U.S.-Taiwan trade talks to begin in fall, White House says

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Another week, another delegation of US officials arrived in Taiwan for talks with government and business leaders on the self-governing island that China claims as part of its sovereign territory.

This latest trip is being made by Indiana Governor Eric Holcomb and state officials who seek to expand business and academic ties, and in particular to bring more semiconductor production by Taiwanese companies into Indiana.

Two delegations of US lawmakers, including Democratic House Speaker Nancy Pelosi, traveled to Taiwan this month to show political solidarity with Taiwan, and China responded with military maneuvers and reminders that Taiwan should not do no movement towards independence. An announcement from the Biden administration that it will officially launch trade negotiations with Taiwan in the fall, prompted a warning against “official exchanges” with the island that Beijing calls a “region of China”.

In short, the United States wants to prevent China from taking control of the island by force and threatening American allies like Japan and South Korea. But lowering trade barriers and expanding trade ties have their own economic logic, said Mary Lovely of the Peterson Institute for International Economics.

“Trade is integral to Taiwan’s importance to the United States,” she said. “The island has been able to produce very important products and has become an integral part of American supply chains.”

Taiwan is the United States’ eighth largest trading partner and exports crucial advanced computer chips, said Eswar Prasad of Cornell University.

“It’s a market for some US exports, like agricultural products,” he said. “But also, consumer goods that go through China have technology from Taiwan. Taiwan also exports directly to the United States”

So why disrupt all those crucial supply chains with official visits and trade talks that make China cringe? Prasad said the United States was trying to assert regional economic leadership.

“It’s a way of, you know, poking China in the eye,” he said.

Additionally, US officials, like the Indiana delegation, want Taiwanese companies to build more factories to produce their sophisticated computer chips here in the United States.

Finally, Kurt Tong, former U.S. ambassador to the Asia-Pacific Economic Cooperation forum, said U.S.-Taiwanese trade talks would likely be less provocative for China than political or military moves.

“The fact that Taiwan’s economy is closely tied to the rest of the global economy is not really a threat to China’s ultimate hope for reunification,” Tong said.

He said China relies heavily on trade with Taiwan and wants the island’s economy to continue to thrive.

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