2023-0608: Chinese Military’s “Unsafe” and “Unacceptable” Maneuvers in Taiwan Strait; A House Resolution Calling for U.S.-Taiwan Tax Agreement

U.S. Slams Chinese Warship’s “Unsafe” and “Unacceptable” Maneuvers in Taiwan Strait

Maneuvers by a Chinese navy ship cutting across the path of a U.S. destroyer in the Taiwan Strait a few days after a Chinese fighter jet came dangerously close to a U.S. aircraft over the South China Sea were “unsafe” and “unacceptable,” U.S. National Security Council spokesperson John Kirby said on June 5.

“In accordance with international law,” the U.S. destroyer USS Chung-Hoon (DDG 93) and the Canadian frigate HMCS Montreal (FFH 336) “conducted a routine south to north Taiwan Strait transit June 3 through waters where high seas freedoms of navigation and overflight apply,” the U.S. Indo-Pacific Command said in a statement issued on June 3.

During the transit, a Chinese destroyer LUYANG III DDG 132 (PRC LY 132) “executed maneuvers in an unsafe manner in the vicinity of Chung-Hoon,” the statement said, adding that Chinese warship “overtook Chung-Hoon on their port side and crossed their bow at 150 yards [137 m]. Chung-Hoon maintained course and slowed to 10 kts [18.5 kph] to avoid a collision.”

The Chinese warship then “crossed Chung-Hoon’s bow a second time starboard to port at 2,000 yards and remained off Chung-Hoon’s port bow,” coming within 150 yards at the closest point.

The Chinese destroyer’s actions “violated the maritime ‘Rules of the Road’ of safe passage in international waters,” the statement said.

It is the second close encounter between U.S. and Chinese military assets in less than 10 days, following what the U.S. military called an “unnecessarily aggressive maneuver” by a Chinese fighter jet near a U.S. surveillance plane over the South China Sea on May 26.

On June 5, U.S. National Security Council spokesperson John Kirby said it “won’t be long before somebody gets hurt,” adding that such “unsafe and unprofessional intercepts” could lead to “misunderstandings” and “miscalculations.”

“When you have pieces of metal of that size, whether it’s in the air or on the sea, and they are operating that close together, it wouldn’t take much for an error in judgment or a mistake to get made, and somebody could get hurt,” he said.

“And that’s just got to be unacceptable,” Kirby said.

[1] Taipei Times: https://www.taipeitimes.com/News/front/archives/2023/06/05/2003800983
[2] Reuters: https://www.reuters.com/world/us/us-seeing-increasing-level-aggressiveness-by-chinas-military-white-house-says-2023-06-05/

U.S. Lawmakers Call for Income Tax Agreement with Taiwan

On May 25, U.S. Representatives Adrian Smith (R-NE), Suzan DelBene (D-WA), Nicole Malliotakis (R-NY), and Judy Chu (D-CA) introduced a bipartisan resolution (H.Res.449) calling for a U.S.-Taiwan income tax agreement to avoid or reduce double taxation between the two countries.

The resolution “encourages the President and the Senate to work with the House of Representatives to avoid or mitigate double taxation between the United States and Taiwan,” and “encourages the President to proactively seek other ways to increase trade, technology, and investment ties between the United States and Taiwan.”

The resolution states that Taiwan is the U.S.’ eighth-largest trade partner, the U.S. exports of goods and services to Taiwan support at least 188,000 American jobs, and Taiwan’s cumulative investment in the U.S. is at least $13,700,000,000.

However, Taiwan is the United States largest trade partner with whom the U.S. does not have an income tax treaty, despite the fact that the U.S. has income tax treaties with 66 countries, including the People’s Republic of China.

It points out that Taiwan has income tax agreements with 34 countries, including countries that do not maintain diplomatic relations with Taiwan.

An income tax agreement between the U.S. and Taiwan “could boost bilateral trade and investment by reducing double taxation and increasing economic efficiency and integration,” it adds.

“This resolution urges action on a bipartisan solution to ensure double taxation does not stand in the way of mutual investment at a time when Taiwan’s significant role in regional security is being tested [by bad actors],” Rep. Smith said in a statement released on May 25.

“Democrats and Republicans both agree that we must help increase Taiwan’s economic resiliency and support American jobs,” Rep. DelBene said, adding that “Reducing double taxation on Taiwanese and American businesses would be a significant step forward in boosting two-way trade and investment, and supporting jobs in critical sectors such as semiconductor chip production.”

“An income tax agreement between the U.S. and Taiwan would bolster the economic relationship between our two countries, increase Taiwanese investment here in the U.S. and shows China that the U.S. will not tolerate CCP aggression against free and Democratic Taiwan,” Rep. Malliotakis said.

“Taiwan already is among the U.S.’s top ten trading partners and that economic partnership has great potential to deepen,” Rep. Chu said, adding that it’s therefore essential “to support ending double taxation between the U.S. and Taiwan.”

[1] Focus Taiwan: https://focustaiwan.tw/politics/202306010019
[2] Rep. Adrian Smith’s Office: https://adriansmith.house.gov/media/press-releases/smith-delbene-malliotakis-chu-introduce-resolution-calling-action-avoid-double