan company recently tried to import a wire with some kind of rubber tubing around it,'' he recalls, ``and the US government refused to allow the product to be exported because some genius thought it could be used for nuclear purposes.''
But US officials say there are many ways to correct the trade imbalance. For example, they are unhappy with the value of the Taiwan dollar, which appreciated about 12 percent or 13 percent last year compared with the US dollar. The Treasury has begun negotiating again with Taipei about revaluing its currency.
One major obstacle to US progress with Taiwan is tough competition from Japan, which has long ties to the country. Because of this competition, Parker says that ``there must be a clearly announced decision from the very top in Taipei to buy American.''
When the Taiwanese seek bids for their major projects this year, he says, the top officials must make the procurement officials aware that they must buy American-made goods even if they are more expensive. ``They have to understand that's the price of admission to the US markets,'' he explains.
The US made progress last year at getting more US products and services into Taiwan: Five companies have received insurance licenses to do business. Last year, Taiwan reduced tariffs on between 30 to 40 products that the US can sell. And Taiwan agreed to open its markets to US beer, wine, and cigarettes.