The public policy developments in Taiwan are similar to other U.S. beef markets. Taiwan banned all U.S. beef imports in December 2003 after the first case of BSE in the U.S. was reported. Prior to the trade halt, annual U.S. beef exports to Taiwan had grown from $4.0 million in 1980 to $70.4 million in 2003. Taiwan permitted imports in January 2006 of boneless beef from animals less than 30 months old and in June of 2007 began negotiations on the protocol finalized in early November to reopen markets to bone-in beef of all ages as well as ground beef and offal. U.S. suppliers have voluntarily excluded ground beef and offal and limited muscle cuts to animals under 30-months of age. According to the U.S. Meat Export Federation (USMEF), Taiwan was the sixth-largest market for U.S. beef exports at $114.3 million for the first ten months of 2009, an increase of 6 percent over 2008.
The issues were neatly framed in a joint press release by USDA and the U.S. Trade Representative, “The decision by Taiwan authorities to place domestic politics over science raises serious concerns….The decision to violate our bilateral agreement is particularly disappointing, as the United States has long been one of Taiwan’s most important trade and investment partners…”
First and foremost this issue is driven by domestic politics. The ruling party has had nothing but grief since opening the market to all U.S. beef. As in most countries, public opinion is not driven by sound science and respect for international agreements. An effort to have a voter referendum on beef imports from the U.S. continues to collect the required 860,000 signatures.
Second, Taiwan has been a reliable trade partner with the U.S. in agriculture and other merchandize and on political issues in Asia. U.S. agricultural exports to Taiwan in 2008 were $3.4 billion, 37 percent of Taiwan’s imports, with exports to the U.S. of only $237 million. Total merchandize exports from Taiwan to the U.S. in 2008 were $36.3 billion, with 40 percent being electric machinery, sound equipment, TV equipment and parts. U.S. merchandize exports to Taiwan were $24.9 billion. The U.S. is Taiwan’s closest informal ally and biggest military supplier. The beef trade issues have to be resolved and the sooner the better.
USMEF has pointed out at least one positive in the current dispute. Boneless and bone-in muscle cuts from cattle under 30-month of age are not impacted in any way. Consumer demand for U.S. beef continues to be strong or the U.S. would not have record sales in Taiwan, and the parliament had to recognize that reality. South Korea’s market is also open to all beef, but only U.S. beef from animals under 30 months of age is sold because of consumer preferences. Japan continues to accept only muscle cuts from animals less than 20 months of age and increasing that to 30 months would likely expand U.S. exports.
This is not trade protectionism in its traditional sense of one country protecting domestic producers at the expense of another country’s producers. Taiwan has a small beef industry and imported beef accounts for 95 percent of the supply. In a consumer-driven market the solution is to allow consumers to choose what they want to buy. Government approval does not mean that all consumers will have the same view of food safety. These issues are going to continue to grow in importance in all countries where consumers have enough income to afford to differentiate products in the marketplace. Trying to pretend the issue doesn’t exist in Taiwan, or anyplace else, or that it can be easily swept under the rug will not resolve it.
The ultimate issue is how to divide between governments and individuals the responsibility for human health and safety. The WTO and other international agencies like the OIE take a science-based approach to government import regulations. The authority of governments to restrict imports of products that are suspected of being unsafe is not at issue. A consensus has developed that import restrictions based on something other than science is not good for consumers or producers. They raise costs for consumers and protect high cost producers to the detriment of lower cost producers. While governments should focus on the science of food safety, consumers have the right to base their food choices on individual criteria that may not be science based.
Taiwan’s actions raise two policy issues. The Bush Administration had worked diligently on a beef trade policy that all barriers should be removed from trade because the OIE determined that all U.S. beef and products are safe. That policy met major resistance from Japan, South Korea, Taiwan and other beef importers. The Obama Administration has taken a more flexible policy approach and secured an agreement with the EU on beef hormones not based on science. The Taiwan government is seeking a similar middle ground that defuses the issue for now while allowing the present beef trade to continue.
The Obama Administration has not paid much attention to trade, and when it has the result has been more import restrictions on items like Chinese tires and steel. The government of Taiwan may have decided that while the Obama Administration will make all the correct complaints against the change in policy, they will do nothing negative. Taiwan President Ma is already making plans to send a delegation to the U.S. to “seek U.S. understanding.” Trade policy can never be completely divorced from domestic public opinion and international pressures. Perceptions of U.S. trade policy can have an impact on how leaders of other countries chose to respond to their conflicting policy pressures.