US plans economic talks with Taiwan in efforts to elevate trade ties

Taiwan, for years, has been pushing the US to negotiate a trade agreement. PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - The United States and Taiwan are planning to announce negotiations to deepen economic ties, people familiar with the matter said, in a fresh challenge to Beijing which has cautioned Washington on its relationship with the island.

The talks would focus on enhancing economic cooperation and supply-chain resiliency, falling short of a traditional free-trade agreement, according to the people.

The deal is likely to include areas of trade facilitation, supply-chain work and trade in agricultural products, they said, speaking on condition of anonymity ahead of a public announcement.

Those elements are similar to the pillars in the 13-member Indo-Pacific Economic Framework that President Joe Biden announced during his visit to Tokyo this week.

While a bipartisan group of lawmakers wanted Taiwan in that group, it was excluded because some countries that agreed to join refused to have Taiwan included over fear of retribution from Beijing, according to people familiar with the process.

The talks are an effort to elevate the US-Taiwan economic relationship, the people said, and will go beyond existing discussions under a Trade and Investment Framework Agreement between the two governments.

Mr Biden earlier this week made a public pledge to militarily support Taiwan in the event of a Chinese invasion, before he and White House officials walked the comments back. China denounced the president's remarks, and has protested Washington's deepening official bilateral engagement with Taiwan.

China regards Taiwan as a renegade province to be reunified, by force if necessary.

Secretary of State Antony Blinken on Thursday (May 26) reiterated that US policy toward Taiwan has not changed and that the US does not support Taiwan independence. Still, the US and Taiwan have a "strong unofficial relationship", he said in a long-awaited speech on the Biden administration's policy towards China.

A spokesman from of the Office of the US Trade Representative declined to comment on the plans for talks on deepening bilateral economic engagement. A spokesman for Taiwan's economic and cultural office in Washington did not respond to a request for comment.

US Trade Representative Katherine Tai told Bloomberg TV this week that she and her Taiwanese counterpart, Mr John Deng, had "very positive conversations" when they recently met in Bangkok.

"We are committed to deepening and enhancing the bilateral trade and economic relationship and we instructed our teams to work over the course of the next couple of weeks on that deepening and enhancement," Ms Tai said.

The two agreed to meet again in the coming weeks to discuss the path forward, her office said in a readout. A large Taiwanese government and business delegation is expected to attend the SelectUSA Investment Summit outside Washington in late June, giving both sides another chance to meet face-to-face.

US officials have stressed that the reliance on Taiwan for semiconductors, in particular, is a geopolitical strategic problem and have pushed for a subsidy programme that incentivises domestic manufacturing of chips. That initiative is part of broader legislation that could pass later this year.

Taiwan, for years, has been pushing the US to negotiate a trade agreement, but American officials have stressed that roadblocks in Taiwan's economic practices, including on agriculture, would need to be resolved as a prerequisite for any negotiations to take place.

The Donald Trump administration, in particular, was hesitant to engage with Taiwan economically while it was negotiating its phase-one trade deal with Beijing, people familiar with the deliberations at the time said.

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