Future trade relations between the US and Taiwan hinge on cross-Straits deals with China.By George Lauriat, Editor-in-Chief, AJOTTrade relations between Taiwan and the United States have a unique status. After the US recognized the Peoples Republic of China (PRC), relations with Taiwan have been built around the 1979 Taiwan Relations Act (TRA). Under the TRA, the US has official relations with the PRC but maintains a special relationship with Taiwan that features significant trade ties. In the subsequent years following the TRA, booming trade between the three parties has at times been held hostage to overarching politics. In no place is this tripartite relationship clearer than in Taipei’s efforts to ink a US-Taiwan Free Trade Agreement (FTA). When Taiwan’s current president, Ma Ying-jeou, Kuomintang (KMT) was elected in March 2008, he made it a priority to renew Taiwan-PRC talks that had stalled since 1998. The defeat of Frank Hsieh and the incumbent Democratic Progressive Party (DPP) after eight years of rule represented a significant change. The DDP’s relations with Beijing were poor, as the party did not wholly subscribe to the concept of one China espoused by both Beijing and the KMT, although from different perspectives. In April, Taiwan’s representative to the United States, Jason Yuan, while speaking at the Foreign and Defense Committee meeting in Taipei, said signing an economic cooperation framework agreement (EFCA) with Beijing would make it easier for President Obama’s Administration to push for an FTA agreement with Taiwan. The Bush Administration was reluctant to further FTA talks with Taiwan if these talks could potentially damage political and commercial relations with Beijing. However, with two new administrations (Obama and Ma), the global recession and Taiwan’s own economic issues, the time might be right to clear the FTA logjam. Cross-straits relations have significantly improved since President Ma Ying-jeou took office on May 20th, 2008. Included among the new agreements is the establishment of regular, direct weekend charter flights, direct carriage of freight by air and sea services, postal services, and food safety standards. Additionally, Taipei lifted the caps on Taiwan investment in the PRC. It’s worth noting that a key economic tenet of Ma’s election campaign was the eventual establishment of “Cross-Strait Common Market” of which ECFA is a first step. At a June 2nd press conference announcing the annual White Paper on Taiwan, Amcham Chairman Alan T. Eusden (Corning Display Technologies) summed up the improvement, “Considering China’s key role in the global supply chain, AmCham regards those as very positive developments in helping Taiwan become better integrated into the regional and global economies. Now, with direct flights, Taiwan finally is in a position to leverage its geographical location to serve as a regional hub for certain operations. In addition, the reduction in tension in the Taiwan Strait is a welcome contribution to business certainty and stability.” According to numerous reports, Taipei and Beijing would like to begin dialogue on the ECFA in the fall. However, there is opposition to the planned talks. In Taiwan, the opposition Democratic Progressive Party (DPP) wants to hold a public referendum, essentially putting the decision for the ECFA in the hands of the people. Besides the political issues associated with autonomy (Beijing considers Taiwan a break-away province), there are some genuine economic considerations with ECFA that Taipei will have to seriously deliberate. They are similar to the complaints heard among US manufacturers. Will an agreement with China open the door to a flood of cheap products at the expense of Taiwanese companies? Another wider concern is whether Taiwan can remain competitive with the rise of ASEAN (Association of Southeast Asian Nations). Eusden touched on the issue stating, “several of our [AmCham] industry committees are already quite concerned that Taiwan-made products – whether made by