On March 16, 2023, the Office of the United States Trade Representative (USTR) released summaries of texts proposed by the U.S. side during the first negotiating round of the U.S.-Taiwan Initiative on 21st Century Trade, which was held in Taipei, Taiwan from January 14-17, 2023. Keeping consistent with the Biden-Harris Administration’s commitment to transparency in trade agreement negotiations, the USTR released the proposed negotiating texts of the trade areas from the mandate.
The negotiations between the U.S. and Taiwan are being conducted under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the U.S. (TECRO). Last June, Deputy U.S. Trade Representative Sarah Bianchi and Taiwan Minister-Without-Portfolio John Deng launched the trade Initiative after Taiwan was left out of the Indo-Pacific Economic Partnership due to concerns over China’s reaction. In August, the USTR announced that the two sides had adopted a robust agenda for negotiations on trade facilitation, good regulatory practices, strong anticorruption standards, enhancing trade between small and medium enterprises, trade, labor, standards, as well as ways to address distortive practices of state-owned enterprises and non-market policies and practices.
The proposed texted from negotiations from the U.S. side covering the following trade areas:
Customs Administration and Trade Facilitation
The proposed text for the chapter on customs administration and trade facilitation would establish clear rules and promote efficiency by focusing on automation, reducing formalities and requiring new or improved innovative border procedures, which will make it easier, faster, and cheaper for American companies to trade with Taiwan. The proposed text requires online posting of all laws, regulations, and procedures related to the import, export, and transit of goods. In addition, the pre-arrival information would be processed and assessed for risk through a single window with a view toward immediate release of goods for which all regulatory requirements have been met. The texts includes reduced restrictions on express consignment shipment and facilitating the return of goods across borders; the limited use of consular transactions for cross-border shipment; reduced formalities for containers; border agencies acceptance of electronic payment; penalty disciplines to ensure transparency, protection for confidential business information; and enforcement cooperation to ensure borders are used for legitimate trade.
Good Regulatory Practices
The U.S. proposed text for this chapter covers a range of rules for rule-making across the full regulatory life-cycle at the central level. This includes publishing draft regulations and allowing time for comments to be considered, as well as guidance and/or mechanisms by regulatory authorities on using the best available information and data when planning regulatory actions. The U.S. has also included in the proposed the text the allowance of stakeholders the opportunity to request issuance, modification, or repeal of regulations if change is justified due to technological changes, new information, or new standards; the expansion of online access to relevant information, including registries of existing laws and the procedural requirements of regulatory authorities; and transparency relating to the functioning and outputs of expert advisors.
Services Domestic Regulation
As described in the explanation provided in the negotiating mandate for the U.S.-Taiwan Initiative on 21st Century Trade, the U.S. proposed text for this chapter includes requiring laws and regulations to be transparent and regulators are independent of the industry they oversee. The proposed text further would require regulators to inform applicants of the requirements to obtain a license to supply services in a given sector, provide a fair opportunity for them to demonstrate that they meet those requirements, and decide whether to issue a license in a reasonable period of time. The proposed text would prohibit licensing rules from discriminating on the basis of gender. Special rules would be designed to preserve regulators’ ability to protect the stability of the financial system. The proposed text encourages regulators to continue experimenting with new technologies to make the application process easier, and goes beyond the existing WTO rules by requiring a high degree of fairness and transparency in all sectors in which foreign service suppliers are permitted to operate.
This chapter of the proposed text includes high anticorruption standards to prevent and combat bribery and other forms of corruption which expands the framework of the USMCA. The proposed text includes obligations to adopt or maintain measure to establish as criminal offenses the bribery of public officials, embezzlement, and money laundering; and setting up requirements maintain books and records to prevent the hiding of corruption. The text also requires the adoption of procedures to report corruption and to protect people who report corruption, including protection for external auditors, as well as measures for the training of public officials, transparency and accountability of public officials, and the reporting by public officials of any conflicts of interest and acts of corruption.
Small and Medium-Sized Enterprises (SMEs)
The text proposed by the U.S. side promotes ongoing cooperation between the relevant authorities in the United States and Taiwan, under the auspices of AIT and TECRO, to increase SME trade and investment opportunities. The proposed text of this chapter includes the exchange of information and best practices in areas such as promoting SME participation in international trade and improving SME access to capital and credit, training programs, trade education, trade finance, trade missions, and trade facilitation; activities to promote SMEs owned by underserved and underrepresented groups, including women, indigenous people, youth, and minorities, as well as start-ups and agricultural and rural SMEs; online, publicly-accessible information resources useful for SMEs trading, investing, or doing business in the U.S. and Taiwan; and periodic SME dialogue that could consider small business trade opportunities and challenges between the two countries.
The negotiations are still ongoing and will be reviewed as they come in. If you have questions about U.S. trade agreements do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.