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US, Taiwan finish round of trade talks, agree to keep discussing 11 topics

South China Morning Post logo South China Morning Post 09/11/2022 Mark Magnier
  • Areas highlighted for continued discussion include anticorruption efforts, digital trade, state-owned enterprises and non-market policies and practices
  • No agreement is expected until at least next year

The US and Taiwan wrapped up two days of trade talks on Wednesday, laying out a road map for continuing negotiations in 11 areas. No agreement is expected until next year.

"The mandate envisions the negotiation of high-standard commitments and economically meaningful outcomes," the Office of the United States Trade Representative said in a statement short on specifics. "The two sides agreed to hold additional meetings."

Taiwan and the US do not have formal diplomatic relations so Washington was represented by the American Institute in Taiwan, the de facto US embassy, and Taipei by the Taipei Economic and Cultural Representative Office in the United States.

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The talks run parallel to, and replicate in scope, the Indo-Pacific Economic Framework that US President Joe Biden launched in May. Given China's sensitivity over Taiwan's participation in multilateral groupings, Washington created this parallel mechanism, analysts say.

Both sets of trade talks reflect Biden's bid to strengthen ties with allies and boost trade in the region in a bid to counter China's growing footprint.

Taiwanese President Tsai Ing-wen greets British trade minister Greg Hands at the Presidential Office in Taipei on Wednesday. Photo: Taiwan Presidential Office via AP © Provided by South China Morning Post Taiwanese President Tsai Ing-wen greets British trade minister Greg Hands at the Presidential Office in Taipei on Wednesday. Photo: Taiwan Presidential Office via AP

Terry McCartin, assistant US trade representative, led the US delegation during the talks, known officially as the US-Taiwan Initiative on 21st Century Trade, with several other economic, finance and small business agencies participating on both sides.

Among the 11 areas highlighted for continuing discussion are anticorruption efforts, digital trade, state-owned enterprises and non-market policies and practices.

The talks coincided with a trip by British trade minister Greg Hands to Taiwan this week, Britain's first in-person high level talks with Taipei since the coronavirus pandemic, to "to boost trade and future-proof our economy" with closer technology ties. That visit, which Beijing decried, included a meeting with Taiwanese President Tsai Ing-wen.

Both sets of talks come at a sensitive time. After US House Speaker Nancy Pelosi's trip to Taipei in early August, China launched a series of unprecedented military exercises and live-fire drills around and over the island and cut off most contact with Washington. The two sides are hoping to put relations at least partially back on track with a potential meeting between Biden and President Xi Jinping at a Group of 20 economies meeting in Indonesia later this month.

Beijing, which views the self-governing island as a renegade province to be reunited by force if necessary, has criticised this week's US-Taiwan trade talks, in keeping with its long-standing policy of working to globally isolate Taipei.

'Inevitable' US-Taiwan trade deal seen pulling island more into US orbit

Few countries, including the United States, recognise Taiwan as an independent state, but Washington is bound by law to support its military defence capability and encourages its presence in global health, crime prevention and aviation forums - objectives Beijing opposes.

Taiwanese officials have promoted the US-Taiwan initiative as a way to help its exporters lower operating costs, help smaller companies expand in global markets and improve the investment and trade environment.

Like the Indo-Pacific Economic Framework, the initiative would not lead to a traditional trade agreement that lowers tariffs and widens market access. These have become politically toxic in the United States, epitomised by former president Donald Trump's decision to pull the US out of the Trans-Pacific Partnership trade deal in the first days of his administration.

Rather, the two agreements attempt to facilitate trade in areas where the White House does not require congressional approval, involving regulations, trade barriers, digital rules, agriculture, labour and environmental standards.

China-US relations: Washington, Taipei launch joint trade initiative

The Chinese Embassy in Washington slammed the negotiations. "China is always against any country negotiating economic and trade agreements of sovereign implication or official nature with China's Taiwan region," said embassy spokesman Liu Pengyu. "We urge the US not to repeat its wrongdoing."

Analysts said it remained to be seen how effective Biden's efforts to more closely engage Indo-Pacific economies would be.

"Time will tell," said Christine McDaniel, a research fellow at George Mason University's Mercatus Center who was formerly with the US Trade Representative's Office. "It used to be that the US needed to show up with some really hard-core market access to get countries to take its demands seriously. But today there are non-economic issues on everyone's mind."

As advanced Western nations and China step up sanctions and reduce economic integration - sometimes termed "decoupling" - particularly in the hi-tech and financial sectors, Indo-Pacific economies have an interest in aligning with Washington even without expanded market access becomes more attractive, she said.

"They probably want to be inside the fence rather than outside the fence," McDaniel added. "Gone are the days of using trade for economic growth and prosperity, at least for now. This is largely symbolic, foreign policy driven, and it has broad, bipartisan support in Congress."

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