 Okay. We're going to go ahead and have our keynote addressed now so we can have folks settle down a little bit. I'm very honored to have with us this afternoon as our keynote speaker, Ambassador Ray Burkhart. Ray in February 2006, then Secretary of State Condoleezza Rice named Ray as chairman of the Board of Trustees of the American Institute in Taiwan and that appointment was of course re-upped under the Obama administration and AIT as everyone in this audience I think knows is the private entity of course established in 1979 to manage US relations with Taiwan in the absence of formal diplomatic ties. Until very recently last December Ray also served at the East-West Center as the director of programs there and the Centers Division that organizes dialogue and exchange programs. Prior to his service at AIT, Ray also served as ambassador, US ambassador to Vietnam from 2001 to 2004. He was also in Taipei formally as the director of the AIT on the Taiwan side from 1999 until 2001 and also served as consul general in Shanghai and deputy chief of mission at the US embassies in Manila and Seoul. So we're very very blessed to have Ray here to engage with us and without any further ado I'll turn it over to him to give us a talk. Thanks Ray. Please welcome him. Thank you Chris. Thank you very much to Chris and to Richard Bush from Brookings to Bonnie Glazer from CSIS for inviting me to speak to this conference. Great group of people out there, lots of old friends, people who've come up and introduced themselves to me who knew me in Shanghai which is a great fun. Thanks a lot for that and so I'm gonna talk relatively briefly. I'm gonna focus on US-Taiwan relations as a relationship, the relationship between the US and Taiwan. I fully expect you know a lot of questions about things like the state of cross-strait relations but I'll leave time for you to raise all those things in your questions. I think as we look at when I look at US-Taiwan relations I always find myself thinking back to 1979 all the way back to then when we broke relations with the Republic of China as we then designated it when we had relations with it and established our current relationship as managed by AIT. A model I might say that's been followed by many other countries who established relations with the PRC. And I think if you look back to 1979 only then do you really really get a sense of how remarkably far we have come. In the early years after 1979 the tendency was to treat Taiwan as an issue, an annoying problem in US-Taiwan relations. Frankly and I think back myself to the people who worked on those issues at that time and what they were thinking and what they were saying and the history books have opened up even more about that. Most of the people in the White House and the State Department at that time they never imagined that we would still be talking about US-Taiwan relations in 2013. They certainly never imagined such a close and serious relationship or that Taiwan would become an important player in the world trading system, an economic powerhouse that required a serious and important relationship. The Obama administration building on the work of the Bush administration has worked very hard to treat our relationship with Taiwan seriously, to treat it on its own merits. I've now worked on Taiwan policy a long time and never imagined it would be so long. In three American administrations and during the terms of three presidents of Taiwan all beginning in 1999, I did take a vacation for three years in Vietnam in the middle of that period but the current national security team in Washington that's you know White House, State Department, Defense Department, good to have Drew here from the Defense Department to represent that maintain their interests here. I would say this team has the greatest, has treated Taiwan with the most genuine interest with the greatest commitment of time and a very important point that doesn't get mentioned too often with the greatest respect that I have seen in all the years I've worked on Taiwan. I give a lot of credit to my friend Kurt Campbell our former assistant secretary of state for his leadership in establishing that kind of relationship and that kind of improvement in our relations with Taiwan and I'm also I am confident that we've now institutionalized those channels of close cooperation so that they're going to continue. They will continue under the new members of our national security team and I would note that we've made all this progress which I'm going to describe in some detail while still doing it within the framework of unofficial relations with Taiwan which was created by the Taiwan Relations Act in 1979. A rather remarkable feat actually. As Dr. Campbell Kurt told our Congress in October 2011 it was actually in the same very important testimony that Richard referred to in talking about Peter Levoie's comments. Kurt said that we now have regular consultations at senior levels with both civilian and military representatives. I can add to that we brief our Taiwan friends on our high-level meetings with the PRC. We brief them on our overall Asia strategy. They brief us on their various channels of communication with Beijing. I think all of us who've worked in Taiwan remember for years and years a regular complaint in Taipei was that we need more high-level interaction between our officials. I can't remember the last time I heard someone made that complaint. It just doesn't come up anymore. We have resumed visits to Taiwan by which Frank would stop during the Chen Shui-bian administration. We have resumed visits to Taiwan by senior officials that continues. As most people here know in the last two years we had Deputy Secretary of Energy Poneman, Usaid, USAID Director Shah, Under Secretary of Commerce Sanchez, Assistant Secretary of State for Economic and Business Affairs Fernandez. I think I've probably forgotten somebody. They have all visited Taipei. Just last month we had some slightly lower-level State Department officials who went to Taipei for the annual meeting there of the Asia Pacific Council of American Chamber of Commerce. An important event and a sign also of importance of Taiwan to the business community, American business community. This is a gathering of 15 American chambers of commerce from across the region. It was the first time in 21 years that the meeting had been held in Taiwan. I also have noted that the flow of senators and congressmen to Taiwan has been very strong, definitely up in the last two years. Just this year, as I recall, we've had delegations led by Senator Inhofe, by Senator Murkowski, and by the new chair of the House Foreign Affairs Committee at Royce of California. Other developments, mostly as you know about, but just take them off, US-granted visa waiver to Taiwan last year. Very big deal. Very important step. It is already facilitating and expanding leisure and business travel from Taiwan to the US. American airlines are adding non-stop flights to Taiwan. Visa waiver will deepen our people-to-people ties and our very important economic relationship. And I would just note, achieving visa waiver was not easy. It was really, really tough. And the process started, really, while I was in Taiwan as director way back 12 years ago. It required a lot of hard work by people, particularly in Taiwan, including major action, lots of very major action to improve the security of Taiwan's passport. Another big development. Last month, we successfully restarted our trade and investment framework agreement talks after a five-year hiatus. I will not talk about beef today. The acting US trade representative, Demetrius Morantis, led the US delegation that went to Taiwan. They had very good meetings. There are some people here today, including Rick Rosika, who were there in the delegation. Both sides are committed to broadening and deepening our trade and investment relations. And various working groups were set up, and they're going to start meeting to deal with some of these issues in very concrete and substantial ways. Our military relationship is stronger than ever. The only aspect anybody ever notices about the military relationship is arms sales. But in reality, it's a lot more than that. We don't talk about some of the rest a lot. But I mean, sometimes maybe we should. We have very excellent information exchange, training, and very important joint assessment and analysis of what Taiwan needs to maintain a sufficient deterrent capability. We have now institutionalized many levels of regular military dialogue and cooperation, from policy makers to military planners, and frankly, all the way down to non-commissioned officers. Just personally, I can say in the past year, I have participated in more military interactions than I can really count and remember, all the way in Washington and Taipei at the Pacific Command in Honolulu and at other locations around the United States. For me, and especially, this were meetings, planning sessions, tabletop exercises, you name it. For me, an especially memorable moment was last October to accompany Vice Minister Andrew Yang at the Pentagon for his meeting with Deputy Secretary Ash Carter. Our economic relationship between Taiwan and United States is really one of the fundamental reasons why we must take Taiwan-U.S. relations seriously. And we must have interaction between certain people at the policy level. The economic relationship is important for American exports and important for American jobs. Things that we're not going to sacrifice. We need to take care of that, and it requires meetings at certain high levels. Taiwan is our 10th largest trading partner ahead of India or Italy. It is a $26 billion market for U.S. products, and it's growing well. It's number two per capita for food and agricultural products, and the sixth largest market for food and agriculture. The U.S. is the largest investor in Taiwan, about $22 billion. I kind of think that's a little low, but that's the figure we put out. Taiwan investment in the U.S. is about $5 billion, also probably a low figure than the reality. And the U.S. Commerce Department has actually selected Taiwan as one of the 15 priority target economies where we'll be actively promoting inbound investment into the U.S. over the next couple of years. Right now, actually, some of us know from talking to people, there are some very large projects of Taiwanese investment in the U.S. and U.S. investment in Taiwan that are in the advanced planning stage. Taiwan was also, I should say, is the sixth largest source of foreign students in the United States. There are about 23,000 Taiwanese students now enrolled in U.S. universities, which is rather astounding figure considering the size of Taiwan. So just to wrap it up, I mean, it's a rich relationship, very rich relationship, countless interactions every day, state and local officials, private sector, nonprofit organizations, religious organizations, you name it, every imaginable sector of our two societies. Americans and Taiwanese like to work with each other. They like to do business with each other. In Taiwan, I always interact with our business people whenever I go there. And when they come here, I spent a lot of time with our business people. They don't encounter the kind of serious problems in Taiwan, frankly, that make it doing business so difficult in some nearby places. I won't go into detail, but you can imagine what I'm talking about. An excellent example, I think, of sort of a symbol, really, of the commitment the U.S. has to strong, future ties to Taiwan is the new office complex that we are building for AIT, for the American Institute in Taiwan, and Taipei's Nehu District. This is going to be a large, modern, and even I would say attractive office building. If you look at some of our embassies and other parts of the world, it's not an embassy, it's an AIT office building. I'm being very correct about that. But if you look at what we've built in some other parts of the world, an attractive would not be a word that anyone would use. So this is also going to be very environmentally sound, seismically stable, the very modern construction materials. I would also say the feng shui is perfect. It has mountains behind, river in front. I always mentioned that since I picked the site 12 years ago. And it's big deal. This is a $220 million project. He may have read about a contract dispute that's kind of slowed down some of the work, but other parts of the work still continue. And we still believe it'll be completed by early 2015. For the first time, we're going to have all sections of AIT under one roof. Now we have the commercial and cultural sections separate from the main office on Shini Road. They're all going to be together. And then I think the real symbolism. This will be the first dedicated office building built by any country in Taipei in at least 30 years. Dedicated office building as its representative office. So I think that's a wonderful symbol of the commitment to longstanding and important future relationship. At the core of that relationship is our shared belief in democracy, rule of law, human rights. Profoundly important principles. Also, frankly, exactly the kind of principles that I alluded to earlier in talking about how this is a place where people like to do business, where you have rule of law. Where Americans have deep respect, very deep respect for the extraordinary economic and political progress of the people of Taiwan, I would say against all odds over the past 34 years since 1979. And for our part, we will stand by the commitments we made to Taiwan 34 years ago. Thank you. Okay, well, Ambassador Burkhardt is very graciously offered to take some questions from the floor. So we're going to start with Monning, very eager in the front. And then we'll move on from there. And again, standard rules, please do identify yourself and keep your remarks short. If we can have a microphone up front. Good question. They're scurrying. They're working to rule. Just speak loudly. We're broadcasting, I guess, aren't we? So yeah, okay, we are. Yeah, all right, well, let's see if we can. Well, just go for it. Talk a little bit about US administration perspectives on the cross-strait relationship. And, you know, I'd like to add a specific element to the question. And that is that there is this narrative that persists on the mainland, as well as in Taiwan, that one of the reasons that President Ma is so reluctant to accelerate the pace of discussions with the mainland on sensitive political issues and military confidence building measures is because the United States really would oppose such an agenda. So I'd like to give you an opportunity to explain how the US would look at progress in those areas and your overall, the overall perspective on the cross-strait developments. Thank you. Thanks, Bonnie. Look, I was in Taiwan as our representative during the trench we've been being era. And then when I came back to be to be the chairman, he was still there. And I remember very well what it was like to have a lack of dialogue across the Taiwan Strait, a lack of communication, a situation which was very worrisome to the United States for its national security interests worrisome because lack of communication can very easily lead to miscalculation. miscalculation can easily lead to conflict and conflict can easily lead to the involvement of the United States. And so ending that situation was a very important accomplishment of the Ma Ying Jiu administration and one that we very much welcomed and continue to welcome. The 18 agreements across the Strait provide stability that we welcome. We viewed we viewed all of this interaction, all of this integration, this communication as not only in our strategic interests, frankly, it's in our commercial interests also, American companies like it too. We also have always believed to answer the second part of your question, we've always maintained a firm belief. And I think that everything that has happened over the last 20 years has reinforced it, is that only the political leaders in Taiwan can judge the topics, the pace, the timing of what they should talk about with the other side. They are the elected political leaders. They're the ones that have to confront their own voters and their own political realities and make those decisions. I think it would be really wrong for the United States or any other outside country to second guess those elected leaders on whether they should take up CBMs now or next year or which topics or when. I think it's totally inappropriate presumptuous really for outside countries to suggest to the Taiwan leaders what, when, and where they should talk about it. And just to underline, in our, we under no circumstances has the US ever discouraged in any way directly or subtly or implicitly in no way have we ever cautioned Taiwan. You don't want to talk about that. We would be nervous if you raise that subject. Never ever. Chen Weihua, China Daily. Again, if you look at the relations between China, US, Chinese, mainland Taiwan, everything seems to be possible. So using your imagination, do you think what it takes for unification to happen finally? Thank you. I use my imagination for many things, but that is one that I would not choose to use it for. That would be, you know, I listened to what Ma Yingju says. And he, if you look at his remarks, you know, he reiterates the three nos. No unification. No, no use of military force and no independence. Recently, in his remarks to the Stanford University people, I noticed that in the question, he reiterated the three nos. And in the question and answer period, he said something which unfortunately, I don't have the exact line in front of me, and it didn't get much attention. But he talked about how maintaining the status quo was a fundamental principle of the, of his cross straight, cross straight relations. I'm sorry, I may be mangling the quote, but it was pretty, pretty close to that. So therefore, it would be again, I use the word presumptuous for me to, or any American official to, or even quasi official to, to, to try to imagine what would be the scenario for for unification. I, I think, you know, all the discussion that's gone on here about the polls and people's attitudes. And I think all of that is something we all should pay a lot of attention to. I lived in Taiwan along to, you know, not only as director, but I was a student in Taijong in the mid 70s. And I first visited Taiwan in 1970. And so I think, you know, the sense of, of separate identity is something that's pretty deep, deep seated in Taiwan. It goes back long before Chen Shui been long before leading way. And so, you know, that would be something that would have to be addressed by anyone who contemplated the idea of unification. My name is Hello. Hello. It's working. My, my name is Eric Lowe. I'm with the Fair Observer. My question is the Fair Observer. Okay. Yeah. My question is that I when I hear about you talking about the time of township and you have almost like a sigh of relief when, you know, Mario took over. In fact, a lot of the, the media says, you know, it was like the United States and China sort of like sort of like having a sort of agreement that, you know, a kind of test that, you know, like he should be because he's for the status quo, no change and independence. So if there is, is the next election, there is a DPP president. Would is prop, is it problematic for the United States, you know, to step back into the situation of Chen Shui bien, or basically, or there you can see a backward and forward situation going on. My personal sort of emotional kind of personal feeling and reaction, I should say, you know, and actually it's a mixed feeling. And, and, you know, I guess I'm again into talking about personal things, which is not what I'm paid to do. But I, I actually had a lot of affection for China. And we had an excellent personal relationship. But from a policy point of view, it was, it was problematic for the United States. And there's no secret to that. We were quite open about it. I, I none of us I think should draw conclusions that the political leadership of either the KMT or the DPP in the future can be totally predicted from what it's been in the past. We have to judge leaders on their own merits. And I, you know, the United States believes in democracy and a fun and not one of the most fundamental principles of democracy is to accept that there can be alternation of power between political parties. And we accept that. And we would work with whomever took office. And we have no intention of interfering in the election, election results. So I'll leave it at that. Hi, Garrett Vanderwees, editor of Taiwan Communique. Ray, I'd like to pick up on where you ended your speech, your emphasis on the shared values, democracy, human rights and freedom in Taiwan. Many people in Taiwan do feel that under the present administration, the past four years, democracy and human rights have eroded because of the rapprochement with China. And that eventually that might lead to a situation that Richard Bush described this morning, that Taiwan would be pressured into unification, not voluntarily by stealth, perhaps. What could the United States do to help Taiwan more to basically make its own decision on its future? Thank you for that tendentious question, Garrett. What the I look, I don't buy the scenario that Taiwan's, you know, the human rights situation and democracy has eroded over the last five years. I'm sorry, I don't buy that. In terms of what, what, what can the United States do to help Taiwan to be able to, how did you put it, may be able to make decisions on its own? A lot of that has to do with providing deterrence capability, which I alluded to in my talk and which Richard talked also at some length about that whole subject, making sure Taiwan has the capability so that coercion is more difficult. So that coercion is something that the idea of launching a blockade or an invasion would be something that would be sufficiently challenging and difficult that that would give pause to someone contemplating such hostility, giving Taiwan the capability to, to defend itself for a sufficient period of time so that the situation could be satisfactorily resolved. All of these are important aspects of giving Taiwan confidence and being able to negotiate from a position of confidence. Thank you, Mr. Ambassador. Talking about giving, John Zan with CTI TV of Taiwan. Talking about giving Taiwan the capability to defend itself, there has been a long standing request for F-16 CDs. Mr. Ambassador, how long do we have to wait before we see any movement towards that? Do we have to actually skip it altogether, probably for Taiwan to request a new generation of, of, of fighter jets? Thank you. You weren't listening, John. I talked about, I talked about how in our military relationship included joint assessment and analysis of what Taiwan needs to maintain a sufficient deterrent capability. That, I'm not going to get into talking about individual weapons systems, but I would note that a sufficient deterrence capability includes high-tech items and low-tech items. It includes not only weapons, but how to use them. It includes protective actions you take, how to fix your runways fast, things like that. So it's, it doesn't, it even goes beyond weapons. And it includes not only things that you might buy, but it includes things that you might make yourself, indigenous manufacturer of weapons. And Taiwan's doing better at indigenous manufacturer of weapons. It's doing better every year. It's getting pretty impressive, actually. And many of those do have excellent asymmetric capability. So I think people, understandably, people sometimes reduce this whole issue to, you know, sort of a kind of obsessive focus on the sale of a particular item. That's not the best way to look at the issue. It's not the correct way to look at the issue. I sometimes think of China wants to obsessively look at whether or not we sell one particular item. I don't know, maybe that's for the best. But it means they're not paying attention to other things. And I say that only half jokingly, frankly. I think, but we shouldn't make that mistake. Thank you, Ambassador. My name is Dong Huiyu. I was trying to reveal news agency. Maybe my question would be easier. It's not on a policy level. I'm just wondering if you have opportunity to contact with the Chinese new director of the Taiwan Affairs Office, Zhang Zijun, or do you have any contact with the Chinese side regarding the cross-trait relations after the new Chinese government office? Thank you. That's a fair question. I don't, you know, a major part of my job is not interaction with the Chinese side on these issues. However, it doesn't mean that I'm allergic to that. Once a year, I mean, twice a year, at least, I take part in track two or track one and a half meetings in which at one of them, they're always in New York. At one of them, there are Richard Bush, Bonnie Glazer, many other people in the room to take part in these meetings also, organized by the National Committee on American Foreign Policy, which I'm sure will be glad for this plug. And Don Segoria will love me for this, you know. But the one of the dialogues every year involves many PRC academics, as well as Taiwan academics, American, they're usually some Taiwan officials and some American officials or quasi officials. In the case, and then there's another meeting, which the next one's coming up in early May, very soon in New York, that meeting always involves officials from the Taiwan Affairs Office of the State Council. And I think once Wang Yi came to the meeting when he was the chair of the office, generally its representatives are at the deputy level. Sun Yafu often led the group, Wang Zai-Shi, some of the others. So that does afford an excellent opportunity for not only discussion in the group, in the sort of the larger meeting, but very often we have private conversations also. Mike Massetic of the PBS Online News Hour. Asia's bursting out with various trade agreements, proposed trade agreements, RETCEP on one side, TPP morphing now into something really big, whereas before it was relatively small. Where does, and you're talking with these folks, where do they see themselves in this swirl of new trade agreements? Right. I think Taiwan, of course, watches all that with great interest and understandably with a certain amount of frustration. Taiwan, the unfortunate condition that Taiwan has found itself in for decades, of course, is the threat and the reality of marginalization from international organizations and international trade packs and all kinds of international agreements. Taiwan itself, as is publicly known, is negotiating a trade agreement with Singapore and another one with New Zealand. Some of those seem to be, at least one of those seems to be fairly far advanced. Taiwan is also doing joint studies with a number of other countries in Southeast Asia and the region on the possibility of such agreements. So they're not inactive. These things are going on. As far as joining larger or sort of multilateral trade agreements like TPP or like the one, what is it, the RCEP, a challenge of those is that they work by consensus. All the countries have to agree to allow in a new partner. Many countries on these issues tend to look over their backs and see what Beijing is thinking. That may not be the way the U.S. operates but certainly other countries operate that way. So that kind of describes the situation. I would say one thing that I think I can add to that is President Ma, particularly since his second inaugural speech, has been remarkably frank in talking about the protectionist, I mean these are his words, the protectionist instincts, protectionist nature of Taiwan's trade posture and about the need to open up and to make Taiwan, I think he called it a free trade island. So that's a very welcome attitude and he knows and everybody in Taiwan, most people in Taiwan know that Taiwan's ability to sign trade agreements bilaterally or multilaterally will be greatly enhanced by that kind of progress toward opening Taiwan's economy. Gregory Ho from Radio Free Asia Chairman, just one question since Chairman Ma has said that Taiwan's internet infrastructure has been hacked 100 times every day, presumably from the other side of the island. So would you agree on expanding the U.S. cyber-military capability into Taiwan and expand or even have a stronger cyber-military cooperation between the U.S. and Taiwan so that make Taiwan to process a so-called real asymmetry power that to deter any further intrusion from the other side. Thank you. This is a topic we do discuss with Taiwan. Taiwan obviously does face a serious cyber threat that's publicly known and it's definitely part of our, in talking about the close military cooperation we have with Taiwan, the close dialogue we have on so many subjects, that's definitely one of the subjects. Shihoko Geritor with the Wilson Center. With what? The Wilson Center. Okay. I want to turn to the ongoing territorial disputes and Taiwan's positioning, trying to position itself as a peace broker in the East China Sea. Now there is a clear difference in the position that Taiwan has compared to China. Will such differences aggravate cross-strait relations and whilst the United States has made clear that it remains the observer in the disputes, will it, will the differences between China and Taiwan make it more difficult for the United States to stay at the sidelines? The agreement that Taiwan reached with Japan I think was not surprising. I think it was something that really met the interests of both sides in a rather neat way. And it was, I think, President Ma and Taiwan government in general, I think always was pretty clear that they felt that the sovereignty issue could be set aside and in an agreement that would deal with the important practical issue of protecting fishing rights, this is a traditional fishing zone of the fishermen from which county is it, from Elan County in Taiwan. It was a long history to that. And so it was something that was rather well handled by both sides. It removed one sort of aggravation and irritant in this situation. I think trying to sort of go from that to analyze whether it's going to become an irritant and frustrate relations and then cause problems for US-Chinese relations, I think this is perhaps an example of that great Taiwan fascination with over-analysis of issues. I think, I really don't think so. I think it's just, that's extrapolation beyond logic. So I think, obviously Beijing expressed some irritation with the agreement, but it wasn't a particularly loud bleat from Beijing, I thought. Thanks. Jeffrey Lin from Senator Angus King's office. My question is essentially, what's the issue that needs more work to be done in the next four to three years? Is it more on the security side or more towards the free trade agreements that is on US-China relations? Because those seem to be too big issues to me. No, I'm sorry. Taiwan and US relations, my bad. Trade and security are both very important issues. We don't, you know, we don't choose between them. I think on the trade side, as I said, we just had our Tifa talks at the deputy minister level. We identified a number of issues, not only involving trade, but also investment. There are, you know, classic kinds of issues you get into in trade negotiations, non-tariff barriers, greater access for American pharmaceuticals and medical equipment, opening up agricultural markets to American products a little bit more. Rick Rezeko left. I was going to ask him. So, you know, sort of, and we want to see progress on those. Taiwan would like to have an investment agreement that may be a little, you know, that may take some work, but we can, we reached agreement on some investment principles. We're working on that. We do want to make investment between the two sides easier, remove some of the barriers, some of the regulatory barriers. American financial industry has some problems in terms of how the financial regulators in Taiwan sometimes make it a bit rough for insurance companies, for example, to exit the market once they've entered and so forth. You know, these are very nuts in bolts kind of things, but important, you know, very important, particularly at the scale of the Taiwan economy, which is a big economy. So those are the kind of issues we're going to work on. And we also, we see that, you know, that Taiwan's economic autonomy is an important thing also. Taiwan doesn't want to be overly dependent on its, on its, on its relationship with the mainland. That's, you know, quite open about that, and that's understandable. Taiwan's enabling Taiwan to have trade agreements, more agreements with us, more agreements with its neighbors, with others, you know, that's something, that's a good thing and something we certainly would like to help. So that's all, that's the trade side, that's very important. The security side, I talked about, you know, the increase, improving the deterrence capability. We deeply believe, as Ma Ying-ju has often said publicly and privately, that there isn't going to be progress in cross-strait relations unless Taiwan feels, feels, feels confidence in its own security. If you want to stop cross-strait progress, the fastest way to bring it to a halt would be to remove Taiwan's sense of security and sense of deterrent capability. Beijing is never going to agree with that, never going to accept that logic, but we believe it deeply, as does Taiwan. Thanks, Mr. Ambassador, for your good talk. Bill Mikhail from the George Washington University. How much- From George Washington University? Yes, sir. How much American U.S. Treasury bills does the government of Taiwan own? How much what? Treasury bills, TBs. Treasury bills? Taiwan is number four. How much? Is that right? Still is number four? Yeah, it's number- Taiwan after, after China, Japan, and Russia, right? Korea. Korea. I don't know. It all stays between Korea and Taiwan, but it's number four and a number four or five. And it's about, it's about it's, isn't it like about $450 billion, I think, in, in treasuries or in other, other, you know, I think that may include things like Fannie Mae and so forth. But, but it's, it's in, it's in that range. It's, it's a little short of a half trillion dollars. It's a lot of money. The Taiwan- I mean, nobody ever thinks about it or talks about it, but Taiwan's a very big player in that whole, that whole field. Yeah. All right. Yep. Well, thank you very much, Ambassador Burghart. Please join me in thanking Ambassador Burghart. And we'll go ahead and take a break before setting up the next panel. Thank you. And join everyone to take their seats again, please. My name's Kevin Neeler. I'm delighted to be introducing our panel today. I, I noticed that that Ray in his concluding question said, U.S. policy doesn't have to choose between economics and security. Well, this panel has chosen and we're about the money. I mean, just to be clear, we, we know the security stuff that was an interesting four and a half hours, a nice predicate, but we know what, what matters in Asia and it's, it's invariably trade and investment. Though my, my wife, who was a reporter in the region for many years, did admonish me that the most boring line in the history of journalism is international trade talks continue. So she said, try to, try to spice it up. We're very fortunate in our panel today to have Simon Chair here at CSIS, Matt Goodman, who was responsible for U.S. economic policy in Asia, most recently both, both at the State Department and the National Security Council. Matt was, however, in the unfortunate position, most new administrations, new entrants in administration are able to say for many months, well, I don't know what the president's views are on this matter. Matt did not have that opportunity because he had lead responsibility on the Obama campaign for the Asia trade policy papers. So he came in on the first day being responsible. Professor Shuei Zhou is with Tom Kong University. He has written and lectured extensively on our topic today on Asian economic architecture and is regularly consulted with the Taiwan government on these issues. Matt and I were discussing beforehand, we're a little concerned because he also happens to know more about U.S. policy than most American policy speakers would. So we're delighted to have him here today. We welcome you both. For decades, it was fashionable when talking about Asian trade and economic issues to start with the Eurocentric observation that Asia doesn't exist in the way that Europe does. I suspect that this was code, Eurocentric code, for the fact that Asia didn't enjoy the advantage of deep, well-established regional structures and habits of cooperation that we all kidded ourselves to believe would give European economies a certain predictability and limited downside risk. Well, three years into the European crisis, I think there are great many people in Asia who said, you know you're right about that. Asia doesn't exist in the way that Europe exists. But the intervening event also as Ambassador Burkhart indicated is in the last decade we've seen the proliferation of Asian trade relationships of all kind and indeed all quality. We now see some 233 trade agreements that crisscross the regions. These are of widely variant purpose from what I guess I would argue is the gold standard of the closer economic relationship between Australia and New Zealand, arguably the most extensive FTA anywhere in the world, to others, some of which are vague and kind of aspirational and may have questionable economic and even political incentives. But then there are the larger transregional agreements that our colleagues are going to discuss today. The work we've been asked to do in this panel with our two experts is to look around the region and offer thoughts on what has been described as this noodle bowl of trade deals and help organize our thinking about what they may mean for US and Taiwan interests. I'd ask both of you to start out if we can, and this audience has demonstrated that it is a frightening group of self-starters capable of highly original thought. And I'd like this to turn this last session as much into a conversation as is possible. So Dr. Joe, may I ask you to begin? Should I sit or should I? Please, whichever you like. Thank you, Kevin. And ladies and gentlemen, good afternoon. My name is Zhiwei Zhou. I am an assistant professor at the Danjiang University in Taiwan, and I really appreciate this opportunity coming here to make a short talk on the regional economic architecture and its political security implications. And so let me just start with a joke that Professor Zhao mentioned this morning that since Mao Zedong said there are 100 years for them to wait for the final invocation, and it's only 41 years past, and we still have 59 years to go. That means for all the politicians, scholars, practitioners in this particular business, we have a lot more work to do so we can save our job, right? So I think to think about the regional economic architecture from Taiwan's perspective, we really have to think about what was done by Mao Zedong a few months before he passed away in the 1980s. And the two things. First of all, he decided to implement democracy war for a lot of reasons and to reinforce the legitimacy of Taiwan's government for two different purposes. Number one, to make sure that Taiwan will be in terms of the system be linked with western democracies. That's important for Taiwan to have allies and friends. And the second implication is to make sure that whoever is going to run Taiwan to rule Taiwan will have the legitimacy to deal with the pressure from mainland China. So that's good. That's very important for Taiwan. And the second job that the second thing he has done before he passed away is to open up to China, which you all know that took place November the 2nd 1987. Just a few months before he passed away, he instructed his counterpart, the KMT, right now to think about a working relationship with China. That's what he said. And therefore he anticipated there is going to be an inevitable trend for Taiwan in the future, in the distant future to see the list, that Taiwan will have to deal with China one way or the other. So it is probably very good opportunity while he was still there to open up this window of opportunity for the next two previous adversaries to stay engaged with each other. So that's actually what happened that I'm going to talk about today. So this trade between Taiwan and China from Taiwan's perspective initially was illegal of course and was indirect and also it's one way traffic between the two. And later on began much more important and a lot of Taiwanese businessmen under the camouflage of visitors going to China looking for trade opportunity or investment opportunity that's what actually happened. And to a certain extent that this trade and investment has become so important that the government will have to deal with because of the exchange of visits by human beings and therefore there's a requirement on the part of the two political system to come up with something new to address this overwhelming ever-increasing traffic between the two. So that's what actually happened. And now let's think about that was back in 1980s and then started in the mid-1990s the government in Taiwan under the leadership of Lianzhan as the premier and also at the time the Minister for Economic Affairs Vincent Xiao later on began the vice president he proposed this Asia-Pacific Regional Operations Center as one of the grand strategy for Taiwan's future. That was proposed in 1993. However, what happened during the 10-year period as far as cross-strait relations concern that Taiwan under Bidonghui's leadership, Taiwan was actually going through a different stage of attitude toward China. First of all, which is go slow, be patient which means the president Lee somehow realized this problem with over-dependence on China's market economically speaking. So we want to go slow and be patient. And a few years later in 1996 that leader Huai proposed go-south diplomacy which is bringing Taiwanese business into Southeast Asia. So Taiwan actually has thought about playing the role of original player and then missed that opportunity for political reason. So all that led to the transition power in the year 2000 and then the 8-year period under President Chen Shui-bian was clear to everybody. And with all that as the background President Ma before running into election, he proposed this idea. We need to find some way somehow to get linked with China. So we have to break this marginalization, this isolation. So the real deal about ECFA at the very beginning whatever the propaganda may be telling us, the real deal is to break the pressure and also for President Ma to score political mileage in the first place. So that's what actually mattered. That's why the moment Ma took office in the year of 2008 in just a few months, the both side concluded a few different agreements. The charter flies and so on and so forth. And then the ECFA top began and was finalized June 29 2010 in Chongqing. To some extent this laid the groundwork for Ma's second term. Especially with the early harvest list which was proposed and which was insisted by Taiwan, asking China and asking the top leadership in China say you've got to approve this otherwise it's going to be reverse consequence to this cross-strait relations. Even though some of the demand raised by Taiwan doesn't really work for some interest group in China for some specific industry. However, China agreed with that but that's just the early harvest list and now the two side are working on the rest of the real deal which is the trade in goods and the trade in service and investment protection and they are thinking about trying to find a way to promote more economic cooperation. So they set up this committee and to deal with a lot of issues and then they even think about custom cooperation on the two sides. So this ECFA deal to some extent not just about economy, it brings in money of course that's very important but it's also very important from Taiwan's perspective to find a way to somehow set up the new regime to deal with China so that's what actually happened. So we have this new regime, a set of norms, rules, regulations, procedures think about ECFA for a second we have a committee and we have certain procedures. If any one of the two parties disagree or dislike what has been happening as far as ECFA is concerned then any one party can terminate this agreement and then by writing the intention to terminate the agreement and the other party will have to respond and the two have to talk for a certain period of time and then even if that conversation cannot lead to a reverse decision which means whatever happened after the termination of the agreement will have to be consulted again by the two parties concerned. So the spirit behind all this is to make sure that as far as trade and economic issues are concerned between the two we have got to talk there's no other way. You cannot resort to coercion to say the least. So this is the first step what Ma Injeol has been thinking about. I think this might have something to do with his intention to talk to the Japanese government on the fishing issue. This is important not just for the fishing rise for the Ilan County which my wife is from so I know a lot of fishermen, the captain let the group to protest actually a friend of mine. So it's not just about fishing, fishing is money that's important too but it has something to do with reinforce the concept that Taiwan even though have everything to be a sovereign state but without being recognized legally as a jury sovereign state. Still, Taiwan can play a certain roles to be connected with the outside world not just to China on economic issue but also to other parts of the world. So that's what President Ma has been doing right now. So having said that because of this setting Taiwan going through the process of isolation being marginalized and all that and then Taiwan find a way to somehow break it and then be connected with China under ACFA and while all this happened that ASEAN plus 1 plus 3 plus 6 and also not to mention what has been going on since 1989 proposed by Australian Prime Minister and later on became much more important after Clinton's had the first summit meeting in Seattle in 1993 and later on the proposed TPP and which right now we have 12 members talking about this agreement so we have TPP and we have CSEP and the economic partnership a lot of anyway so we have all that and Taiwan has been trying to find a way out so the next question for me to think about to challenge myself seems that the economic interdependency with China or to put it differently the over dependence on the Chinese market is inevitable for Taiwan then what should the Taiwanese government be doing to deal with the problem that may be coming from this over dependency if Taiwan cannot stay far away from China if that's not an option then what do we do so there might be several safety laws Taiwan can think about any one of those will be helpful to for Taiwan the number one option that we can think about which is the safety law of itself as Mr said earlier that it might be possible it might be good for Taiwan to become part of the TPP process that will certainly help Taiwan to ease the pressure of being overly dependent on the Chinese market and not to the extent to replace ACFA but it certainly will help and the second possible safety law for Taiwan in a sense I somehow try to bring this differently right now because economically speaking Taiwan is very dependent on China and Taiwan is not able to get away and maybe if for some businessmen from Taiwan they prefer not to get away because of the money issue and just a few days ago the party chief from Guangxi province in Yunnan just from Guangxi just came to Taiwan to promote more business opportunity for Taiwanese investment saying because of ASEAN plus 1 plus 3 and all that opportunity because China is opening up to that part of war and Guangxi and Yunnan is certainly the front gate to that big block so more Taiwanese business will be depending on the Chinese market so the problem is when Taiwan is overly dependent on China maybe it will somehow smooth out the pressure if Taiwan can be politically linked to the rest of the world or let me put it differently probably a lot of people in this room would prefer not to see a really closely integrated China-Taiwan relationship to the extent that the two finally become politically affiliated with each other right so to prevent that from happening maybe this will serve Taiwan's interests and this will serve the US interests as well to some extent it is possible to let Taiwan it goes as it happens to see Taiwan actually being interconnected with China economically speaking however political speaking Taiwan will be able to be linked to the rest of the world this is something I'd like to bring to your attention today I'm not talking about international space I'm not talking about recognition I'm talking about more political connection for Taiwan and to the extent that if Taiwan can play a certain role certain functions maybe this will somehow reduce the possibility that Taiwan will be forced into of course involuntary into whatever the future unification proposal later on so I'm talking about the second part which is about political connection with the rest of the world okay and of course when I talk about this I'm not proposing the judiciary independence but I'm talking about the fact of participation as long as this political connection doesn't really reach the level that in China's perspective whatever Taiwan has been doing in this regard has been reached a point that Taiwan may be offering itself to any others as an ally to go against China as long as we don't reach that we don't pass that threshold this political connection for Taiwan with the rest of the world maybe just something worthy of our consideration and that's the second one the third one which is the last one the safety part which is the military aspect and we talk about that moments we also mentioned that very clearly and I think this is certainly very important for Taiwan to continue to have these arms sales in different aspects, different areas as long as the defense capability is sufficient there so I'm not going to go into detail the last point I want to bring to your attention today is an issue that China is very much concerned which is Taiwan's identity issue and we understand that China is very pleased seeing that Taiwan's these people, the majority of people actually in Taiwan is not endorsing the idea of one big Chinese family in the near future so that's an issue for China however they don't really appreciate they don't really understand or they are not ready to offer to Taiwan at this point a certain perception which is when we talk about this concept one China different interpretation I think this slogan actually was proposed in 2002 and by a book written by Dr. Su Qi on the 92 consensus originally that wasn't the phrase the original phrase was one China common respective interpretation because I offered that first draft and Dr. Su Qi said oh no this is some people don't get the idea about respective so he used the plan word saying different one country common different interpretation with that expression we might be able to accommodate to finance to accommodate everybody's perspective and now I like to offer a different maybe one step further a different expression to somehow made it clear to you not just to people in Taiwan to understand what really happened as far as Taiwan's identity is concerned because they don't really appreciate they can really understand the feeling of being a master of its own domain well the famous musical opera let me draw there's a song called Master of the House that's important people in Taiwan want to be able to feel they can run their own destiny that's important but they are not able to go for the jewelry independence this is clearly reflected in the public survey so the next the second best choice is to find a way for the two people to share this so I'm proposing here that maybe a different expression such as one country shared representation if this may work anyway in the distant future maybe the people in Taiwan will be able to feel much more about being the master of at least they're part of the big family so one country shared representation only by proposing this or advocating this maybe there is an opportunity for people in Taiwan after all this economic integration after all this cultural exchange a lot of Chinese students coming to Taiwan and vice versa going there just for a 10 day visit that doesn't help Agfa was the second round of cross-strait interaction the second round because it opened up a very different aspect alive a big bond has been created to link the two together but it only served the money issue business interests it doesn't really cultivate the Chinese that's the problem and it will never bring Taiwan into the embrace of Beijing's whatever it is unless there's more consensus being built up during this long process of peaceful development so that's why I'm proposing today one country shared representation this is something that maybe we can think about for the future and having said that on the final note since there are quite a few perceptional gap among Beijing, Washington DC and Taipei and vis-à-vis this triangular relationship that means we have a lot more work to do so we will not lose our job anyway thank you I'll end my presentation on that note thank you thank you so much for that very rich menu of political economic ideas Matt I'm going to ask you to even widen the aperture further and look at some of the regional opportunities from the US perspective okay thank you Kevin and I can't resist using my standard line about the relationship between economics and the important issues that you discussed earlier today which is that all of you are interested I think primarily in life and liberty and we do the pursuit of happiness so there's a reason it was listed third but it's also a good thing and hopefully one that can keep you awake after lunch remember the founder said happiness or property that's right so I was asked to talk about regional economic architecture from a US perspective and I will probably not do that I'll probably do regional economic architecture from a Matt Goodman perspective but I will try to channel the US more broadly where I can and I'll just cover three areas first of all why the United States engages in Asian economic affairs how we engage in Asian economic affairs and actually try to answer the question of what the landscape looks like from here in DC so why we engage well I mean I think Willie Sutton had it right why he robbed banks was because that's where the money is Asia the Asia Pacific obviously with 30 trillion dollars of GDP which is about 55% of the world 45% of the world's trade and the US selling a trillion dollars worth of goods every year to the region which is more than half of what we sell anywhere it's clear that this is a region that we need to be involved in economically in her now seminal piece in foreign policy in November 2011 Hillary Clinton when she laid out the pivot the so-called pivot I'm not sure what the current popularity of that term is but I find it useful because it's short and has sharp consonants in it so I'm going to use it she talked about the focus of the previous decade being primarily on the areas of the world in which there were risks the most risks and dangers and that the Obama administration was trying to shift focus towards areas of the world in which there were opportunities and if you're going to look for opportunities in the world you're going to look at the Asia Pacific again and you're going to look at economic issues indeed when she laid out the elements of the strategy she had sort of six elements to the pivot strategy at least a couple of them one was explicitly about economics trade and investment expansion and a couple of the others like engaging with multilateral institutions and dealing with emerging powers were implicitly about a lot of economic issues so economics is absolutely a critical element of the pivot or rebalancing strategy and really for three reasons one it's I mean beyond the money one is it's what Asians want they want the United States engaged on economic issues in the region they want our military security political diplomatic presence but they don't just want that they want our economic presence it's what Americans want you know I think Americans would not support our continued military engagement in the region if it weren't for the growth and jobs that were presented from the region and and it locks us into regional affairs in a way that particularly through treaty negotiations that were engaged in which I'll come back to it locks us into the region in a way that really nothing other than maybe security alliances really do so I think and by the way at a much cheaper cost I'm sure Barbara Weisel thinks the costs of TPP negotiations are very high but in the scheme of things it's actually quite a cheap way to buy some real some engagement and some love in the region as well by the way okay so how we engage I mean we do it bilaterally regionally and globally bilaterally obviously we have economic relationships with every country of Asia and I'm not going to talk about every one of them I'll just talk about Taiwan for a second I think some of the others are very well known the US-Taiwan relationship economically is very important it's a half trillion dollar economy we have about 90 billion dollars of two-way trade there's about 20 billion dollars of US investment in Taiwan but it is also a relationship that's had its challenges and there are a number of outstanding issues that make it difficult have made it difficult to deepen and expand the relationship and I think people are well aware of the ones in the agriculture sector and so I won't focus on those there's been some good progress but I think those still continue to hinder the relationship there are issues about regulatory unique regulatory structures and systems and processes in Taiwan that are creating challenges and I think there's a broader question about from Washington's perspective about the deliverability the ability to deliver on economic progress and on commitments even and I think that has been a challenge in the relationship I think President Ma clearly has demonstrated good intentions and he's made good progress on some of these issues but that's after a lot of hiccups and stops and starts that have really I think undermined some of the confidence in the relationship here but because of the progress that I mentioned there were a resumption of the Tifa talks in mid-March and I think that's a very significant step I mean it's kind of amusing because when I used to do trade policy in the US government a Tifa was considered sort of very much FTA super light I mean it was basically a short document that was a framing document for having any kind of conversation at all it's taken on enormous weight I know in Taiwan and we have significance in this context because it does provide the framework for talking about potentially deepening relations and in fact in the talks last month there was a pretty significant statement on investment relations and agreeing on principles on investment and on ICT on technical barriers to trade and so forth and so there's been some real progress under this and I think it's very important and a good thing that it will now be a regular part of the relationship which is good but I think that ultimately President Ma has said it best when he said in his inaugural that only if Taiwan opens to the world will the world embrace Taiwan and so I think that's literally what he said and I think that's the right spirit in which I think the US is looking for further progress in some of these difficult issues I'm going to come back to other ways we work with Taiwan but let me just move on quickly to the regionally of course we engage in a number of different ways but primarily we're focused in terms of economic engagement at the regional level at the moment in two areas one APEC the Asia Pacific Economic Cooperation Forum that we helped found in the late 80s and elevated to the leaders level in 1993 and APEC while it's I often call it the Rodney Danger field foreign policy and maybe there's some people here old enough to remember Rodney Danger fields line so I can still use that but it actually is quite it gets a lot of good stuff done in fact that was our slogan when we hosted APEC in 2011 get stuff done and actually it was something a little cruder than that but we reduced it to get stuff done for the purpose of the PG ratings that we were trying to aspire to but it's been useful as an incubator for trade and investment liberalization across the region and so for example again in our host year in 2011 we agreed and with Taiwan strong support agreed on a set of liberalization measures in the environmental goods and services space and this was something that the Doha the WTO had been struggling with for many years and APEC rolled up its sleeves and went out and got an agreement to lower tariffs on environmental goods below 5% by 2015 with a specific path to agreeing on what those products were and then moving forward to reduce tariffs and so it's done some very useful things and I think still plays a very important part of the architecture maligned as it often is and then obviously the other one is TPP that's the other regional engagement with the addition of Japan which is an enormous significant inflection point in a lot of things in Japan's history and U.S.-Japan relations and certainly in the development of TPP this grouping of countries 12 economies across the Asia-Pacific has a combined GDP of something like $27 trillion about 40% of the world economy and a third of world trade and as you know the aspiration is to reach as the leader said a comprehensive next generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st century challenges and this this is I mean clearly the most important economic initiative that we're pursuing really anywhere in the world but certainly in Asia and it's been a hard slog over the last couple of years since it started in 2010 the leaders have set the goal of October in Bali for agreement in principle and the text of the agreement most people think that's not going to be reached I think there's a chance it might I'm not going to stand up here and predict exactly when it's going to be reached but I would say that there's more progress than I think meets the eye and still some tough issues and intellectual property on state-owned enterprises on environmental issues, investment issues but I do think it's a lot of progress and I think it with a real commitment from the United States and frankly even the addition of Japan net net I think is a good thing for TPP's momentum although it will obviously be challenging to absorb such a large and complex economy into the group a couple of myths about TPP that I like to try to dispel I mean one again that it's not working I think the problem with these trade negotiations is that it is well like your headline you continue and you don't know much about what's actually going on behind the scenes until the very end so it really is sort of darkest before the dawn and then all of a sudden you realize there's actually quite a substantial amount of work that's been done and there's this very powerful set of commitments that's been made if it works and I do think I'm on the relatively optimistic side but admit that there's a substantial risk that it won't work but I do think it might as well work and if it does it's going to surprise everybody and it's going to be a huge thing for the region and for us economically and strategically and the other big myth is of course that it's designed to contain China which really I know is an on again off again held view in many quarters in Beijing but really doesn't sort of make sense I mean a trade agreement can't contain anyone and the objective is actually precisely the opposite of what that implies which is that it implies the objective of TPPs to exclude China in fact it's designed to pull China into a system of rules that the US and the other parties to TPP feel need to be updated to deal with the realities of the 21st century trade regime and so it is very much designed to ultimately pull China in okay and then finally one thing that I would say about two more things about the regional engagement one is Taiwan and TPP so theoretically Taiwan is an eligible member for TPP membership it's a member of APEC and TPP was born out of the rib of APEC and it every one of the 21 economies including Taiwan is theoretically eligible for membership you have to be accepted into the group by all of the existing members and you have to demonstrate that you're willing to aspire to the same set of high standard commitments that the current group is aspiring to so far Taiwan has expressed interest but not really a demonstrated commitment to reaching those high standards and so it hasn't there haven't been as far as I'm aware serious conversations about bringing Taiwan in but I think it's would be a very good thing for everyone involved if ultimately Taiwan were to aspire to join and we're able to join at that high level of commitment so so again it's something that I think is possible and then one more thing about the regional engagement we do not engage have not engaged yet the United States in one of the major other forums of the regional architecture in Asia which is the East Asia Summit we've not engaged on economic issues and that's been deliberate because of a desire to really focus that forum on the key really the security related issues in the region where there was a sort of gap in the architecture at certainly the leaders level and so the focus has been on those issues doing this stuff inside the government I stuck to that party line that we shouldn't pursue economic issues in EAS now that I'm on the outside I would say actually that I think we should I think we should engage more in the economic issues there is an aspiration to talk about trade and financial issues in the EAS and I think the US could bring a lot to that conversation and could help shape it constructively but I also you know I understand the realities of all the other strains of what the US is trying to do in the region still I think we could creatively find a way to engage more on those issues finally a global level people forget that we actually do a lot of Asian economic work at the global level obviously in the WTO but also in the G20 we're half the well if you count literally 20 around the table it's actually more like 57 if you count the EU and various invited guests but of the 20 half of those countries are Asia Pacific countries if you include you know the United States and Canada Mexico so so we actually do a lot of work on growth on financial stability and other things and that's often neglected as an important forum for dealing with with Asian economic issues but it is very much a part of the story. Okay so just finally just the sort of DC view I think of all this some of that's implicit in what I just said but I think of the sort of New Yorker map of the world the New Yorker view of the world when I think about our view again now I really am dating myself unless except it's been replicated so many times that it's been franchised out so and I think from Washington's perspective when you look at the regional architecture you're looking first and foremost at APEC and TPP somewhere in sort of the foreground and then looking out at this RCEP the Regional Comprehensive Economic Partnership which the U.S. is not party to but it's very much a part of the landscape again bringing together 16 of the 18 members of the East Asia Summit all but the U.S. and Russia and I think this often gets misunderstood as well I think that actually RCEP is not an unhealthy thing for the United States it helps create a healthy competition between these different approaches and actually even in economic terms there's been some pretty significant on these agreements and Peter Petrie in particular has done economic econometric analysis in which he shows that the RCEP could generate if it led to total liberalization of border measures among the 16 members where the border barriers are still relatively high it could generate annual global income gains of as much as 600 billion dollars per year annual global income gains whereas TPP might generate only more like I think it's 300 or so again because most of the benefit in terms of the welfare gains would be more directly from RCEP and removing these higher barriers in that grouping of countries sorry by 2025 I didn't say 2025 is the year by which he estimates these gains would be accruing but he also importantly shows that if these two agreements can ultimately be brought together in some way and he isn't very specific about how that would exactly happen we're doing a little work on that here at CSIS but if these two things could be brought together into a APEC vision of a free trade area of the Asia Pacific that could generate as much as 1.9 trillion dollars in annual global income gains by 2025 which is real money so meanwhile out there on the horizon you've got the Korea, Japan China FTA which has now had a first actual round of talks last month although I'm not sure there was much concrete resolved there but this is a significant development and something that I think is worth watching again I don't think it's zero sum with the GDP or RSEP in principle and may even be a possible way of bridging those two other bigger broader tracks there's talk of doing more rounds of this this year but I'm not sure given the stuff you guys were talking about earlier today and that is the sort of security tensions in the region I'm not sure whether how fast that's going to progress and then you have all this 233 other bilateral arrangements also of course and much of that strikes us from Washington as more strategic than it is economic in terms of the actual economic bang for the buck in a lot of those agreements but to the extent it does increase trade and it does increase economic welfare that's a good thing for the United States even if we're not a party to the agreement so looking at all this it's messy and it is a noodle bowl but somehow it's inevitable because there is no single answer that's going to bring all of these countries economies together in the near future to one big happy economic arrangement for a variety of reasons and I think in some level it actually works there is a kind of a healthy interplay between these different organizations that keeps everybody on their toes and I think helps produce better outcomes I'll stop there Well my thanks to both of you for setting the table elegantly for questions you know what moderators always do they have a couple of framing questions out of fear that no one is going to have a point of view in the audience I've seen you at work I have no such fear and I'm not going to waste a moment on personal dignity let me go ahead and again the same rules as before please identify yourselves Hi my name is Eric Lowe I'm with the free app server my question would be to Mr. Goodman I don't know what phrase you're talking about with the danger field situation the only thing I heard about is like I got no respect that's the one I heard of okay and my question is that you know they talk about like the TPP thing the problem is that you know like since China is the most important you know country in the region for not inviting them over into the TPP situation so is it going to make it very difficult because a lot of countries in the Asia Pacific region trade with China so that's why they think it's kind of a containment situation it's almost like you have an Obama situation without Beyonce I hadn't thought of that I like metaphors but I'll have to chew over but well look I think competition is not the same thing as containment I think a lot of this is about competition it's every country wants to be more involved in the China market and wants to we do and everybody in ASEAN and Northeast Asia all want to be engaged economically with China but they want to compete on a level playing field with high standard rules and I think they want to incentivize everybody including China to play by those rules and so I think that's really what this is about in terms of inviting China I mean people don't get invited in the first instance to join TPP and open architecture as part of APEC everybody's invited in a sort of general sense but you have to since apply you have to say we're interested and we'd like to join Japan nobody asked Japan to join Japan asked to join and said and it eventually convinced just this weekend by the way if you didn't know the TPP trade ministers met at the APEC another useful role for APEC at the APEC senior officials meeting trade ministers met and they agreed issued a statement that they all agreed that Japan was ready for entry we have to still go through our procedures domestically but we've agreed in principle and so Japan has now been in that sense invited in if China made a decision that it wanted to aspire to join this agreement and to aspire to reach the same high standard of rules in theory it could join I think that's not going to happen so I'm not playing games I mean I don't think China's going to join anytime soon but in theory it could and nobody's excluding it from joining back here Guanyin Lu from University of Virginia I actually have each question to the gentlemen the panelists to Professor Joe I can sense that there's like a rising consensus given to your presentations that in Taiwan there's a pressure to Taiwan to break up the isolation and also to kind of diversify is a trade ties besides with a man in China but I wonder that because I think in reality and what we can see that for Taiwan which reaches the effort with China and also the Fisheries Act agreement with Japan are contingent on either China's flexibility and also Japan's pressure under the political tension on territorial disputes so I wonder that could you kind of I think I believe there are some kind of factors in constraint China Taiwan's options for example like Tifa and TPP obviously Taiwan has no like given the asymmetrical negotiation directly under the US Taiwan cannot really control the progress given that it has to concern about the US reaction and I think the US has been very clear about the TPP it has to be under the consensus with other partners in that situation Taiwan can be included so given this kind of fact and also and think about the slow movement for Taiwan to approach ASEAN countries to reach agreements so could you kind of identify the factors that actually what made Taiwan has a very slow movement and what would be the Taiwanese administration to break this kind of ice and to really move on for the second question to well I'll tell you what that was a very substantial question let's try to give Ambassador Joe the opportunity to respond to that if we can thank you during the 1990s that Taiwan wasn't able to find a way to promote its external trade opportunities with other countries and because of the pressure from China and now since Taiwan has hammered out the equity with China and to the certain extent it actually removed the isolation issue on the part of Taiwan so that's what I was saying and the second question the second point you mentioned how come Taiwan has been slow in terms of moving toward ASEAN country and well as Ambassador said that moment ago that Taiwan and a few other countries in ASEAN they have been talking about the possibility of working on moving toward free trade agreement and so on and also Taiwan has been talking to Singapore on that particular issue and I think the politics in Taiwan actually doesn't really drive the political elites to think about this issue on a global scale they think about the relation with the US and with China mostly for political elites and they have to clarify this, they have to figure out this first and then it will be easier for Taiwan to actually expand its horizon with others and that's also one of the reasons that when Ma was asked during the debate with Tsai Ing-wen on the ACFA deal and also on other occasions what would be the potential benefit for Taiwan to do sign the ACFA and the official position the propaganda set on the part of the Taiwanese government say once we sign this with China we can easily find ways to sign FTA with others that's what being proposed before okay and right down here Dr. Bush thank you very much thank you for two great presentations Ambassador Zhou a set of link questions that relate to why China is economically attractive to Taiwan I mean we've heard several different reasons why it is and why it should be one is as a platform for the production and assembly of goods for advanced markets second is an end market itself both for Taiwan goods with ACFA Taiwan services and you mentioned another as a backdoor into ASEAN and other markets is this mix changing what is the policy environment within China towards these different kinds of modes of interaction and what does a changing mix have to do with how does it relate to Taiwan's competitiveness and economic autonomy thank you on the part of the Taiwanese government there is really not much about the policy guidelines toward the business community as far as how they should be reaching out into the Chinese market and the example I raised earlier was the party chief from the Guangxi province coming to Taiwan to lure more local businessmen to begin to explore the opportunity in China because that part of China actually was as the front door to ASEAN and there is wherever there is business opportunity and there is businessmen going and that's the driving force behind all this and what happened in the 1980s the model since 1977 the model in Taiwan has become relatively richer it's a labor intensive export oriented industrial park and later on it was replaced because some of the sunset industry moving toward China to reap the last profit possible profit it can actually get and nowadays the most prevailing obvious model the business model is like Foxconn is one of the issue and ASEAN hasn't been the target area for Taiwan as a whole officially hasn't been it was proposed in 1996 but it wasn't a big success for a lot of reasons first of all the language barrier and geographical locations in China it has been considered as much more easier for but nowadays as the rising awareness of this issue and labor issue in China it become much more difficult for our business to follow the previous model and that's why Vincent Xiao during his meeting with Xi Jinping just a few days ago at the Boa Forum for Asia he proposed to Xi Jinping we need a new model for cross-strait economic cooperation and we need to explore the common vision across Taiwan Strait and we also need to jointly find a strategy to address to deal with cope with the regional economic integration that's what Vincent Xiao proposed to Xi even though his right now is a civilian but that's his interest of concentration and it reflected a lot of future possibility which means from his point of view Vincent the late the former vice president of Taiwan he has been concerned about the future model for Taiwan's economy to become to remain successful and prosperous and in his point of view he said dealing with those issues jointly with China is probably the best approach for both Beijing and Taipei and what Xi responded during his meeting and Xi was saying okay we understand this is important and we will look into this problem and we will find a way a pragmatic way and a feasible way for Taiwan to be linked to such a regional economic block that remarks to some extent reflect that Xi's cautious response toward the request from the former Taiwan vice president so this is not a promise but there's a possibility for the two to move forward and that's why I said China so far as as far as economic front is concerned is still very reluctant to bring Taiwan into as an equal partner they always want to treat Taiwan separately even on an equal basis but separate just among the two of us and so this is romance with nobody else involved so that's a problem wherever there's a romance one of the lovers would love to make it public we want to make sure there's a guarantor during this process so for Taiwan it may be okay to have enduring romance going on indefinitely without getting into a bond a legal bond a marriage unless there's something prearranged before this take place prenot to some extent which is to settle the property before they enter a special political affiliation with each other so we want to share representation around the world so that we feel much more comfortable we are part of the family that's what you are proposing Taiwan has been asking Taiwan to Xi Jinping said this we want you to think about this from one big family we want Taiwan to jointly work with China on all this economic issue from the viewpoint of one big family but what kind of proper protocol Taiwan can actually claim or Taiwan should be entitled to so that's an issue that hasn't been addressed that's why I say we need to share this representation around the world that's the first point even though it may be political sensitive but it doesn't really cost China much imagine one day if Taiwan can have an opportunity to be represented in most of the international organization and having liaison office in all capitals and much more in a much more political sense and then this arrangement may not actually jeopardize may not actually challenge China's claim as you know being one of the big sovereign states it doesn't really produce the next step automatically say okay as long as Taiwan has all that it will become independent you know automatic it doesn't guarantee that way not to mention there's a military pressure there but somebody means there's a point made earlier once China switch to the coercion the stick approach I mean this would be a completely different book and so China doesn't want that either it doesn't serve their it doesn't serve nobody's interest so we have to stick to with this peaceful this carol approach so where is the real carol where is the real beef for Taiwan we need to figure out the real beef issue I am astonished by our host today that we've got some friends we've got travel obligations hence we're going to have to we were to have cut this session short at 2.30 but I think you'll agree with me this is this is too good a discussion not to keep going I couldn't presume to summarize this but I both in listening to what Ambassador Burkhardt said and the comments I've just heard so many policy options and policy choices driven by interest failures or interest successes and how adaptive we are to them so much of what I've heard is adapting to successes not dealing with failures that certainly on the economic side I'm hardened by it please join me both in thanking our organizers and in thanking our panelists today for an outstanding summary of the issues thanks so much