Taiwan is considering forming a high-tech strategic partnership with the US, which wants increased Taiwanese investment, Vice Premier Cheng Li-chiun (鄭麗君) told a news conference in Taipei yesterday while giving an update on talks with Washington.
Taiwan — home to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker — runs a large trade surplus with the US. Its exports to the US are subject to a 20 percent tariff, a figure that Taipei is seeking to cut.
Cheng, who is leading the tariff talks with Washington, said she was hopeful that both sides could reach a consensus on expanding investment in the US through a “Taiwan model.”
Photo: George Tsorng, Taipei Times
That would not involve relocating supply chains, but rather extending and expanding US production capacity, said Cheng, who returned this week from the latest round of talks.
The government views the model for investing in the US as “industrial investment planning” coupled with government support measures such as export credit guarantees and joint Taiwan-US development of industrial clusters, she told reporters alongside Minister Without Portfolio Yang Jen-ni (楊珍妮), who leads the Executive Yuan’s Office of Trade Negotiations, and Vice Minister of Economic Affairs Ho Chin-tsang (何晉滄).
“The current negotiation focus is that the United States expects us to expand investments and engage in supply chain cooperation,” Cheng said.
The Taiwan Model would allow corporate owners to choose the industries in which they wish to invest, and the government then invests based on those choices, she said.
The government would establish an investment insurance scheme, providing companies with financial support and encouraging them to invest, she added.
While science parks in Taiwan might not be 100 percent replicable in other countries, the nation is willing to share its experience to help foster and build industry clusters in the US, thereby decreasing investment risks and corporate overheads, she said.
This does not mean we are moving Taiwan’s science parks to the US, she added.
To encourage the formation of industry clusters and science parks, we hope the US would provide land, utilities, services, basic infrastructure, as well as facilitating visa issuances, and expediting legal frameworks and environmental assessment processes, Cheng said, adding that those conditions would accelerate the formation of corporate investment plans, as well as facilitating the creation of local supply chains and industry clusters.
To meet the conditions would require a joint effort by the industrial sector, the financial sector and the government, with success creating a “win” for all parties, Cheng said.
In addition to discussions on supply chain collaboration, Taiwan is also in talks with the US over tariff rates, Cheng said, adding that Taiwan has reiterated its position that the rates would not be cumulative.
The two nations are also discussing preferential tariff rates for semiconductors and related products, as well as other items mentioned under Section 232 of the US Trade Expansion Act of 1962, Cheng said.
Neither the US Department of Commerce nor the Office of the US Trade Representative has responded to requests for comment on the talks.
TSMC, whose business is surging on demand for artificial intelligence applications, is investing US$165 billion to build chip factories in Arizona, although the bulk of its production would remain in Taiwan.
Cheng, who said that TSMC did not take part in the latest talks, reiterated that a proposal floated in US media by US Secretary of Commerce Howard Lutnick for a “50-50 split” in making chips is not something Taiwan would agree to and was not brought up.
The aim of Taiwan’s industry is to “remain rooted in Taiwan and deploy around the world, and then have bilateral strategic cooperation,” she said.
Taiwan has sought three main concessions in the negotiations: to reduce the tariff rate, receive comprehensive preferential treatment covering semiconductors and other items under the act, and receive improved investment opportunities in the US.
The US tariff policy took effect on Aug. 7, setting Taiwan’s provisional tariff rate at 20 percent.
There have been five rounds of talks so far this year, starting with a video conference on April 11 and followed by meetings on May 1, June 25, July 8, late July to early August, and from Thursday last week to Monday.
Additional reporting by CNA
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