US and Taiwan launch trade ‘initiative’

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The US and Taiwan have launched an initiative to deepen economic engagement just days after Washington unveiled a regional framework that excluded Taipei.

The Biden administration said the “US-Taiwan Initiative on 21st-century Trade” would “develop an ambitious road map” for negotiations in areas from agriculture and digital trade to climate.

President Joe Biden last week launched the Indo-Pacific Economic Framework with 12 other countries, and later added Fiji. The US did not ask Taipei to participate partly because some south-east Asian nations were concerned about antagonising China, which claims sovereignty over Taiwan.

The new initiative disguises the disappointment in Taiwan over Joe Biden’s trade policy. President Tsai Ing-wen took a big political gamble two years ago by opening the island’s market to unpopular US pork and beef, a move she hoped would kick-start talks on a bilateral free trade agreement that would expand access to the American market.

Ahead of IPEF’s launch last week, a bipartisan group of 252 US House and Senate lawmakers had urged Biden to include Taiwan in the regional framework to demonstrate support.

“The exclusion of Taiwan from IPEF dealt a hard blow,” said Bonnie Glaser, a Taiwan expert at the German Marshall Fund. “This step is welcome, but it falls short of both IPEF and a bilateral FTA. Nevertheless, if agreements are reached in all these areas, they could comprise future chapters of a bilateral trade deal if the politics become more favourable.”

A senior Taiwanese official said the initiative was “important to further boost the substance of our dialogue on trade. But of course, we remain keen to negotiate a bilateral free trade agreement at some point, and to join IPEF.”

Both IPEF and a White House pledge to invest $150mn in members of the Association of Southeast Asian Nations were designed to answer criticism that US Indo-Pacific strategy has been too heavy on security while lacking a trade component.

But some observers questioned what contribution the new US-Taiwan initiative would make. Many of its elements were already being discussed by the governments. When they resumed their Trade and Investment Framework Agreement talks a year ago, digital trade, trade facilitation and supply chain security were among the central topics.

Officials have also been discussing some of the same issues under the US-Taiwan Economic Prosperity Partnership Dialogue launched in late 2020.

Joining IPEF and having a free trade deal with the US are particularly important to Taiwan because Chinese pressure has resulted in locking it out of most existing bilateral and regional trade deals.

China and Taiwan have both applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, an 11-nation trade deal that replaced the Trans-Pacific Partnership after it was abandoned by the US under then-president Donald Trump in 2017.

Taiwan is the ninth-largest US trading partner based on 2020 data, according to the US trade representative office. The island is one of the world’s largest suppliers of semiconductors and other electronic components.



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