China stepped up its diplomacy with the US to dampen Taiwan’s elation after Secretary of State Anthony Blinken announced the possibility of resuming trade talks with the island that Beijing considers a rebel province. During a House of Representatives Foreign Affairs Committee hearing on the US State Department’s annual budget, Blinken was asked about the administration’s position on a bilateral trade agreement with Taiwan.
"I’d have to refer you to Katherine Tai, the US trade representative, but I know we are engaged in conversations with Taiwan, or soon will be, on some kind of framework agreement, and those conversations should be starting," Blinken said.
Taiwan’s Ministry of Economic Affairs said that it is "enthusiastic and expectant" following Blinken’s statement. However, Chinese Foreign Ministry spokesman Zhao Lijian said on Tuesday that China has always opposed signing any agreement with "the Taiwan area, as it would affect the nature of its sovereignty." The Chinese official called for a cautious approach to the Taiwan issue and stressed countries from sending false signals in favor of Taiwan’s independence.
Taipei Times reported that Blinken’s announcement provided a confidence boost for those seeking independence as the Trade and Investment Framework Agreement (TIFA) can be a step in that direction. Liu Chih-hung, deputy director of the Taipei Foreign Trade Bureau, noted that the trade negotiation department should now look into TIFA in detail. The Taiwanese official expressed hope that TIFA talks could resume quickly, eventually leading to the signing of a trade deal between the US and Taiwan.
A free trade agreement with Taiwan is of particular interest to Washington as it ensures a stronger US presence in the Asian market, and is mostly stable – economically and politically, whilst also opposing the Chinese Communist Party. The US understands the need to have a foothold in Asian markets as there is stiff competition from mainland China and Japan. In this sense, Taiwan is a good market base, and it is for this reason that the US is exerting strong political pressure on Taipei. The US is likely to use this leverage to bolster its economic and geopolitical interests in the trade agreement.
There is an idea that the US will be able to use negotiations as a lever of pressure against China, but this is not so simple as Taiwan has no leverage to exert pressure on China unless the island’s authorities decide to have an American military presence. However, this scenario will aggravate Sino-U.S. relations and make it even more difficult to resolve the issues that already exist.
It must be remembered that China has never objected to Taiwan’s informal economic exchanges with partners, but it does want official processes to go through Beijing first. Beijing strongly opposes official contact between the US and Taiwan at the top level, including in the economic and trade fields. An important prerequisite for Beijing is that such relations should be carried out within the framework of the "One China" policy.
Questions must be raised on whether the US’ example of institutionalizing trade relations with Taiwan will prompt its allies in Europe and Asia to also begin formal trade negotiations with it. With the exception of the UK, no other major European country would likely be interested as they are closely linked with mainland China economically. In general, the EU and individual European countries, particularly the likes of Germany, France and Italy, do not have an interest in trading with Taiwan if it means worsening their economic relations with China. For this reason, it is unlikely that they will want to develop official commercial relations with Taiwan.
Negotiations on bilateral trade development and trade dispute settlement between the US and Taipei began in 1995. The talks reached a dead end after Barack Obama stepped down as President in 2016 and Trump was voted in on the platform of bringing American industry back from China – something he ultimately failed to do.
Bonnie Glaser, a Taiwan expert at the German Marshall Fund of the US, said that Blinken’s comment was a signal Washington is likely to move forward with the resumption of TIFA talks with Taiwan, but that the administration has probably not made a decision on whether to take the much larger step of pursuing a bilateral trade agreement. It appears then that even the US is having some doubts on whether to pursue such a trade agreement as there will certainly be reprisals from China.
Paul Antonopoulos is a research fellow at the Center for Syncretic Studies.