US, Taiwan Sign 1st Agreement of 21st Century Trade Initiative — Rebuke From Beijing

The U.S. and Taiwan signed the first agreement under the U.S.-Taiwan Initiative on 21st Century Trade (USTI) in Washington on the morning of June 1. Beijing sharply criticized the agreement and accused Taiwan’s Democratic Progressive Party authorities of “using Taiwan’s material resources to please foreign countries.”

The agreement was signed by representatives of the American Institute in Taiwan and the Taipei Economic and Cultural Office in the U.S. Deputy U.S. Trade Representative Sarah Bianchi attended the signing ceremony.

According to the Office of the U.S. Trade Representative, the agreement aims to strengthen and deepen economic and trade relations between the U.S. and Taiwan. We are grateful to both parties for reaching this important milestone, and we look forward to the upcoming negotiations on the other trade areas set out in the Initiative’s negotiating mandate.

The first agreement provides for customs administration and trade facilitation, good regulatory measures, internal supervision of services, anti-corruption, small and medium-sized enterprises and so on. According to this agreement, both parties aim to reduce waiting times for customs clearance of imports and exports, with the possibility of submitting documents and paying customs tariffs electronically. The parties also aim to help small and medium-sized enterprises better understand management according to rules and seek public input on the drafting of rules, increase the transparency and ease of service sector license applications, strengthen cooperation in the fight against corruption in the field of economics and trade, enhance trade and investment opportunities for SMEs, etc.

The U.S. sees enhancing economic and trade cooperation as a more substantive measure in support of Taiwan. After Taiwan was excluded from the Biden administration’s Indo-Pacific Economic Framework for Prosperity, the U.S. and Taiwan launched the USTI on June 1 last year. The framework of this free trade initiative covers 11 areas, including trade facilitation, good regulatory practices, agriculture, anti-corruption, SMEs, digital trade, labor, environmental protection, standards, state-owned enterprises and non-market economies. Negotiations between the two parties started last August with a number of video conferences and two face-to-face consultations last November and this past January.

The Office of the U.S. Trade Representative previously stated that once the initial agreement is signed, negotiations would begin on other more complex areas of trade, including agriculture, digital trade, labor and environmental standards, state-owned enterprises and non-market policies and practices. The agreement is not expected to change tariffs on goods, but it will increase exports of U.S. goods to Taiwan.

In response to the U.S.’ and Taiwan’s proposed signing of the USTI, Zhu Fenglian, the spokesperson for China’s Taiwan Affairs Office, said on May 31 that she was firmly opposed to any negotiations of a sovereign or official nature between countries that have established diplomatic relations with China and China’s Taiwan region, and that this position was consistent and clear.

Zhu argued that the DPP authorities’ pushing of this so-called agreement allowed the U.S. to take whatever it wanted and meant “using up Taiwan’s material resources to please foreign countries,” and that it was a complete waste of money and dead in the water. The so-called agreement, she said, was an unequal one: that it was a political deal dressed up as economics and trade, an American ruse to bleed Taiwan dry and DPP obsequiousness at Taiwan’s expense; that betraying the interests of the island’s enterprises and its people was the cost of the “diplomatic achievements” of which the DPP authorities boasted; and that Taiwan’s core industrial advantages and overall competitiveness had been weakened.