US-China relations are stuck in choppy waters after the formal declaration of trade talks between the US and Taiwan. The first round of talks begins this fall.
The move comes after US House Speaker Nancy Pelosi and a US congressional delegation visited the island, which China opposed and responded with an escalation of military exercises. .
David Sacks, a researcher at the Council on Foreign Relations, discussed trade negotiations with the United States and Taiwan, and what might unfold as a result of the negotiations.
“Taiwan is one of the top ten trading partners of the United States. We know how important that is for global semiconductor manufacturing as well,” Sacks told Yahoo Finance Live. “The continent is the most Taiwan’s big export market and I think that’s a real vulnerability for Taiwan that we should be working to mitigate.”
Despite heightened tensions, China and Taiwan are important trading partners. The value of trade along the Taiwan Strait was $166 billion in 2020, and Taiwan has a trade surplus with the mainland.
Taiwan is also the world’s leading exporter of semiconductors, which are used in automobiles, cellular devices, and more. Taiwan’s Ministry of Finance said chips accounted for 40% of Taiwan’s $446.45 billion in exports in 2021, an increase of 27.1% from 2020.
Sacks also said successful trade talks were a top priority for Taiwanese President Tsai Ing-wen.
“She is a trained trade negotiator, helps lead negotiations for Taiwan to enter the World Trade Organization (WTO) and took a politically unpopular step more than a year ago when she lifted restrictions on the export of U.S. pork and beef with an additive,” The Bags explained.
After US officials affirmed their support for Taiwan, President Tsai’s office thanked President Pelosi and others for their support and said Taiwan is a reliable partner for the United States.
As for what an actual deal might look like, Sacks listed potential options for the United States and Taiwan given that the Biden administration lacks trade promotion authority.
“I don’t know if the end product here will be a formal trade agreement that will go to Congress for approval, or if it’s something just short of it, but dealing with trade facilitation, labor standards labor, environmental standards,” Sacks explained.
If the United States acts first, Sacks believes other countries will follow.
“I think if the United States takes the first step, negotiates a meaningful trade deal with Taiwan, it could spur Japan, Australia, South Korea and other major economies in the region to open similar negotiations. with Taiwan, because they will see that it is something that is doable, something that is possible,” Sacks said.
Yaseen Shah is a writer at Yahoo Finance. Follow him on Twitter @yaseennshah22
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