Despite a lack of formal diplomatic relations with the United States due to unique historical and political circumstances, Taiwan has continued to be one of America’s most reliable friends. Here are just a few of the ways that close connection has been manifested:

Strategic interests. In a region of critical importance for the United States, Taiwan is a valued ally and source of support for continued peace and stability in the Indo-Pacific. In addition to its crucial geographic position in the first island chain between Northeast and Southeast Asia, Taiwan is seen as a trusted partner for the United States, with its commitment to democratic principles, human rights, and the rule of law. This year’s orderly, hard-fought, three-way presidential election further underscored Taiwan’s position as an exemplary model of democracy in the region.

Technological connections. In recent years, pandemic-related supply chain concerns have drawn attention to Taiwan’s prowess in the production of the semiconductors needed to make everything from missiles to automobiles to household appliances. Taiwan Semiconductor Manufacturing Co. (TSMC) is now world-renowned as the source of an estimated 95% of the world’s most sophisticated chips. Given leading American corporations’ close collaboration with TSMC and other Taiwanese chipmakers to protect product quality and intellectual property, U.S.-Taiwan cooperation in the sector has taken on huge importance, both commercially and in terms of national security.

Investment into the United States. Taiwanese companies are now among the most active in investing in manufacturing projects in the United States, creating thousands of high-paying jobs. TSMC alone is committed to building three semiconductor fabs in Arizona, investing a total of US$65 billion and potentially generating 6,000 high- tech employment opportunities. Another 20,000 workers are expected to be needed during the construction phase. Additional investment projects are coming from suppliers of materials and equipment to support the chipmakers, as well as from companies in such fields as green energy, photonics, electric vehicles, and automotive components. To solicit that investment and promote trade, more than a dozen U.S. states have opened offices in Taiwan in the past year and a half. By the end of 2024, there will be at least 23 U.S. state offices in Taiwan.

Booming trade. Taiwan ranked as America’s eighth- largest goods trading partner in 2023. The US$128 billion in two-way trade far exceeds the amount with much more populous countries, such as India and Brazil. In the first quarter of 2024, the trade value rose to a record high of nearly US$40 billion, according to Taiwan’s International Trade Administration. Taiwan’s strong demand for agricultural products such as soybeans, corn, and wheat has made it the seventh-largest importer of American farm products. Building for the future, the bilateral economic relationship is being bolstered by ongoing negotiations to conclude an agreement under the U.S.-Taiwan Initiative on 21st Century Trade.

In this environment, American businesses operating in Taiwan have been prospering. Membership in AmCham Taiwan has been rising steadily, totaling an all-time high of over 1,200 individuals representing more than 570 enterprises. In the Chamber’s 2024 Business Climate Survey, more than 80% of respondents expressed continued high confidence in the Taiwan economy and their companies’ business prospects.

To preserve this favorable environment for U.S. companies and to further enhance the vitality of the overall U.S.-Taiwan relationship, AmCham Taiwan urges the American government to take the following steps:

1. Ensure continued sufficient support for Taiwan’s defense. Security and predictability are vital for business operations and economic sustainability. Over the past two years, tensions in the region have risen as a result of threats and attempted intimidation by increasingly belligerent actors. In response, Taiwan has moved to strengthen its defense posture by increasing its military budget, extending the length of service for conscripts, and revamping its reserve system. Private-sector groups have also established civil defense programs. But external assistance is still essential. AmCham appreciates the support from the Biden administration and both sides of the aisle in Congress in helping to fortify Taiwan’s ability to defend itself. Besides the continued provision of defensive military equipment in line with the Taiwan Relations Act, the United States is helping Taiwan reinforce its cybersecurity capabilities and has expanded the types of training, logistical support, and strategic cooperation made available.

The United States needs to see to it that the delivery of agreed-upon arms packages to Taiwan is handled expeditiously. Excessive procedural requirements, as well as the demand for military supplies to support the defense of Ukraine, have stretched the time from order to delivery to as long as five or six years in many cases. We also suggest that the U.S. government look at helping to empower Taiwan’s defense industry by facilitating the participation of suitable Taiwanese companies in the supply chains of American defense contractors. Moreover, we encourage the United States to build support for the maintenance of peace in the Taiwan Strait among allies throughout the region, including Australia, Japan, the Philippines, and South Korea, since any conflict would bring disastrous repercussions for the entire Indo-Pacific.

2. Complete agreement on the U.S.-Taiwan Initiative on 21st Century Trade and use it as a springboard for a full-fledged bilateral trade agreement.
The Initiative is an excellent opportunity for the United States and Taiwan to define fundamental principles that could serve as a new gold standard for international trade and investment agreements. An initial agreement covering chapters on good regulatory practices (GRP), customs administration and trade facilitation, regulation of services, small- and medium-sized enterprises, and anti-corruption policies was signed in mid-2023.

The GRP chapter is of particular relevance to our member companies. When it is implemented, it will be vital to the sustained and effective use of public platforms for notice and comment, adopt a broad definition of “trade, investment and intellectual property matters” in determining which regulations fall under the provisions, and clearly stipulate the kinds of “urgent situations” that may be exempt from the provisions to avoid misapplication.

The first agreement has yet to go into effect, pending internal processes in the two governments. AmCham eagerly anticipates the swift implementation of the agreement and looks forward to our member companies participating in the consultative committees it establishes, particularly the GRP Committee outlined in section 3.17.

Meanwhile, negotiations are proceeding  on  chapters of the Initiative dealing with agricultural trade, labor rights, and environmental protection – to be followed by digital trade, state-owned enterprises, industry standards, and non-market policies. AmCham urges conclusion of a robust accord by the end of this year, providing momentum to move forward on a full-scale, comprehensive bilateral trade agreement (BTA).

In recent years, controversy over trade policy has made it difficult for the U.S. government to consider entering into any new free trade agreements. Hopefully, however, a U.S.-Taiwan agreement can be an exception. Once the Initiative is completed, the majority of the sections of a BTA will already have been negotiated, leaving mainly tariffs and other market-access considerations to be addressed.

Even more importantly, there is strong bipartisan support in Congress for concluding a BTA with Taiwan. This support has been growing due to increasing recognition of the national security implications for Taiwan associated with such an agreement. The Biden administration has also sought closer cooperation with Taiwan in many areas. A U.S.-Taiwan BTA no longer seems like a pipedream.

3. Enact necessary legislation for a U.S.-Taiwan agreement on double taxation avoidance. After years of discussion with little progress, Taiwan and the United States seem closer than ever to finalizing a bilateral arrangement to avoid double taxation between the two jurisdictions. The breakthrough was the development of proposed legislation in the U.S. Congress to provide protection against double tax liability for Taiwanese entities operating in or dealing with the United States. Once the law is passed, it would go into effect after equivalent provisions were enacted by Taiwan’s Legislative Yuan to cover American entities.

The initiative has received broad bipartisan backing  in Congress at a time when such cooperation between Democrats and Republicans has been a rarity, and the Taiwanese government has been equally supportive of concluding such an arrangement. The main motivation on both sides is the growing interest of Taiwanese companies in investing in the United States to take advantage of market opportunities. In particular, the above-mentioned huge investment by TSMC has increased awareness in the United States of how Taiwanese investment can spur job creation and technological advances in key industries.

Yet despite positive conditions, the legislation has been stuck in the Senate Finance Committee because of arcane Senate practices that have bundled it together with other bills that enjoy less sweeping support. Considering the benefits that both economies would derive from this legislation, as well as the symbolic value its passage would represent for U.S.-Taiwan relations, we request speedy action in Washington to find a creative solution to the current impasse.

4. Schedule visits to Taiwan by high-level U.S. government officials on a routine basis. China’s overreaction to the August 2022 Taiwan visit by then-Speaker of the House Nancy Pelosi raised the level of sensitivity surrounding contacts with Taiwan by senior American officials. However, this should not deter U.S. government administrations from utilizing visits by Cabinet secretaries or other officials to advance mutually beneficial relations between two major trading partners.

Conducting such high-level visits more frequently reminds all observers that they are a routine matter. When they are rare, they may be perceived as more provocative. At one time, such trips by officials of Cabinet rank were indeed fairly routine. During the 1990s, they occurred once every two years on average, and they aroused little more than an expression of displeasure from Beijing. In more recent years, the sole Cabinet-level visitor was then-Secretary of Health and Human Services Alex Azar in January 2021, although members of Congress and state governors come to Taiwan on a regular basis.

Whatever the visitors’ rank, their presence in Taiwan represents a concrete demonstration of the solidity of the bilateral relationship and is greatly appreciated by the Taiwanese government and people. On a practical level, such visits can also play an extremely useful role in furthering cooperation and policy alignment between the two parties, as well as raising issues of concern to U.S. companies and helping to accelerate reform in Taiwan. These contacts could form the basis for meaningful bilateral advances in such key areas as energy, climate change mitigation, healthcare, transportation, and environmental protection.

5. Continue efforts to promote Taiwan’s participation in relevant international organizations. Beijing’s objections have kept Taiwan out of many international organizations, often with potentially serious ramifications for the health and safety of its people. AmCham appreciates the efforts of the U.S. government to champion Taiwan’s entry into organizations that do not require statehood as a condition of membership. When full membership is impossible, Taiwan has sought observer status to at least ensure basic access to information.

Taiwan’s agile response to the pandemic and its donation of large quantities of masks and other protective equipment to the United States and other countries demonstrated its commitment to advancing international health. Yet it has been excluded from the World Health Assembly and related opportunities for cross-border collaboration. Similarly, lack of participation in the International Civil Aviation Organization (ICAO) carries potential risks for flight safety, and exclusion from Interpol impedes efforts to counter criminal activity.

The U.S. government has voiced support for widening Taiwan’s opportunities to interact with these important organizations. In view of the continued opposition those efforts are encountering, we urge Washington to intensify its campaign to persuade more allied nations to join the cause.