Congress should get creative on Taiwan

Since Russia invaded Ukraine, fears that China may take similar action have grown. Members of Congress — while united on little else — have been particularly outspoken in voicing support for Taiwan and opposing China’s intimidation of the island. We have seen a flurry of bipartisan political statements, visits to Taiwan, symbolic legislative proposals, and congressional exhortations to the Biden administration to support Taiwan diplomatically, militarily and economically.

It is in the economic policy area where Congress could have the most material impact on U.S.-Taiwan relations — if it chooses to step up and show real leadership.

In late March, some 200 lawmakers wrote to Commerce Secretary Gina Raimondo asking that Taiwan be included in the Indo-Pacific Economic Framework that President Biden will likely announce later this month in Tokyo. But Raimondo and U.S. Trade Representative (USTR) Katherine Tai are certain to rebuff that request, since they know that Taiwan’s inclusion would drive away key Southeast Asian participants like Indonesia, that are the main targets of that Framework. These “fence sitter” nations fear that including Taiwan in the framework might antagonize China. Meanwhile, Taiwan is worried that exclusion from the framework will hurt its regional standing and diminish domestic enthusiasm for market opening.

Fortunately, and substantively closer to the mark, many members of Congress have also revived long-standing calls for the United States and Taiwan to negotiate a comprehensive bilateral trade agreement. Fifty Senators signed a letter to then-USTR Bob Lighthizer urging him to start such talks in October 2020; Sen. Rob Portman (R-Ohio) has now reportedly rounded up at least 43 senatorial signatures for a similar message. As Portman said during an April trip to Taipei, “Taiwan should be a part of the … [Indo-Pacific] Framework but frankly, I think it’s much more important that we reach out to Taiwan and begin negotiations on a free trade agreement.”

Portman is right. Even so, the Biden administration has shown no sign of taking on this challenge.

Instead, the Commerce Department in December 2021 initiated a new Technology Trade and Investment Collaboration (TTIC) framework with Taiwan, which looks like a useful talk-shop for policymakers and business leaders to discuss closer industrial cooperation in key sectors like semiconductors. That program built on the earlier State Department-run Economic Prosperity Partnership Dialogue (EPPD), an even broader avenue for economic policy talks launched by the Trump administration for primarily symbolic purposes. The USTR, meanwhile, has continued to systematically downplay Taiwan, continuing its half-hearted approach to the bilateral Trade and Investment Framework Agreement (TIFA) talks that also characterized the attitude of the Obama and Biden administrations.

The current path, then, looks likely to be more “conversations,” posturing, and executive branch inaction on a question that — unlike other trade policy matters — seems to enjoy strong bipartisan support in Congress to smartly move forward.

So, what should Congress do? The crux of the matter is that representatives need to remember their constitutional prerogatives and go beyond back-seat driving to take control of the agenda — and push forward an aggressive timetable for a bilateral trade agreement with Taiwan.

Article 1 of the Constitution specifically says “Congress shall have Power … To regulate Commerce with foreign Nations.” Although Article 2 sees a role for the president, granting him or her the “power, by and with the Advice and Consent of the Senate, to make Treaties,” the greater authority over trade resides with Congress. This is why administrations must obtain “trade promotion authority” from Congress before negotiating comprehensive trade agreements.

If Congress really wants to see a bilateral trade agreement with Taiwan, it can on its own initiative pass legislation requiring that such a negotiation take place, while providing specific funding and the legal authorities to make it happen. One good plan would be for Congress to mandate that negotiations start within 2022, with a completed text presented for passage by early 2024 to avoid excessive electioneering. Congress’ mandate would also establish a rough “trade promotion authority”-style scope for the pact, modeling the most recent trade agreement it approved with Canada and Mexico. It might even be possible for Congress to itself hire the staff necessary to negotiate the agreement, if USTR appears recalcitrant in pursuing talks with Taiwan.

The advantages of a U.S.-Taiwan bilateral trade agreement are manifold. In need of friends and formal relationships, Taiwan is likely to agree to terms that allow improved market access for U.S. goods in problem sectors. Such a pact will also boost U.S.-Taiwan industrial cooperation and cross-investment in critical high-technology sectors, bolstering future capabilities while strengthening the partners’ shared ability to deny emerging technologies to China. Taiwan, for example, has the world’s best semiconductor foundries, while the United States is best at semiconductor design.

With a bilateral agreement, more cooperative ventures like Taiwan Semiconductor Manufacturing Corporation’s $12 billion investment in Arizona are likely. Meanwhile, foreign investors will feel safer investing in Taiwan once a bilateral pact with the United States reinforces the stability of U.S. economic and political commitments there. Russia’s attack on Ukraine has raised anxieties about doing business in Taiwan; a U.S.-Taiwan agreement can help put those concerns to rest.

Congress can make all this happen, if it goes beyond rhetorical exhortation and uses its constitutionally derived powers to take the driver’s seat in pushing forward a U.S.-Taiwan bilateral trade agreement.

Kurt Tong is a partner at The Asia Group and was previously the U.S. chief of mission in Hong Kong and U.S. ambassador for Asia-Pacific Economic Cooperation.

Tags Biden China International Russia Taiwan

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