AmCham Taiwan Recommendations on U.S.-Taiwan Initiative on 21st Century Trade

On June 1, representatives of the U.S. and Taiwan governments announced the U.S.-Taiwan Initiative on 21st Century Trade (hereafter, “the Initiative.”). The American Chamber of Commerce in Taiwan (AmCham Taiwan) enthusiastically welcomes this effort. On August 15, the Office of Trade Negotiations under the Executive Yuan called for public comment on Taiwan’s negotiating objectives. AmCham is pleased to provide the following recommendations. For recommendations in Chinese, please see here.  

AmCham Taiwan is an independent, non-profit organization established under the Taiwan Ministry of Interior, operating since 1951, now on behalf of 540 organizational members. AmCham aims to enhance the business environment in Taiwan for all, and to foster ties between the United States and Taiwan. 

First, our Chamber calls on the Taiwan authorities, beginning with the Office of Trade Negotiations and including all related agencies and political leadership, to make realization within 2023 of ambitious executive agreement(s) under the Initiative an economic and national security priority for Taiwan. Over recent years, a strong case already emerged for Taiwan to move decisively to diversify and transform its economic linkages through closer U.S. economic collaboration. The stark threats to Taiwan as revealed by international events from the beginning of 2022 elevate that need to a top national priority. The concerted effort to re-initiate the Trade and Investment Framework Agreement (TIFA) talks in June 2021, led over a full year by President Tsai, Ing-wen, is the level of commitment we hope to see. 

Second, Neither the U.S. legislative nor executive branch appears ready to initiate a BTA. However, in the interim, Taiwan should negotiate aggressively to obtain a useful result that serves as a building bock toward a higher-order agreement in the future. 

Taiwan (and U.S.) authorities must leverage the Initiative as a stride toward a comprehensive investment chapter, a Bilateral Trade Agreement (BTA), or entry into regional accords, including the Indo-Pacific Economic Framework (IPEF) and the Comprehensive and Progressive Trans-Pacific Partnership (CP-TPP). Surveys have shown that the BTA and IPEF are of interest to domestic and foreign businesses in Taiwan. A digital trade chapter in the initiative could either dock into, or form the basis for, binding or aspirational plurilateral digital economy disciplines.  

Third, Taiwan should identify and prepare negotiating points within the 11 negotiating work streams agreed upon with reference to the 96 recommendations submitted by AmCham Taiwan to the Taiwan authorities as our annual Taiwan White Paper on June 22. 

As highlighted in the attached cross-reference, our White Paper concerns line up well with the Initiative work streams. The issues highlighted in our White Paper were selected by our members (comprised of American, Taiwan, and third-country capital firms) based in part on their capacity to significantly improve Taiwan’s business climate and performance and, in so doing, benefit Taiwan’s investment attractiveness and global competitiveness. By preparing reform approaches and negotiating bottom lines on these 96 priorities in advance of the Initiative, OTN will be ready to advance documented American priorities that will also benefit Taiwanese firms, workers, and interests. This “give” will set the stage for corresponding “take” on needs of Taiwan’s exporters and investors as they look to grow in the U.S. market. In our White Paper’s recommendations to Washington, AmCham has called for a double tax avoidance agreement, and we believe there is support within the U.S. Administration and Congress to negotiate a tax agreement because it promises to spur two-way investment. 

Fourth, Taiwan must reduce or eliminate long-standing irritants in the trade relationship and generate momentum by making concessions to gain early “wins” in the Initiative. Agricultural disagreements – mitigated but not eliminated in recent times – are targets for early attention and negotiating flexibility. Consideration should be given in advance to how trade dislocation in rural regions of Taiwan can be mitigated. 

Fifth, Taiwan should seize the initiative and play to its strengths in technology, democratic practice, and as an internationally trusted partner to work under the Initiative to forge a “gold-standard” Digital Trade Agreement (DTA) that will address concerns from privacy to cybersecurity and “internet-of-everything” standards, to the ethical control of artificial intelligence in the digital economy. Such a broad, cross-cutting agreement would unleash greater productivity, benefitting large and small businesses on both sides, thereby facilitating agreement in many of the 11 work streams. By blazing new ground in a field of top interest regionally and globally, and designed to allow for the accession by others, Taiwan would secure entre into other economic groupings. For all these reasons, AmCham Taiwan believes that a digital trade agreement should be made the focus and driving force of the Initiative. 

Taiwan has a historical opportunity to seize upon the opportunity presented by the U.S.-Taiwan Initiative on 21st Century Trade, to put its most important and strategic bilateral trade and security partnership – that with the United States of America – on yet stronger footing while galvanizing other sources of international integration and economic and political support. It will take concerted effort and political capital, but real achievement is at hand in the negotiations soon to get underway. AmCham Taiwan appreciates this opportunity to comment and commits to supporting both governments in concluding strong executive agreements.