Testimony:
Office of the United States Trade Representative (USTR)

Fair and Resilient Trade Pillar of an Indo-Pacific Economic Framework (IPEF)

(Arlington, Virginia, April 11, 2022)

Written Testimony. See attachment for full text, including supporting tables and charts.

Introduction

The US-Taiwan Business Council (USTBC) thanks the Office of the United States Trade Representative (USTR) for this opportunity to comment on the Fair and Resilient Trade Pillar of the proposed Indo-Pacific Economic Framework (IPEF). It is our understanding that IPEF is intended to promote U.S. interests and support economic growth in the Indo-Pacific region, while developing new approaches to trade policy that would advance a broad set of worker-centered U.S. priorities.

USTBC is a member-based organization that has worked since 1976 to foster bilateral trade and business relations with Taiwan and to support U.S. companies active in the market. We believe that Taiwan is a prime candidate to join the IPEF, not only as a top tier trading partner for the United States and a like-minded democracy, but also due to their crucial role in the global supply chain – particularly in technology.

Taiwan can help the United States achieve its goals with the IPEF, and should be a first-round consideration for joining this initiative.

Conclusions & Recommendations

U.S. strategic interests in the Indo-Pacific are interwoven with our support for the bilateral relationship with Taiwan – both when it comes to trade and the economy, as well as on national security. Taiwan plays a tremendously important role both as a market for U.S.-made goods and as a manufacturing and innovation partner for U.S. businesses. By any measure, Taiwan is a terrific example of the successful U.S. foreign policy that supports flourishing free market democracies. Taiwan is worthy of significant U.S. support.

While USTBC also believes that Taiwan should be a key target for exploring bilateral trade initiatives – including negotiating and signing a Bilateral Trade Agreement (BTA) – Taiwan’s inclusion in the IPEF can serve as a representation of the sustained U.S. commitment not only to Taiwan but to all our existing partners in the region.

Taiwan has already expressed their interest in potentially joining this new initiative as a full member. Including Taiwan in the IPEF would underscore U.S. leadership on economic matters in the Indo-Pacific, and would bind Taiwan even closer to U.S friends and allies in the region. In addition, Taiwan’s leadership on cutting-edge technology development would well serve the objectives of this initiative, which includes issues surrounding the digital economy.

Taiwan can serve as a partner for the U.S. on matters ranging from transparency and good regulatory practices, to new ideas on environment and climate issues, to respecting labor rights. As a long-standing and trustworthy economic partner, Taiwan brings a number of strengths that could help the U.S. achieve the goals it has set for the IPEF.

Conversely, excluding Taiwan from this important initiative undermines the bilateral economic relationship that would deprive the framework of a major and positive force for economic development. Missing this opportunity to engage with Taiwan would weaken the U.S.-Taiwan relationship. It could potentially impact the island’s relationship with U.S. allies and other partners in the Indo-Pacific, such as Japan, which could even have national security implications for the United States. In addition, excluding Taiwan from the IPEF only makes sense if it takes place in consideration of how China would react to its inclusion. Instead, the U.S. should pursue a policy toward Taiwan that prioritizes American national interests over China’s sovereignty claims.

USTBC remain committed to maximizing the U.S. business and commercial relationship with Taiwan. While we understand that there are some outstanding trade issues, we do not support U.S. preconditions on the path to broader ties.

Taiwan is attempting to better integrate itself into the region’s ongoing trade liberalization, but it is likely that any such effort will be unsuccessful in the absence of U.S. leadership. Many Indo-Pacific countries will not engage with Taiwan due to Chinese political objections unless the U.S. offers leadership and an established framework.

The IPEF could serve as such a framework, and including Taiwan in this initiative offers the U.S. an excellent opportunity to lead on Indo-Pacific trade and economic development.