After months of negotiations, the US government has reached a trade agreement with Taiwan closed. The island republic has agreed to abolish or lower 99 percent of its tariff barriers, said the office of US Trade Representative Jamieson Greer. The majority of Taiwanese exports to the USA should be subject to a tariff rate of 15 percent. This corresponds to that Customs, which also applies to other US trading partners in the Asia-Pacific regionsuch as Japan and South Korea.
In addition, commits himself Taiwanfor which the US is the most important ally, to buy significantly more US goods by 2029, including liquefied natural gas and crude oil, aircraft and engines as well as systems and equipment for power grids as well as shipbuilding and steel construction. The agreement gives the US preferential access to export industrial and agricultural goods such as cars and beef to Taiwan.
“This is a new chapter for Taiwan’s foreign trade,” said Taiwanese President Lai Ching-te. The agreement will promote economic and technological cooperation between Taiwan and the USA deepen, he added. The agreement still has to go through the Taiwanese parliament.
USA depends on computer chips from Taiwan
Observers interpreted the trade deal as a sign of deepening economic relations between the USA and Taiwan. The United States continues to rely heavily on Taiwan for the production of computer chips. Booming semiconductor exports contributed to a US trade deficit with the island of almost $127 billion (around €107 billion) in the first eleven months of last year.
U.S. Trade Representative Jamieson Greer said the agreement would “significantly improve” the resilience of U.S. supply chains, particularly in high-tech sectors.
Lai said his country would establish a “Taiwan model” for U.S. technology cooperation by integrating its semiconductor and information and communications technology industries with the U.S. AI sector. Taiwanese semiconductors and related products will receive “preferential treatment” under the deal, the U.S. Trade Representative’s office said.
Taiwan expects fairer competition with the EU
Taiwan’s government announced that the tariff rate now set allows Taiwanese companies to compete under a level playing field JapanSouth Korea and the EU to compete. In addition, this will eliminate the disadvantage that has previously resulted from the lack of a free trade agreement between Taiwan and the USA.
Taiwan mainly exports information and technology products to the USA. The United States is also Taiwan’s most important international supporter and arms supplier threatened by the People’s Republic of China. The agreement comes a few months before the US President’s planned visit to China in April Donald Trump. China sees the island state of Taiwan as a breakaway province and is striving for reintegration, if necessary with military force.
Taiwan and the USA agreed to a trade agreement already announced in mid-January.
