US-Taiwan talks to focus on supply chains and digital trade

Taiwan and the United States will discuss supply chain security and digital trade in their first trade negotiations in five years, as countries seek to deepen economic ties in the face of growing tensions with China.

Negotiations are set to begin Wednesday and will allow both sides to put a stronger focus on trade to keep up with their efforts. strengthening security and political ties amid growing tensions with Beijing. China claims Taiwan as part of its territory and threatens to invade it if Taipei resists indefinite unification.

“We want to elevate our business relationship to the next level of cooperation, an appropriate level for the future,” John Deng, Taiwan’s trade representative, told the Financial Times. “We want to talk about supply chains, digital commerce and trade facilitation.”

Washington’s decision to restart negotiations under the Trade and Investment Agreement (Tifa) marks a step by the Trump administration, which has given priority to reaching a limited trade deal with Beijing. .

Taiwan has been pushing for a bilateral trade agreement since President Tsai Ing-wen open the country’s market for U.S. beef and pork last week, a long step demanded by Washington.

Deng acknowledged that it might not be possible to reach such an agreement immediately. “A BTA is our ideal and that is the reality,” he said. “[The US] will not initiate too soon bilateral trade agreement negotiations with any country. But we can slowly pave the way. ”

Sarah Bianchi, who has been appointed as deputy trade representative for the United States, said Thursday that the new engagement with Taiwan under Tifa was an example of the Biden administration working with allies “to meet the growing challenge of China “.

“I don’t think the Trump administration integrates a commercial and strategic policy,” Jeff Schott told the Peterson Institute for International Economics, a think tank. “The Biden administration clearly takes a more holistic approach to relations with China, and sees Taiwan’s relationship as the most critical.”

The new discussions followed an internal debate in Washington that included calls from the state department to add an economic component to efforts to strengthen ties with Taipei.

Katherine Tai, the U.S. trade representative, had been less enthusiastic, but Jake Sullivan, a national security adviser, ordered his office to begin negotiations, according to four people familiar with the situation.

“Ambassador Tai and the Biden administration are committed to strengthening our economic and trade relationship with Taiwan, and look forward to discussing a number of issues during this week’s Tifa meeting,” USTR said.

The United States is likely to focus on semiconductor supply chain security and digital commerce, as well as pressuring Taipei to continue with a commitment to open its market to American pork.

The Tsai government did little to promote public acceptance of American pork, which may contain controversial traces of the food additive ractopamine. A referendum organized by Taiwan’s opposition on the entry of American pork is due to be held in August.

Deng warned that a decision against market opening could derail discussions. “Will the United States continue the Tifa discussions and further deepen our trade relationship? I think they wouldn’t – will they discuss if you can’t even address these current issues, why should we discuss future issues with you?”

“But we don’t have to rely primarily on a single market, it’s too big a threat for Taiwan,” he added, referring to China.

Digital commerce, one of the issues the two sides are focusing on, covers topics including duty-free commerce of digital products, data location barriers, cyber security and privacy rules.

Wendy Cutler, a former U.S. trade negotiator, said it would be crucial that the negotiations yielded some common initiatives, rather than just “a commitment to talk and coordinate more” to effectively strengthen trade ties.

Cutler suggested that the United States and Taiwan could work together on mapping semiconductor supply chains amid a global chip shortage.

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