US and Taiwan hold first round of trade talks in new bid to counter China’s economic influence

On Jun 28, 2022

The US said on Monday that it had held the first round of talks with Taiwanese officials on an initiative aimed at boosting trade ties “based on shared values” – formally opening another front on which US President Joe Biden is trying to counter Beijing’s economic influence.

US deputy trade representative Sarah Bianchi and Taiwanese minister without portfolio John Deng met under the auspices of the American Institute in Taiwan (AIT), Washington’s de facto embassy on the self-ruled island, and the Taipei Economic and Cultural Representative Office in Washington (Tecro), according to an announcement by the office of the US Trade Representative (USTR).

The two sides expect to sign “agreements with high-standard commitments”, which “will cover a number of trade areas, including trade facilitation, regulatory practices, agriculture, anti-corruption, small- and medium-sized enterprises, digital trade, labor, environment, standards, state-owned enterprises, and non-market policies and practices”, USTR said.

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The office’s announcement about the US-Taiwan Initiative on 21st-Century Trade earlier this month sparked an angry response from Beijing, which considers the self-ruled island to be a renegade province.

“The US insistence on playing the Taiwan card will only endanger China-US relations,” foreign ministry spokesman Zhao Lijian said after AIT and Tecro announced the initiative.

Allen Carlson, director of Cornell University’s China and Asia-Pacific Studies program, said that “Washington is undertaking [the new US-Taiwan initiative] with more than one eye, probably two eyes, on Beijing and how Beijing is responding”.

“It does seem then, across a whole host of areas – whether it’s economics, whether it’s security, whether it’s diplomacy – that Beijing and Washington are sort of sparring with each other, to get a sense of what they can do, how far they can go and what the other side’s intentions are,” Carlson added.

The trade initiative is widely seen as a response to pressure on Biden to include Taiwan in his Indo-Pacific Economic Framework (IPEF), another key effort by his administration to check mainland Chinese economic integration with countries in the region.

Analysts have said that Biden would not have been able to bring the 12 inaugural IPEF members on board had he included Taipei because of concern in some of these countries over how Beijing would react.

But Taiwan is a key US trading partner, and especially important because many American manufacturers depend on the advanced semiconductors produced on the island, home to the world’s largest contract chip maker, TSMC. The company has started construction at a site in Phoenix, Arizona, where it plans to spend US$12 billion to build a chip fabrication facility.

US lawmakers have their own plan for closer ties with Taiwan as a way to counter Beijing, a motivation that represents “maybe the very last and sole bipartisan issue left in the United States”, Carlson said.

The Taiwan Policy Act of 2022 seeks to go further than the decades-old Taiwan Relations Act to bolster US military ties to the island. If passed, the law would, among other provisions, dispense almost US$4.5 billion in security assistance over the next four years and designate Taiwan as a “major non-Nato ally” alongside Israel, Japan and South Korea.

Passed in 1979, as Washington switched its official diplomatic recognition of China to Beijing from Taipei, the Taiwan Relations Act authorises the US to provide Taipei with arms used in a “defensive character”. As with Washington’s overall policy towards Taiwan, the degree to which the US government is obligated to provide that support is intentionally ambiguous.

“What you’re seeing is both sides and both parties kind of manoeuvring to make the case that they are defending America’s interests in Asia and are standing up to China,” Carlson said. “And Taiwan is, frankly, kind of a tool within the domestic political game.”

According to the USTR, Bianchi and Deng also “held round-table conversations with several groups of US and Taiwan stakeholders”, while “members of Congress and labour and business leaders shared their views” – though he statement did not name those parties. It added that the two officials planned to hold additional talks “in the near future”.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

SOURCE: NEWS AGENCIES