US and Taiwan announce start of formal trade talks after Pelosi's controversial visit

Thu 18 Aug 2022
Posted by: Phillip Adnett
Trade News

Taiwan has announced it is to hold formal trade talks with the US – weeks after Nancy Pelosi’s controversial visit that sparked a diplomatic row between with China.

The talks with Taiwan are intended to build what US assistant secretary of state for East Asia, Daniel Kritenbrink, has described as “supply chain resilience” between the two.

Details have now begun to emerge about what the talks will cover.

US-Taiwan trade initiative

According to The Guardian, a US trade representative said that “consensus on a negotiating mandate” had been reached for the US-Taiwan Initiative on 21st-Century Trade, previously announced in June.

It is not being regarded as a full free trade deal, but deputy US Trade Representative Sarah Bianchi said it would “deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses”.

Politico reports that the two sides have agreed not to discuss possible tariff cuts, but will instead seek agreements in areas like agriculture, customs procedures, regulation, anti-corruption, and small- and medium-sized enterprises.

It is also believed the talks will seek new agreement in areas such as digital trade.

Limited sanctions impact

According to The Times, China’s responded to news of talks by calling for the US to cease their engagement with Taiwan, with a spokesman stating: “China will take resolute measures to uphold its national sovereignty and territorial integrity.”

China had previously imposed trade sanctions on Taiwan in retaliation for hosting Pelosi, but economists estimated that these measures impacted less than 1% of Taiwan’s trade (and only about 0.04% of its two-way trade with China).

According to CNBC, Taiwan’s more commonly traded goods, like electronics and technological parts, were not targeted, whilst smaller areas of trade were included in Chinese measures – such as natural sand and citrus fruits.

Taiwan currently exports more to China ($113 billion last year) than it imports ($82 billion. Bloomberg reports that Beijing could well place levies on minerals – particularly those which are crucial to Taiwan’s semi-conductor and chip manufacturing potential.


China has already denounced recent moves by the US to increase domestic semiconductor manufacturing, according to the South China Morning Post.

The US CHIPS and Science Act, signed into law by US president Joe Biden earlier this month, has been the subject of complaints by the China Semiconductor Industry Association as a violation of fair trade.

Taiwan currently dominates the outsourcing of semiconductor manufacturing – otherwise known as the foundry market – with Taiwanese companies commanding over 60% of global revenue, according to Taipei-based research company TrendForce.

As covered previously by the IOE&IT’s Daily Update, semiconductors are a crucial part of many consumer goods – such as phones, computers and cars.

Autumn talks 

The first round of US-Taiwan trade negotiations is expected to begin in the autumn.

Taiwan is the US’ ninth-largest trading partner, according to 2020 data from the US trade representative office.