Moving Toward a BTA with the U.S.

Recent progress in tightening the U.S.-Taiwan relationship has been stunning. Developments have included high-profile visits to Taipei by the U.S. Secretary of Health and Human Services, as well as the Under Secretary of State for Economic Growth, Energy and the Environment. Additional major military sales are reportedly in the offing, following Taiwan’s August purchase of 66 new American-made F-16 fighters.

And perhaps most significantly, Washington is including Taiwan in its efforts to create what it is calling the Economic Prosperity Network, an alliance of countries committed to fair and mutually beneficial trade practices. Taiwan’s world-class semiconductor and other high-tech industries will be a valued part of the drive to restructure international supply chains to ensure their security.

Most recently, the U.S. Treasury Department and Taiwan’s Ministry of Finance announced unprecedented plans to cooperate to provide funding for infrastructure investment in developing countries.

The next logical step is for Taiwan and the U.S. to begin negotiations on a bilateral trade agreement (BTA).

The two countries are among each other’s most important trading partners, and each would have much to gain by further reducing tariff and non-tariff barriers. The Tsai Ing-wen administration has already demonstrated Taiwan’s goodwill by announcing that major restrictions on imports of American beef and pork – long the number-one bilateral trade issue – will be lifted from 2021.

Practically speaking, little tangible progress toward a BTA is likely to occur until after the next U.S. presidential term begins in January. But since support for Taiwan in U.S. political circles has been bipartisan – as has the desire to ensure trade stability and security – the American position is likely to be similar whether the next administration is Democratic or Republican. Senators from both political parties were among the 50 signatories to a letter to the U.S. Trade Representative urging action toward a BTA with Taiwan.

Some American commentators have expressed concern that pursuing such an agreement would jeopardize chances to engage in further trade talks with China, which is undeniably the much larger market. But the argument can also be made that trade negotiations with Taiwan would strengthen the U.S. hand in dealing with Beijing.

Taiwan is a relatively open economy with appropriate standards in the often-sensitive areas of labor and environmental affairs. It is also heavily dependent on international trade for its economic well-being. As a result, it is likely to be a willing partner for a comprehensive, high-level BTA that could serve as the new “gold standard” for trade agreements, with strong provisions on such topics as intellectual property rights and dispute-settlement mechanisms. Such an agreement could be held up to Beijing as the model the U.S. intends to follow in future.

A bigger obstacle may be the internal politicization of the issue within Taiwan, especially the opening of the market for U.S. pork with acceptable levels of the food additive ractopamine. Given the importance for Taiwan’s prosperity and security of strengthening its relations with the U.S. – and considering the established scientific evidence that meat with trace elements of ractopamine is safe for human consumption – AmCham Taipei hopes that no political barriers to conclusion of a BTA will obstruct the current progress.