Trade negotiations between Taiwan and the United States

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In November 2022, representatives from Taiwan and the United States took early steps towards beginning negotiations over a trade agreement that would focus on lifting non-tariff trade barriers. It is possible that an agreement will be signed by the end of 2023. If a deal is reached, however, ratification by both countries, and then implementation, will take years longer. A trade deal would serve as an additional pillar of the US–Taiwan relationship and would complement the increasing cooperation between Washington and Taipei on technology issues.

On 8–9 November 2022, Taiwan and the United States began negotiations in New York over what they are calling the Initiative on 21st-Century Trade. The reason this is an ‘initiative’ rather than a full free-trade agreement (FTA) is because, as Taiwan’s Deputy Trade Representative Yang Jen-ni said at a legislative hearing on 5 December, it will not address tariffs but only non- tariff barriers to trade. The talks held so far have consisted of ‘conceptual discussions’ between representatives from the respective diplomatic offices – the Taipei Economic and Cultural Representative Office in the US and the American Institute in Taiwan. The next round of talks – presumably more formal in nature – has not yet been scheduled, but the tentative target is to reach an agreement before the Asia-Pacific Economic Cooperation leaders’ meeting in November 2023. Most trade negotiations take years, but given the economic and geopolitical context, this seems a realistic timeline. Ratification and implementation will take longer, however.

Almost everything but tariffsA US–Taiwan FTA has been under consideration for at least two decades, having first been proposed during former US president George W. Bush’s first term of office (2001–05) under the guidance of then-trade representative Robert Zoellick as part of a trade policy called ‘competitive liberalization’, which aimed to use global competition as leverage to drive down negotiated tariffs and other trade barriers. In 2002, the US International Trade Commission concluded that an FTA between the US and Taiwan would have only ‘relatively small’ effects on their economies. US trade with Taiwan has grown since the early 2000s, however. In 2021, for example, Taiwan was the United States’ eighth-largest trade partner by volume, with total bilateral trade (US$113 billion) roughly equal to that between the US and India despite India’s population being 60 times larger than Taiwan’s.