 Good morning, everyone. Welcome to CSIS. I'm Michael Green, the senior vice president for Asia here, and it's my great privilege to introduce our distinguished speaker and to welcome some some good friends from both Taipei and Washington here today, Ray Burkhardt and Richard Bush and others who've played a big role in our relationship. We are delighted that Taiwan, the ROC, Minister of Economic Affairs, my friend John Chen Chung-Dung, is here to give us a strategic and policy explanation of economic policy thinking and trade policy thinking in Taipei and also how to move forward with the U.S. and with regional and global economic affairs. We'll invite Minister Dung to give opening comments and then my colleagues here at CSIS will interview him before opening up to questions from all of you. The interrogators for Minister Dung will be Scott Miller, who is our senior advisor and the William M. Scholdt Chair in international business at CSIS. If you've heard this, Scott, he is encyclopedic on TPP, TTIP, WTO, and Scott Kennedy, our Deputy Director of the Freeman Chair in China Studies, and the Director of our new project on Chinese business and political economy. And we will then open up to all of you. Our bilateral trade with Taiwan is at $67 billion. It's important, but it's important beyond those numbers because it's in U.S. interests and in Asia's interests for Taiwan to be increasingly integrated in the emerging trade and financial architecture, not only in Asia with things like TPP, but globally as TPP, TTIP, and other things move forward and start hopefully kick-starting a new round of global liberalization. And Taiwan ought to be right at the center of that and leading it, but has a lot of work to do, too, to get to that place. So we look forward to hearing from Minister Dung about thinking and planning in TTIP about this, and then turning it over to our colleagues to ask him some questions, and then we'll open it up to you before we conclude. So John, welcome and thank you. Thank you very much, Michael. Scott, Scott, Richard, Ray, friends. I'm first, I want to thank CSIS for arranging this opportunity for me to come over here, and of course, I can see many familiar faces here. I feel very much at home. I left in 2007 here as the deputy representative in the tech role. I can tell you I miss Washington DC very much, and everything is so familiar. Everything comes back very quickly, but it is not as cold as I expected. I brought with me all the heavy equipment. There's no need to use it in these two days. I meet my job for to this current position for two months. So I'm quite new, but I think Washington DC is an important place that I should visit, and I have so many friends, I have so many business I need to discuss with. So this is the first foreign ships since I took over this new job. Today, I would like to talk about Taiwan's economic prospects. As well as some challenges, opportunities, and to offer my observations on how our two countries can work together to enhance this relationship. First of all, I think let me tell you my feeling as the minister of this ministry. This ministry has played a very crucial part in Taiwan's economic development process. We have so many admirable and memorable ministers before me, and no wonder that the general public, the society, has very high expectation to this, to this, to the ministry and to the to myself. I only two months, I can feel that the stress that I have, this is daily stress. I didn't really expect the stress so high when I accept the offer, but now you are here, you do your best. Very quickly, to give you a picture of what we are doing in the ministry. Of course, we are responsible for international relations, international trade. We conduct trade negotiations, we do trade promotions, and we try to enhance the economic relations with all of our partners. And we also take care of industrial development. Ministry help the companies, business community to do research and development. And to develop and maintain industrial zones, there are about 150 industrial zones in Taiwan. We call industrial park in Taiwan, where the ministry is responsible to take care of them, to take care of the companies there. For instance, if any of the industrial park has pollution, we have to take care of that. In other words, my colleagues were in a very difficult position to be to be blamed by the neighbors there for the pollution of the companies that for the companies that they met that pollution. So very challenging. You get alerted every day. You don't want your phone ring in the middle of the night because that means something happened. And we also develop programs to connect schools and business. This is one of the biggest issues that we have. The school education cannot connect with the business need. So that's another thing we have to do. And of course we try to attract foreign investment and we assist Taiwanese companies to invest in abroad. Then we also cover small, medium industry. You probably know that 80%, more than 80% of our GDP were contributed by the small, medium industries in Taiwan. Over 98% in terms of number of the companies are small, medium enterprises. So all of our economic growth performance, mainly majority of them were the work due to the work of small, medium enterprise. So we have to take good care of them. We do energy policy. The biggest debate in Taiwan now is nuclear power. Shall we continue to use nuclear power or not? This is a very emotional issue there. So again, we have to deal with the issues. Last but not least, we have to make sure that the country has enough power supply, enough electricity, enough water supply, enough gasoline supply. We'll be surprised. That's our job. If there's any shortage of electricity, you can be sure that I will receive the first telephone call that we have a problem there. We don't have a shortage of water. So you will say, what's the matter with you? Why that you have to... If there's no rain, no rain, who can help this? But the current situation in Taiwan is the rain was the... The rainfall is the lowest in 50 years. And we didn't expect... If weathermen told us the forecast that in the next three, four months, things won't change that much. In other words, we'll continue to have a shortage of rainfall. So again, that's the area we have to take care of. Now, let's very quickly on the ministry's job. Please give me a call when you come to visit Taipei. I will show you around where our facilities... We have electricity. We have power plants everywhere. We have water... Everywhere else. I will show you around Taiwan. Now, let's go back... Let's go to Taiwan's economic prospects. Our economic performance in 2014 was better than expected. The growth rate in 2014 is 3.5%. Also, from the report of Zhonghua Institution for Economic Research, the purchasing managers' index has increased for two consecutive months, implying that the business communities are optimistic about the future. And then we will have a modest expansion in Taiwan in this year. Looking ahead of 2015, we think we thank the unwavering pace of recovery in the United States and the monetary policy implemented by some major countries. We see some economic indicators of our exports, our foreign orders, our industrial production, our shipments, et cetera, all show a healthy trend. So according to the latest statistics, Taiwan's economy is expected to maintain a modest growth this year. The growth rate will be in the range of 3.22 or 3.5%. Of course, as a minister, you hope you can do better than this 3.8%. We might have the chance to do better. So with the Mountain Smartphone innovations, online retail sales could see a lasting boost from the advancement of four generation, 4G mobile communication network. However, that's the positive sign. However, the slowdown of economic growth in mainland China, that is 7.4 in 2014, and then in 2015 will be 6.8, according to IMF estimation. And other factors will affect Taiwan's export somewhat. So it is estimated that Taiwan's export will grow by probably 3.2. It's not very impressive, but it's okay. We hope we can do better on our exports. Moreover, the low global oil price could save on production costs for importing countries, oil importing countries, like Taiwan. So through this fall of a crude oil price contribute to lower production costs and stores inflation, but we also need to watch the oil price closely and cope with any change required. Now let's move to Taiwan's challenges. First, our first challenges, our industry need to modelize and transform. Since 1980, Taiwan has focused on production of electronics, information, technology, and communication sectors, which met Taiwan in exporting powerhouse. However, today we see the practice of curtailing and suppressing costs to the bare minimum. This has cleared, this kind of practice has its limitation. To continue our economic progress, Taiwan must come to terms with several key realities. One, we must take steps to develop stronger exports in our service industry. Almost 70% of our GDP is in the service sector, while exports and investment continue to concentrate currently in manufacturing sector. To combine in the future, to combine our manufacturing capability, service should be a key area for our export to go forward. Second, we must increase the amount of value-added products to value-added products. The domestic industry too often focus only on activities with low value-added aspects, such as manufacturing components and OEM. We need to improve that. Thirdly, domestic research and development expenditures on industrial sector should increase. Our research and development investment in private sectors are inadequate, and more government budgets are required to put in this area. Fourthly, we are in need of brand recognition for our products. We have some, Easter, we have some giant, we have some good brand name products, but three, four is not enough. We need more. Another thing we have is this low FDI stock. In comparison with neighboring Asia countries, Taiwan has had lackluster performance in conducting foreign investment. According to the research by Brookings' institution, the level of FDI attract to Taiwan between 2006 and 2012 remained almost unchanged at 50 billion US dollars. For the same period, Malaysia and South Korea each had over US dollar 100 billion in FDI, and Japan has close to US dollar 200 billion in FDI. The National Development Council of the government recently surveyed business in Taiwan from Europe, the US, and Japan to ask them about our business climate. There are three major recommendations emerged. First, Taiwan's regulatory regime needs to be more internationalized, coherent, and transparent. As the MChem 2015 business climate survey suggests, the majority of business leaders consider that inconsistent regulatory interpretation, excessive bureaucracy, and outdated laws and regulations are the obstacles to do business. We must take steps to harmonize our regulatory regime with international standards. Second, policy communication should be strengthened. Coordination within government and between government to industry, and most important, between government and society should be enhanced. I don't know whether you notice that all the cabinet members were asked to attend a class two weeks ago to learn how to communicate. I mean, the youngest of us is about 50 years old. We have to learn these internet things. But we need to do it. There's no other choice. Last, we must accelerate efforts to integrate more closely with major trading partners in East Asia, as well as internationally to increase our market reach. Definitely, we need a new market. Since the second in the 50s, Taiwan has adopted export promotion and import substitution policies because there's no natural resources. However, we have long-dependent on development of the electronic industry, whose export to total export, the export of that sector to total export grew from 30% in 1968 to 60% now, cause an imbalance in the economic structure. Though the trade value stands approximately between $570 billion to $6 billion per annum since 2011, our major trading partners are still the United States, mainly China and Japan. We need to find more markets for our products. We have seen in recent years the proliferation of bilateral FTAs or pro-lateral regional trade arrangements because the multilateral liberalization under WTO Doha Round came to a standstill. According to WTO statistics, about 400 free trade are in effect around the world as of January of 2015. The level of the liberalization in some of these bilateral and regional FTAs has reached an impressively high standard. For example, I would like to report to you that in both of the agreements between Taiwan and Singapore and the agreement between Taiwan and New Zealand, our, on these FTAs, the coverage of trade in goods with zero tariff is more than 99%. Both agreements include chapters such as competition, environment, field, field, pictures, television, cooperation, no, television co-productions and cover new emerging issues such as indigenous cooperation. So our FTA are very high standards which covers new issues. Maybe the other FTA has not covered yet. This is our agreement with New Zealand and our agreement with Singapore. The conclusion of free trade agreement can create trade opportunities for countries aggressively seeking bilateral regional integration. However, for countries having no very clear chance to participate in this process, our trade opportunities will disappear or to be drastically reduced. We face just such a prospect as long as it is not part of the growing network of trade integration agreements taking shape today. Those are the challenges we have now coming to the opportunities. The green economy and sustainable development, we have opportunities there. In the future, industry development will include the information technology industry with the integration of computers, communications and consumer electronics. Under pressures from the deterioration of the eco-environment and earth resources, most advanced countries are engaging in developing green manufacturing and consumption with the concept of sustainable development. In fact, green trade is now a global trend. The United Nations is urging countries to promote green economies and public green procurement. The APEC members have reached consensus on the market liberalization of environmental goods. The WTO is launching a negotiation of trade in environmental goods. Every major FTA includes an environment chapter. Major companies are also setting up standard operation procedure for green procurement. In our case, we see exports of green products such as traditional environmental pollution control equipment, energy saving water equipment, green materials, low carbon vehicles, carbon capture and seal equipment are all growing. This shows that green products possess significant potential. Secondly, we think there are business opportunities in smart and digital lifestyle. In an area driven by computer demand, the ultimate goal of technical development is to ensure that consumers are able to maximize convenience and efficiencies through the use of new information technology to create a fully digitalized lifestyle. The concept of digital lifestyle was born. Taiwan's ICT industry has a strong foundation. It may create new possibilities for our economy and to help Taiwan realize its global potential. The concept of the digital lifestyle can be applied to both of the urban and rural and solve the issue of sustainable development of mankind. For instance, on the medical care, traffic, GPS, car information service, the digital lifestyle is already more than just a concept. Several noticeable examples can be seen in the field of intelligent traffic such as this freeway electronic toll collection system. I was told that this is the first system in the world that you collect toll according to the mileage you travel. So we have that. It is very convenient. When you drive in Taipei, they deduct this on the prepaid card. Fail, very fail. Nobody really complains. At the beginning, when we started this system, drivers complained. Some drivers complained. But now people are happy. We think we can export this business model. For instance, traffic control signals, U-Bike systems, we believe the new business model plus the technology will create many business opportunities to companies both here in the United States and in Taiwan. Now, in Taiwan, there are some debates whether the multilateral path or the regional one is the better approach to trade liberalization. When we joined WTO in 2002, we hoped that the multilateral path would have achieved more by now. As an idealist, we should support the multinationism, multilateralism, but being a realism, we have also recognized that the bilateral path and negotiation of FTA can be a great supplement to WTO. We tested the bilateral model by signing with two non-diplomatic allies, which I just mentioned, Singapore and New Zealand. In these two exercises, we proved that Taiwan is able to enter meaningful economic relations through FTAs with trading partners without causing any political difficulties to all parties concerned. Also, Taiwan's historical economic cooperation, framework agreement signed with China in 2010 also shows that Taipei and Beijing can figure out a way to manage the bilateral relations. Taiwan also concluded a bilateral investment protection agreement with Japan, which is quite... we didn't really imagine we could do that with Japan, but we did it. On regional relations, of course, Gobi Young investment trade, recent problem in South China Sea and East China Sea, Taiwan demonstrated to the world our determination to be a good neighbor. People-to-people exchange with ASEAN countries for education, training, and jobs shows that Taiwan is a very constructive force to the region's development. The students coming from Southeast Asia countries to Taiwan now are getting more and more. You see them around our campus. Taiwan is a relatively small domestic market, which means that the growth of our economy must remain reliant on foreign trade. If our exports suffer, so does our economy. Over the past 20 years, Taiwan's trade dependency has reached a maximum of 140 percent, and Korea is 80 percent, Japan is 20 to 30 percent. However, both countries are successfully signing FTAs. It is also instructive that the share of foreign trade covered by FTA is 40 percent to Korea, 20 percent to Japan, but only 10 percent to Taiwan. So our FTA coverage on FTA is very low. In order to take full advantage of economic opportunities awarded to participating members by regional economic integration, as well as avoid the effects of being marginalized, Taiwan should push for inclusion in TPP, which would lower cost of our exporters and increase our global competitive capabilities. Now, come to the toward the end of my speech. I think to Taiwan, trade liberalization is a path that we must take. It is not a choice, but it is imperative. In 2014 Global Trade Facilitation Index released by the World Economic Forum last year, Taiwan was ranked 24th in the world. Our scores in category of border management, infrastructure constructions, and operation environment increased. However, in the category of market access, our ranking dropped 20 places to 121. In this category, we performed especially poorly in the subcategory of access to foreign markets, placing at 137 places. The reason for this is our exporters face an average tariff rate of around 10 percent additional. So there is no level playing field for our exporters if these things cannot be changed. The conclusion that we can draw from this number is very clear. Taiwan must actively pursue free trade agreement with our trading partners, and we have to participate in TPP. Of course, we understand this is not an easy path to take. We understand that the government must convince constituents at home that pushing for domestic reforms during the process of negotiating FTA is the proper path. We have to show that we are advocating such change not only to satisfy our foreign trading partners, but also to boost our own ability to compete on international level. We must show that pursuing trade liberalization through jointly bilateral or regional FTA will help secure Taiwan's long-term growth by attracting more foreign and domestic investment. Taiwan is the 19th largest economy in the world. We already have strong links with several members of TPP through existing production supply chain. Over the past decades, our trade with Asian countries has doubled, and Taiwan's technical know-how and investment in other countries has played a significant role in the Asia-Pacific region's development. In 2013, business environment risk intelligence chose Taiwan as the third best country in the world to invest. In terms of practical business collaborations, Taiwan's industrial cluster development ranked number one in the world in the WEF's World Competitiveness Report for the ninth consecutive year and continued investment by leading U.S. companies stands as proof of the credibility that Taiwan's business environment is very good. One objective of regional economic integration agreements such as TPP should be to improve the efficiency of existing supply chain. Taiwan as a major global trading partner which is also actively engaged in regional production arrangement and committed to a high standard of ongoing economic liberalization should be fully a partner in bringing about the Asia-Pacific's closer economic integration process. I think we have demonstrated our willingness to undertake high standards trade liberalization commitments in both of our FTAs with New Zealand and Singapore. We have, as I mentioned, almost 99% of the items were liberalized in those two agreements. If we can do it there, we can do it with most of the many countries. Meanwhile, we have also revised our IPR-related laws and regulations on copyright, patent, trademark, and trade secret. This also brings Taiwan into lines with international practice. I think many investors from the United States you ask them why they choose Taiwan to put their investment. One of the major reasons is our IPR protection and our respect to the property rights and our legal system. More importantly, Taiwan is already reviewing and adjusting our domestic regulations to prepare for future regional integration. Once the opportunity for our participation in TPP presents itself, Taiwan will be ready to integrate further with regional supply chain. We'll be able to attract more incoming investment and enhance our competitiveness through this liberalization process. We understand that current TPP members only accept exceeding members by consensus in the future once TPP makes agreement. We hope it can be done soon. Since the United States has undoubtedly played a vital role in any such extension process and given the long-standing friendship between our two countries, we sincerely hope that U.S. will voice its strong support for Taiwan's membership in TPP. As many of you know, the United States and Taiwan enjoy strong trade relations. I myself have the privilege of witnessing that in the past 30 years. Allow me to share a few of the data points out to illustrate the scope and the importance of our bilateral trade relationship. I'm sure that many of the figures will not come as a surprise to you. Last year, Taiwan was among the United States' top 10 trading partners, the U.S. replacing Japan as our second-largest trading partners in 2014. Today, to a career, people working on trade areas for long is also quite unimaginable. We replaced Japan, U.S. replaced Japan as our second trading partners. Among foreign banks in Taiwan in 2014, U.S. banks ranked first in a number of branches established. This is 21 percent. So you go to Taiwan, you see American banks, banks from the United States everywhere, and they have good business. Trade aside, the ties between people to people are also significant. Even under today, 47 percent of Taiwanese students who study abroad choose the United States as the destination for persuading their higher education. Trade and investment form a vastly important dimension of the broader United States-Taiwan relationship. An important channel for conducting our bilateral talks is the Trade and Investment Framework Agreement, this TIFA. Trade talks between U.S. and Taiwan under TIFA have been processing smoothly in these two years. Last March was in Washington, D.C., we hope. And in that meeting, we covered investment, IPR, pharmaceuticals, medical devices, agricultural, multilateral, regional corporations. So it covers many issues. We hope this year's TIFA can be held soon in Taipei. On this regional front, we are happy to see there are 52 senators and 114 House of Representatives have expressed their support for Taiwan's participation in TPP. Once this process is completed, we hope it can be sooner, our nearly 300 billion import markets is up for American exporters, business community to grab. Taiwan and the U.S. share value in terms of governance and institutions ever since the 50s. And our participation in TPP is a step forward for U.S. pivot to Asia through these trade initiatives. Given the long-standing friendship between our two countries, we sincerely hope that once TPP begins to accept accession of new members, the U.S. can support our efforts. The world economy today poses many challenges, especially for economists like Taiwan. That depends so heavily on the foreign markets. And as I view it, with some of the particular hurdle Taiwan faces in securing our economic future, I ask our American friends to keep Taiwan very much within U.S. strategic blueprint. Washington's clear focus on maintaining and reinforcing our strong mutual and long-lasting ties is greatly needed and much appreciated. Thank you very much. Minister Dung, thank you very much for an excellent talk and for joining us all at CSIS today. We're very glad to have you here. Thank you very much, Scott. Well, this is the Scott & Scott Show. But we're very kind. I can assure you. Just a little bit on the process. We've prepared several questions but we have a very smart audience of terrific folks who come to our events and we want to give them a chance as well. So we're going to ask a few questions on some topics that you raised and your remarks, and then we'll throw it open to the audience. We'll ask the audience members to do, as we do, identify where you're from and ask a question. So we've got about 40 minutes or so and so I think we can have a pretty good discussion. You know, I first went to Taiwan in 1989 when I was a student at Taidah when I studied Chinese and I must tell you, the weather in Taipei was much better than the weather here. But if you come back in the spring, things will be much nicer. But, you know, living in Taiwan then, it did feel quite provincial. You know, I had great friends. I remember exactly the street I lived on, and just really loved Taiwan. I went back 15 years later in the economy and society had changed dramatically. And so Taiwan has continued to evolve in many ways and adapt. And the first question I wanted to ask is about Taiwan's famous small and medium-sized enterprises that you talked about in your speech. In many ways, everyone recognizes that small and medium enterprises are a core of a country's economic strength. I come from a family of small business owners myself. But you also talked about the issues of branding and, you know, getting more global international recognition. And there are a few companies from Taiwan that have such recognition, Acer among them. Do you think there might need to be some type of reconsideration of sort of the industrial structure in Taiwan to maybe give greater promotion to larger companies and firms to help Taiwan be more internationally competitive? Okay, Scott. The current combination, of course, the number of large companies, a much smaller comparison, for instance, compared with Korea, their large corporations contribute a majority part of their GDP. Ours, this is the small and medium. So if the question is, how we change this structure, I will be very hesitant to say yes to agree. I will be very hesitant. I think this is our treasure. I think small and medium companies is a strong foundation for the economy. They are very flexible. Any market change can very quickly reflect into their production process, into their marketing method. So I wouldn't change. And on the contrary, all I'm doing in the past two months is to encourage the small, medium enterprise. I have the privilege of visiting companies in the countryside, southern, middle part of Taiwan. And I deliberately choose small companies. I think they need encouragement. I think they can do better. I think we are blessed to have them. Sure. It makes a lot of sense. Let me turn to ask about a topic that wasn't a key point of your speech, but it was still relevant, and that's cross-strait economic ties. As Mike Green mentioned, there's about $67 billion in trade between the United States and Taiwan. But cross-strait trade was about $120 billion last year, about $2 billion in investment from Taiwan in the mainland, about 5.4 million visits from Taiwan to the mainland, according to the statistics that we saw, and about 4 million mainlander visits to Taiwan. So very in-depth relations and part of Taiwan's economic success story over the last few years is probably somewhat tied to the growth of the mainland as well. But also, when the mainland catches a cold, Taiwan sneezes, probably too. It's positive and minuses. I know this has been a topic of intense discussion in Taiwan. How dependent do you feel Taiwan is on the mainland economy, and do you feel it's too dependent on the mainland economy? You are right, Scott. You have good memory of all those numbers. Look at this. 40% of our export goes to China, about 40%. That too heavily dependent on China's market, we have big debate in Taiwan on that. Somebody says 40% with the third 1.3 billion population is growing, their per capita now is moving above 6,000, 7,000. That's a growing market. So 40% is about... We've maintained this 40% for some years. Of course, you cannot deliberately control that number. What we can do is to cultivate the other markets in order to balance that. I think as a minister of economic affairs, I like to believe this 40% export market seems reasonable, and we do not expose... We do take advantage of the growing market there, but we also maintain a reasonable balance vis-à-vis other foreign markets. Investment, $200 billion. Investment, is that too much? Again, we cannot control. We have a reviewing process. What we do now is we ask the potential, the applicants, if companies want to invest in China, we ask them, what's your plan in Taiwan? If their plan is to continue investing in Taiwan, if they continue to hire employees in Taiwan, then we will let the case go. And we check it. They cannot make empty commitments. We check it. So over the years, we think this practice is okay where they can, again, take advantage of the growing market there, but also create opportunities for our own. So as the tourists, that's fine. We enjoy the money they bring in. They do create jobs. The tourists do create jobs for bus drivers, for the restaurants, so on and so forth. So overall, it's not too much to rely upon China or not. Overall, I think it is our capability to further strengthen our relations with foreign countries, with other foreign countries. Sure. Thank you very much. I've got one more, and then I'm going to pass on the baton. Much of what you say actually resonates with how Americans are looking at our own economy and our need to upgrade the challenges we have between promoting investment abroad as well as developing and manufacturing here. But also, I wonder, you lived in Washington before, so you know that this is a very political town, and politics has a huge effect on American economic policy, of course. So you laid out a very clear list of policy priorities and directions that Taiwan needs to take. To what extent, putting on your sort of political analyst's hat, how do domestic politics in Taiwan affect the ability to make these types of changes? As we noticed, there's an election upcoming, and party politics in Taiwan can be pretty fierce. Last spring, the students decided to do much more than American students usually do, and entered the legislative UN without invitation. So it's pretty complex politically. So from just looking at Taiwan's politics, how big a challenge is that in adopting the type of... I know you already mentioned all the things that you have to do in your position as minister, but strategically, how do you overcome all of those challenges? I hope politics is everywhere in every area. Economic issues cannot escape from these politics as well. I understand that. But I do hope that only these politics, when they come to economic issues, hopefully the society have a stronger consensus that this is our lifeblood. We shouldn't destroy the achievement we have so far. This is the most important part, to continue to defend our system, our way of life. Can we work? Can we achieve that? I think we can do it. Through longer process, through more efforts, through more explanation, through more and willing to make compromise. I was... The first thing I achieved as a minister, this is a very domestic issue. This is a very domestic issue. We have in my presentation, I put the company called Taiwan Power Company, the monopoly. They supply all the electricity for Taiwan. It's good companies. We built up from scratch, and now everybody has everywhere, every corner, high mountains, everywhere is the electricity. It is their contribution. But now politicians always utilize them as their political tool. To be very specific, in every election, you cannot raise the electricity bill. But when the fuel or everything, the price is going up, how can you ask them not to adjust their bill? But they did. In the past years, they did so. So the debt accumulation of that company is almost the same as their capital. Assets, it's terrible. You want that company being broken. You want shortage of electricity supply. Politicians, they don't care. I think it's terrible. We shouldn't. They do not have the ability, enough capital to make further investment. In 20 years or in certain years, all the equipment will be outdated. But the first thing I noticed, and then as a minister, I was quite happy. I was able to establish a formula where as we guarantee that they can have certain margin of small, but small profit, where they can save it to make further investment and also help the morale of the engineers working in that company. It is achievable. It is difficult. It is achievable. I can tell you, it created a lot of anxieties. And then you work long hours. You are on call of the legislators. Anyone, if they have any questions about this company, you'll go. Just go. Day and night, early morning, late evenings. So I think the society, gradually we are learning how to push the agenda which is right through these political difficulties. Thank you so much for discussing those topics. I'm going to turn the floor over now to Scott. He's going to talk about some other issues. Thank you again for your presentation this morning. We very much enjoyed your remarks and learned from them. I'd like to start with noting that you commented on the growth of Taiwan's trade with the rest of Asia. And Taiwan is clearly becoming very deeply integrated in the production chain, the production networks of Asia which is excellent for your economy. And I would note that probably the sector where you've been the most successful is in electronics. Taiwan, at this point, partly built on the information technology which created essentially free trade in the sector. Taiwan has moved up the value chain very dramatically in electronics and now has world-class companies that are core to the performance of electronic products, but also there's a degree of sophistication of Taiwan's contribution to the value chains in electronics. I mean, when an American asks me why we should care about trade with Taiwan, my first response is because your mobile phone won't work if you don't have Taiwan. So it's a very impressive story and it's happened very recently so it's something to celebrate. My question is, what other sectors could Taiwan reasonably expect to replicate the success that you've had in electronics and why? It's not that easy. We tried several years ago and Taiwan wants to develop biotechnology. We have some success, but basically it's not as good as we hope. I think now what we are doing is we think we can combine our ICT foundation and the cultural side and then field in whatever sectors can be medical care, can be auto parts, combine this ICT and cultural part. Many of our business leaders while advocating Taiwan can have large business opportunities for the overseas Chinese communities, just large, which will have good reception. If we can practice that, if we can have tests in Taiwan that can be successful, we can export that business model. That's our hope. It might be any sectors. That's very encouraging. Thank you. Let me ask another question from your remarks. You did mention that Taiwan is committed to the multilateral trading system and multilateral liberalization as well as bilateral negotiations and pre-trade agreements. There's a third leg to that stool, which is unilateral or autonomous liberalization, mainly done through things like pre-trade zones. I know that Taiwan has recently established pre-trade zones as an economic strategy. Can you tell us how that's working? Okay. For instance, how many lawyers? I was told there are many lawyers in any gathering in Washington. We can find some for you if you need that. Put out an APB. For instance, the legal service sector, if we tell our lawyers, we want to further open up American lawyers to practice in Taiwan, the answer is no. Why? Why do we have to open up our markets to American lawyers further? They can do some business here. We put limitation on them, but they can do business. So that's the argument. Business community wants them to come in. We don't want to say the US government wants them to come in. Business community wants their service. There are so many agreements. A very large size needs a very sophisticated legal skills which you cannot provide. But lawyers always argue back. The idea now is to have this special concept idea. We open up limited market, fully open for them for the foreign legal service. Same principle applies to architects. Same applies to everything that you have resistance of the domestic suppliers. Then let's open it up in a certain part, ports, airport area, and then let the user enjoy the benefits. One day, voluntarily or involuntarily, this can apply to whole country. That is the concept. Very good. Thank you. Let me ask one more question, and it's where you concluded your remarks. You mentioned and reiterated to this audience, Taiwan's interest in becoming a trans-specific partnership member. Many of us in Washington have encouraged Taiwan in pursuit of this goal. Part of the judgment that will likely take place or certainly has taken place with other economies which have become parties to the negotiation is a question of readiness. I believe that your government has been going through the process of looking carefully at similar agreements, say the US-Korea Free Trade Agreement and others, to get an internal assessment of your readiness that would then become part of the decision, part of the information that the existing parties would review in order to make a judgment on Taiwan's readiness to a seat. Could you tell us how that's going and what you're learning about that review of both readiness for the domestic market reforms and readiness to engage outwardly? Yes, I think the experience we learned from that exercise so far is unless you can help them increase their competitiveness, they will resist. Domestic interests will be resist. And then unless you can assure them that once they get in trouble you will help them and you have enough money prepared to go through that process then they will resist. So one way for us to prepare for that is one is to increase their competitiveness. We can do that. We still have. We've been doing that for some time. The best example is this stock industry which is very small, very weak, very vulnerable, but now they are very confident that they can face the competition once we open up. So there are some good stories. Agriculture is an area we need to really pay attention to. Agriculture because of its natural conditions. Our agricultural sector is not that competitive. In terms of the staple grain products, they are good in flowers, in vegetables. They are very, very good. Probably we have to move, gradually move from the staple, from large scale grain production into that area. The process needs to be faster, quicker. But that's what we are doing. But you always feel that not fast enough. So that's... Scott, do you want to check with the audience? Of course, most definitely. We've got plenty of time for the audience to ask questions. And so what we'll do is I'll moderate and select. Just please identify who you are, the organization you're with, and ask a question. So not no speeches, but questions. So we'll start right in the middle here. I know him. John Zen with CTI TV, Zhong Tian. Mr. Minister, it's good to see you back in Washington, DC. It seems every time we see you, you get a new promotion. In that sense, we want to see you more. My question is, why on your very first visit to the United States in your new capacity, are you going to tackle any of the most sensitive trade issues in U.S.-Taiwan trade, like pork or beef? You know, that's the issue that stands in the way in the growth of U.S.-Taiwan economic trade. Thank you. I know he always brings up very difficult, very difficult questions. I think between two countries, I mean, we have 770 billion trade. Certainly, certain issues are difficult for both sides to deal with. Pork is one of these very good examples. I think we have to deal with those issues anyway, but timing is important. Whether this is a good time to deal with that issue, I think we, both governments need to have wisdom to handle that. You push an issue in the wrong time, cannot succeed, but you push that in the right time, may be the chance of success increase. On the pork issue, considering all the factors in Taiwan, I will say the timing might not be that right to deal with now, but I understand this is a thing, this is a product that U.S. government and the U.S. export in communities are very concerned of, we certainly understand that, but I think we may have to deal with that in the later stage. Can I come right here? Yes, in the second round. I know him. Garrett Vendorwees, editor of Taiwan Communique. John, welcome back to DC. Great to see you here. Scott already mentioned the issue of cross-trade relations and over dependence on China, and I think Hillary Clinton even mentioned that last summer. There's one other aspect to that, and that is that in the view of many people in Taiwan, the rapprochement with China and the economic relations have basically only benefited the large conglomerates and not trickled down enough. There are students in Taiwan who have an excellent education but cannot find a job. So my question to you is, what do you see as the best way forward to that so there is more of an even distribution in society of the benefits? Yes, Garrett, you... There is... because of that... because of the impression, we check the number of our exports to China. You are right, that showing on the statistics that only large companies can know how to deal with that large system. So on the... on check with every shipment, many of them were shipped by large corporations. We then interview... we then interview the different association, industrial associations. The number we compile is this. About 50% of our exports are coming from small and medium companies. About 50%. And 50% were exported by large companies. Then you go to talk to those exporters, large companies. Say where you get your components and where you get materials or you get components. The answer is very clear. I have... In my presentation, I mentioned about this cluster. It is provided... their components were supplied by their neighboring cluster satellite companies. Which has more, basically. So... So while the number seems like 50% were benefited by the large companies, but in reality, small companies are also benefited from this process by supplying them the parts, components and doing the service for them. Now, another thing, of course, is the... the unemployment rate and low wage of the youth group. The unemployment rate, according to the statistics for the youth group, is about 11%. Which is high, because overall unemployment rate is only 4%. Less than 4%. What can we do? I mean, to a certain degree, for young people with strong motivation, we have to help them to find a job. The problem now is when they finish their school, they do not possess the skill that the company wants. So we have to help the education side. We put a lot of money to help the schools to buy machineries, to hire new teachers, experienced teachers. And then we ask the companies not to adopt, to cooperate with the schools to bring the students earlier, in the earlier stage, into the factories. Those are the efforts we are making. We hope we can produce some result. There are some results. It cannot resolve all the problems. But we think it is important, because otherwise, we do not take good care of those young people who cannot find a job of very low wage. This is a group in the society where they are the source of this sunflower movement. So it is an important issue. I'll go right here. Zhou Yingfeng from World Journal. My question is about China's investment in Taiwan. According to the statistic released by your ministry, in 2014, the investment from China to Taiwan dropped by 4%. It is even lower than it was in 2012. I wonder, in your opinion, is it all due to the slowing down of the Chinese economy, or is there something we can do on the Taiwanese side? My second question is about the carbonate. Mr. Jing Puzong resigned last week and today in Taipei, Mr. Wang Yuqi also resigned. Some people comment that people are abandoning this broken ship. What do you think about the turmoil in the carbonate? Thank you. Your first question is already difficult enough. Your second question becomes unanswerable to me. That's the easy questions first. We are the investment regime for the Chinese investment to Taiwan that has not been relaxed in the past two years. In the original plan, we hope we can relax their investments step by step. Scott mentioned we have 200 billion investment in China, but we have less than 1 billion investment from China to Taiwan. This is unbalanced. This is unbalanced. And because we have many restrictions, we hope that by the effective, by the service agreement being effective, because in the service agreement, we open up more sectors for Chinese investment. But that one, of course, starts in legislature. That's why you see the drop of the Chinese investment to Taiwan. Is that a concern? Yeah, I mentioned in my presentation that slowdown in China of course will affect everyone. Certainly will affect Taiwan. Investment from China, do they create jobs? Of course they create jobs. Unlike the previous saying by some people that they will bring in many Chinese to work in Taiwan. It doesn't happen. They have the right to impose some managerial positions. But most of the employees working for their investment are Taiwanese. So they create jobs for Taiwan. Is that a concern? We hope that if everything can move smoothly, I think there are some opportunities for their investment. It is because of the service agreement, the stagnant, the store of the service agreement in legislature so that the attraction of Chinese investment to Taiwan has become less. Do I want to see it changed? Yes, they create jobs. And so whoever, whoever can create jobs is a positive force in our society. Second question, I don't know, it happened. It all happened after I left. Sorry. You're already wearing enough hats so make sure you don't get any more. We have a question right up here in front and then I'm going to go toward the back for the next one. I'm a partner and director for Vietnam Southeast Asia and Washington D.C. for the Interstate Traveller Company in Detroit. Now my question is, what an edifying conversation. My question is this on TPP. Other than, well, combined with the obstacles you see internally in Taiwan to preparing for entrance into PPP, what do you believe are the chief obstacles outside of Taiwan? President Obama has problems with his political base. Japan has protectionist issues and on and on. What do you see as your analysis? This is the first experience that I ever have in my 30 years service in this area. Why are the TPP the information of TPP can be kept so secret? Not released to the outside world or generally speaking in the multilateral negotiation. Some people leak or tell us what happened in non-negotiations, but TPP is an exception. We have so much trouble to get to know what happened there and we get different information from different sources. So a lot of myths but as to, therefore, I don't really, of course, we believe me, we put a lot of emphasis, we spend a lot of resources on following what happened in TPP negotiations. You are right. Japan has some difficulties on their agricultural products. Our Japanese friend told us what happened in that area that give us some thought for us to be ready to prepare ourselves. But I think all the information lead us to believe TPP probably they are in the process of real engagement. So it might come soon and we hope so. Hi, my name is Titi Lio Ogondale. I'm a recent graduate from Syracuse University. I just got my masters in international relations. I actually used to live in Taiwan. I just came back from Christmas. So my question is as Scott had pointed out about China and Taiwan cross-strait relations and how economic ties are becoming more and more integrated, is there a fear in Taiwan about the economic ties being so close that it could cross wires with political ties being reabsorbed into China in terms of reunification? Thank you. If we see what happened in this sunflower thing I think the fear is there in younger in young generations. It depends upon I think if you ask me how I think it I think we are strong enough we are strong enough for not to be able to continue to defend our system. I think we have American support. We share the same core value here. If we continue to move forward, not to go backward or to maintain those core values freedom, democracy and then for today's to keep our economy strong we should be comfortable that we can achieve we can achieve that not being absorbed by China. We have time for just one more question and then if you, I don't call on you now you can just come up to the stage afterward for a few minutes but the woman in the purple dress. Thank you for the color. I'm Miss Purple. Iris Shaw of Taiwan's Democratic Progressive Party Minister, thank you for mentioning about the importance of reaching social consensus, especially during the trade negotiations our society has paid some price during the beef issue and the tea issue. So we believe you're in a great position of reaching across the aisle because you and Dr. Tsai has worked together well since the day in the Mellon Affairs Council. Having said that, DPP has just established TPP tax force so my question is is there any mechanism in place to ensure sufficient and meaningful consultations with different political parties and business communities and all the parties concerned very good. As I said, the communication with the society with different group of interests are very important. We could make it in our WTO accession process. The government has very open channel to dialogue with different parties. Currently on TPP I understand DPP has established a mechanism and they discuss TPP issues in the think tank for quite some time. Certainly I'm willing and we are committed to talk to them. There are some initial contact already met. We will do that and I think this is important. We need to let the society to know what happened in this TPP how we are preparing for that to achieve that goal and I think there are some very good person in DPP who are focusing spend efforts on that. Next time when we see each other I'll have more positive things to report. Hopefully by that time the mechanism is already being established. Well you've only been in your job two months but you're already feeling like a veteran listening to your remarks and your engagement with the audience and your presentation and the discussion was very informative. I think we all learned quite a bit and we appreciate you taking the time to be with us and we wish you the best of luck with the rest of your trip.