U.S.-Taiwan Initiative on 21st Century Trade: How Should the Legislature Oversee?

On June 29th, the Executive Yuan enacted the “Trade Agreement between the Taipei Economic and Cultural Representative Office in the United States and the American Institute in Taiwan regarding Taiwan and the United States”. Today, the Economic Democracy Union held a press conference to provide analysis and opinions on how the Legislative Yuan should oversee the U.S.-Taiwan Initiative on 21st Century Trade, specifically distinguishing between “signed” and “under negotiation” executive agreements or treaties. The Economic Democracy Union also called for the review of regulations such as the Statute for Adjusted Support in Response to Trade Liberalization and the Regulations for the Implementation of Laborer and Employment Adjusted Support in Response to Trade Liberalization, urging the strengthening of impact assessments processes and assistance for trade liberalization, as well as the inclusion of measures to counter economic coercion by China and other authoritarian regimes in the scope of these regulations.

Ou Hsu-shao: The Legislature should focus its oversight on issues under negotiation in the “deep-water area”.

Ou Hsu-shao, researcher of the Economic Democracy Union, indicated that the U.S.-Taiwan Initiative on 21st Century Trade initiated its negotiations in June last year, and was expected to follow a modular approach, conducting phased negotiations on twelve trade issues, and signing treaties or executive agreements in batches. Among the twelve issues, the first stage includes five topics such as “customs administration and trade facilitation, sound legal framework, domestic regulations for the service industry, anti-corruption, and small and medium-sized enterprises,” which reached bilateral consensus relatively quickly. These topics were signed on June 1st, and the Executive Yuan approved the administrative agreement on June 29th. The second stage, known as the “deep-water area,” will soon begin negotiations on three topics: labor, agriculture, and environmental protection. The four topics of “digital trade, standards, and state-owned enterprises and non-market measures,” were categorized as third-stage issues which require more time for communication and discussion.

The five agreements signed in the first stage of the U.S.-Taiwan Initiative on 21st Century Trade were categorized by the Executive Yuan as “administrative agreements” and were submitted to the Legislative Yuan for review. However, all three opposition parties argue that these agreements shall be treated as “treaty drafts” and subjected to legislative deliberation. In response to this, Ou Hsu-shao argued that the Conclusion of Treaties Act, specifically the five points promulgated by Article 3 Paragraph 1 shall be utilized to determine whether these agreements meet the criteria of “treaty drafts.” Based on the principle of legislative autonomy, however, the Executive Yuan cannot impose its classification standards on the Legislature; which enables the Legislature to deliberate on the agreements, despite being submitted as administrative agreement reviews. According to media reports, Liu Shih-fang, the Secretary-General of the ruling party caucus, has stated that the caucus does not object to changing the classification to “deliberation.” Premier Chen Chien-jen also stated that he respects the exercise of power of the Legislative Yuan and hopes that the initiative can complete all procedures as soon as possible.

However, in contrast to the first-stage issues that emphasize government regulatory transparency and stakeholder participation in regulatory amendments, the more controversial and impactful issues lie in the deep-water area, which is the second stage of negotiations regarding “labor, agriculture, and environmental protection.” In this regard, the current focus of Legislative oversight shall not be ex post facto reviews and deliberations, but rather accept reports on the negotiation points and potential disputes from the competent authority, and solicit opinions from legislators. Article 6 of the Conclusion of Treaties Act had specifically promulgated that “The competent authorities may explain to the Legislative Yuan and report to related committees of the Legislative Yuan properly on guidelines, principles and possible disputes before reaching an agreement on the text of a treaty.”

Ou Hsu-shao emphasizes that the agricultural elements in the upcoming second stage negotiations involved “revisions of food safety and quarantine inspection standards based on international standards, scientific evidence, and risk considerations;” the environmental aspects involved “implementation of strict environmental standards and pursuing more proactive carbon reduction efforts;” and the labor aspect required “ensuring the participation of stakeholders such as workers in the decision-making process, establish enforceable high-standard trade norms, and enhance employment and wages.” The negotiation outcomes will inevitably involve the interests readjustment of various stakeholders. The Social Welfare and Environmental Hygiene Committee of the Legislative Yuan and the Economic Committee of the Legislative Yuan shall promptly arrange reporting of competent authorities in accordance with Article 6 of the Conclusion of Treaties Act and hear the suggestions from members of the Legislature. This is the true mandate of legislative oversight for the U.S.-Taiwan Initiative on 21st Century Trade.

Lai Chung-chiang: Legislative oversight of the deep-water area shall also extend to the preparation of accompanying legislation and administrative measures.

Lai Chung-chiang, convener of the Economic Democracy Union Think Tank, stated that the Economic Democracy Union anticipate productive processes and quality results in the ensuing negotiations regarding the “labor, agriculture, and environmental protection” aspects of the U.S.-Taiwan Initiative on 21st Century Trade, which can only be achieved through full participation of the Legislature and the public. Economic Democracy Union also expects the initiative will help diversify Taiwan’s trade risks. Economic Democracy Union further reminded that in future treaty review process, in addition to the four types of resolutions listed in Article 10 of the Conclusion of Treaties Act (approval, revision, reservation, disapproval), scope of legislative oversight shall also be extended to mandate the preparation of accompanying legislation and administrative measures for industries and labor impacted by the agreement. If necessary, the effective date of the treaty should be postponed until the completion of accompanying legislation, establishment of regulatory orders, preparation of administrative plans, and sufficient budgetary and financial resources for said administrative measures.
To achieve this, the Legislative Yuan should initiate major revisions to the Statute for Adjusted Support in Response to Trade Liberalization, the Ministry of Labor shall also review the Regulations for the Implementation of Laborer and Employment Adjusted Support in Response to Trade Liberalization.

Furthermore, the Economic Democracy Union suggests a “Regulations for the Response to the Impacts of Trade Liberalization and Economic Coercion” which will regulate economic coercion methods initiated by authoritarian regimes, such as weaponizing trade, utilizing trade control measures to force enterprises and the public to make political statements, or support political proxies and loval collaborators. These methods include requiring artists to make statements which identifies them as from “Taiwan Province, China”, expressing opposition to Taiwan independence, demands for companies to declare adherence to the “One China Principle,” or the widespread ban on imports of Taiwanese agricultural products followed by selective reopening to allow the resumption of imports of sweetsops (sugar-apples, or atemoya) or Taitung.

The Economic Democracy Union proposes that for investments and trade from regions with high economic coercion risks, mandatory economic coercion insurance (or Westward Risk Insurance) should be implemented with the collection of insurance premiums. In the future, if the import of sweetsops from the 25 farms in Taitung is once again restricted by the Chinese government due to political factors, the insurance revenue collected can be used to compensate the affected businesses for their insurance-related losses, mitigate their damages, and assist them in transitioning/diversifying. The idea is to “take from those involved in Westward expansion and use for those involved in Westward expansion,” internalizing the external costs, rather than using funds from the national treasury or burdening the military with the responsibility of consuming the sweetsops.

| Press Conference Information |

Organizer: Economic Democracy Union
Date: July 5, 2023 (Wednesday)
Time: 9:20 AM
Venue: Conference Room 101, Legislative Yuan Zhonghsing Research Building

Lai Chung-chiang, convener of the Economic Democracy Union Think Tank
Ou Hsu-shao, researcher of the Economic Democracy Union
Media Contact: Ou Hsu-shao, researcher of the Economic Democracy Union


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