US-Taiwan Free Trade Agreement

Summary

Taiwan was the 11th largest U.S. trading partner with over $10 billion U.S. services exports in 2018, yielding a surplus for the U.S. of over $1.6 million. Taiwan is also the 8th largest agricultural export destination for the United States in 2018. U.S. trade deficit to Taiwan also decreased by 7.3% from 2017. As a result, Taiwan is an important source of job creation for the United States. Pork and pig organs, constituting only 0.1% of U.S. exports to Taiwan, therefore should not be imposed as a precondition for USTR to enter into FTA negotiations with Taiwan. Insisting on sector-specific liberalization loses sight of the big picture for the U.S. 

Bi-Partisan Support

In December 2019, 161 House of Representatives sent a joint letter to USTR urging the latter to start the negotiations for a bilateral trade agreement with Taiwan.

Focus on Big Sale Tickets

  • In 2018, Taiwan imported US$3.9 billion of agricultural products from the U.S. and is the 8th largest destination. U.S. pork and pigs’ organs constitute little of its total export to Taiwan, and it is therefore unnecessary to insist on this as the precondition to trade negotiations with Taiwan.
  • The U.S. can put all its demands on the negotiation table, instead of demanding sector specific liberalization as a precondition for negotiating a trade deal.

Benefits on Service Trade

  • The U.S. has been enjoying trade surplus in services with Taiwan in the past, including a surplus of $1.6 billion in 2018. With a total of $10 billion services exports to Taiwan in 2018, there is a great potential for more access to the Taiwan market.
  • Taiwan fulfills the three conditions of market potentials for service trade: trade openness, democratic system, and access to major financial centers in Asia.
  • A US-Taiwan FTA will help the Taiwan government to further liberalize its service sector, similar to Abe’s strategy of using the TPP to restructure agriculture in Japan.

A US-Taiwan FTA Can Strengthen Taiwan’s Sovereignty

  • Taiwan is over-reliant on the Chinese economy: 40% of exports and 70% of investment goes to the Chinese market. This gives the PRC a leverage to affect the political decision making in Taiwan and as a consequence undermines Taiwan’s sovereignty.
  • The PRC has been blocking Taiwan from signing FTAs with other countries. As a country that strongly supports market economy, it is in the U.S. interest to oppose the PRC’s bullying of Taiwan by signing a US-Taiwan FTA.

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