With Lapse of TPA, Biden Rejects Bipartisan Calls for a Taiwan Free Trade Agreement

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Posted by Rowan Saydlowski on Thursday, August 5th, 2021, 11:10 AM PERMALINK

The Biden Administration recently let Trade Promotion Authority lapse, making any type of comprehensive trade agreement impossible. Just days before, his administration received a bipartisan letter from 42 senators calling on the U.S. Trade Representative to pursue a Free Trade Agreement with Taiwan. A trade agreement with Taiwan, the UK, or even to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is now all but impossible.

Instead, the Biden-Harris administration will resume a limited executive-level Trade and Investment Framework Agreement (TIFA) with Taiwanese officials. As an executive agreement, the TIFA will be nonbinding and avoid any reduction in tariffs or other commitment that would require implementation legislation.

The narrow scope means American workers will be missing out on the massive benefits that free trade with allies like Taiwan has to offer. A bipartisan group of senators say the TIFA talks don't go far enough and they're calling for U.S. Trade Representative Katherine Tai to pursue a real Free Trade Agreement with Taiwan instead.

In a letter to Ambassador Tai at the end of June, the group of 42 senators led by Senator Marco Rubio (R-Fla) and Senator Mark Warner (D-Va) requested that the administration "take steps to begin laying the groundwork for negotiation of a free trade agreement... with Taiwan." This letter follows a previous letter by 50 senators in late 2020 calling for a free trade agreement with Taiwan and a letter by 161 members of Congress in 2019 calling for the same. Taiwanese President Tsai Ing-wen also stated her own desire for a free trade agreement with the United States last year, and Taiwan's chief trade negotiator John Deng reiterated this desire to U.S. officials last month.

While the United States does not have formal diplomatic relations with Taiwan, it shares deep economic ties with the island nation. Taiwan is the U.S.'s ninth-largest trading partner in the world, and the U.S. exports more to the island than to France or Italy. The island is particularly important for American farmers as the seventh-largest destination for agricultural exports from the United States.

Taiwan is a strategic technology partner as well, home to companies like Taiwan Semiconductor Manufacturing Company (TSMC), the global leader in high-end chip production. A trade agreement would incentivize greater technological exchanges between countries and could seal in rules on how to deal with state-owned enterprises, like those found in the USMCA, that would prevent a Chinese takeover of the industry.

Previous free trade talks between the United States and Taiwan had stalled due to trade barriers from the island government, in particular those on U.S. meat exports. As of January 2021, however, Taiwan lifted its restrictions on American pork and beef, showing an open willingness to negotiate and make concessions in order to get a larger deal.

In addition, USTR has previously identified numerous trade barriers from Taiwan that remain today, such as those restricting imports of rice, ground beef, certain animal byproducts, and genetically modified foods. Additionally, Copyright Piracy was one of Taiwan's worst-performing subcategories on the 2020 International Property Rights Index. While Taiwan has made recent progress on combatting copyright infringement, US-Taiwan negotiations could result in robust enforcement for intellectual property belonging to American companies. Without TPA, the Biden Administration ensures these barriers stay intact.

The Biden Administration must shift its focus away from bloated international tax cartels that will harm American workers and toward Free Trade Agreements that will lower trade barriers to provide an economic boost for all countries involved. Taiwan would be a great place to start.

Photo Credit: Pixabay

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