Taiwan Using its Close US Ties to Seek Elusive Economic Deals with a Major Trading Partner

Taiwan is taking its strong relations with the United States to a new level by pursuing economic deals that could make the export-reliant but isolated Asian island more competitive in the world.U.S. and Taiwanese officials Friday signed a memorandum of understanding to expand “economic prosperity” through a series of talks, the de facto U.S. embassy in Taipei, the American Institute in Taiwan, said in a statement on its website. Future dialogue will be aimed at creating new types of cooperation, the statement said.The memo signed in Washington raises hopes that Taiwan and the United States can eventually do more together economically, officials in Taipei say.“In the future, cooperation will grow even closer and broader,” Taiwan’s Foreign Affairs Ministry said.Taiwan’s ultimate prize would be a formal free trade agreement, and Taipei has already charmed the United States this year by easing bans on pork and beef imports, despite pushback from domestic pig growers. Without a trade deal, Taiwan must pay standard import tariffs to the massive U.S. market rather than the lower tariffs granted to export competitors, such as South Korea, that have agreements with Washington.“Signing this memorandum means that there’s a chance to move forward,” said Liang Kuo-yuan, president of the Polaris Research Institute research organization in Taipei.“If you can keep it up, then longer term and then if they can sign a deal, for Taiwan of course there’s a very big advantage,” he said.Taiwan, because of a decades-old political dispute with Beijing, struggles to sign deals with China’s 170-plus diplomatic allies including the United States.’A lot of anxiety’China also frowns on Taiwan’s ambitions to join major world trade agreements. This month the 10-member Association of Southeast Asian Nations inked a Regional Comprehensive Economic Partnership trade deal with China, among other states.“The regional treaty between China and the ASEAN, that is what has been creating a lot of attention in Taiwan, because of China being part of the ASEAN and Taiwan won’t be able to have that privilege,” said Kent Chong, managing director of professional services firm PwC Legal in Taipei.“That creates a lot of anxiety,” he said.The United States is Taiwan’s second-biggest trade partner, based on $85.5 billion in total imports and exports last year. Technology products and services, including personal computers, make up roughly one-fifth of the Taiwan gross domestic product.In 1994 Taiwan and the United States agreed to talk regularly toward a trade deal, and they had met 10 times as of 2016 but never under U.S. President Donald Trump. Trump, however, has elevated overall U.S.-Taiwan ties by speeding the pace of arms sales, signing pro-Taiwan legislation, and sending senior-level officials to the island.Taiwan fits Trump’s tough China policy, which is marked by disputes over trade, technology sharing and Beijing’s maritime expansion. China calls self-ruled Taiwan its own and resents the United States for helping it politically or militarily.Although the broad strength in Taiwan-U.S. political ties will help with economic deal-making, trade agreements with the United States normally take years as each side frets over protecting segments of its economy. The 2010 U.S.-South Korea free trade agreement took more than four years to work out. Taiwan should make “psychological preparation” for a long process, Liang said.Only after the two sides announce specific industries for discussion would Taiwan’s numerous smaller companies get excited, said Lin Ta-han, CEO of the Founder-Backer, a Taipei company that helps startups raise money.“Unless there’s a chapter that discusses content related to tech development or startup companies, if this [dialogue] just has no specific nature or if there’s no specific deal, then we wouldn’t get see this news as advantageous or disadvantageous,” Lin said.For now, Taiwan and the United States plan to discuss working together on 5G networks, internet security, the safety of investments, “reliable” supply chains and resilience in manufacturing, the AIT statement said. Taiwan expects talks too on cooperation in infrastructure, including renewable energy, the ministry statement said.To smooth the way for any trade talks, Taiwan President Tsai Ing-wen said in August that starting next year her government would lift a ban against U.S. pork containing the feed additive ractopamine and ease restrictions on imports of American beef.     

         

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