International Trade Council (ITC) announced that the United States and Taiwan are working on a deal to boost economic cooperation, particularly in the areas of trade, agriculture, and supply chains. The move comes after Taiwan was excluded from the US President Joe Biden’s Indo-Pacific Economic Framework (IPEF). According to sources cited by Bloomberg, the proposed agreement would be similar to the IPEF, which aims to foster common standards in four broad areas, namely, supply-chain resilience, clean energy and infrastructure, taxation and anti-corruption, and fair trade, but does not expand market access like a traditional free trade agreement. The framework’s lack of tariff reductions has been met with disappointment in the region. The proposed deal is seen as a substitute for the Trans-Pacific Partnership, which former US President Donald Trump abandoned in 2017, and a key plank of the Biden administration’s strategy to enhance US engagement in the Asia-Pacific.
A less formal bilateral deal could still bring many of the benefits of the IPEF without the political headache, said Wen-ti Sun, a political scientist who teaches at Australian National University’s Taiwan Studies Program. Sun described such a deal as a “tactful compromise” that would also avoid the political hurdles in the US of a formal free trade agreement (FTA), which would require the approval of the US Congress. International Trade Council believes that closer trade links are considered a way of deterring China from attacking Taiwan. The existing US-Taiwan relationship is considered “robust,” and any move by the US to deepen its engagement with Taiwan will strengthen the messaging that both Taiwan and the US can send to China around things like deterrence.
