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International relations

Taiwan and US ink memo on economic cooperation

Taipei seeks trade deal with Trump administration but pivots to Biden as clock ticks

Keith Krach, the U.S. undersecretary of state for economic growth, energy and the environment, arrives in Taiwan on Sept. 17.   © Reuters

NEW YORK -- The U.S. and Taiwan on Friday signed a memorandum of understanding to promote bilateral economic cooperation as both sides contemplate a bilateral trade agreement during President Donald Trump's final weeks in office.

This opened the inaugural U.S.-Taiwan Economic Prosperity Partnership Dialogue, which is being held physically and virtually, where a Taiwanese delegation and American officials have discussed issues including clean 5G development, supply chain restructuring, energy and infrastructure.

Hsiao Bi-khim, Taiwan's representative in Washington, signed the document Friday morning in a ceremony witnessed by Deputy Economic Minister Chen Chern-chyi and Keith Krach, the U.S. undersecretary of state for economic growth, energy and the environment.

"The U.S. is Taiwan's most important partner," Chen said. "The challenges of the pandemic have made it more important for countries to have secure relationships based on trust," he said.

Taiwanese President Tsai Ing-wen's administration is treating the U.S. presidential transition delicately after enjoying close ties with the outgoing Trump administration.

Hsiao spoke last week with Antony Blinken, a top foreign policy adviser to President-elect Joe Biden who has publicly promoted economic cooperation between the U.S. and Taiwan.

Chen said Friday that Taiwan will "continue to push" for a free trade agreement with the U.S. but that it may take time for Biden's team to put its own personnel and policy in place.

Biden is expected to adopt the multilateral approach of former President Barack Obama, under whom he served as vice president, said Kharis Templeman, a political scientist and adviser to the Hoover Institution's Project on Taiwan in the Indo-Pacific Region at Stanford University.

Trump largely abandoned multilateral agreements and pulled out of the Trans-Pacific Partnership as part of his "America first" platform.

"The best thing a Biden administration could do for Taiwan would be to start bilateral trade talks," Templeman said, although Biden may keep trade liberalization "on the back burner for the first year or two of his presidency."

Even if it takes time, a bilateral trade agreement will likely "still be on the table" under Biden, said Anthony Kim, research manager and editor of the Heritage Foundation's Index of Economic Freedom.

"Taiwan now has a global reputation and credibility" due to its model response to the COVID-19 pandemic and its progress in areas ranging from clean energy to 5G development, Kim said.

"That's why Washington has been paying greater attention," he said.

Earlier this week, Taiwan's Foreign Ministry restated its interest in joining the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which evolved from the original TPP after the U.S. withdrew.

This came in the wake of last weekend's signing of the Regional Comprehensive Economic Partnership by 15 countries, including China, Japan and South Korea.

Chinese leader Xi Jinping said Friday that his country will consider joining the CPTPP, a move that could hinder Taiwan's potential participation in that pact.

Washington and Taipei have hastened economic talks since Tsai moved in August to lift restrictions on U.S. pork and beef imports. The barriers had been seen as the key obstacle precluding a bilateral trade agreement.

Krach, the U.S. undersecretary, visited Taiwan in September and "met with high-level government officials and people from various sectors," according to the island's Foreign Ministry.

Taiwan also hosted U.S. Health and Human Services Secretary Alex Azar in August. China deployed air force jets near the median line of the Taiwan Strait in both instances after earlier promising retaliation for the U.S. visits.

Despite this, Washington and Taipei have not yet opened formal trade talks, leaving Tsai's government tasked with maintaining goodwill with Trump officials while building ties with Biden's transition team.

Taiwan and the U.S. in August issued a joint declaration to cooperate on 5G security under Washington's "Clean Network" initiative and to conduct "rigorous" checks of 5G suppliers to prevent interference by foreign governments. The move aided Washington's efforts to keep Chinese vendors, especially Huawei and ZTE, out of the world's 5G networks.

Support for Taiwan -- and skepticism over Chinese involvement in 5G development -- are sentiments shared by both major U.S. political parties, raising the likelihood that a Biden administration will be receptive to deepening economic ties with Taipei.

But with the president-elect making clear his economic energies will be focused internally, "It is extremely unlikely that the Biden administration will launch talks for a bilateral free trade agreement with Taiwan during the first year in office," said Michael Mazza, a visiting fellow at the American Enterprise Institute.

"If and when he does turn to pursuing new trade agreements, there is not much reason to believe Taiwan will be at the top of his list, although it should be," Mazza said.

The economic dialogue with Taiwan covers such areas as semiconductors, healthcare and energy. "All of these issues will be of signal importance for the Biden administration as well, which will almost certainly recognize that the tech competition between the United States and China is not going away any time soon," Mazza said.

"Given Taiwan's central and arguably irreplaceable role in global technology supply chains, failure to continue and seek meaningful outcomes from the new economic dialogue would be the height of irresponsibility," he added.

Andrew Wheeler, the head of the U.S. Environmental Protection Agency, is scheduled to visit Taiwan in December, Taiwanese Premier Su Tseng-chang said Friday.

Although Wheeler is a Trump appointee, Kim said the visit will give Taipei the opportunity to signal its clean-energy commitments to the incoming Biden administration, which will likely prioritize energy cooperation in its trade policy.

"Taiwan has been very careful connecting all the key dots in Washington," Kim said. "They will manage this transition very strategically and carefully."

Additional reporting by Taisei Hoyama in Washington.

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