The United States and Taiwan have a long-standing and vibrant trade relationship. Taiwan is the 12th-largest trading partner of the United States and a top-10 destination for U.S. agricultural and food exports. The United States is the largest source of foreign direct investment in Taiwan, cumulatively investing US$23 billion as of January 2014. The time is right for the U.S. to proceed with exploratory consultations with Taiwan on the feasibility of a bilateral investment agreement (BIA).
The TIFA, signed in 1994, provides the primary mechanism for trade dialogue between the United States and Taiwan authorities to expand trade and investment links and deepen cooperation. In 2013, total two-way goods trade was $64 billion. Trade and investment relations between the U.S. and Taiwan have always been close. Thus Washington should launch the negotiation of a BIA with Taipei in the near future. A BIA would serve as the beginning of a more robust and comprehensive economic relationship between U.S.-Taiwan.
Taiwan is an important security and economic partner of the United States. To further demonstrate the commitment to enhancing trade and investment relations with the U.S., Taiwan sent a delegation of 42 business leaders to the SelectUSA Investment Summit last fall. The delegation was the third largest among over 60 participating countries. To improve Taiwan's competitiveness and to avoid the danger of being marginalized, Taipei also dispatched a high-level CEO delegation led by former Taiwan Vice President Vincent Siew to the U.S. last November to promote investment in the U.S. from Taiwan.
On the economy side, a BIA with the U.S. and the participation in Trans-Pacific Partnership (TPP) certainly will contribute to Taiwan's economic security. But also, it will make Taiwan economy more vibrant. This is certainly also in the interest of the United States when the U.S. continues to enhance its economic presence in Asia-Pacific region. If Taiwan is able to join the TPP then it’ll be the sixth largest economy in that organization. Certainly, that will bring benefit to all the members of TPP.
Negotiating a BIA would be an effective way to address non-tariff barriers to trade and investment and to spur more investment in both directions. The U.S. asset management companies, which have already established a promising market in Taiwan, could have much to gain from BIA provisions. The U.S. government officials and lawmakers must support the launch of such talks as a step toward eventual membership for Taiwan in the proposed TPP trade bloc.
The U.S. should seriously consider the benefits to be gained from greater economic integration with Taiwan. The American Chamber of Commerce in Taipei recently has urged the U.S. government to start negotiations with Taiwan on a BIA. Progress in the TIFA talks to remove trade barriers and conclude a U.S.-Taiwan BIA would also help Taiwan make strides toward qualifying for TPP. Taiwan deserves consideration to become a BIA partner and a candidate for second-round TPP membership.
Taiwan is now ready to work proactively with the U.S. to contribute to the high standards of the TPP. As a first step toward its admission to the system, Taiwan, hopefully, can conclude a Bilateral Investment Agreement with the U.S. to further regularize its extensive business exchanges, leading to a closely connected U.S.-Taiwan partnership heading toward the Trans-Pacific Partnership.
Wang is advisory commissioner for the Overseas Chinese Affairs Council of Republic of China (Taiwan) in the United States.