The launch of the Indo-Pacific Economic Framework (IPEF) on the sidelines of the Quadrilateral Security Dialogue (Quad) summit in Tokyo on May 23 received huge global attention, primarily because the IPEF has crystallized the Quad-plus formula to develop a strong regional economic grouping to challenge China’s dominance in the region.
Of course, one country that keenly observed this development was Taiwan. In fact, with Taiwan’s strong economic base and its security challenges emanating from China among other factors, sections of academics in Taiwan, the US and elsewhere expected Taipei to be included in the IPEF. Therefore, its exclusion disappointed a majority of them.
However, it needs to be understood and stressed that the absence of Taiwan from the IPEF also runs a high risk of the failure of this initiative for various reasons.
First, one of the major pillars of IPEF is to build trade and technology policies to promote economic activity and investment, promote sustainable and inclusive economic growth and benefit workers and consumers. Certainly, Taiwan, which adheres to the rules and regulations of the WTO and enjoys a strong bilateral economic relationship with the US and other countries, naturally has a major role to play in promoting rules-based free and fair trade in the region.
At the same time, Taiwan’s expertise in advanced technology is globally recognized. This can be gauged from the fact that nearly 80 percent of global network security hardware equipment is produced in Taiwan. With the digitization of the world economy, Taiwan can offer its expertise in making it more secure and reliable. After all, Taiwan faces cyberattacks from China on a regular basis. More to the point, Taiwan’s New Southbound Policy completely reciprocates the IPEF.
Second, improving transparency, diversity, security and sustainability in regional and global supply chains is another pillar of the IPEF. Therefore, while the US-China trade dispute, the COVID-19 pandemic and Russia’s invasion of Ukraine have severely impacted supply chains, Taiwan has emerged as a major player in sustaining global supply chains.
Taiwan provided medical equipment to other countries when the world medical system had virtually collapsed, and has been a major source of semiconductors, producing 90 percent of global output of the most advanced semiconductors. In turn, the issue of the production of semiconductor has placed Taiwan at the center of global attention. It only proves the necessity for Taiwan’s inclusion as an integral part of maintaining global supply chains in the IPEF.
Third, the IPEF also intends to contribute toward the development and deployment of clean energy technologies to decarbonize our economies and build resilience to climate impacts. Although several countries are still debating how to deal with these issues, Taiwan has already expressed its commitment to achieving net-zero emissions by 2050 and has taken several initiatives, including the National Climate Change Adaptation Action Plan. Given Taiwan’s geography and climate, its participation in IPEF would enable Taipei to share technology, ideas and experience to the countries of the Indo-Pacific region in reducing carbon emissions.
The fourth pillar of the IPEF is to promote fair competition by enacting and enforcing effective and robust tax, anti-money laundering and anti-bribery regimes in line with existing multilateral obligations, and standards and agreements to curb tax evasion and corruption in the Indo-Pacific region.
This objective assumes huge importance at a time when China has been subverting all the rules and regulations of international trade to its own benefit. On the other hand, Taiwan has a robust system of fair competition, having built the trust and confidence of foreign traders in the country. More to the point, the Fair Trade Act (公平交易法) provides basic rules for all kinds of competitive behaviors of enterprises. Moreover, Taiwan’s record on democratic principles, and social and institutional values has been exceptionally good. Hence, it is beyond comprehension how the IPEF can succeed in its endeavors without the support of Taiwan.
Of course, while this analysis makes a strong case for Taiwan’s inclusion, it should also be realized that the IPEF can play a pivotal role in nurturing Taiwan’s independent identity. For example, Taiwan’s participation in regional and global groupings would help Taipei to reduce its dependence on China in the economic sphere.
When countries such as the US, Japan and others have strongly opined in favor of Taiwan’s existence as an independent nation, talks need to be backed by actions. At the same time, half-hearted approaches to address the Taiwan issue would only embolden China to increase its assertive posturing. Though at the bilateral level, US President Joe Biden’s administration has launched a new trade pact with Taiwan, the US should also recognize that Washington needs to go beyond its individual efforts to strengthen Taiwan’s national identity. In doing so, US-led groups including the Quad, the IPEF and others have hardly any choice but to take concrete steps to engage Taiwan.
As the IPEF is still at the nascent stage, it should be expected that wisdom would soon prevail over the Quad’s members — the US, Japan, Australia and India — to include Taiwan in the new regional economic grouping of the Indo-Pacific region.
Sumit Kumar is a former Ministry of Foreign Affairs visiting fellow at National Chengchi University and a postdoctoral fellow at the Indian Council of Social Sciences.
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