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AIT Chairman James F. Moriarty

Those who Play by the Rules will be our Partners

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Those who Play by the Rules will be our Partners

Source:Chien-Tong Wang

James F. Moriarty, chairman of the board of the American Institute in Taiwan (AIT), took out time during a recent visit to Taiwan to discuss bilateral relations, U.S. trade policy and foreign policy in the Asia-Pacific region under President Donald Trump.

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Those who Play by the Rules will be our Partners

By Yi-shan Chen, Shu-ren Koo
From CommonWealth Magazine (vol. 638 )

It is 8:30 a.m. on Dec. 15, 2017. James F. Moriarty, chairman of the American Institute in Taiwan (AIT), is all set for an exclusive interview with CommonWealth Magazine: Lying on his desk are the transcript of U.S. President Donald Trump’s APEC speech in Vietnam and an interview outline with anticipated questions.

Moriarty is a veteran diplomat looking back on a career spanning 36 years. Since taking the helm of the Board of Trustees of the AIT in October last year, he has visited Taiwan three times.

This time, Moriarty came to Taiwan on the back of President Trump‘s Asia swing, during which Trump announced his new “free and open Indo-Pacific foreign policy.” Moriarty is direct and clear in his statements. Putting on his reading glasses, he reads out loud some China-related passages from Trump’s speech:

“But for this - and I call it the Indo-Pacific dream - if it's going to be realized, we must ensure that all play by the rules, which they [China] do not right now.

Those who do will be our closest economic partners. Those who do not can be certain that the United States will no longer turn a blind eye to violations, cheating, or economic aggression. Those days are over.

We will no longer tolerate the audacious theft of intellectual property. We will confront the destructive practices of forcing businesses to surrender their technology to the state, and forcing them into joint ventures in exchange for market access. We will address the massive subsidizing of industries through colossal state-owned enterprises that put private competitors out of business.

Moriarty finishes, noting, “So that's sort of the road map and part of the thinking behind what we're trying to do with respect to trade.”

Roy Chun Lee, deputy director of the Taiwan WTO and RTA Center at the Chung-Hwa Institution for Economic Research, observes that Trump is uncompromising when it comes to trade. “Trump style means bringing things to the fore, concretizing and dramatizing them. He is frank and categorical about the problem of unfair trade and very focused; it is impossible to dodge him.”

Lee points out that Trump is very clear in his demands toward U.S. trade partners, as he provides lists of required improvements, demands that trade surpluses be reduced, and does not tolerate “unfair competition”. Once Taiwan and the United States have relaunched talks under the bilateral Trade and Investment Framework Agreement (TIFA), Taiwan won’t be able to back out, but will have to answer these demands. "This is completely different from the Obama era,” Lee says.

On the second day of Moriarty’s visit to Taiwan, Trump signed the National Defense Authorization Act in Washington, including clauses that strengthen the US-Taiwan defense partnership. This was the latest development in bilateral ties following the passage of three pieces of legislation pertaining to Taiwan by the U.S. Congress in July.

What are the key points of Trump’s new Asia policy? How will bilateral ties between Taiwan and the United States develop?

The following are excerpts from the exclusive CommonWealth Magazine interview with Moriarty:


Q: So, you’ve been here five days. Can you tell us what you observed from the past four days and if there are any surprising messages you’ve gotten in Taiwan.

A: I’d say no major surprises…I do see an island that is always fascinating for me. I enjoy coming to Taiwan. I’ve told people that, for me, having served here in the 1990s and having studied language here in the late 1980s...it's always great to see a place where democracy has taken such deep root. I've been in a lot of places that have tried to democratize and haven't pulled it off that well, and I've been in some places that have no intention of democratizing, but to see a place where, the way I put it is: People under 30, they have this democracy chip in their DNA. What I mean is, they can't imagine anything other than having the right to choose their leaders and having the right to criticize their leaders and having the right to vote their leaders out if they're dissatisfied with them.

It's just something that the young people here take for granted. And to me that's very positive. It's very refreshing. It shows that you have a mature and deeply rooted democracy people respect. So I can't say that's brand new, but once again as I travel around the island, go down to places like Taichung and Taoyuan...it’s clear that’s here, that's as present here as it is in the United States.

Q: In the Legislative Yuan, you asked the congressmen about the transitional justice law. Why are you so interested in this topic?

A: Well, I had heard about the passage of the law, I think it was actually while I was traveling out here. And so, I have also heard repeatedly from Chinese academics, officials and other folks about something they call qu zhongguo hua (去中國化), which is as horrible-sounding in English as it is in Chinese. Desinification. What is it? Chinese define it very broadly, and almost anything that happens on Taiwan that they don't like they would charge as desinification. So with that preamble, that's pretty close to exactly what I said to the LY members. I then asked a question. The question was, did this issue, did the Chinese accusations of the desinification, come up during the LY debate.

It was a legitimate question; I just wanted to know. I want to make it clear that I was in no way criticizing the law. I was seeking information, not even about the law so much as about the debate. You know I'm trying to understand Taiwan politics. Were parties raising this during the debate over the bill? That's all I said. I want to make that clear. I did not criticize the passage of the law. I did not criticize the content of the law.

Q: Since you mentioned desinification, in the past year, do you think President Tsai or any Taiwan activities triggered instability across the strait?

A: I do think that the Chinese insist on the 1992 consensus. But I'm not sure that there's anything that President Tsai could do that would make the Chinese loosen the pressure on Taiwan. We always urge both sides across the strait to be creative, patient, and flexible, to get into a dialogue as high a level as possible to resolve issues between the two. And we are seeing that sort of attitude from the Tsai government. We think they've been doing a good job, so I'm not going to criticize any specific actions on the part of the Taiwan authorities.

Q: Any suggestions for Taiwan? Because people in the U.S. think that the cross-strait relationship is very cold; can Taiwan do anything to break the ice?

A: I would just say keep on trying, keep on reaching out, keep on using every avenue open to try and communicate with the mainland, continue to avoid provocations of the mainland. I give the current administration high grades, and I'm not saying they haven’t been doing that; I'm saying that that's what they need to continue to do in the hope that the mainland will respond.

Q: In November, President Trump visited Asia, and he mentioned a new terminology, the "Free and open Indo-Pacific foreign policy". Could you elaborate on this concept?

A: Well, if you look at it, I think that President Trump was not just assuring the world but telling the world that the Indo-Pacific area is very important to the United States. That was a very long presidential trip, and it was very clearly pursuing two main goals, the first of which was to rally the world against the developments in North Korea, against the growing nuclear threat from North Korea. Just on November 28, you had the latest ICBM test. This is a threat to peace and stability in Northeast Asia unlike any we've seen in recent decades. We do think that the whole world has to stand united against this threat and use all levers possible to make sure that the only outcome of the North Korean nuclear program is increasing pressure and increasing isolation. I do want to salute Taiwan for going beyond the U.N. Security Council resolutions and breaking commercial ties with North Korea completely. It's a sign of solidarity of Taiwan not just with the United States but with the broader international community.

The other main topic was to discuss, as you said, a future free Indo-Pacific region - like-minded countries, trading together, working together to build a stronger future for each country.

Q: But President Trump is not interested in multi-lateral trade agreements.

A: He points out that these multilateral trade agreements, to some degree, have been distorted in a way that has been very unhelpful to most of the countries involved in the global trading system. Basically, I would recommend that you really look closely at the speech that the president gave at APEC. It does lay out his vision of what the Indo-Pacific, this free Indo-Pacific area that he's talking about, would look like. It's not a call for isolationism, it's a call to develop the strengths of individual countries with fair and reciprocal trade.

Image: Chien-Tong Wang

Q: Why did President Trump use this new term, “Indo-Pacific” instead of the traditional term “Asia Pacific”? Is this indicative of any change of policy?

A: Yes, and actually it's been a gradual change.

There's a growing recognition on the part of the United States that India is a very important partner going forward. It has been an important partner but will be an increasingly important partner going forward. Like we do with Taiwan, we share similar values with India.

I think we share similar views for the future of this broader region, which is that it should be one where individuals get the respect they’re due, where trade is conducted on fair and reciprocal principles, and where the free and democratic nations of the area cooperate with one another to guarantee a better future for all.

I would say that this is a change that's been coming down the pike, as we say, and the Obama administration had actually used similar phrases periodically. But it's clear now that Secretary Tillerson and President Trump really see this as a key part of their vision for the future of Asia. In other words, the close binding in with India but also the other countries of South Asia too.

Q: Is this related to China’s one belt one road policy?

A: I don't see it as a direct response, but it is a response to a variety of developments, many of them having to do with China.

Q: There are three pieces of legislation initiated by Congress this year about Taiwan. Part of the provisions are related to the Taiwan Security Act and the Taiwan Travel Act and the act just signed by President Trump, the NDAA. I am very curious as to whether this indicates that U.S.-Taiwan relations will be upgraded, or it is just a response from your Congress to the threat of a rising China in this region.

A: If you look at where we are with Taiwan today, the security, the economic and the person-to-person fields, the United States is doing things with Taiwan that we wouldn't have even been thinking about five years ago. My own belief is that we will be doing things five years from now that we wouldn't have been thinking about today in all those areas.

Maybe it's in part a response to the China question, but I also think it's in part due to this recognition that the current administration is trying to embody in the Indo-Pacific strategy or partnership that they talk about, that basically, Asia is very important to the United States, and Taiwan is a very important part of how we see our role in Asia evolving.

Again, to put some flesh on it, we are doing much more in the security sphere than we have in the past: Lots of visits out here, increasing conversations with the military, the specific steps you recounted, the National Defense Authorization Act. I think you're aware that part of the language of Congress is advice to the administration. Traditionally, administrations decide how they're going to implement that advice; it’s in no way binding.

But the binding parts of that are very interesting. They say, you know, establish a clearer, quicker process for addressing, for looking at Taiwan’s requests for arms sales. And I will tell you nobody in Washington opposes that. It's sort of a recognition that there should be sort of a regular process so that we look at requests from Taiwan for defensive military sales and decide on them quickly and in close consultation with the Taiwan side. So that's pretty positive from my view.

Look at the economic side, and look at the people-to-people side. Our trade continues to grow; an island of 23 million people is our 10th largest trading partner. Taiwan is two-thirds the size of California and is our 10th largest trading partner. That's a huge amount. People-to-people ties: In 2012, you got the visa waiver. Travel’s up 60 percent. Look at Global Entry: it's been a couple of weeks and we've got well over a thousand, between 12 and 15 hundred applications already. Customs and Border Patrol are going to be sending people here in January. They'll be out here to interview people that quickly.

So if you look at the economic ties, the people-to-people ties, the security ties, the relationship is growing.

And again I get back to my point, which is: America is staying in Asia, and staying in Asia means getting important places right. And Taiwan is a very important place.

So I think the Congress is recognizing that to some degree. I think there is a little bit of concern about China coming through in this, but I also think it's just a recognition of the importance of Taiwan in our overall relationship with Asia.

Q: How about trade relations? The U.S. and Taiwan have worked very hard on a trade agreement and upgrading the trade relationship between our two countries. What kind of progress do you expect in the future?

A:  I continue to push Taiwan to resolve the perennial issues of pork and beef and other issues. I do think that that is important in terms of setting the atmosphere for the overall trade relationship. But since you've asked, I am now going to give you a quick quote from the president's speech at APEC. 

 “I will make bilateral trade agreements with any Indo-Pacific nation that wants to be a partner and that will abide by the principles of fair and reciprocal trade…We will deal on a basis of mutual respect and mutual benefit…We want you to be strong, prosperous and self-reliant, rooted in your history, and branching out toward the future...”

 Here's something that relates to your questions about China:

But for this -- and I call it the Indo-Pacific dream -- if it's going to be realized, we must ensure that all play by the rules, which they do not right now. Those who do will be our closest economic partners. Those who do not can be certain that the United States will no longer turn a blind eye to violations, cheating, or economic aggression. Those days are over. We will no longer tolerate the audacious theft of intellectual property. We will confront the destructive practices of forcing businesses to surrender their technology to the state, and forcing them into joint ventures in exchange for market access. We will address the massive subsidizing of industries through colossal state-owned enterprises that put private competitors out of business. We will not remain silent as American companies are targeted by state-affiliated actors for economic gain, whether through cyberattacks, corporate espionage, or other anti-competitive practices. We will encourage all nations to speak out loudly when the principles of fairness and reciprocity are violated.

So that's sort of the road map and part of the thinking behind what we're trying to do with respect to trade.

Image: Chien-Tong Wang

Q: How does U.S. face outside criticism of anti-globalization?

A: There has been tremendous distortion of the global trading system. The global trading system was never created, the WTO was never created with the concept that you would have the second-biggest economy in the world subsidizing SOEs, engaging in theft of intellectual property, forcing investment in areas by outside actors. This is, frankly, a bigger danger to Taiwan and its economy than it is to the United States.

Q: What is your suggestion to Taiwan?

A: I am suggesting that we are willing to talk about trade. We want to do it in a fair and reciprocal manner. That's why I keep on saying if you address some of the outstanding issues, that will help. And that Taiwan has to keep saying, we are interested, we are serious, and we keep our commitments. And the TIFA processes is a good place to start.  First of all, we have to get people in place. We hope that the new deputy USTR (United States Trade Representatives) will be confirmed shortly and will assume his responsibilities. He will then have to look at his priorities. There will be a lot of interest in what we’re saying in this area, I believe.

Q: America is not going to join CPTPP right now?

A: Right. And again, it's based on the assumption that what happens in multilateral deals is best practices get watered down. A lot of what we do now is in services, and that always raises lots of problems. You can get a deal with one country to make significant progress on a specific area of services, and then other countries say, well, we don't want to do that. Then the first country says sorry, we can't do it. That's the theory behind why we are more interested in moving towards bilateral deals, bilateral deals where we take the best from each deal and use that as a standard going forward.

Q: You attended a seminar in June and suggested that Taiwan take more responsibility on national defense. What is Taiwan's responsibility?

A: Let me start by saying that we remain committed to the Taiwan Relations Act. We will continue to provide necessary defensive weapons. We are a partner of security of Taiwan. Let me be clear on that. Within that context, though, it's important that Taiwan do what it can to deter potential aggression and to defend itself if aggression happens. What we've been talking to the authorities here about is what does that look like going forward.

We are pushing for a sense of urgency. The threat has grown tremendously over the past decade. And meanwhile, Taiwan's defense expenditures have stayed flat, absolutely flat. So we are talking to the authorities, and actually I would say we're very encouraged right now.

The government seems to be taking a very close look at what can be done, and we're having very productive talks with your side, and they're coming up with new strategies and new doctrines that look very promising. We'll talk to them about what we can do to help as they develop those strategies. If arm sales are necessary to help implement them, we will process them quickly and do what we can to assist. So right now, actually, I'm much more encouraged than I was in June.

Q: The U.S. used to be the world’s police, at the front. After President Trump took office, it seems that U.S. no longer stands in front, just staying behind its allies like Japan, South Korea, Taiwan, and supporting them from the back. Is that a correct observation?

A: What we are saying is that our allies and our partners are very, very important. You know we would not be where we are in Asia or where we want to be in 10 years from now unless we have the close cooperation of our allies. At the same time, we are saying that collective security is not just the responsibility of one partner. So, there is something called the free rider syndrome. I think President Trump sort of has captured a feeling that, in many instances, particularly since the end of the Cold War, our democratic partners have said: we'd like to spend a lot less on defense. The United States hasn't had that luxury. And so it begins to look like a big imbalance. You know, we're spending a much larger percentage of our much larger GDP than our allies are. Then it does raise questions.

When you say, pushing them in front, you're implying that somehow we're ignoring our alliance commitments. We haven't withdrawn our troops from Asia. We have assured everybody that we will meet our alliance commitments. But we are looking for our partners to do more. And frankly, if they would ever match our own spending in terms of percentage of GDP, we’d be delighted. Look at the figures. We spent a heck of a lot more on collective defense than any of our partners do. And to say that by asking them to spend more, we are somehow pushing them in front…I think it's a little inaccurate, at least from a U.S. perspective.

Q: How would you describe "fairness" (in terms of trade) from the U.S. perspective?

A: Again, fairness is an even playing field. Let's face it: If a U.S. company tries to do business in certain areas, they hit a lot of restraints that foreign companies do not hit in the U.S. That's unfair. If a U.S. company is forced to transfer technology, that's unfair. We do a great job protecting intellectual property in the States. It is the basis of the modern economy. Other countries either don't do as good a job protecting it or actually encourage the theft of intellectual property. And, intellectual property, like I said, is the basis of the modern economy. So, yes, to say that the country that engages in those bad practices that I just described is the champion of globalization is an incredibly short-sighted view.

Q: What do you think of President Tsai?

A: I think she's very pragmatic, very intelligent. She is a good partner of the United States. She understands the need not to provoke China. And yet she is obviously very proud of Taiwan's accomplishments. I find her somebody that I can personally work with.

Transcript edited by T.C. Lin

Translation from the Chinese article by Susanne Ganz


Additional Reading

What Two Speeches Tell Us about the Future of China and the US
A Taiwan-US Coalition?
American Economist Stephen Roach: Pressure on China Bad for Business

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