US and Taiwan sign first agreement under new trade initiative

Office of US Trade Representative confirms signing of deal, which had been reached two weeks ago, takes place in Washington
Further economic and trade negotiations will build on the pact, which includes customs, regulatory and anticorruption measures

Taiwan

Bochen Han

Published: 3:05am, 2 Jun 2023

Why you can trust SCMP

The United States and Taiwan have signed a new deal intended to strengthen their economic and trade relationship, the office of the US Trade Representative announced on Thursday.

The agreement – the first under a framework for talks between Washington and Taipei called the US-Taiwan Initiative on 21st Century Trade, which was launched last year – includes allowances for electronic documentation and payments, measures meant to speed up trade between the two markets.

The agreement was signed in Washington under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States, with Deputy US Trade Representative Sarah Bianchi present.

The USTR office announced two weeks ago that the US and Taiwan had concluded negotiations for the agreement, which covers customs administration and trade facilitation, good regulatory practices, services regulation, anticorruption and small and medium-sized enterprises.

Sarah Bianchi, the deputy US trade representative, attended the signing of the agreement. Photo: USTR

Through these provisions, “US businesses will be able to bring more products to Taiwan and Taiwanese customers, while creating more transparent and streamlined regulatory procedures that can facilitate investment and economic opportunities in both markets,” USTR said.

The office noted that negotiations on additional trade issues would commence after the signing.

Talks commenced in August, after the Biden administration left Taiwan out of its larger pan-Asia Pacific trade initiative, the Indo-Pacific Economic Framework (IPEF), also launched last year.

Neither of the frameworks currently allows for tariff reductions or other market access provisions as these measures would require congressional approval, a source of criticism against IPEF by some pro-trade advocates.

Business groups urge Biden to return trade to heart of Asia policies

Thursday’s deal comes after Chinese Commerce Minister Wang Wentao met Commerce Secretary Gina Raimondo in Washington and US Trade Representative Katherine Tai on the sidelines of the Asia-Pacific Economic Cooperation in Detroit last week.

The resumption of high-level face-to-face meetings follows a deterioration in US-China relations after a Chinese surveillance balloon was discovered over US skies and Taiwanese President Tsai Ing-wen met with high-ranking American politicians in the US in April.

Beijing views Taiwan as a breakaway province to be united eventually with the mainland, by force if necessary, and opposes official meetings between Taipei and countries that recognise China.

Chinese foreign ministry spokesperson Mao Ning said that the US’s move “gravely violates the one-China principle and the three China-US joint communiqués, and contravenes the US’s own commitment of maintaining only unofficial relations with Taiwan”.

Chinese Foreign Ministry spokesperson Mao Ning criticised the US trade agreement with Taiwan. Photo: AP

The US must “refrain from negotiating or signing any agreement of sovereign implication or official nature with China’s Taiwan region, and stop sending any wrong message to separatist forces seeking ‘Taiwan independence’ in the name of economy and trade,” she added.

The US maintains that its engagements with Taiwan do not contravene its one-China policy, composed of agreements known as the three joint communiques that established America’s formal diplomatic recognition of the People’s Republic of China while allowing “cultural, commercial and other unofficial relations” between America and Taiwan.

The policy is also guided by the Taiwan Relations Act, which authorises the US to support the island’s defence capabilities and the Six Assurances, commitments Washington made to Taipei in 1982 to disregard Beijing’s opposition to US arms sales to the island.

USTR said the text on customs and trade facilitation will cut red tape for US firms to export products to Taiwan, allowing customs forms and payment of duties and fees to be submitted electronically and reducing wait times for vessels and trucks.

US and Taiwan reach deal on first part of ‘21st century’ trade pact

The section on regulatory practices and services regulation is meant to help small businesses better understand regulations in both markets and streamline communications between licence applicants and regulators, the office said.

The anti-corruption language would commit both sides to establish comprehensive measures to protect whistle-blowers and combat issues like money laundering, the office said.

The small- and medium-sized enterprises text would promote resources for such businesses to learn about both markets and improve their access to capital and credit.

Thursday’s deal came ahead of one of the year’s most high-profile security conferences, the Shangri-La Dialogue, which will be held in Singapore from Friday to Sunday.

China’s defence chief Li Shangfu is expected to attend, as will his US counterpart Lloyd Austin, though the Pentagon said this week that Beijing had rejected a proposal for the two chiefs to meet.