US-Taiwan Trade Talks Resume... Full-Scale China Containment Through 'Semiconductor Alliance'

Taiwan Aims for FTA with the US
Vaccine Supply Negotiations Also Underway

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Trade and Investment Framework Agreement (TIFA) negotiations between the United States and Taiwan have resumed after five years.

As US-China competition intensifies mainly in the technology sector, there is speculation that the US will formalize its "semiconductor alliance" with Taiwan, home to the world's largest foundry (semiconductor contract manufacturing) company TSMC, to actively counter China.

According to Taiwan's Central News Agency and Bloomberg on the 30th, the US Trade Representative (USTR) and Taiwan's Office of Trade Negotiations held the 11th round of TIFA negotiations via an online video conference on the same day.

TIFA is regarded as a preliminary step toward a Free Trade Agreement (FTA).

On the US side, Terence J. McCartin, Deputy USTR for Asia, and on the Taiwan side, Yang Zhenni, Director of the Taiwan-US Affairs Committee, participated as chief negotiators.

This round of negotiations began following an agreement earlier this month between Katherine Tai, USTR Representative, and her Taiwanese counterpart to resume talks.

The core agenda of this negotiation was supply chain stability, including the semiconductor sector.

Taiwan's Office of Trade Negotiations stated that while the talks focus on ensuring stable semiconductor supply, negotiations will also cover various areas such as intellectual property protection, digital trade, trade enhancement, regulatory transparency, foreign investment, financial services, labor rights, and environmental protection.

The issue of semiconductor supply chain stability is a particularly important agenda for the US.

The Biden administration has strongly expressed its intention to reorganize supply chains of key industries such as semiconductors under US leadership.

Bloomberg predicted, "Discussions on stable semiconductor supply will extend to issues related to TSMC's new semiconductor factory under construction in Arizona, USA."

Previously, TSMC announced plans to invest $12 billion in building and operating a semiconductor production facility in Arizona, USA.

In particular, there is speculation that Taiwanese semiconductor companies may leverage their semiconductor supply chains to negotiate vaccine supply with the US.

According to Hong Kong's South China Morning Post (SCMP), executives from Taiwan's Foxconn and TSMC reportedly met with US officials earlier this month to discuss vaccine supply negotiations.

US Secretary of Commerce Gina Raimondo said, "I understand that Taiwanese semiconductor company officials are in contact with senior US officials to secure vaccine accessibility."

The resumption of TIFA negotiations took place as the US builds a strategic relationship with Taiwan despite China's opposition.

[Image source=EPA Yonhap News]

Taiwan also plans to use this opportunity to strengthen security by deepening its relationship with the US.

To this end, Taiwan aims to use the eventual conclusion of TIFA as a stepping stone toward concluding an FTA with the US.

Xiao Meiqin, Taiwan's representative to the US who effectively serves as Taiwan's ambassador, stated on Facebook on the 29th, "Step by step, we are building friendship and mutual trust, hoping that the day will come when we sign a bilateral (free) trade agreement in the future."

Besides the US, Taiwan is also reported to be negotiating FTAs with New Zealand and Singapore.

Bloomberg emphasized, "(An FTA with the US) would be a significant political achievement for the Tsai Ing-wen administration," adding, "Although most Taiwanese goods are already exported to the US tariff-free, an FTA with the US would serve as a political shield for Taiwan when concluding FTAs with other countries."

Previously, the US and Taiwan began TIFA negotiations in 1994 and held a total of 10 related talks until 2016, but the Trump administration suspended TIFA talks with Taiwan.

This content was produced with the assistance of AI translation services.