NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bilateral Negotiations and Multilateral Trade: The Case of Taiwan-U.S. Trade Talks

Tain-Jy Chen, Meng-chun Liu

NBER Working Paper No. 5324
Issued in October 1995
NBER Program(s):   ITI

This paper reviews the history of bilateral trade negotiations between Taiwan and the U.S. The question posed at the outset is: does bilateralism enhance or jeopardize multilateralism? The U.S.-Taiwan experience seems to suggest a grossly negative answer. Bilateral negotiations for market opening with the threat of unilateral trade sanctions (such as Section 301 action) tend to encourage trade preferences and U.S. negotiators are inclined to accept such preferential arrangements in areas where U.S. domestic interests are homogeneous and concentrated. Even in the case of tariff negotiations where any tariff concessions made by Taiwan are extended to other trading partners on an MFN basis, bilateralism does not necessarily enhance multilateral principles. The scope of tariff concessions made by Taiwan shows a strong bias in favor of the sectors in which the U.S. has a comparative advantage in Taiwan's market and the sectors in which U.S. domestic industries exhibit monopoly power. Meanwhile, U.S. commitments to GATT strengthen its position in bilateral negotiations and help persuade Taiwan, which is not a member of GATT, to make similar concessions.

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Document Object Identifier (DOI): 10.3386/w5324

Published: Tain-Jy Chen & Meng-Chun Liu, 1997. "Bilateral Negotiations and Multilateral Trade: The Case of Taiwan - U.S. Trade Talks," NBER Chapters, in: Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6, pages 345-370 National Bureau of Economic Research, Inc.

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