North Korea’s Market May Open Up, Expert Says  

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Taiwanese businesses are among many that are making preparations to enter North Korea if a nuclear deal is successful and the nation opens up its market, an expert on North Korea said at an AmCham Taipei briefing held at the Chamber’s Lincoln Room on July 23.

Before the United States and others imposed strict sanctions on North Korea in recent years, Taiwanese companies were doing business with the country. They were mostly exporting chemicals, textiles, and machinery, while importing minerals, metals, and other raw materials. “Taiwan has good healthy [business] relations with the North,” said Seong-hyon Lee, Director of Unification Strategy Studies at the Sejong Institute, a think tank outside of Seoul. “They want to be ready for when the North Korean market opens up. When it does, they’ll rush in.”

Some critics of the recent U.S.-North Korea talks believe that the negotiations will fall apart eventually like they have many times before. But Lee is optimistic about North Korean leader Kim Jong-un’s latest peace offensive, saying Pyongyang will opt for denuclearization if it is more lucrative than going nuclear.

“Kim is 34. He’ll be around for the next 50 years or more. However, he doesn’t want to rule an impoverished nuclear country for the next 50 years,” Lee said.

From left to right: Seong-hyon Lee, Director of Unification Strategy Studies at the Sejong Institute and AmCham Taipei President William Foreman

At last month’s summit meeting between President Donald Trump and Kim in Singapore, the U.S. leader tempted Kim with images of what North Korea’s economic development could look like if it gave up its nuclear weapons. “They have great beaches,” Trump said to reporters shortly after the summit. “You see that whenever they’re exploding their cannons into the ocean. I said, ‘Boy, look at that view. Wouldn’t that make a great condo?’”

It may be highly unlikely that North Korea will open to such an extent in the near future. In addition, anyone dealing with North Korea at this point risks violating international sanctions and facing ethical questions about doing business with a dictatorship that ignores human rights.

Although Taiwan is not a member of the United Nations, President Tsai Ing-wen’s government has complied with the punitive U.N. measures against Pyongyang – a move that has drawn praise from the United States, Taiwan’s most valued friend.

Before the sanctions were tightened, Taiwan imported US$12.2 million in goods from North Korea in 2016, making Taiwan the country’s fourth largest trading partner.

Taiwan will continue to obey the sanctions, said Fang Wu-wan, a spokesperson for Taiwan’s Bureau of Foreign Trade. “We currently stand by this commitment,” she said. “How we proceed in the future depends on the international climate.”

Despite the current restrictions, some of the most prominent multinational companies are waiting for an opportunity to enter East Asia’s last undeveloped market. “It’s a world of business,” Lee said. “Even if North Korea is a bad guy, they’re looking for an opportunity if they can make money.”

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CPTPP: The Challenges for Taiwan

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Following the U.S. withdrawal from the embryonic Trans-Pacific Partnership (TPP) soon after Donald Trump’s inauguration as President, the other 11 TPP countries decided to maintain the multilateral trade agreement under the revised name of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

As a major trading economy, Taiwan hopes to be able to join the CPTPP when the pact is formally established and opens membership to more countries in a second round. Currently the CPTPP signatories are still in the process of seeking ratification from their various parliaments.

Da-Nien Liu, research fellow at the Regional Development Study Center of the Chung-Hua Institution for Economic Research (CIER) and an expert on regional trade agreements, shared his insights on “The CPTPP: The Challenges for Taiwan” with AmCham Taipei members and guests on May 24 at the  Chamber’s Lincoln Room.  Liu is also a former Deputy Secretary General of the National Security Council during the Ma Ying-jeou administration.

Liu noted that Taiwan will feel an economic impact from CPTPP whether or not it is able to participate in the agreement. If allowed to secure membership, Taiwan will need to liberalize its import regime, which would likely affect the domestic agricultural sector and certain industries. If Taiwan is excluded from CPTPP, the impact would be even greater, affecting the country’s markets in such sectors as plastics, iron and steel (and their products), electrochemical equipment, and auto parts.

The “China Factor” will be a major challenge for Taiwan, Liu said, as Beijing may try to pressure CPTPP members not to admit Taiwan or to block Taiwan’s accession until after China joins the group. Another prospective challenge might be the “down-payment” problem, as CPTPP member countries would likely expect Taiwan to resolve any outstanding trade disputes with them during bilateral talks preceding Taiwan’s entry into the agreement.

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Navigating Trade in the Time of Trump

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The United States under the Trump administration has dramatically stepped up its use of economic sanctions against nations, firms, and even individuals that it accuses of a wide range of violations of international law. Given Taiwan’s dependency on trade and its close ties with U.S. suppliers and customers, Taiwanese firms are on the frontlines of sanctions risks, and at least nine Taiwanese entities have found themselves on the U.S. “blacklist” of sanctions violators.

Adam Smith, a former U.S. senior sanctions official during the Obama administration, recently visited Taiwan to offer his views on how Taiwan’s businesses can navigate these treacherous waters. At a presentation on “Understanding and Navigating the Risk of Economic Sanctions in the Trump Era,” held at AmCham Taipei’s Lincoln Room on May 17, Smith offered his perspective on why trade sanctions are being deployed so frequently. He noted that sanctions can be wielded under the sole authority of the president, are highly flexible and effective, and “they cost the government nothing,” in contrast to other measures such as military interventions that put people and materiel at risk.

The impact of sanctions by the U.S. can be huge, forcing rogue nations such as Iran and North Korea to the negotiating table and impacting some of the world’s largest companies, such as China tech-behemoth ZTE Co., which found itself on the U.S. “blacklist” by dint of its continued trading with sanctioned nations. Sanctions cut off ZTE from its supply chain of U.S. components and within days of being singled out by Trump, ZTE declared that it could no longer operate.

Only U.S. persons or entities are directly required to act in accordance with U.S. issued sanctions. However, any transaction involving U.S. financial institutions must also comply with such sanctions, and as 87% of global trade occurs in US dollars, this means that the vast majority of global businesses are required to comply. Refusing to comply, or inadvertently violating sanctions, could result in being placed on the blacklist and banned from participating in most global trade. Further, products that contain a minimum of 10% components produced in the United States are also considered to be U.S. goods and their makers are likewise expected to comply.

To avoid falling afoul of U.S. sanctions regime, Smith advises companies to develop “a compliance system, policies, and processes internally, but also figuring out what your exposure looks like.” Smith says that companies need to ask take thorough inventory of their own and their trade partners’ activities. “The more you know… the more you can explain it, if need be,” says Smith.

 Listen to audio clips to learn more: 

From left to right: Adam Smith, former senior sanctions official in the U.S. Government and Partner of Gibson Dunn; AmCham Taipei President William Foreman

 

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Visit of Cosmetics Trade Specialist Tonya Kemp

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Since its establishment early this year, AmCham Taipei’s Cosmetics Committee has kept in close touch with the Taiwan Food & Drug Administration as TFDA drafts amendments designed to modernize the Control of Cosmetics Hygiene Act. The Committee and TFDA have been in agreement that regular two-way communication between government and industry is the best way to ensure that relevant laws and regulations are as effective and practical as possible.

In line with that goal, the Cosmetics Committee recently arranged for a U.S. expert in cosmetics industry affairs, Tonya Kemp, to visit Taiwan in late October. Kemp was formerly Senior Director of International Trade Policy at the Washington, DC-based Personal Care Products Council (PCPC), the leading national trade association representing the global cosmetic and personal care products industry. Currently she is Senior Principal Trade Policy Advisor for Amway Corp., while also serving Chairman of PCPC’s Asia Pacific Subcommittee and an Advisor to the International Trade Administration of the U.S. Commerce Department.

From left to right: Susan Chao, Managing Director, MindShare Communications Ltd., Taiwan Branch; AmCham President Andrea Wu; AmCham Cosmetics Committee Co-Chair Abigail Lin, Manager, Global Product Stewardship, Taiwan, Procter & Gamble Taiwan; Pei-Weng Tu, Director, Division of Medical Devices & Cosmetics, Food and Drug Administration, MOHW; Speaker Tonya Kemp, Senior Principal Trade Policy Advisor, Amway Corporation / Chairman of Asia Pacific Subcommittee, Personal Care Products Council, USA; Speaker Kuo-Teng Hung, Section Chief, Division of Medical Devices & Cosmetics, Food and Drug Administration, MOHW; Jen-Ni Yang, Director General, Bureau of Foreign Trade, Ministry of Economic Affairs.

Kemp was one of two presenters at a luncheon meeting of the Cosmetics Committee held at the Mandarin Oriental Hotel on October 27 on the topic of “U.S. and Taiwan Cosmetics Regulation.” Explaining the Taiwan regulatory structure was Kuo-Teng Hung, Section Chief of TFDA’s Division of Medical Devices and Cosmetics, who outlined how it will be transformed under the new law from a pre-market registration system to one of post-market surveillance through notification and the use of Product Information Files (PIF). Kemp’s presentation reviewed the American experience with post-market surveillance and the benefits of industry self-regulation.

During Kemp’s stay in Taipei, the AmCham Cosmetics Committee also arranged for her to pay courtesy calls on the Commercial Section of the American Institute in Taiwan, where she met with Deputy Director Mark Lewis and his staff, and on TFDA Director General Wu Shou-mei and her colleagues. The Director General expressed keen interest in increased contacts with PCPC to help TFDA keep abreast of international best practices.

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APCAC Appeals to Congressional Leadership to Approve TPP by Year’s End

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Signed by 25 American Chambers of Commerce in Asia-Pacific, a letter demonstrating unprecedented unity and urgency was addressed to the Leadership of the U.S. Congress urging them to ratify the TPP agreement before the end of 2016.

APCAC’s collective membership represents more than 15,000 companies, 50,000 overseas American workers, and annual trade and investment volumes exceeding US$600 billion.

The letter highlights five key areas that TPP would address, enabling U.S. companies to compete against formidable Asian and European multinationals in the Asia-Pacific Region:

  1. Improving market share in Asian markets and supply chains
  2. Equalizing existing disadvantages from Asian Free Trade Agreements (FTA’s)
  3. Eliminating barriers that undermine U.S. innovations and standards
  4. Protecting opportunities in emerging markets
  5. Enhancing opportunities to shape positive outcomes.

Click here to read and download the full letter.

 

 

United States and Taiwan Hold Dialogue on Trade and Investment Priorities

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Below is the full text of a press release from the United States Trade Representative (Link to original here), regarding the conclusion of the tenth TIFA Council meeting.

More on Tifa Here:

Washington, D.C. – U.S. and Taiwan trade authorities concluded the tenth Trade and Investment Framework Agreement (TIFA) Council meeting under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the United States (TECRO).  Ambassador Robert Holleyman, Deputy United States Trade Representative, and Wang Mei-hua, Taiwan’s Vice Minister of Economic Affairs, co-led the discussions to enhance the longstanding trade and investment relationship between the United States and Taiwan.  Other participants and contributors included AIT and the U.S. Departments of State, Agriculture, Commerce and the Copyright Office.

The TIFA is the key forum for trade dialogue between the United States and Taiwan authorities and covers the broad range of trade and investment issues important to U.S. and Taiwan stakeholders.  The U.S. authorities welcomed the concrete steps taken by Taiwan after the conclusion of the 2015 TIFA Council meeting to follow through on important commitments related to intellectual property (IP) protection and enforcement.  Taiwan authorities also highlighted progress in addressing technical barriers to trade and fostering transparency in matters related to trade and investment.
At the meeting, the U.S. authorities pressed Taiwan for expeditious resolution of agricultural trade issues, including removal of longstanding and unwarranted barriers to U.S. beef and pork, which is necessary for any deepening of our trade relationship.  In the area of IP protection and enforcement, the TIFA talks took stock of progress on pharmaceutical IP protection and committed to strengthen engagement on Taiwan’s intellectual property rights legislation, promoting the use of legitimate educational materials, and on enforcement cooperation.  Both sides welcomed the strong exchanges already conducted between the two patent offices and look forward to deepening this cooperation for the benefit of U.S. and Taiwan rights holders and patent applicants.  The two sides also pledged to deepen dialogue to streamline time-to-market of medical devices and to improve transparency and procedural fairness in trade and investment matters.  The Taiwan authorities provided updates on its regional and multilateral initiatives and highlighted its close cooperation with the United States on various initiatives in the WTO.

Background 
The United States and Taiwan have a long-standing and vibrant trade relationship.  Taiwan is our 9th largest goods trading partner and a top-10 destination for U.S. agricultural and food exports.  U.S. goods and services trade with Taiwan totaled an estimated $86.7 billion in 2015.  The TIFA, signed in 1994 under the auspices of AIT and TECRO, provides the principal mechanism for trade dialogue between the United States and Taiwan authorities to expand trade and investment links and deepen cooperation.