Two months after U.S. Speaker of the House Nancy Pelosi’s visit to the island, Taiwan continues to be a pertinent subject in Washington, DC. Following numerous Taiwan visits by politicians and legislators, the U.S. Senate Foreign Relations Committee advanced the Taiwan Policy Act of 2022 by a 17-5 vote on September 14. The bill has been described as “the most comprehensive restructuring of U.S. policy toward Taiwan since the Taiwan Relations Act (TRA) of 1979,” and will most certainly reshape United States-Taiwan relations.
As these developments unfold, it is crucial to maintain an eagle eye on efforts to bolster trade and economic ties between the two markets. The U.S. and Taiwan have spent decades building a robust security and economic relationship and are now in an unprecedented position to further these relations through a Free Trade Agreement (FTA).
President Tsai Ing-wen during the final two years of her administration could solidify trade relations with the U.S. if she amplifies efforts to implement a trade agreement. While political gestures are not without meaning, the U.S.-Taiwan Initiative on 21st-Century Trade presents a platform to produce tangible results for the economy and people on both sides of the Pacific during a volatile time for global trade. Most importantly, the Initiative could serve as a springboard to a comprehensive agreement that provides market access benefits and meaningful integration.
This view was reiterated by President Tsai when she addressed a delegation led by U.S. Congresswoman Stephany Murphy on September 8, stating she is “confident that through the U.S.-Taiwan Initiative on 21st-Century Trade Initiative, we can sign a high-standard trade agreement and advance bilateral trade development.”
A recent in-depth study by U.S. think tank The Heritage Foundation found that an FTA between the U.S. and Taiwan would result in an increase in total trade by US$6.2 billion annually for the United States and by US$3.8 billion annually for Taiwan. Perhaps more importantly, the increased exchange between people and businesses would strengthen the bond between the U.S. and Taiwan in ways that symbolic visits cannot.
For these developments to occur, extensive efforts from the private sector are needed. By uniting in numbers and voicing an invested interest in the benefits that a trade agreement would undoubtedly incur for international companies, corporations have a chance to make a real difference in the future of Taiwan-U.S. trade relations.
Participation from the private sector produces integrated and collaborative solutions that can better address actual needs and issues in trade. With firsthand knowledge of bottlenecks and inefficiencies, the private sector can act as a bridge between government interventions and business operations.
Public-private partnerships can help overcome resistance to change from individual stakeholders in the public and private sectors. If a trade deal is mainly government-driven, there is a risk that outputs will lack relevance or even increase burdens if they are not aligned with business operating models.
An efficient way to actively back an FTA between Taiwan and the United States is to become a member of the U.S.-Taiwan Bilateral Trade Agreement (BTA) Coalition, which AmCham helped create in 2020. Coalition members can submit a written statement, to be published on the Coalition’s website, indicating that the organization supports a U.S.-Taiwan FTA. By being an early supporter of an FTA, organizations will not only help facilitate more robust trade relations, but will also be pivotal in the drafting of a practical FTA based on real-world problems and solutions.