Taiwan`s Ministry of Economy has developed a position paper (see below) to encourage the signing of a free trade agreement with the United States, including research and development, cooperation and technology transfer. A study by the U.S. International Trade Commission in October 2002 concluded that an E.G.E.I.-Taiwan TRADE Agreement between the United States and Taiwan would greatly benefit U.S. exports of motor vehicles, rice, fish and other food products, but would have a small impact on the U.S. economy as a whole. China recently surpassed the United States as Taiwan`s largest export market. The group of 42 Republicans and eight Democrats sent a letter to Trade Representative Robert Lighthizer, in which he viewed Taiwan`s record as an economic partner and ally of U.S. security and encouraged it to begin the formal process of negotiating a comprehensive trade agreement. But Taiwan is active this week in Washington and is participating in several dialogues that could lay the groundwork for a long-discussed free trade agreement with the United States. Any form of bilateral trade or investment agreement focuses on Taiwan`s political image vis-à-vis China and the rest of the world.
A free trade agreement with Washington would amount to the United States` recognition of Taiwan`s sovereignty and Taiwan`s independence from China. This goes against Chinese policy and could trigger military action. The United States maintains Beijing`s one-China policy while maintaining unofficial relations with Taiwan. Even if Taiwan were to insist on a trade pact with Trump officials, it appears that a Biden administration will support new trade negotiations with Taiwan. All stakeholders agreed that there would be benefits for both sides if the United States and Taiwan concluded a free trade agreement (FTA), but they also noted that China`s current opposition to such negotiations remains a major obstacle. We need to find a creative way to show China that China could also benefit from such a free trade agreement. But no discussion is ongoing or planned. On the one hand, the United States is ambivalent about trade liberalization, with USTR chief Lighthizer explicitly criticizing free trade agreements. Taiwan, for its part, also has national constituencies sensitive to additional competition. Indeed, over the years, the main obstacle to a trade agreement between the United States and Taiwan was not a commercial consideration, but a lack of political will.