In December’s “President’s View,” I flagged two member challenges: business travel and climate action. With apologies for breaking the spell of the seasonally appropriate Wine & Dine coverage, I would like to outline two more: supply chains and geoeconomic competition. These are global stories in which Taiwan figures prominently.
Concerns about supply chains – their integrity and geographic concentration, as well as military and industrial base vulnerabilities – had registered with systems planners well before COVID-19 had shone a spotlight on them. Since the pandemic, the model of “efficiency-at-all-cost” in zero-buffer systems and the very assumption of the infallibility of market signals to steer corrections have turned “concern” into “anxiety.”
Concerns about supply chains – their integrity and geographic concentration, as well as military and industrial base vulnerabilities – had registered with systems planners well before COVID-19 had shone a spotlight on them. Since the pandemic, the model of “efficiency-at-all-cost” in zero-buffer systems and the very assumption of the infallibility of market signals to steer corrections have turned “concern” into “anxiety.”
Trade-dependent and with over three decades of manufacturing investment in China, Taiwan holds important pieces in the supply jigsaw. Taiwan is both a source of frontline insight for policymakers and a master link in production chains considered most strategic, especially semiconductors and ICT, mobility, and healthcare.
Taiwan is strengthening its own value chains. The government reports over 1,100 reshoring and domestic expansion projects representing US$56 billion in investment over the last 20 months under a single Taiwan government program (“Invest in Taiwan”), which was just extended for three years. It is testament to the strength of this Taiwan re-basing “pull” that manufacturing would be moving onto an island where land, water, power, and personnel constraints are strong outbound “push factors.”
Layered onto the calculations of Taiwan businesses and authorities is a different outbound push – that from foreign customers and governments. An example involves foundry production giant (and AmCham member) TSMC. It has begun investing US$19 billion in chip plants in the U.S. and Japan, while considering sites in Germany and India. Thus, Taiwan is helping to unkink chains for the global community, too.
The U.S. State Department’s Economic Prosperity Partnership Dialogue and Commerce’s just-launched Technology Trade & Investment Collaboration promise more public-private collaboration in semiconductors and other sectors. Our Chamber might find a niche supporting international and local firms, current members and aspiring ones, to navigate the changing investment panorama.
With a new committee covering semiconductors joining the existing 25, AmCham offers a platform for public-private discussions and partnerships on supply chain matters. Our multinational membership allows for conversations beyond America and Taiwan.
There may be a role for AmCham to address capacity or talent gaps that also stress supply chains. President Tsai floated the idea of international training of semiconductor technical talent last spring. As the foremost English-speaking chamber in Taiwan, AmCham possesses a networking and cross-cultural training niche that can facilitate Taiwan’s coming wave of overseas investment, especially that involving mid-tier suppliers and SMEs making their first forays abroad. Those managers may wish to enroll staff in our well-regarded NextGen Leadership Program.
My second business challenge is geoeconomic strife. While such competition is longstanding and global, lately the game has changed. Its stridency and the bluntness of the geoeconomic tools being wielded – market denial, massive regulatory fines, sanctions, politicized FTAs, infrastructure platforms like the Belt and Road Initiative and Global Gateway – have elevated it as a business risk for AmCham members. In fact, geoeconomics have complicated otherwise largely technical issues around supply chain reform. At a recent forum, a leading opposition figure warned Taiwan against “confrontational” supply chain adjustments.
The tactics being employed against Eastern Europe and Australia – energy pipelines, dubious phytosanitary findings, local government actions – are uniquely familiar to Taiwan, making its experience relevant for nations confronting economic coercion. Recent EU delegations to Taiwan studying misinformation and gray-zone tactics reflect the island’s instructional value.
Paralleling the supply chain debate is an appreciation that in geoeconomics, too, Taiwan is both object and actor, as shown by Taiwan’s September application to join the CPTPP and its filing with a gradually reactivated WTO over China’s ban on custard apple imports reveal this. A month back, Taiwan concluded a Double Tax Agreement with Korea. Drawing Taiwan into liberal trade frameworks is seen as stabilizer against geoeconomic pressure.
Taiwan, and specifically AmCham Taiwan, can help meet these four challenges. Addressing one of last month’s issues, we posted a statement on our website regarding the responsible reopening of business travel. The Chamber has championed a U.S.-Taiwan Bilateral Trade Agreement, the application of science- and rules-based commercial governance, and collective free-trade advocacy.
In our 2021 White Paper, we proposed six “tracks” to trade liberalization and integration to knit Taiwan into the Indo-Pacific open-trade architecture, an undertaking dubbed the “Taiwan Commercial Initiative.” Seeing that half of those tracks were activated in the past half-year, let us return to the pleasant theme of Wine & Dine. Three cheers for AmCham Taiwan!
