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US, Taiwan agree to lift trade, clouding planned China talks

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The Washington Post | 19 May 2023
By Eric Martin | Bloomberg

US, Taiwan agree to lift trade, clouding planned China talks

The US and Taiwan agreed to boost trade ties, the first tangible results under an initiative announced last year that faces vehement opposition from Beijing and clouds the outlook for a visit to the US next week by a Chinese commerce official.

The Taiwan initiative isn’t a formal free-trade agreement and doesn’t address thorny issues such as tariffs, but it’s part of a broader drive to deepen trade ties amid heightened tensions with Beijing. China, which claims Taiwan as its territory, has denounced the trade talks, saying any move to formalize such ties is a change to the uneasy status quo around Taiwan.

The agreement was announced hours after the Chinese embassy in Washington said Minister of Commerce Wang Wentao is scheduled to meet next week with Commerce Secretary Gina Raimondo in Washington and US Trade Representative Katherine Tai at an Asia-Pacific Economic Cooperation ministerial meeting in Detroit.

The planned meetings with Wang come after US National Security Adviser Jake Sullivan sat down with China’s top diplomat for two days of talks earlier this month as the two countries sought to ease tensions.

“The question is the extent to which this will irritate the Chinese, and what will they do about it,” said Bill Reinsch, a former Commerce Department official in the Clinton administration and now at the Center for Strategic and International Studies.

The initial agreement announced Thursday under the US-Taiwan Trade Initiative will streamline customs, reduce wait times for trucks and vessels and improve regulation, Tai’s office said Thursday. Tai called it “an important step forward in strengthening the US-Taiwan economic relationship.”

“We look forward to continuing these negotiations and finalizing a robust and high-standard trade agreement that tackles pressing 21st century economic challenges.,” Tai said in a statement.

China’s government has repeatedly protested Washington’s deepening bilateral engagement with Taiwan and issued two complaints after the announcement, first from the embassy in Washington and then from the Ministry of Foreign Affairs in Beijing.

“The US move seriously violates the One China Principle under the three joint communiques and goes against the US pledge of maintaining unofficial relations with Taiwan,” Ministry of Foreign Affairs Spokesman Wang Wenbin said Friday in Beijing. The US should “stop any form of official exchanges, stop signing or negotiating any treaty with implications of sovereignty and of an official nature, and stop sending any wrong signal to Taiwan independence and separatist forces.”

The agreement also comes as President Joe Biden is in Japan to meet with leaders of the Group of Seven nations, with a focus on countering China’s influence.

The Taiwan trade initiative was announced last June, days after President Joe Biden initiated the Indo-Pacific Economic Framework for 13 other nations in the region. That deal was designed to counter China’s influence but didn’t include Taipei.

The measures announced Thursday will smooth border procedures and cut red tape, making it easier, faster, and less expensive for US businesses to sell products to Taiwan and Taiwanese customers, the trade representative’s office said. The steps on regulatory practices will boost transparency and mechanisms to help small- and medium-sized businesses better understand procedures, it said.

The initiative also will address money laundering, denial of entry for foreign public officials, and strengthened protections for whistleblowers, according to the trade office.

The US has also been pushing to offer Taiwan a better tax deal to facilitate investment in semiconductors and other high-end technology in the US.

Representative Mike Gallagher, the Wisconsin Republican who chairs the House Select Committee on the Chinese Communist Party, said there’s strong bipartisan support for a comprehensive Taiwan free-trade agreement and a tax deal, which he called important for economic and national security.

Earlier in the week, US Defense Secretary Lloyd Austin confirmed that the Pentagon was crafting a security assistance package for Taiwan using military equipment drawn from US inventory, and subsequently could seek funding to replenish its stockpiles.

“This is part of our long-standing commitment to upholding our obligations under the Taiwan Relations Act and other US policies and to doing our part to maintain peace and stability in the Taiwan Strait,” he told a Senate panel on Tuesday.

— With assistance from Dan Murtaugh and James Mayger.

(Updates with Chinese comment from eight paragraph.)

 source: The Washington Post