The U.S. Does A Bit Of Kowtowing In Taipei

There's nothing like $300 billion to help make friends. Ever since Taiwan announced in 1991 that it would spend that much on a huge, six-year infrastructure plan, European countries that formerly shunned Taiwan have sent a stream of high-level officials to kowtow in Taipei, in hopes of getting a share in the project. Yet Washington--wary of offending Beijing--has maintained its 13-year ban on Cabinet-level visits to Taiwan. In the heated bidding for contracts, American executives feared that Washington's caution would cost them their shot at Taiwan's billions.

Now, the same executives are smiling. In a major policy shift, U.S. Trade Representative Carla A. Hills visited Taipei from Nov. 30 to Dec. 3, meeting with business and government leaders, including President Lee Teng-hui. Taiwanese hail the visit as a breakthrough in relations between the two countries. It comes on the heels of President Bush's decision, over China's objections, to sell F-16s to Taiwan. "These events were long overdue," says one Foreign Ministry official.

HIGH HOPES. Trade relations between the two countries are fairly good. Less than one-third of Taiwan's exports now go to the U.S., down from nearly half in the mid-'80s. Moreover, the country's trade surplus with the U.S. has dropped by half over the past five years, to an estimated $8 billion this year. But Hills had plenty to talk about. She argued for increased enforcement of U.S. intellectual-property rights, particularly now that high-tech goods such as PCs and software are among Taiwan's fastest-growing exports. She also brought up Taiwan's alleged manipulation of its currency to make its exports more competitive. "We need more dialogue, more communication," says Samuel C. Shieh, governor of Taiwan's central bank, but he denies any currency manipulation.

Hills made a pitch for U.S. companies to get a share of Taiwan's energy, telecommunications, environmental, and transportation projects. She also raised U.S. concerns about the fairness of the bidding. These issues have been discussed before, but never with a messenger of Hills's stature. "People will sit up and take notice," predicts Winchell M. Craig, executive director of the American Chamber of Commerce in Taipei.

The Americans certainly hope so. They have won contracts worth about $1 billion, or 30% of the total awarded to foreigners. But some of the biggest fish have gotten away. Take the solid-waste incinerators that Taiwan is building to handle the massive mounds of garbage building up alongside its rivers. Westinghouse Electric Corp. had hoped to provide the incinerators, but so far, orders worth some $1 billion have been awarded to such Japanese companies as Mitsubishi, NKK, and Takuma.

FAT PRIZE. American executives have cried foul, charging that the Japanese colluded on their bids. Hiroshi Yamaguchi, general manager of Mitsubishi Corp. and chairman of Taipei's Japanese Chamber of Commerce & Industry, denies the accusation. Taipei says it will urge locals to link up with Americans or Europeans and avoid the Japanese. That may not do it. "The Americans still aren't doing enough," says Nelson An-ping Chang, president of Chia Hsin Cement Corp. in Taipei. He faults them for not investing as much time, money, and personnel as the Japanese.

Hills's visit may provide the most help to Westinghouse and General Electric Co., which are both eyeing a fat prize: a nuclear power plant worth $6.4 billion. Bids are now being submitted for the long-delayed project. On such big-ticket items, the Taiwanese will likely be checking to see who has signed their guest book lately, says Yang-jen Chen, vice-president of Joy Environmental Technologies Inc. in Houston. His company has won about $150 million worth of pollution-control projects. "With the bigger projects, the visits may become very important," he says.

Hills will have less influence on another American concern: the bureaucracy that is slowing down the whole plan. Only $28 billion has been budgeted for work this year, and about 30% of the projects under way are behind schedule. The government now admits that the program will take much longer than six years to complete.

Having gotten their wish for a high-level Washington visitor, Americans in Taiwan are taking no chances. They will soon write to President-elect Bill Clinton and ask him to send his new Commerce Secretary to Taipei. With the Taiwanese making new friends in Europe, the Americans figure they need all the help they can get.

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