U.S., Taiwan discuss closer trade ties . . .
Yesterday, the U.S. and Taiwan announced the U.S-Taiwan Initiative on 21st Century Trade, which will focus on best practices and standards for inclusive and responsible cross-Pacific commerce between the two governments. It will parallel Washington's new Indo-Pacific Economic Framework (IPEF), with its 13 inaugural members. The perceived snub of not including Taiwan in the IPEF had cast doubts on U.S. policy towards engagement and even protection of the island and highlighted Taipei’s reliance on Washington in shoring up its autonomy from mainland China. The new initiative reaffirms U.S. ties to the island.
Strategic partner for the future . . .
Taiwan is a strategic partner for the U.S. and other global players due to its strategic location within the Asia Pacific and its status as a robust democracy and a market that is more accessible than mainland China. It also plays a critical role globally as a major semiconductor manufacturer, producing and exporting these vital components required to support innovation and rapidly digitalizing economies worldwide. However, Taiwan is excluded from many multilateral organizations and trade agreements due to China's insistence on the ‘One-China’ policy – a condition of formal diplomatic relations with Beijing demanding the severing of formal diplomatic relations with Taipei. Nevertheless, Taiwan has been proactive in pursuing stronger ties internationally. It has welcomed recent plans from the EU to strengthen economic relations, mainly to secure and diversify technology supply chains. Last year, Taiwan also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, of which Canada is a member.
Circumventing diplomatic tensions . . .
The new U.S.-Taiwan trade initiative serves as an unofficial model for increased engagement with Taiwan without overly provoking Beijing. The Biden Administration has worked to strengthen ties with allies like Japan and South Korea, both of which could assist in Taiwan's defence in the event of a Beijing-led invasion. Giving Taiwan a trade lane parallel to the IPEF also helps avoid potential issues vis-à-vis China. Certain countries wishing to maintain economic ties with China, including many in Southeast Asia, may not have joined IPEF if it included Taiwan and directly challenged Beijing. These types of unofficial frameworks for engagement may be valuable tools for Canada to consider when balancing relations with Taipei and Beijing.