The relationship between the United States and China is already tense, and President Joe Biden’s tentative steps toward a new trade deal with Taiwan are only going to make things worse.
Talks are expected to begin in the fall, adding another layer of complexity to what is expected to be Biden and Chinese President Xi Jinping’s first face-to-face meeting as world leaders at the G-20 forum in Indonesia this November.
The BIDEN administration was criticized for being “inconsistent” on the issue of requiring vaccines for all international visitors.
The economic significance of the so-called U.S.-Taiwan Initiative on 21st-Century Trade is hotly debated amongst experts on trade in the Indo-Pacific region. They do not think the Biden administration is trying to provoke China on purpose, but the announcement of a negotiating mandate this week that could update the 1994 U.S.-Taiwan Trade and Investment Framework Agreement shows that Biden is serious about including the self-governing island in his regional strategy.
Research fellow at the Council on Foreign Relations David Sacks told the Washington Examiner, “It’s an important and, frankly, overdue announcement.” In terms of U.S. trade, Taiwan is a major player. A greater appreciation for its significance, particularly in the semiconductor industry but also in other supply chains, emerged during COVID-19. Taiwan is obviously central to the debate over weaning ourselves off China and constructing reliable, risk-free supply chains.
Even as tensions rose with China over House Speaker Nancy Pelosi’s (D-CA) visit to Taiwan, the White House continued to push for trade deal negotiations. Sacks counters that China’s sanctions and military drills over Pelosi’s visit this month have nothing to do with the real reason for the talks: the administration’s decision to exclude the island from its Indo-Pacific Economic Framework for Prosperity and Taiwanese President Tsai Ing-decision wen’s last year to end protectionist policies that hurt U.S. beef and pork.
Sacks argued that the United States has a vested interest in seeing Taiwan diversify its trade away from China proper. In my opinion, China has tremendous leverage during a crisis because the mainland is by far Taiwan’s largest export market and its largest trading partner.
Senior administration officials are expected to lead the U.S.-Taiwan talks, since Vice President Biden lacks the congressional support and trade promotion authority to negotiate a free trade deal. This is in contrast to prioritizing an agreement with China over one with the island, as was the case during the administration of former President Donald Trump and his representative, Robert Lighthizer. According to Sacks, Biden and his aides are hoping the “political buy-in” will inspire other countries to negotiate their own deals with Taiwan. At this time, only New Zealand and Singapore have no binding agreements.
Even if no formal agreement is reached between the United States and Taiwan, senior nonresident fellow at the Atlantic Council Jeremy Mark is confident “a lot of good” will result. Mark thinks the biggest problem is the stress the talks put on U.S.-Chinese relations after Pelosi’s trip due to the “uncertainties.”
The question is, as he put it, “if you look back at the coverage of what was announced in June on the economic relationship with Taiwan, [if] that’s all it’s going to be, the usual angry boilerplate, or whether there will be other steps taken because they see the need to demonstrate more clearly that they are increasingly uncomfortable with the direction of U.S.-Taiwan relations.”
Critics of the U.S. Trade Representative’s (USTR) negotiating mandate announcement this week and of Biden’s Indo-Pacific approach generally have focused on the absence of market access.
Research fellow at the Cato Institute Clark Packard argued that “the United States ought to reengage on the Trans-Pacific Partnership and bring Taiwan into that existing free trade agreement framework.” The Indo-Pacific Economic Framework and the talks with Taiwan raise another concern of mine: neither of them includes an enforcement mechanism. There is no system for settling disputes.
American Enterprise Institute senior fellow Derek Scissors chimed in, saying, “The U.S. and Taiwan already have fairly open trade and investment, and the Biden administration has shown no interest in true trade liberalization with anyone.” To paraphrase, “China would strongly object if the United States signed a formal trade agreement with Taiwan, but that is not going to happen in 2022 or 2023 at the earliest.”
Specifically focusing on facilitating trade between small and medium businesses, agriculture, and the digital space, the United States and Taiwan will negotiate these matters through the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States. The U.S.-Taiwan Initiative on 21st Century Trade was announced in June, and negotiations are set to begin in the fall. Standards for both the workplace and the environment, as well as the implementation of anti-corruption measures, will be discussed.
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This week, Deputy U.S. Trade Representative Sarah Bianchi stated, “We plan to pursue an ambitious schedule for achieving high-standard commitments and meaningful outcomes covering the eleven trade areas in the negotiating mandate that will help build a fairer, more prosperous, and resilient 21st century economy.”
The Examiner of Washington Keywords: China, Xi Jinping, Joe Biden, Trade, Taiwan Videos
Naomi Lim, the original author
Start Here: Biden puts US-China relations to the test with trade talks in Taiwan
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