Taiwan and the US on June 30 resumed the Trade and Investment Framework Agreement (TIFA) talks. US Secretary of State Antony Blinken said that US legislators from the Republican and Democratic parties have urged US Trade Representative Katherine Tai (戴琪) to sign a free-trade agreement with Taiwan, and that they deem it a part of the US’ Indo-Pacific strategy against China.
Taiwan and the US signed the TIFA in 1994, as a platform for promoting investment and trade between the two sides.
There was a five-year hiatus in talks — the previous talks were held during the administration of former US president Barack Obama — but with ties between Taiwan and the US becoming stronger than ever, the administration of US President Joe Biden complied with a request from the US Senate to restart them.
The TIFA conference has two main axes: One is economic recovery following the COVID-19 pandemic, and the other is deepening Taiwan-US economic and trade cooperation.
For example, how to end a global shortage of IC chips used in electronics and vehicles as the COVID-19 pandemic eases highlights Taiwan’s key position in the global semiconductor supply chain.
In addition, Taiwan and the US should reach a consensus on how to synchronize laws and regulations on issues such as environmental protection, digital trade and e-commerce cooperation.
The following defines the importance of the resumption of TIFA talks from the perspectives of strategic, economic and regional integration:
First, on the strategic side, TIFA will promote the security and economic growth of Taiwan, the US and the entire Indo-Pacific region. Not only is the US improving its partnership with Taiwan under its Indo-Pacific strategy, it is also including Taiwan as a key part of the core supply chain.
As Hong Kong has lost its democratic system and free economy, the US and Europe have withdrawn a large amount of investment from the territory.
It is extremely important for the US to maintain Taiwan’s democracy and freedom; while at the same time, the US is increasingly worried about China’s ambitions of a policy to achieve global dominance via its “Made in China 2025” initiative.
The US is united with Taiwan, Australia, Europe, Japan, South Korea and other countries to reorganize a non-China supply chain, and Taiwan occupies a key position in the US’ core supply-chain policy.
In terms of the economy, it has become even more important for the US to enhance the semiconductor supply chain. The Biden administration has submitted a review report on the supply chain of key industries — including semiconductors, auto batteries, pharmaceuticals, minerals and applied materials — and hopes to establish a stable and secure supply chain.
Taiwan’s industrial supply chain is well-integrated and has demonstrated high reliability upstream and downstream, so Taiwan has earned its place as an indispensable partner of the US.
In terms of regional integration, Taiwan is the US’ 10th-largest trading partner, while the US is Taiwan’s second-largest trading partner. About 50 percent of Taiwan’s trade is conducted with China and Hong Kong, while Taiwanese investment there is as high as 80 percent. As a result, the risk of being controlled by China is relatively high.
China has excluded Taiwan from integration into ASEAN, but Taiwan can use TIFA talks to further explore a bilateral free-trade agreement with the US, as the cornerstone of integration with other countries in an Indo-Pacific strategic supply chain.
Jeff Sheng is chief researcher at the American Chamber of Commerce in Kaohsiung.
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