Now we can talk: Steaks raise stakes for Taiwan-US trade ties

Where's the beef?

After years of asking Taiwan that question, the United States finally has an answer. 

The island that was long shy about eating American beef – nervous about cow bones ground up in hot dogs or imports bearing an agent that some suggested may cause human health problems –  allows all of that in now.  And this week it got what it wanted in return: talks on trade liberalization. Those talks resumed behind closed doors on Sunday and Monday in Taipei.

Why the change?

“I think the United States has more leverage and Taiwan doesn’t have much,” says Alex Chiang, professor of diplomacy at National Chengchi University in Taipei. “Eventually, it has to give into the US demand. We really need free trade agreements with other countries, especially as the US is one of the big trading partners.”

There had been several bans on US beef imports to Taiwan over the years. Imports of US beef with bones were completely shut down, to the chagrin of the US in 2003. Then, partly because of changing science and partly because of the political muscle beef has for the US, bans have been lifted since 2010 little by little.  

Within months after Taiwan agreed to let in the last critical batch of contested beef in 2012, that with the feed additive ractopamine, US officials agreed to resume talks that could get Taiwan into a regional trade liberalization pact and start negotiations for a two-way free-trade deal.

Those talks, dubbed Trade and Investment Framework Agreement negotiations, were shelved in 2007 as Washington started pointing to where the beef wasn’t. 

The United States is Taiwan’s second-biggest export destination after China while Taiwan is the 11th-largest American trade partner. Taiwan had already imported about $128 million of US beef per year before the most recent ban was lifted this summer.

In mid-2012 an official with Washington’s de facto embassy in Taipei said resolving the beef bans represented Taiwan’s general willingness to seek freer trade with the United States.

“When determining with which markets to move forward, I think Washington wants to first eradicate as many unscientific trade barriers as possible before taking the next step,” says Sean King, senior vice president with the political consulting firm Park Strategies in New York.

US officials had said the once banned beef would not cause health problems in humans – for Washington, a matter of science.

The talks between Deputy US Trade Representative Demetrio Marantis and Taiwan’s Vice Economics Minister Cho Shih-chao won’t hand any deals to Taiwan this week. But eventually their closed-door talks could lead Taiwan toward a hard-to-get FTA and admission to the Trans-Pacific Partnership, an 11-member free trade agreement being formulated with heavy US influence.

Either breakthrough would keep Taiwan in the same herd as Japan, South Korea, and the rest of Southeast Asia as they all push their exports on the world’s top economy.

Taiwan is a latecomer because political rival and economic bull China asked other countries to avoid talks with the island until Beijing and Taipei signed their own trade pact in 2010.

South Korea signed a free trade agreement with the United States last year, and Japan is in discussion with the United States about joining the Trans-Pacific Partnership. Where else is the beef? In Japan and South Korea.

“I don't think the US requires trading partners to import US beef,” says Wai Ho Leong, regional economist with Barclays Capital in Singapore. “It however will demand fair treatment of its beef relative to other [meat] producers.”