By Betty Hou and Samson Ellis

June 30, 2021

The U.S. and Taiwan will sit down Wednesday for long-stalled trade talks, with computer chips and vaccines likely replacing pork and beef as the main topics of discussion.

Ensuring stable supplies of semiconductors will be a focus of the talks, Hsiao Cheng-Jung, chief of staff in Taiwan’s Office of Trade Negotiations, said Monday. Taiwan is one of the main global suppliers of chips and its premier manufacturer is building a new factory in the U.S. to boost supply amid a global shortage.

The talks will also look to strengthen trade relations between the two sides and speed up the post-pandemic recovery, according to Hsiao, but for Taiwan, the final political goal is a full trade deal with the U.S. “We hope that the step-by-step accumulation of friendship and mutual trust can pave the way for signing a bilateral trade agreement in the future,” Taiwan’s representative to the U.S. Hsiao Bi-khim said in a Facebook post Tuesday.

A trade deal would be a political coup for the administration of President Tsai Ing-wen. Although much of Taiwan’s exports to the U.S. are already tariff-free, a deal with the U.S. may provide political cover for Taiwan to sign similar deals with nations that want to boost ties but are otherwise wary of a backlash from China, which claims the island as its territory.

U.S. lags far behind China as a destination for Taiwanese exports

Taiwan currently only has trade deals with New Zealand and Singapore, signed during a temporary thawing of ties between Taipei and Beijing. The U.S. had held talks with Taiwan regularly since 1994 as way to iron out bilateral trade and investment issues, but these were suspended during the administration of former President Donald Trump.

Taiwan’s refusal to lift a ban on the imports of pork products containing the feed additive ractopamine and the White House’s focus on a trade deal with China were widely seen as the reasons those talks were halted. ​The lack of the meetings over the past few years has held back progress in certain areas such as the restrictions on U.S. meat imports, according to the American Chamber of Commerce in Taiwan’s 2021 white paper.

While Tsai eased the limits on the ractopamine last year, opposition groups have organized a referendum scheduled for August on whether the government should reimpose the ban on food-safety grounds.

“Ambassador Tai and the Biden Administration are committed to strengthening our economic and trade relationship with Taiwan, and we look forward to discussing a range of issues during this week’s TIFA meeting,” said Adam Hodge, a spokesman for U.S. Trade Representative Katherine Tai.

Investment in U.S. Surged

But money flow from Taiwan to China have slowed over time

Source: Taiwan’s Ministry of Economic Affairs

Discussions over a stable supply of semiconductors will likely touch upon Taiwan Semiconductor Manufacturing Co.’s new chip-making fab in Arizona, construction of which was “well underway” earlier this month. The company has pledged to spend $12 billion over the coming decade building and operating the plant.

Taiwanese investment in the U.S. has risen significantly since Trump first imposed tougher import duties on Chinese-made goods as part of his effort to reverse the U.S. trade deficit with China. The upturn has coincided with a steady slowdown in Taiwanese investment in China over the past decade.

The talks will also try and simplify import and export procedures for vaccines and medical supplies, President Tsai Tuesday in a live-streamed post on Facebook. Taiwan is currently facing a serious coronavirus outbreak, although the U.S. has sent millions of vaccine doses.

— With assistance by Cindy Wang, and Eric Martin