Heritage Foundation: A U.S.–Taiwan Free Trade Agreement in 2020

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The stars are aligning to make 2020 the perfect year to start negotiations between the U.S. and Taiwan for a comprehensive free trade agreement (FTA). With the Trump Administration having made significant progress on three of its trade priorities—the U.S.–Mexico–Canada Agreement, phase one of the U.S.–China Economic and Trade Agreement, and the U.S.–Japan Trade Agreement—the U.S. can finally make trade and economic negotiations with Taiwan a priority. The same can be said on the other side of the Pacific, as Taiwan is currently in a honeymoon phase after having just completed presidential and legislative elections.

U.S. and Taiwanese officials should begin negotiating a comprehensive FTA as soon as possible—before Washington falls into the politics of its own presidential election cycle. The Trump Administration should also establish a high-level economic dialogue with Taiwan to address issues that might fall outside of trade negotiations, such as cyber-espionage threats, labor markets, and energy supply.

Now is the perfect time to begin negotiations for an FTA. President Tsai Ing-wen was just re-elected on January 11, 2020, to serve as Taiwan’s 15th-term president. Taiwan should expect several months of political stability through this honeymoon period. President Tsai’s party, the Democratic Progressive Party, also managed to maintain the largest share of seats (61 of 113) in Taiwan’s legislative body, the Legislative Yuan. And there are some indications that she plans to use her political capital early on to remove long-standing obstacles—particularly around beef and pork—to an FTA.

In the U.S., there is generally a good amount of support for Taiwan from both the Administration and Congress. The Trump Administration has been following through with needed arms sales to the island nation. Meanwhile, the last two Congresses have passed a number of pro-Taiwan bills, including the Taiwan Travel Act and the Asia Reassurance Initiative Act of 2018.1

Asia Reassurance Initiative Act of 2018, Public Law No. 115–409 and the Taiwan Travel Act, Public Law No. 115–135.

In 2019, the House passed the Taiwan Assurance Act, and both the House and Senate passed resolutions re-affirming the 40-year-old Taiwan Relations Act.

On December 19, 2019, the two co-chairs of the House Taiwan Caucus, along with 159 other representatives, sent a letter to the U.S. Trade Representative (USTR) suggesting it begin negotiations for a U.S.–Taiwan FTA.2

These efforts are welcome given the increasing influence that China has in pressuring countries to disregard Taiwan’s participation in international organizations and regional trade pacts. At the same time, Beijing continues to increase its own efforts to make Taiwan’s economy more dependent on China. In November 2019, China’s Taiwan Affairs Office announced 26 new measures to incentivize Taiwanese investment in China’s fifth-generation (5G) telecommunications development, high-tech research and development, and other sectors, such as tourism, finance, and agriculture.3

Full report:

https://www.heritage.org/trade/report/us-taiwan-free-trade-agreement-2020

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