Written by Brian Hioe.
Image credit: 03.29「民主夥伴共榮之旅」僑胞歡迎儀式 by 總統府/ Flickr, license: CC BY 2.0 DEED.
The US and Taiwan signed the first stage of the US-Taiwan Initiative on 21st Century Trade in June, paving the path for both to streamline customs and taxation procedures between both sides. The trade agreement will also boost economic cooperation regarding small-to-medium-sized enterprises while implementing anti-corruption measures. Progress on the trade agreement has continued, with the second negotiating round of the agreement starting in August. In particular, an end to double taxation between the US and Taiwan is a concrete outcome that both sides may pursue, long a stumbling block for those that work and do business in both the US and Taiwan. As progress on the US-Taiwan Initiative on 21st Century Trade has continued, legislation to this effect has been introduced in the US Senate.
The Tsai administration has touted the agreement as an accomplishment. Nevertheless, the significance of the US-Taiwan Initiative on 21st Century Trade may be regarding how it serves as a step forward for the Tsai administration’s longstanding aim of securing a bilateral trade agreement (BTA) with the US.
A BTA as Firmer Bedrock for US-Taiwan Ties
Taiwan has long angled for stronger economic ties with the US under the Tsai administration. This would be with political and geostrategic aims in mind, in that stronger economic ties with the US would provide a greater incentive for the US to defend Taiwan from the geopolitical threat of China.
The US itself was aware that stronger economic ties with Asian countries would lead to stronger political ties. This is why the Trans-Pacific Partnership (TPP) took shape under the Obama administration. It was to strengthen economic links with Asia Pacific countries to counter the rising economic, political, and military might of China.
This quickly changed when the Trump administration took power. One of the Trump administration’s first acts in office was to withdraw the US from the TPP. This took place even as the Trump administration also took an unprecedented phone call from Taiwanese president Tsai Ing-wen–even before being formally sworn into office.
It was under the Trump administration that the US-China trade war began. Withdrawing from the TPP was otherwise at odds with this harder stance on China. But, even as the Trump administration took a hard stance on China, it threw many of the traditional alliances of the US in the Asia Pacific into question. This included threatening to withdraw troops from US bases in the Asia Pacific and demanding that countries hosting bases contribute more to the US economically. And though the Trump-Tsai phone call was initially seen as a sign of a more supportive stance, this was quickly thrown into doubt after comments by Trump suggesting that he viewed Taiwan as potentially to be traded away with China as part of trade negotiations.
The Biden administration has maintained many of the measures of the Trump administration intended to apply pressure on China. The Biden administration did not rejoin the TPP, which took a new form under Japan-led auspices as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). That being said, otherwise, the Biden administration signalled renewed relations with traditional allies of the US in the Asia Pacific.
A broadly supportive stance for Taiwan continued under Biden, with US-elected politicians coming to visit Taiwan on an increasingly regular basis. With the flurry of diplomatic visits after the Pelosi trip last August, the political relationship between Taiwan and the US has strengthened in the past few years–ironically, in a way that has outpaced the hope that stronger economic ties between the US and Taiwan would lead to stronger political ties.
Taiwan continues to pursue CPTPP membership. But with the US showing no signs of wishing to rejoin the CPTPP, Taiwan now instead hopes to pursue a BTA with the US. Hence, the significance of the US-Taiwan Initiative on 21st Century Trade as a step toward this.
Trade Deal in an Age of US Scepticism in Taiwan
Yet even so, one has observed a parallel phenomenon in a period of strengthened US-Taiwan ties in a manner that would have seemed unimaginable before. Namely, the pan-Blue opposition in Taiwan has increasingly come to embrace a US-sceptic stance. Certainly, the many flip-flops by the US under the Trump administration have given ammunition to this narrative.
This scepticism is on a number of fronts. For example, there is the suggestion that US weapons sales to Taiwan are the US trying to impose unwanted arms onto Taiwan simply to make a profit and that this is what visits by US politicians hope to accomplish. One further sees the claims that arms deals could endanger Taiwan, with purchases of Volcano landmines making Taiwan full of land mines a la Cambodia, or that the US would seek to turn Taiwan into a munitions stockpile. This ventures into the wholly conspiratorial with claims in major pan-Blue outlets such as the United Daily News that the US hopes for Taiwan to engage in bioweapons manufacturing against China.
To this extent, economic and political ties with the US as a whole have been called into question. Much of such argumentation draws from the claim in international political discourse that the Russian invasion of Ukraine only took place because Ukraine became too close to the US and NATO, suggesting that Taiwan could see the same fate through stronger political, economic, and military ties with the US.
This, too, has led to questioning of the US-Taiwan Initiative on 21st Century Trade from the KMT, with the KMT calling for a review of the bill. Particularly as the progress around the bill took place near the tenth anniversary of the CSSTA, the agreement is framed as equivalent to the CSSTA—which led to protests in 2014 in the form of the Sunflower Movement—and hence needs similar oversight. This reflects not only growing US scepticism among the KMT but an attempt to shoot down what the DPP would otherwise claim as an accomplishment in strengthening US-Taiwan ties.
In the meantime, domestic political trends in the US see MAGA Republicans, a newly emerged political tendency in the Republican party whose high-pitched rhetoric is deeply shaped by the Trump administration’s tenure and who broadly call for a shift toward protectionism and isolationism by the US, turn against American support for Ukraine. The suggestion is that Ukraine is a drain on American resources while the American interest would be better served elsewhere. Though sometimes the suggestion is that the US should focus more on Taiwan than Ukraine, the rise of such trends–themselves in line with protectionist and isolationist trends that took shape during Trump’s time in office–could also see a rapid inversion of views on Taiwan among US policymakers.
This, then, perhaps illustrates why pursuing economic relations with the US continues to be a priority for pan-Green policymakers. After all, even if it has become increasingly popular for US politicians to visit Taiwan after the Pelosi visit–with former Trump administration staffers hoping to keep in the public eye through a visit to Taiwan among them–this could potentially change down the line. But, even if there is a waning interest in Taiwan from US-elected politicians, economic links between the two could ensure more durable foundations as to why it would be in the American interest to defend Taiwan.
Indeed, and if there has been greater awareness of the world’s dependence on Taiwan for semiconductors since shortages in the wake of the COVID-19 pandemic, it is a question whether Taiwan will be able to maintain global reliance on Taiwan forever. Certainly, the Chinese military threat to Taiwan has existed before Taiwan’s current dominance in semiconductor manufacturing–and it could last after. But a trade deal could go a long way in cementing firmer economic ties between the US and Taiwan that are not dependent on a single industry.
But, much as the US’s role is increasingly questioned by the pan-Blue camp, as Taiwan approaches a trade deal with the US, one also expects to see the pan-Blue camp lean into similar narratives as in the past. Preceding political administrations such as the Ma administration tried to frame the entrance to China-led trade blocs such as Regional Comprehensive Economic Partnership as necessary at the same time as pursuit of entering the CPTPP, for instance, never mind that both trade blocs are at odds with each other.
Both political camps in Taiwan are expected to try and frame which trade blocs are most advisable for Taiwan in line with the dominant political narratives of their camps–whether China-sceptic or US-sceptic. And though trade agreements have not become a major campaign issue for the 2024 presidential election cycle so far, one imagines that this could increasingly become focused on in the future.
At the same time, it is to be seen whether the idea of strengthened US-Taiwan trade ties could, in fact, come under fire from the US side. Taiwanese semiconductor manufacturing giant TSMC’s Arizona fab has prompted some worries in Taiwan, with the fear that the US could potentially gain access to sensitive technologies that allow Taiwan to maintain its predominance in semiconductor manufacturing.
But Taiwan’s Arizona fab has also provoked blowback from domestic American union groups, seeing as Taiwan is importing a great deal of labour for the fab. Local union groups have called for the visas of Taiwanese workers to be locked, with the view this is taking jobs away from local workers. Measures to make it easier to do business between Taiwan and the US — with the streamlining of customs, taxation, or the movement of workers through the US-Taiwan Initiative on 21st Century Trade or other agreements — could lead to blowback from the US side as well. After all, the deal could unpredictably see a backlash from economically protectionist politicians that frame BTAs with Taiwan as ultimately benefiting Taiwan more than the US, particularly if the deal is framed as having a negative impact on American jobs. This would be in line with the broader backlash against free trade in the US—which is significant enough that Biden himself likely was dissuaded from rejoining the TPP after taking power because of the resurgence of protectionist views in the US during the Trump administration. Such trends stand to affect Taiwan as well.
Brian Hioe is one of the founding editors of New Bloom. He is a freelance journalist, as well as a translator. A New York native and Taiwanese-American, he has an MA in East Asian Languages and Cultures from Columbia University. He graduated from New York University with majors in History, East Asian Studies, and English Literature. He was Democracy and Human Rights Service Fellow at the Taiwan Foundation for Democracy from 2017 to 2018 and is currently a non-resident fellow at the University of Nottingham’s Taiwan Studies Programme.
This article was published as part of a special issue on US-Taiwan Trade Agreement.
