The bulk of the Taiwan White Paper consists of recommendations for the Taiwan government on ways to improve the business climate. But in this section, AmCham Taipei annually adds some requests aimed at policymakers in the U.S. For some time, the main requests have been largely the same from year to year – resume the Trade and Investment Framework Agreement (TIFA) Council talks on a regular basis, start the process toward negotiating a bilateral trade agreement, and arrange for more high-level visits in both directions, especially by cabinet members. AmCham has also called for concerted U.S. efforts to help Taiwan to participate in relevant international organizations, such as the World Health Organization (WHO) – at least as an observer.
During the past few years, the overall bilateral relationship has appeared stronger than ever. Vice President Mike Pence, Secretary of State Mike Pompeo, and other U.S. officials have praised Taiwan’s democratic achievements and stressed its strategic importance. The U.S. Congress has passed several pieces of legislation designed to show support for Taiwan. Washington has signed off on several major arms deals with Taiwan, including last year’s agreement to supply new F-16V aircraft and the approval this spring to sell heavy-duty torpedoes. The two governments have been expanding collaborative programs such as the Global Cooperation and Training Framework, and the American Institute in Taiwan – the embassy in all but name – has moved into its new, specially built US$250-million office complex in Taipei. Officials on both sides have described the bilateral relationship as better than it has ever been.
But despite all that progress, no breakthroughs have yet occurred on the several economic and trade issues highlighted in the Taiwan White Paper. The TIFA Council has not met since 2016. No serious discussion has taken place about paving the way for a bilateral trade agreement. And over the past two decades, only one U.S. cabinet official, the Environmental Protection Agency administrator, has visited Taiwan. Taiwan remains excluded from such international organizations as the WHO, Interpol, and International Civil Aviation Organization (ICAO) that have a direct bearing on the safety and well-being of its citizens.
Developments in recent months, however, have brought new hope that cooperative economic relations between the U.S. and Taiwan can be strengthened significantly. The continued souring of U.S.-China relations – first due to deep-seated trade tensions and then mutual recriminations over the spread of the COVID-19 virus – makes Washington less likely to look to acquiescence from Beijing before taking any initiatives involving Taipei. The Trump administration appears determined to restructure supply chains to reduce American dependence on a China it now increasingly views as a strategic adversary.
Since only so much of that manufacturing capability can realistically be “reshored” to the U.S. in the near- to medium-term, the U.S. will need to rely on trusted allies. Given its shared democratic values with the U.S., dedication to the rule of law and IPR protection, high-tech manufacturing prowess, and long history of working with major American companies, Taiwan deserves to be at the top of the list. The recently announced plan for Taiwan Semiconductor Manufacturing Co. (TSMC) to invest US$12 billion in building an advanced integrated-circuit plant in Arizona indicates the potential scope for this kind of cooperation.
Despite the absence of formal diplomatic relations, Taiwan is one of the closest friends and allies that the U.S. possesses in the Indo-Pacific. AmCham Taipei urges the U.S. administration and Congress to take the following steps to broaden and deepen the American relationship with Taiwan:
Suggestion 1. Recognize and act on the contributions Taiwan can make in reducing American vulnerabilities in sensitive high-tech supply chains.
There appears to be wide bipartisan support in the U.S. for programs to assure undisputed technological leadership in key areas of future economic development, including artificial intelligence, the Internet of Things, and biomedicine. The need for such a policy was clear even before the current pandemic struck. It is even clearer now as the U.S. must consider ways not just to revive a crippled economy but to propel it to new strengths.
Commentators have called on the U.S. government to promote a national innovation policy to spur R&D and new investment. They have also acknowledged that the U.S. will not be able to achieve this turnaround on its own. It will need to work closely with trusted governments and companies abroad. For the reasons mentioned above, Taiwan is perfectly positioned to play that role and to help buttress the cause of free markets in East Asia. AmCham Taipei urges the U.S. authorities to bear that potential strategic partnership in mind when considering other aspects of the U.S.-Taiwan relationship.
Suggestion 2. Bring the TIFA process back on track as soon as possible.
Over the years, the “TIFA talks” – led by a Deputy U.S. Trade Representative on the American side and a Vice Minister of Economic Affairs heading the Taiwan delegation – have generally been held on an annual basis. The last such session, however, was in October 2016. A shortage of personnel in the Office of the U.S. Trade Representative (USTR) has been partially blamed for the delays, and this year the impact of the coronavirus pandemic on international travel has certainly been a factor.
No doubt, the COVID-19 pandemic will further delay a restart of the TIFA process. USTR has also said that the negotiators who are responsible for Taiwan are also involved with the U.S.-China talks, which have monopolized most of their time. It might make more sense for USTR to group Taiwan together with Japan and South Korea because the three economies have so much in common, and USTR staff responsible for those countries might have more time for Taiwan.
AmCham Taipei urges resumption of the TIFA process as soon as the travel situation permits. From the perspective of the U.S. business community in Taiwan, the TIFA talks have proved to be extremely useful in improving mutual understanding and resolving policy differences between Taiwan and the U.S.
Suggestion 3. Begin preliminary discussions for launching bilateral trade agreement negotiations.
In 2019, Taiwan passed Italy to become the 10th largest trading partner of the U.S., with a total of US$85.5 billion in two-way trade. But despite Taiwan’s prominence as a commercial counterpart, it is rarely mentioned when prospective candidates for free trade agreements with the U.S. are discussed. A major reason is certainly political. China would undoubtedly object strenuously, even though the U.S. has entered into numerous lower-profile agreements with Taiwan. In the current political environment, however, Beijing’s opposition might carry less weight than it has in the past – and the U.S. administration would likely have to expend less political capital to cope with it.
Another obstacle to an FTA has been U.S. displeasure with Taiwan’s restrictions on certain U.S. beef and pork products. But Washington’s position that resolution of those issues must be a pre-condition for starting FTA negotiations has not achieved positive results. The Chamber believes a different strategy would be more practical – begin talks with the clear understanding that these issues would need to be resolved as part of the negotiations.
Suggestion 4. Arrange cabinet-level government visits in both directions.
Congressional passage and President Trump’s signing of the Taiwan Travel Act in 2018 was taken as reaffirmation of the U.S. commitment to Taiwan’s security and well-being. But contrary to expectations, the law has not led to any breakthrough in travel exchanges by senior officials of the two governments. Again, China’s potential reaction has been a key factor. The answer is to make such visits a routine occurrence, as was the case in the 1990s when a U.S. cabinet secretary came to Taiwan every other year.
As the final year in the current presidential administration in the U.S., 2020 may present an opportunity. No matter who wins in November, there will undoubtedly be cabinet ministers who will soon be leaving office – and for whom an end-of-the-year trip to Taiwan would raise little concern about disrupting engagement with China.
Suggestion 5. Use U.S. influence to help Taiwan gain participation in certain international organizations.
Although political factors prevent Taiwan from gaining admission to international organizations that require statehood as a condition for membership, it is important for Taiwan to have at least observer status – and full access to information – in organizations whose activities bear directly on the health, safety, and well-being of the 23 million Taiwanese. The main such organizations are the WHO, Interpol, and ICAO.
With regard to WHO in particular, the COVID-19 pandemic is likely to generate more support for Taiwan. Besides the general principle that all people should have access to information on potentially lethal diseases, Taiwan won plaudits for its handling of the virus at the same time as China has been criticized for lack of transparency.
In addition, the U.S. government can now be expected to be more vocal in support of Taiwan’s inclusion in those international organizations. The TAIPEI Act passed by Congress this March (the full name is the Taipei Allies International Protection and Enhancement Initiative) is aimed at helping Taiwan ward off pressure from Beijing that hinders its ability to maintain an international presence. The law requires the Secretary of State to report back to Congress with a strategic plan for how to enable Taiwan to gain entry or observer status in international organizations.