The discussion around a possible bilateral free trade agreement between Taiwan and the US has been drawn out for years, with Taiwan requesting and the US acting lukewarm toward the idea.

At stake in any kind of bilateral trade or investment deal here is, first and foremost, the political standing of Taiwan vis-a-vis China and the rest of world. An FTA with Washington would amount to US recognition of Taiwan’s sovereignty and independence from China. This goes against Chinese policy and could trigger military action. The US adheres to Beijing’s "one China" policy while it maintains unofficial relations with Taiwan.

The economics of a potential deal are another story. Taiwan is the US’ eighth largest trading partner, and sixth largest importer of US agricultural goods, and wants its own terms of access to US markets. But the US insists that the actual benefits of an FTA for Taiwan would not be important, even though Washington constantly pressures Taiwan to improve its policies on electronic commerce, government procurement, intellectual property, food safety and US beef for the benefit of American corporations.

In the meantime, the two governments, through their respective proxy agencies, signed a sort of Trade and Investment Framework Agreement in 1994 and conduct discussions through the TIFA Council.

last update: May 2012


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