Taiwan and the US will discuss supply chain security and digital trade in their first trade talks in five years, as the countries seek to deepen economic ties in the face of growing tension with China.
The negotiations are due to start on Wednesday and will allow both sides to put a stronger focus on trade to match their efforts to bolster security and political ties amid increasing strains with Beijing. China claims Taiwan as part of its territory and threatens to invade it if Taipei resists unification indefinitely.
“We want to elevate our trade relationship to the next level of co-operation, a level fit for the future,” John Deng, Taiwan’s trade representative, told the Financial Times. “We would like to talk about supply chains, digital trade and trade facilitation.”
Washington’s decision to restart talks under the Trade and Investment Framework Agreement (Tifa) marks a shift from the Trump administration, which prioritised agreeing a limited trade deal with Beijing.
Taiwan has been pushing for a bilateral trade deal since President Tsai Ing-wen opened the country’s market to US beef and pork last week, a step long demanded by Washington.
Deng acknowledged that it might not be possible to reach such an agreement immediately. “A BTA is our ideal and this is reality,” he said. “[The US] won’t too quickly start bilateral trade agreement talks with any country. But we can gradually pave the way.”
Sarah Bianchi, who has been nominated to be deputy US trade representative, said on Thursday that re-engaging with Taiwan under Tifa was an example of the Biden administration working with allies “to address the rising challenge of China”.
“I don’t think the Trump administration integrated commercial and strategic policy,” said Jeff Schott at the Peterson Institute for International Economics, a think-tank. “The Biden administration is clearly taking a more holistic approach to relations with China, and sees the Taiwan relationship as one that is more critical.”
The new talks follow an internal debate in Washington that included calls from the state department to add an economic component to efforts to strengthen ties with Taipei.
Katherine Tai, US trade representative, had been less enthusiastic, but Jake Sullivan, national security adviser, urged her office to initiate the talks, according to four people familiar with the situation.
“Ambassador Tai and the Biden administration are committed to strengthening our economic and trade relationship with Taiwan, and we look forward to discussing a range of issues during this week’s Tifa meeting,” said USTR.
The US is likely to focus on semiconductor supply chain security and digital trade, as well as pressing Taipei to follow through with a commitment to open its market to American pork.
Tsai’s government has done little to encourage public acceptance of US pork, which may controversially contain traces of the feed additive ractopamine. A referendum organised by Taiwan’s opposition on the admission of US pork is due to be held in August.
Deng warned that a decision against opening the market could derail discussions. “Will the US continue Tifa talks and further deepen our trade relationship? I think they would not — they would argue if you can’t even handle these current issues, why should we discuss future issues with you?” he said.
“But we must not keep relying mostly on one single market, this is just too big a threat for Taiwan,” he added, referring to China.
Digital trade, one of the issues both sides are focused on, covers topics including duty-free trade of digital products, data localisation barriers, cyber security and privacy rules.
Wendy Cutler, a former US trade negotiator, said it would be crucial that the talks yielded some joint initiatives, rather than just “a commitment to talk and co-ordinate more” to effectively strengthen trade ties.
Cutler suggested the US and Taiwan could work practically together on mapping out semiconductor supply chains amid a global chip shortage.