President William Lai (賴清德) on Tuesday urged the legislature to approve a trade agreement with the US that has yet to be finalized, warning that failure to do so could lead the US to hike tariffs on Taiwanese goods to 25 percent or higher.
In an interview with the FTV News channel, Lai said the tentative deal his administration reached with the US followed extensive negotiations and investment commitments by Taiwanese companies.
The terms of the agreement are “very good,” Lai said, adding that he hoped the legislature would approve the finalized version of the deal and not cause Taiwan to go back on its word.
Photo courtesy of the Presidential Office
Lai was referring to a tentative agreement with the US this month under which the US would lower tariffs on Taiwanese goods from 20 percent to 15 percent.
In return, Taiwan committed Taiwanese companies to provide up to US$250 billion in direct investment in the US, while the government would provide up to US$250 billion in credit guarantees for companies investing in the US.
Vice Premier Cheng Li-chiun (鄭麗君), who led the negotiations, said the deal would also grant Taiwanese semiconductors and other products the most favorable treatment under Section 232 of the US Trade Expansion Act, although the final tariff rates and quotas have yet to be finalized.
Once a deal is signed, it needs to be approved by the legislature. Its fate could also be complicated by an upcoming US Supreme Court ruling on Trump’s authority to impose tariffs.
Lai said that if the legislature delayed approving the agreement, the US could raise its tariffs on Taiwan to 25 percent “or even higher.”
Lai was likely hinting at the situation in South Korea, with US President Donald Trump on Monday threatening to raise tariffs from 15 percent to 25 percent for “not living up to” a trade deal reached last year.
Aside from the positive response from Taiwanese companies and the stock market to the deal with the US, the “anxiety” in South Korea shows that such an agreement is desirable, Lai said.
Lai also urged the legislature to approve the NT$1.25 trillion (US$39.91 billion) special defense budget his administration has proposed, while criticizing a competing plan put forward by an opposition party.
The legislature is primarily responsible for “oversight,” and lawmakers should respect the professional judgement of the Ministry of National Defense, which proposed the budget, he said.
The special defense budget is “NT$1.25 trillion over eight years, or NT$150 to NT$160 billion per year, which the government would use to build T-Dome — a smart air defense system — and advance the defense industry, all of which is interconnected and indispensable,” Lai said.
The Taiwan People’s Party, by contrast, has proposed cutting the budget to NT$400 billion, Lai said, warning that this would require giving up purchases that would leave T-Dome with a “hole” in it.
The passage of either special budget bill would be a significant expenditure for Taiwan, where overall defense spending in the government’s budget proposal, which remains stalled in the legislature, was about NT$950 billion.
The Chinese Nationalist Party (KMT) has not yet decided whether to review the government’s special defense budget or propose its own, a KMT lawmaker told the Central News Agency on condition of anonymity.
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