Finding the Hidden Dragon : Why Closer Economic Relations with Taiwan Makes the U.S. More Prosperous

Taiwan has indicated its interest in joining the Trans-Pacific Partnership Agreement. In this report, we evaluate the implications of Taiwan's accession for the United States to inform the negotiation process. We consider the sectoral export prospects for U.S. industry and provide estimates of the overall economic gains for the U.S. of the TPP12 and a TPP13 that includes Taiwan. We find that Taiwan's accession strongly expands the liberalization potential of the TPP, raising the overall gains for the original 12 members by over US$ 20 billion, or by 25% compared to the TPP12 scenario. Taking into account Taiwan's gains, the overall gains from a TPP13 compared to a TPP12 amounts to an additional $50 billion. The U.S. is one of the major beneficiaries of Taiwan's accession, with services and investment liberalization being important drivers for the gains