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The US took an oddly two-faced approach to Taiwan this week

US declared it would defend Taiwan militarily, locked Taiwan out of the Indo-Pacific Framework, and engaged in high-level bilateral trade talks

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U.S. President Joe Biden gestures as he boards Air Force One at Yokota Air Base in Fussa, Japan, Tuesday, May 24, 2022. (AP Photo/Eugene Hoshiko)

U.S. President Joe Biden gestures as he boards Air Force One at Yokota Air Base in Fussa, Japan, Tuesday, May 24, 2022. (AP Photo/Eugene Hoshiko)

TAICHUNG (Taiwan News) — On March 31, the U.S. and Taiwan held high-level talks “on expanding Taiwan’s participation at the United Nations and in other international fora” is in line with U.S. State Department policy.

On May 13, U.S. President Joe Biden signed into law a bill promoting Taiwan’s entry into the World Health Organization’s (WHO) World Health Assembly (WHA) as an observer and that “reaffirmed Congress’ policy of supporting Taiwan’s participation in international organizations, particularly the WHO.”

The Japanese, Australians, and others have made similar comments. However, on a major trip to Asia that saw Biden state the U.S. would militarily come to Taiwan’s defense if it was attacked by China (see previous column), he unveiled a new Indo-Pacific Economic Framework (IPEF) trade pact that pointedly didn’t include Taiwan. A White House statement on the pact said this:

“Today in Tokyo, Japan, President Biden launched the Indo-Pacific Economic Framework for Prosperity (IPEF) with a dozen initial partners: Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Together, we represent 40% of world GDP.“

Taiwan is a gaping hole in that lineup. Its economy dwarfs many of those countries, is essential to global technology supply chains, is a major trading partner for most of those countries, and sits in a key central position geographically.

Clearly, there are only two possible explanations for this: The U.S. either feared, or already knew, some of the key players wouldn’t have joined if Taiwan was a participant.

That’s a worrying sign for Taiwan’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement (and its hope to join the IPEF as a future “partner”). Australia, Japan, New Zealand, Singapore and Vietnam are members of that grouping too, and Brunei and Malaysia are signatories.

This means it is quite possible one or more of the CPTPP members or signatories scuppered Taiwan’s entry into IPEF. That the U.S., Japan, and Australia, in particular, didn’t push harder for Taiwan’s inclusion is bad, but even worse are Singapore and New Zealand, both of which already have free trade agreements with Taiwan.

Interestingly, word that Taiwan was to be excluded from the IPEF came from U.S. National Security Adviser Jake Sullivan rather than someone from the State Department or the Office of the United States Trade Representative (USTR). Sullivan said: “We are looking to deepen our economic partnership with Taiwan, including on high technology issues, including on semiconductor supply, but we’re pursuing that in the first instance on a bilateral basis.”

That word didn’t come from the USTR is probably because just prior to IPEF's launch on May 20, Taiwan’s top trade negotiator and Minister without Portfolio John Deng (鄧振中) and U.S. Trade Representative Katherine Tai met just before the APEC Trade Ministerial Meeting in Bangkok, Thailand. The USTR statement on the meeting included this line: “Ambassador Tai and Minister Deng directed their teams to explore concrete ways to deepen the U.S.-Taiwan trade and investment relationship and to meet again in the coming weeks to discuss the path forward.”

So, as the U.S. and other friends are snubbing Taiwan in just the sort of “international fora” they proclaim they want Taiwan to be able to participate in, the U.S. and Taiwan are going ahead to work on “concrete ways” to deepen trade. This isn’t insignificant; the two had an online meeting in April, and talk of meeting again in the coming weeks suggests that something positive might be in the works.

The President of the American Chamber of Commerce in Taiwan (AmCham), Andrew Wylegala, and the Chamber’s Senior Advisor Don Shapiro certainly think so. In a piece for Commonwealth Magazine, they wrote the following:

“Tantalizingly, the announcement of an “exploration” of something “concrete” in the USTR official notice hinted that a breakthrough might be at hand on a comprehensive bilateral trade agreement or BTA, something that has been discussed off and on ever since 2002.”

Wylegala is a former U.S. diplomat in the U.S. Department of Commerce, and Shapiro is a former journalist well-known for his deep knowledge of Taiwan, especially on the business side during his years as editor-in-chief of TOPICS magazine. Though the AmCham in Taipei is a booster of a BTA and will naturally take a positive tone on the subject, both men are deeply knowledgeable and presented a good case for their optimism.

They noted the U.S. is increasing engagement in Asia, that a Taiwan BTA has strong bilateral support in Congress, that President Tsai Ing-wen (蔡英文) has removed a major obstacle in trade relations by unbanning ractopamine pork imports, and that increasing tensions with China and Taiwan’s key role in industries like semiconductors are building political support for Taiwan in the U.S.

They also point out that the “Trade and Investment Framework Agreement (“TIFA talks”) process resumed last year after a five-year hiatus to deal with basic trade issues, that the two sides formed a U.S.-Taiwan Economic Prosperity Partnership Dialogue (EPPD) to develop more far-reaching cooperation, and that they forged a Technology Trade and Investment Collaboration (TTIC).”

However, while momentum is looking good in terms of beginning negotiations on a BTA, the current divisive political environment in the U.S. and inter-agency issues could yet derail any agreement. To tackle this, the authors stated that “achieving a BTA breakthrough will take concerted action along at least three lines.”

Even the announcement of BTA negotiations would be a big deal for Taiwan. It would give the green light to other countries to proceed with their own BTAs with Taiwan as the U.S. took the heat from China over the issue.

Australia, which had been negotiating with Taiwan after the latter and New Zealand signed a BTA but abruptly pulled out (probably under pressure from China), could come back to the table. The United Kingdom, now adrift from the European Union, is actively looking for new trade deals.

Canada, Japan, Somaliland, South Korea and — considering the scale of Taiwan’s investments in the country — Vietnam, would all be obvious potential partners. There has been reporting that India is already working on a BTA with Taiwan, and I find this dubious, but this could be the impetus to make that a reality.

Germany’s new government may also stop being an obstacle to the EU deepening ties. The CPTPP member states could also grow more of a spine about letting Taiwan in.

All of this activity — the Biden statement, the top-level trade meeting, and the U.S.' exclusion of Taiwan from the IPEF — took place in just a few days. The whiplash has been disconcerting, but there are some positive signs.

Courtney Donovan Smith (石東文) is a regular contributing columnist for Taiwan News, the central Taiwan correspondent for ICRT FM100 Radio News, co-publisher of Compass Magazine, co-founder of Taiwan Report (report.tw), and former chair of the Taichung American Chamber of Commerce.