Taiwan President Tsai Ing-Wen seeks to bring forward free trade talks with the U.S. With Taiwan being a long-standing trade partner of America, this big step by Taiwan to strengthen the U.S-Taiwan relationship could potentially create new economic, social and political opportunities for the nation which faces pressure from China.

Taiwan is already a well-established trading partner for the U.S. The country was the 11th largest goods trading partner in 2018 with the U.S. totaling $76.0 billion in two-way trade of goods in 2018 and $18.5 billion in services.

A comprehensive trade deal with Taiwan can offer U.S. companies an alternative to doing business with Beijing, this would be a crucial lifeline in certain sectors. As President Tsai said during a video presentation hosted by the Hudson Institute and Center for American Progress that “the past months have shown us the importance of economic linkages and supply chain security for both Taiwan and the U.S.” and “[Taiwan and the U.S.] must be clear-eyed on how to move forward on an FTA.”

Along with growth in two-way goods trade, an FTA can bring an increase in services trade, especially in FDI which would be a large beneficiary. In her speech, President Tsai called attention to the increased two-way investment flows linking the U.S. and Taiwan, stating that Google and Microsoft have “substantially increased their investments in Taiwan” over the last year. With Taiwan seeking to become a global hub for technology, a FTA with the U.S. can open the county up to deals with large American tech firms. The FTA could set groundbreaking rules on how to deal with SOE, prevent coerced technology transfers, and limit data localization, similar to those in the USMCA. 

This was the essence of a coalition letter Property Rights Alliance executive director Lorenzo Montanari signed alongside other conservative groups sent to president Trump. The letter calls on Trump to “look past the way business has been done in the past and take a fresh approach when the U.S. stands to gain. The veto power Beijing has exercised over this issue in the administration’s past should be revoked. Nothing about an FTA with Taiwan is incompatible with serviceable, productive relations with China.”   

One of the longstanding complaints from the USTR preventing trade negotiations has been Taiwan’s prohibitions on meat from the U.S. entering their market. That barrier is no longer there, as president Tsai announced the easing of restrictions on imports of U.S. pork and beef earlier last month. It was done for national interest but also, in the words of president Tsai “If we can take one crucial step forward on the issue of U.S. pork and beef, it will be an important start for Taiwan-U.S. economic cooperation at all fronts.”  

Secretary of State Michael Pompeo said that “this move opens the door for even deeper economic and trade cooperation” and “kudos to president Tsai for her leadership.”

With members of the U.S. Senate believing now is the perfect time to start trade negotiations with Taiwan, a joint letter was sent to U.S. Trade Representative Bob Lighthizer encouraging him to begin the formal process of negotiating a trade agreement with Taiwan. The senators said, “as we look to advance our initiative for a free and open Indo-Pacific, we believe that now is the time to establish trade agreements with like-minded counties in the region.”

With Tsai’s bold response regarding this long-standing issue, the ball now remains in the U. S’s court to start a formal process to institute a free trade agreement with Taiwan. Entering into the negotiation process can help advance America’s strategic vision for a free and open Indo-Pacific region, as well as strengthen the U.S economic partnership with Taiwan.