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Doors Open to Potential U.S.-Taiwan Trade Negotiations, At Long Last

Shihoko Goto

Trade tensions between Taiwan and the United States are hardly new, with agricultural barriers being the thorn that has persistently rattled both Republican and Democratic administrations. So Taipei’s decision on August 28 to lift import restrictions on U.S. pork and beef after years of dispute marks a breakthrough in bilateral trade relations. It’s a major step forward between the two sides, and a much-needed step in the right direction for the ultimate goal of a bilateral trade agreement between Taiwan and the United States.

In the near term, the lifting of the ban on their products into the Taiwanese market is a major victory for U.S. pork producers and cattle ranchers after years of dispute over the safety of U.S. agricultural exports. But in the longer term, the latest move could lead to a trade deal that opens the door for greater flow of technology goods and services at a time when the United States is eager to reshore production of IT products. For Taiwan, meanwhile, the possibility of a free trade agreement with the United States will enhance its international position and strengthen bilateral ties with Washington at a time when cross-Strait tensions continue to rise and its very survival is at stake.

There are, however, sizeable political hurdles on both sides before a free trade agreement could actually be concluded. In Taiwan, criticism from opposition parties who disapprove of President Tsai Ing-wen’s leadership will no doubt argue that the Democratic Progressive Party is yet again aligning itself too closely with the United States and jeopardizing relations with Beijing as a result. At the same time, considerable backlash from Taiwan’s agricultural sector as well as from consumer groups concerned about food safety is to be expected. U.S. beef product restrictions have been in place since 2003 following the outbreak of mad cow disease, and pork import limitations were imposed in 2006 to ban meat containing ractopamine.

Negotiations for a free trade agreement without Taipei agreeing to U.S. beef and pork imports have been a political non-starter for the United States, so the latest development will push forward the possibility of discussing an FTA on the table.

But as a former trade negotiator, Tsai is well aware of the need for Taiwan to allow U.S. agricultural products if the government wants to negotiate a bilateral trade deal seriously. Negotiations for a free trade agreement without Taipei agreeing to U.S. beef and pork imports have been a political non-starter for the United States, so the latest development will push forward the possibility of discussing an FTA on the table. At the same time, Tsai is now in her most politically powerful position yet, secure in her second term in office and free from considerations of personal reelection. That gives her the ability to take risks and tackle the persisting political thorn of trade barriers.

For the United States, meanwhile, strong economic ties with Taiwan is especially needed in the technology sector in the longer term. As tensions over technology governance and rules intensify amid heightened U.S.-China-tensions, U.S. tech giants including Google and Microsoft have beefed up their investments to Taiwan. Moreover, Taiwan remains a global leader in the semiconductor industry, and the decision by TSMC to invest $12 billion for a plant in Arizona earlier this year gives a leg up to the United States, who has been concerned about national security implications of the relying on chips imported from Asia.

There is no lack of political will on the part of the United States. Last December, the Congressional Taiwan Caucus led by Reps. Albio Sires (D-NJ), Steve Chabot (R-OH), Gerald Connolly (D-VA), and Mario Diaz-Balart (R-FL) secured signatures from 157 members, urging USTR to consider a trade agreement with Taiwan that would “encourage more investment in American industries” and “also help establish comprehensive and high-standard rules for digital trade”.

Beijing responded to the Taipei visit by U.S. Health and Human Services Secretary Alex Azar earlier this month...by sending two fighter jets towards Taiwan ahead of the meeting.

Looming large over both Taipei and Washington is China, at a time when Beijing is buckling down on moves that would challenge its authority and its view of Taiwan. Indeed, Beijing responded to the Taipei visit by U.S. Health and Human Services Secretary Alex Azar earlier this month − the highest-level visit by a U.S. official to Taiwan to date − by sending two fighter jets towards Taiwan ahead of the meeting. Azar’s visit was pivotal in leading to a breakthrough on food safety and trade, which highlights the fact that closer working relations between the two sides could lead to further positive developments.

There is no doubt that simply initiating formal trade negotiations with the United States would enhance Taiwan’s international standing which in turn runs the risk of punitive actions from Beijing. But it is precisely because of Beijing’s opposition to Taipei’s identity and political will that serious negotiations for a bilateral FTA between Taiwan and the United States must begin in earnest.  

Follow Shihoko Goto, deputy director for geoeconomics and senior associate for Northeast Asia, on Twitter @GotoEastAsia.

The views expressed are the author's alone, and do not represent the views of the U.S. Government or the Wilson Center. Copyright 2020, Asia Program. All rights reserved.

About the Author

Shihoko Goto

Shihoko Goto

Deputy Director for Geoeconomics and Senior Associate for Northeast Asia, Asia Program
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Asia Program

The Asia Program promotes policy debate and intellectual discussions on U.S. interests in the Asia-Pacific as well as political, economic, security, and social issues relating to the world’s most populous and economically dynamic region.   Read more