US and Taiwan begin discussions on trade and investment

The US and Taiwan agreed on Wednesday to begin formal trade and investment talks as relations between Washington and Beijing have grown increasingly strained.

The discussions stem from a joint initiative announced in June and are expected to begin in the early autumn. They are aimed at deepening economic engagement in agriculture, digital trade, climate and other areas.

The announcement came amid heightened tensions following a flurry of Chinese military manoeuvres in response to House Speaker Nancy Pelosi’s recent visit to Taiwan.

The Biden administration said late on Wednesday that the sides had reached “consensus on the negotiating mandate”. The initiative will “deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses”, deputy US trade representative Sarah Bianchi said.

She said Taipei and Washington aimed to “pursue an ambitious schedule” for the discussions.

The US announced the “US-Taiwan Initiative on 21st-century Trade” just days after it unveiled the regional Indo-Pacific Economic Framework that excluded Taiwan, partly because some south-east Asian nations involved were concerned about antagonising China, which claims sovereignty over the country.

Wednesday’s announcement falls short of Taiwan’s hopes for a bilateral free trade deal. Taiwanese officials have said the talks are important to keep trade ties open, and it still hopes it can negotiate such a deal in the future.

The talks are likely to further inflame tensions with China, which opposes US efforts to deepen ties with Taiwan and accuses Washington of moving away from its “one China” policy, under which Washington recognises Beijing as the sole government of China while only acknowledging Beijing’s position that Taiwan is part of China.

China has stepped up efforts to isolate Taiwan after Pelosi’s visit and another this week by a second congressional delegation, raising concerns it is trying to impose a new status quo, dissuading foreign politicians from engaging with Taipei.

Taiwan is the ninth-largest US trading partner, according to 2020 data from the US trade representative office. It is one of the world’s largest suppliers of semiconductors and other electronic components.