First Agreement Under Taiwan–US Trade Initiative Takes Effect

Flags of Taiwan and U.S. are placed for a meeting in Taipei, Taiwan, on March 27, 2018. Tyrone Siu/Reuters

TAIPEI, Taiwan—Trade offices in Taiwan and the United States said the two sides achieved an important milestone, as the first agreement under a bilateral trade initiative came into force on Dec. 10.

The agreement, which was signed in June 2023, covers customs administration and trade facilitation, regulatory practices, rules for domestic service providers, anti-corruption, and small- and medium-sized enterprises.

In a statement, U.S. Trade Representative Katherine Tai said the agreement under the U.S.–Taiwan Initiative on the 21st Century Trade “represents an important step forward in strengthening the U.S.–Taiwan economic and trade relationship.”

“We thank our Taiwan partners for helping us reach this important milestone,” Tai said.

Taiwan was excluded from the U.S.-led Indo-Pacific Economic Framework, which the Biden administration launched in May 2022 in an effort to restore U.S. economic leadership in the region and counter communist China’s increasing economic and military coercion.

Less than a month later, Washington and Taipei announced the launch of the initiative, which joined the U.S.–Taiwan Economic Prosperity Partnership Dialogue and Technology Trade and Investment Collaboration Framework established between the two sides. Formal negotiations under the initiative began in August of the same year.

In a separate statement, Taiwan’s Office of Trade Negotiations said the agreement underscored the “rock solid partnership” between Taiwan and the United States.

“Given the highly volatile global situation, it is of strategic significance for Taiwan to consolidate and expand its relationships with important economic and trade partners,” it said.

Speaking to local reporters, as shown in a video uploaded by local television station SETN, Premier Cho Jung-tai called Tuesday “a very important day for the development of the Taiwan–U.S. relationship.”

Cho said the agreement will help Taiwan form multilateral and bilateral relationships with other nations in the future.

According to the Office of the U.S. Trade Representative (USTR), the United States and Taiwan have been talking about a second agreement under the initiative to address more trade areas, such as agriculture, environment, and labor.

Taiwanese authorities have expressed a desire to ultimately sign a free trade agreement with the United States.

Riley Walters, a senior non-resident fellow with the Washington-based think tank Global Taiwan Institute, published an article in late November discussing the likelihood of Washington and Taipei signing a free trade deal after President-elect Donald Trump takes office in January.

“If the Trump Administration wanted an easy, but big, win in its first year, all Trump would have to do is tell the Congress his intent to negotiate a deal with Taiwan,” Walters wrote.

“The real question then would be, would Trump be willing to look past his distaste for trade deficits to build a stronger economic partnership between the United States and Taiwan.”

According to the USTR, the U.S. trade deficit in goods and services with Taiwan was $50.2 billion in 2022. Taiwan has been the United States’ 10th largest trading partner over the past decade, except in 2019, when it ranked ninth place.

In June, the American Chamber of Commerce in Taiwan published a white paper that included discussions of a free trade agreement.

“In recent years, controversy over trade policy has made it difficult for the U.S. government to consider entering into any new free trade agreements,“ the report reads. ”Hopefully, however, a U.S.-Taiwan agreement can be an exception.

“Once the Initiative is completed, the majority of the sections of a [bilateral trade agreement] will already have been negotiated, leaving mainly tariffs and other market-access considerations to be addressed.”

Speaking at the paper’s release, Dan Silver, the chamber’s chairman, said the high level of bipartisan support for Taiwan in Congress gave hope that a free trade agreement could be signed in the future.

The recent trade talks have angered Beijing, as the Chinese Communist Party considers Taiwan a part of its territory and opposes any form of official interaction between Washington and Taipei.

Reuters contributed to this article.