Window for Historic U.S.-Taiwan Trade Agreement Closing Fast

COMMENTARY Trade

Window for Historic U.S.-Taiwan Trade Agreement Closing Fast

Feb 21st, 2020 2 min read
COMMENTARY BY
Riley Walters

Policy Analyst, Asia Economy and Technology

Riley Walters is policy analyst, Asia Economy and Technology in The Heritage Foundation’s Asian Studies Center.
Now is also the perfect time for the U.S. administration and the Taiwanese government to pursue a free-trade agreement, but this window is closing fast. SAM YEH / Contributor / Getty Images

Key Takeaways

Taiwan is a beacon of democracy and freedom in the Indo-Pacific region.

An agreement with Taiwan would not only be important for U.S. commercial interests, it would also be the easiest agreement for the administration to achieve.

The U.S. commitments to Taiwan have stayed strong. It’s time for a U.S.-Taiwan free-trade agreement.

In just three years, the Trump administration has finished renegotiating a trade agreement with Canada and Mexico and hammered out new trade agreements with Japan and China.

With these deals now signed, President Trump has the opportunity to pursue new agreements. And no pact would enhance the legacy of this deal-making administration more than a free-trade agreement with Taiwan. It’s 30 years overdue.

Previous administrations often cast aside the idea of a U.S.-Taiwan free trade agreement in favor of economic and strategic dialogues with China. Meanwhile, regional trade blocs and international organizations have kept Taiwan at an arm’s length out of fear of angering Beijing.

Unlike its predecessors, the Trump administration has shown a willingness to bear Beijing's criticisms and continue a bilateral dialogue with China—all while supporting Taiwan and the buildup of its defense capabilities.

An agreement with Taiwan would not only be important for U.S. commercial interests, it would also be the easiest agreement for the administration to achieve.

Now is also the perfect time for the U.S. administration and the Taiwanese government to pursue a free-trade agreement, but this window is closing fast.

Recently reelected, President Tsai Ing-wen is currently going through a political honeymoon period, which would make politically easier to implement reforms now as a part of a trade agreement with U.S. instead of in a year from now.

Meanwhile, there’s already bipartisan congressional support for a U.S.-Taiwan agreement. Last year, 161 members of the House sent U.S. Trade Representative Robert E. Lighthizer a letter calling for such an agreement. That kind of bipartisan support is generally hard to find in Washington, especially on trade issues.

With every month we get closer to the U.S. presidential election, the more likely it is that President Trump will become consumed with campaigning. Meanwhile, the political honeymoon period for the Tsai administration will slowly wear off.

But there are better reasons for the U.S. to pursue a free-trade agreement with Taiwan, regardless of politics.

Taiwan is a beacon of democracy and freedom in the Indo-Pacific region—Beijing hates that. But the U.S. should do what it can to support a free and prosperous Taiwan.

For decades, Beijing has used any means necessary to consume Taiwanese talent and investment.

Over the last two years, Beijing and various provincial governments in China have implemented new, albeit questionable, incentives for Taiwanese companies to move to the mainland and invest in China’s fifth-generation (5G) telecommunications development, high-tech research and development, tourism, finance, agriculture, and so on.

Meanwhile, those that don’t kowtow to Beijing’s demands face punishment.

Just like Western companies faced Beijing’s wrath last year as protests in Hong Kong developed, it wasn’t but a couple of years ago that Western companies were forced to apologize for not conforming to Beijing’s wishes about how they operate in Taiwan. Just last October, Christian Dior had to beg for forgiveness and swear to uphold Chinese sovereignty—penance for having shot a video featuring a map that didn’t show Taiwan as being part of China.

Also last year, Beijing upped its pressure on Taiwan by punishing its tourism industry, banning Chinese tourists from going to Taiwan alone—i.e., tour groups only. This restriction cut the number of tourists from mainland China by almost two-thirds to roughly 90,000 a month.

A silver lining here—that has helped limit the exposure of Taiwan's domestic population to the coronavirus, though the virus also has stalled the business operations of Taiwanese companies that have already invested in China.

Other countries are hesitant to pursue greater economic cooperation with Taiwan, which has even lost several of its few remaining diplomatic allies over the last couple of years.

But the U.S. commitments to Taiwan have stayed strong. And it’s up to the Trump Administration to continue to do what others can’t. It’s time for a U.S.-Taiwan free-trade agreement.

This piece originally appeared in The Washington Times