Taiwan wants to push bounds of US trade deal to beat isolation

Taiwan’s top trade negotiator signaled a desire to expand Taipei’s initial agreement with Washington into one that more closely resembles a free trade deal, as the export-dependent economy works to counter China’s efforts at isolating it.

The island’s trade officials are talking with their US counterparts about broadening the scope of their current arrangement reached earlier this year, John Deng, the head of Taiwan’s Office of Trade Negotiations, said in an interview in Taipei on Friday.

“One goal is to expand the coverage: more topics like agriculture, labor. We are willing to talk whatever international trade regime needs to address,” Deng told Bloomberg News. “Second is the market access issue, that is tariffs. We hope that one day the US government is ready for tariff talk.”

There is no timetable for the next round of talks, Deng added.

Known formally as the US-Taiwan Initiative on 21st Century Trade, the current trade framework between the two economies covers issues such as regulatory practices, customs and corruption. 

But it excludes anything about tariff reductions, traditionally called “market access” — thorny issues which are difficult to resolve, given tensions between the US and China. Beijing claims the democratically ruled island as part of its own territory. 

The Biden administration also has opposed negotiating traditional free-trade deals, having refrained from picking up tariff talks with the UK and Kenya that it inherited from the Trump administration, due in part to opposition to past deals in Congress and a concern that such pacts in the past hurt American workers by incentivizing manufacturers to move overseas for cheaper labor.

President Tsai Ing-wen has long sought a free-trade agreement with Washington. Along with being a major economic coup for Taipei, a broader agreement more closely resembling a free-trade deal would be a political one too, further solidifying US support.

Talk about potentially enhanced trade cooperation with Washington also comes as Taiwan navigates a precarious relationship with Beijing. China has worked in recent years to punish the island’s economy through measures including sanctions on food products and travel curbs on tourists. 

Signals of Support

Taiwan has been encouraged by strong signals of support from US lawmakers, Deng said. He pointed to a show of unanimous approval in July of the existing trade initiative with Taiwan by a US Senate that’s often been reluctant to ratify trade agreements. 

Talks are already underway between Taiwan’s trade negotiators and President Joe Biden’s team, led by US Trade Representative Katherine Tai. Deng said Taiwan wants to push talks “as far as we can” on a working level, before awaiting sign-off from each government.

One obstacle Taiwan faces in expanding its deal with the US could be the politically sensitive issue of migrant workers employed by the island’s distant-water fishing fleet. 

An estimated 35,000 foreign fishermen — predominantly from Southeast Asia — often face mistreatment that ranges from withheld pay, to punishing 18 to 22-hour work days, to physical abuse aboard Taiwanese fishing boats, according to a report by the US Department of Labor. The report lists Taiwanese seafood as a product of forced labor.

“Our legal system should be able to address that,” Deng said. “But it takes time to change, to change law, to change practices.”

Taiwan’s advances on accelerating economic dialogue with the US contrasts with the lack of success in efforts to join a major regional alliance called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. 

That pact is largely centered around nations bordering the Pacific Ocean and in East Asia, such as Australia, Canada, Singapore and Vietnam. It was once seen as a way of balancing China’s growing influence in the region before former President Donald Trump pulled the US out of the pact, leaving Japan as its dominant economy. 

The main hurdle to Taiwan joining that deal centers around Chinese objections. Beijing opposes Taipei’s participation in international organizations that would imply the island has statehood. 

China has also applied to join the CPTPP. New applicants can only join the trade pact with the support of all other members. 

Deng said Beijing has sent a clear message to countries in that trade agreement that they are only to admit China, not Taiwan. Taipei has to be realistic that it might not be easy to join, he added. 

Deng said a possible solution for Taiwan could be to form a network of bilateral free trade deals. 

“Society here has a fear that China is trying to isolate Taiwan,” and they have achieved that aim in “many areas,” he said. “So to get Taiwan out of this isolation in the trade and economic area, maybe it’s a series of bilateral deals.”