After a year of extensive talks, representatives from Taiwan and the US on Thursday signed the first round of a new trade deal between the democratic self-ruled island and its superpower ally.<\/P>
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Lauded by authorities as the most significant step taken in trade relations between the US and Taiwan since the latter\u2019s accession to the WTO twenty years prior, the new trade agreement has been hammered out within the frameworks of the US-Taiwan Initiative on 21st Century Trade, a joint effort launched last year seeking to extend trade ties.<\/P>
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Focused on facilitating the exchange of goods between Taiwan and the US by cutting red tape at customs and reducing wait times at borders, the agreement also looks to combat bribery and other forms of corruption by establishing matching standards.<\/P>
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According to representatives from both sides, the agreement is also aimed at boosting trade and investments between small- and medium-sized businesses in the US and Taiwan.<\/P>
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Politics over economics<\/P>
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The announcement of the deal drew harsh criticism from China as it slammed the US earlier on Thursday for approving it.<\/P>
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Accusing the White House of violating agreements on the status of Taiwan, the Chinese foreign ministry demanded that the US \u201crefrain from sending wrong signals to the \u2018Taiwan independence\u2019 secessionist forces\u201d, AP reported.<\/P>
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China sees the trade deal as a \u201cdiplomatic move that seeks to affirm the island\u2019s sovereignty which is contrary to US commitments to China\u201d, said economist and WST & Partners chairman Jean-Paul Tchang as he emphasised the political undertone of the deal.<\/P>
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Although the White House insisted that the trade deal with Taiwan is brokered under the US One China policy, Beijing remains adamant and urged Washington to cease contact with Taipei.<\/P>
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China\u2019s fierce reaction coupled with rising tensions across the Taiwan Strait has raised fears over potential economic retaliations targeting Taiwanese exports, a move that Beijing has previously undertaken over another perceived political slight.<\/P>
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\u201cBeijing is certainly more prone these days to use its trade relationship with Taiwan, and others, as a tool for political coercion. I believe we\u2019re seeing that right now as Taiwan nears its presidential election and China is preparing new tariffs if the DPP (the Democratic Progressive Party, Taiwan\u2019s current ruling party) wins again,\u201d said Riley Walters, the deputy director of the Hudson Institute Japan Chair.<\/P>
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While China is unlikely to drastically change its trade policies regarding Taiwan, Beijing could potentially \u201ctarget Taiwanese companies that join in on US boycotts of Chinese products in the future\u201d, said Tchang.<\/P>
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A symbolic deal?<\/P>
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While China may feel sidelined politically, it has little to fear on the economic side of things.<\/P>
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Unlike conventional trade deals, the agreement between the US and Taiwan fails to include tariffs, which ultimately raises the question regarding its efficacy on deepening ties between the trading partners.<\/P>
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\u201cTaiwan has been trading with the US for decades \u2026 starting with manufactured goods in the 70s up to semiconductor chips now \u2026 and while there\u2019s been a few hiccups in the 90s due to issues with intellectual property rights, trade has been going smoothly [between both] for the most part\u201d, said economics professor Wu Dachrahn from Taiwan\u2019s National Central University.<\/P>
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\u201cTo be frank, the trade agreement signed between the US and Taiwan doesn\u2019t appear particularly constructive\u201d, said Wu, adding that trade volumes between the US and Taiwan have remained relatively stable over the past two decades.<\/P>
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\u201cI would definitely say this deal is more symbolic than anything else. While the new deal could help ease some of the regulatory barriers to trade between the US and Taiwan, I don\u2019t see this as having a significant impact on trade flows,\u201d said Walters.<\/P>
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\u201cWhat could\u2019ve been beneficial to Taiwan\u2019s exports [to the US] is finding a solution to trade obstacles between China and the US,\u201d Wu said as he pointed to US tariffs levied on certain Chinese imports including semiconductors and consumer electronics.<\/P>
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While the US currently ranks as Taiwan\u2019s second largest export market, China remains Taiwan\u2019s top trading partner, accounting for up to 40 percent of the island\u2019s total exports, of which over 50 percent are electronic components, said Wu, adding that most of these components are used in products destined for the US.<\/P>
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Free trade agreement?<\/P>
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\u201cSo what Taiwan really needs is to be able to better export its goods which of course have been affected ever since the US started a trade war with China,\u201d Wu said.<\/P>
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Although Washington has shown little inclination in lifting current tariffs imposed on Chinese goods, the Taiwanese government hopes to counter the indirect impact on the island\u2019s exports by signing a free trade agreement with the US.<\/P>
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In a published statement Thursday, Taiwanese President Tsai Ing-wen alluded to an FTA between the US and Taiwan as she hailed the newly inked trade agreement.<\/P>
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\u201cWhile the new deal does provide a more complete framework to serve as a basis for an FTA and perhaps even help with Taiwan\u2019s application to join the CPTPP (editor\u2019s note: Taiwan applied in 2021 to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which is an FTA between 11 countries on either side of the Pacific), it still seems quite unlikely given the current political climate,\u201d said Wu.<\/P>
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Despite the large support in the US Congress for Taiwan, the Biden administration has little interest in traditional trade agreements, said Walters.<\/P>
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The US, as well as most countries except for Panama, Honduras and Guatemala, have refrained from inking FTAs with Taiwan since 1979 when the US switched diplomatic recognition from Taiwan to China, for fear of provoking Beijing’s ire.<\/P>
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\u201cIt\u2019s not about economics anymore, it\u2019s politics\u201d, said Wu.<\/P>
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Source: France24.com<\/P>
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