Industry News

U.S. Implements First Step in Trade Agreement with Taiwan

Dec. 18, 2024
By: Chaney A. Finn


The United States and Taiwan (officially the Republic of China) do not have diplomatic relations. However, the United States and Taiwan cooperate across a range of topics. One of these is trade relations, with discussions and negotiations are conducted between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States, in an arrangement known as the U.S.-Taiwan Initiative on 21st Century Trade. This provides a foundation for the two countries to address trade and investment challenges and opportunities and advance mutual priorities over time.

On December 9th, the U.S. Trade Representative (USTR) announced the first agreement from this arrangement finally took effect December 10th, 2024. Agreed to and signed in June 2023, this agreement covers anti-corruption, customs administration and trade facilitation, and small and medium-sized enterprises. This implementation comes after the USTR certified to U.S. Congress that Taiwan had taken the measures necessary to comply with its obligations under the agreement.

Support for the implementation of the first agreement was evident on both sides, as USTR Tai called it a “milestone” in the partnership and “an important step forward in strengthening the U.S.-Taiwan economic and trade relationship.” Taiwan's Office of Trade Negotiations stated, "Given the highly volatile global situation, it is of strategic significance for Taiwan to consolidate and expand its relationships with important economic and trade partners."

The announcement also added that negotiations for a second agreement pertaining to additional trade areas, including labor, environment, and agriculture are currently ongoing. The current arrangement under the U.S.-Taiwan Initiative on 21st Century Trade is considered “building blocks” towards a more comprehensive free trade agreement, although that will be unlikely for the foreseeable future.

The path forward is not free of complexity. The relationships among the United States, the People’s Republic of China, and Taiwan are complicated, with the United States recognizing the People’s Republic for diplomatic purposes but also legally bound to support Taiwan’s defense capabilities, as well as having high interest in Taiwan’s manufacturing and trade capabilities.

The U.S. relies heavily on Taiwan for critical manufacturing as it is the leading global producer of semiconductors used for a variety of commercial and military applications, posing it as a key economic and national security interest. Notably, Taiwan was not included in the 2022 Indo-Pacific Economic Framework for Prosperity, which among other things, counters Chinese economic and military coercion in the region.

Should you have questions regarding the U.S.-Taiwan Initiative on 21st Century Trade, this agreement, or any other trade-related questions, do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.