Text: Commerce Secretary Daley on Taiwan Trade, WTO Membership
(U.S. looking forward to Taiwan's entry into WTO)

U.S. trade relations with Taiwan have grown steadily and the United States is looking forward to Taiwan's entry into the World Trade Organization (WTO), according to Commerce Secretary William Daley.

In remarks before the U.S.-Taiwan & Taiwan-U.S. Business Council November 19 in San Antonio, Texas, Daley noted that Taiwan has made great progress in its WTO negotiations, concluding agreements with virtually all the economies requesting such arrangements. The WTO still needs to complete its work on Taiwan's application, he said, although very few substantive issues remain. "Once that is accomplished, we will see Taiwan at the table," Daley said.

WTO accession will be good for the people of Taiwan, he said, "and it will be good for the American companies in this room."

"You want to do more business there, and you will see tariffs and barriers reduced as part of Taiwan's entry to the WTO," Daley said. "Americans highly value our ties with the people of Taiwan, and we expect they will grow as it enters the WTO."

Progress aside, Daley noted there are still issues that remain to be resolved in U.S.-Taiwan trade relations. "We still have concerns about medical devices and pharmaceuticals. We still have concerns about enforcement of intellectual property protection, especially for semiconductor chips and optical media," he said.

"We still have concerns about government procurement procedures. And we see a need for Taiwan to introduce measures to increase transparency in the financial system. And," he continued, "I am concerned about the dramatic increase in steel imports."

Imports of steel products from Taiwan into America in the first nine months of 1999 were up 92 percent over 1998, and 450 percent compared to the same period in 1997, Daley said.

Following is the text of Daley's remarks, as prepared for delivery:

(begin text)

Remarks by Secretary of Commerce William M. Daley
U.S.-Taiwan & Taiwan-U.S. Business Council
November 19, 1999
San Antonio, TX

Someone told me I am the first Commerce Secretary to be here in a very long time, although Ron Brown was supposed to come in 1993. But he had to cancel, because we were in the middle of a health care debate and he needed to be somewhere else at the last minute. Six years later, we are still in the middle of the health care debate -- at least the Democrats are. For the Americans in the audience, I am sure the governor of this state will have something to say on that, also.

But in these same six years, our trade relations with Taiwan have obviously taken off, and we are looking forward to Taiwan's entry into the World Trade Organization.

As all of you know, last year, we completed our WTO negotiations with Taiwan. This year, Taiwan has made great progress, concluding agreements with virtually all the economies requesting such arrangements. The WTO still needs to complete its work on the application -- although very few substantive issues remain. Once that is accomplished, we will see Taiwan at the table.

It will be good for the people of Taiwan. And it will be good for the American companies in this room. You want to do more business there, and you will see tariffs and barriers reduced as part of Taiwan's entry to the WTO. Americans highly value our ties with the people of Taiwan, and we expect they will grow as it enters the WTO.

And let me say something to the business people of Taiwan. I can't tell you how much our businesses appreciated how quickly you got the factories back on line after the terrible earthquake. I hope everyone is getting their lives back to normal.

This morning, I want to address our trade relationship with Taiwan -- and in a rather frank way. Then I will discuss the American agenda for the Seattle talks, which begin 11 days from now. And then I want to take some of your questions, because this is an opportunity for me to hear the concerns and views of all of you.

First, on the commercial relationship, we have a $50 billion two-way trade relationship. But to be honest, I am concerned about our growing trade deficit with Taiwan, and our growing deficit with the rest of the world.

As America's bookkeeper, I am the one who every month has to report our trade numbers. And every month, I usually have to report yet another record deficit. America's trade deficit in goods is likely to exceed $340 billion this year, up from $200 billion in 1997. A large part of that increase is due to the Asian financial crisis.

It is also due to the fact that while our economy is healthy, other economies in Asia and the rest of the world are not so healthy. As a result, they are not buying our goods like they used to.

In 1997, American exports to the Asia-Pacific region totaled more than $200 billion, representing 30 percent of U.S. exports worldwide. In 1998, our exports to the region had dropped to $167 billion, representing 25 percent of U.S. exports worldwide. If this were a company, and your market share dropped from 30 to 25 percent, your shareholders would be less than pleased.

The picture is better in Taiwan. The fact is American exports did not drop off substantially in 1998. Although our exports to Taiwan have not fully recovered, we are pleased our exports are up by 23 percent in the most recent quarter, from a year earlier. Now that Taiwan's economy is growing again, we should be able to export even more.

Let me say, I am concerned about the increase of steel products from Taiwan into America. In the first nine months of this year, they were up 92 percent over last year, and 450 percent compared to the same period in 1997. That is a dramatic increase in steel -- and as Senator Rockefeller knows this is not good news for American steel workers back in West Virginia.

Let me provide one more statistic: our deficit with Taiwan is now the sixth largest deficit we have with any economy in the world. It was nearly $15 billion last year, and will likely be larger this year.

No question, we need to see some improvements. We take in about one-fourth of all the goods Taiwan exports, and we need Taiwan to take in more of our goods. I have been saying to groups such as this that America cannot fuel global growth forever. I think American companies should look to increasing exports to Taiwan in the areas you will focus on in your discussions today. That includes high-tech areas, such as bio-tech; and services, like banking and finance. I know many American companies also have their eye on the $150 billion in infrastructure projects anticipated over the next decade.

And no question, Taiwan's entry into WTO will provide more market access and should help increase our export opportunities. Last week, I was at a Harley-Davidson plant in Pennsylvania with President Clinton, and they are eagerly awaiting Taiwan's entry. Once that happens, the ban Taiwan has on large motorcycles will be lifted, and they see Taiwan as a great market for Harleys. By the way, since I would do anything to sell an American product, I felt obliged to ride one of the bikes. I absolutely believe the people of Taiwan will love them!

The fact is, Taiwan has made remarkable progress in liberalizing its trade regime in anticipation of entry into the WTO. They have lowered tariffs and reduced non-tariff barriers across a range of sectors. They have taken a number of steps to improve the investment climate, especially for service industries. Restrictions on financial institutions are gradually being lifted.

Several public sector firms have been privatized, and competition is being introduced in telecommunications, power generation, and oil refining and distribution. These efforts are genuinely appreciated by this Administration, and by our business community.

Let me say one more thing about our global trade deficit. There is no question in my mind, America's record trade deficit is becoming a political issue. If our trade deteriorates with Asia, as a result of market forces, it is understandable given the economic situation. But there comes a point when trade deficits are no longer politically sustainable in America. What would not be understandable, is if trade barriers were behind the weak export figures.

The reason I took the President to Harley-Davidson was before we go into trade negotiations in Seattle, he needs to hear what workers have to say about trade. For six months I have been going around the country, talking to thousands of Americans about trade. And what I hear is that even in an economy as great as ours -- not everyone agrees trade is good for the country.

There is no consensus trade works. A large number of Americans support trade, and clearly want to keep the border open. But they have questions. They have concerns. They hear about the layoffs, not the payoffs. They have fear.

I went to almost 20 cities, and there wasn't a place where I did not have protestors with bull horns, expressing sincere beliefs that trade does not work. Every group in the world with an axe to grind is going to Seattle to demonstrate. The President says he'll have more demonstrators against him than he's had in the whole seven years he's been President. Actually, he's kind of looking forward to it.

He wants all the consumer groups to come, all the environmental groups, all the labor people to come. He wants to have a huge debate about this. Of course, I'd like all the business groups to come too, and be as organized as all the protestors.

The fact is, President Clinton and the Vice President have worked really hard in the last seven years to turn this economy around, and they did it with the help of trade. Until the Asian financial crisis, one-quarter of our growth was because of exports.

The President believes very strongly that in the next century, more countries must trade. The round in Seattle is very important to beginning the new century right.

That brings me to the second point I want to briefly discuss, and that is the American agenda for Seattle.

It will focus on agriculture. We want to ensure in this round agriculture is treated as fairly as other sectors in the global economy. America is the largest exporter of farm products in the world. One in every three acres planted here is growing food for abroad. Five years ago, during the last trade round, we joined with our partners to put agriculture on the WTO's agenda. In Seattle, we want to move forward with this, eliminating export subsidies. In the European Union, fully half of the overall budget is spent on ag subsidies. This stacks the deck against farmers in other parts of the world, and we'll work to level the playing field.

Also, we will be focusing on manufactured goods. Since 1948, we have cut major industrial nations' tariffs on goods by 90 percent. In Seattle we'll join other members pressing to lower barriers even further. We will focus on eight sectors -- chemicals, energy, environmental goods and services, fish, forest products, gems and jewelry, medical and scientific equipment, and toys. These sectors account for almost 30 percent of all our merchandise exports.

The President has set equally ambitious goals for services. America is the world's largest exporter of services -- it is one area we even have a surplus -- $83 billion last year. Yet few services commitments were made in the Uruguay Round. We need more this time.

Last year, we placed a moratorium on tariffs on e-commerce. In Seattle, we want to extend that ban, we want to keep cyberspace duty free. Also, we will press for agreement on lower tariffs for information technology products.

And the President feels it is time to move forward on addressing environment and labor issues. A strong system of trade does not mean a race to the bottom on environmental and labor rules. The President wants international organizations to protect and enhance the environment, while expanding trade; and to improve labor standards, while expanding trade.

So, in a nutshell, that is a pretty aggressive American agenda for Seattle. We hope we can complete the round in three years, which also is ambitious. And we hope these talks are open -- they are not done in secret -- so the workers of America, of Taiwan, in every part of the world will know what is going on.

Let me end by saying that if there is any economy in the world that understands the importance of global trade, it obviously is Taiwan. What the people of Taiwan have done to grow their economy, to move from aid to trade, to increase the average person's income from $200 in the 1950s to $13,000 today -- is remarkable. I hope Taiwan will continue reforming, as it enters the world trading system of the next century.

Thank you very much.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State)


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