RCEP outcasts US and Taiwan seek benefit from each other with futile economic dialogue

By GT staff reporters Source: Global Times Published: 2020/11/20 17:38:54

The view of Taipei Photo: VCG

The US and the island of Taiwan - two outcasts of the world's two major regional trade agreements, the RCEP and CPTPP - will hold a high-sounding "economic prosperity partnership dialogue" on Friday, which analysts described as a "political show" that is unlikely to achieve any substantial progress at a time when the new US administration is preparing to take over the White House in less than 70 days. 

According to Taiwan media, Keith Krach, the US State Department's under secretary of state for economic growth, energy and environment, will join the dialogue in Washington along with Chen Chern-chyi, deputy head in charge of economic affairs on the island of Taiwan. Meanwhile, Wang Mei-hua, the head of Taiwan's economic affairs authority, will hold a virtual conference from Taipei with Krach.

According to the American Institute in Taiwan (AIT), the dialogue will address issues like secure supply chains, the "Clean Network" and 5G security, semiconductors, infrastructure development, investment screening, women's economic empowerment, health security, and science and technology cooperation. 

David Stilwell, assistant secretary of state for the Bureau of East Asian and Pacific Affairs, announced that the US would launch an annual economic and commercial dialogue with Taiwan after the island lifted restrictions on ractopamine-enhanced pork imported from the US. During Krach's visit to Taiwan in September, it was said that the dialogue mechanism would be initiated. However, it only turned into an exchange of views on how to start the dialogue.

Observers said that the talk will be used as a "political show" for the Taiwan authorities to fool its people following their snubbing from the RCEP and the CPTPP. It is also a move by the US administration to make the Chinese mainland uncomfortable. In the end, it is Taiwan's authority to swallow the bitter fruit of guiding the US to go against the mainland. 

Political farce

Analysts on the island of Taiwan believe that with multiple issues to be discussed over three hours, the dialogue will be more strategic and will not reach any concrete results.

Representatives from Taiwan attending the talks in the US are only deputy heads of the island's economic and business departments. Indeed, the person responsible for economic negotiations should be the trade representative, rather than the US State Department, said Zhang Hua, an associate research fellow of the Institute of Taiwan Studies, Chinese Academy of Social Sciences. 

Douglas Paal, Distinguished Fellow at the Carnegie Endowment for International Peace of the US, told the Global Times on Friday that he does not think Friday's economic discussions would focus on a trade agreement or a free trade agreement.

"It [the dialogue] is a way of doing something to advance Taiwan's status. They [the Trump administration] are trying to push the envelope a little bit, not really cross any red lines," he said.

He noted that the coalitions to counterbalance China's growing influence are an important objective of the economic dialogue. "That's not going to change when Trump leaves office. It will still be an important part of the Biden administration's policy judging from what they've had to say in advance."

Yuan Zheng, a senior fellow of the Institute of American Studies at the Chinese Academy of Social Sciences, told the Global Times that despite US relations with Taiwan becoming more and more "official" under Trump's presidency, the mainland is the actual side that takes the initiative, with calm and confidence.

"Even if the US and Taiwan island cross the line, the mainland is fully capable of a counterattack," said Yuan.

Chang Ya-chung, a Taipei-based political scientist and member of the KMT (Kuomintang), told the Global Times that the dialogue is nothing but a farce and political show that allows the DPP authorities to fool the island's people by suggesting that they have made some progress with the US after Trump failed in his presidential reelection attempt and Taiwan failed to join the RCEP. 

"Even if an agreement is signed, the US' commitment is still questionable under the Biden administration, as the US may focus on domestic issues, prioritizing the COVID-19 pandemic and local economy. So there is no reason to highlight the importance of Taiwan," said Chang.  

And the US is bound to demand a very high price if Taiwan decides to make a deal, said Chang, noting that the US does not budge on negotiations even with Canada and Europe, let alone Taiwan, who is in an extremely unequal place in terms of its size and status, said Zhang, describing Taiwan's passiveness. 

Some Taiwan observers also view the dialogue as compensation for Taiwan's Democratic Progressive Party (DPP) allowing US ractopamine-enhanced pork imports to Taiwan, which has helped US pig farmers ease their sales problems and become more willing to support Trump before the election. 

Taiwan's dead end 

Besides the political farce, observers believe that the economic talk is a signal that Taiwan has entered a "dead end" under the DPP's leadership as they failed to join major multilateral trade frameworks in the Asia-Pacific region under the guidance of secessionists.

Wang Jianmin, a Taiwan affairs expert, told the Global Times that the dialogue will not help Taiwan's negotiation with the US on the Trade and Investment Framework Agreement, noting that Taiwan's absence from both the RCEP and CPTPP will bring about monumental challenges for the island's economic growth.

Taiwan's main source of economic growth lies in the mainland. And the only promising prospect for Taiwan is expanding its cooperation with the mainland on the basis of the 1992 Consensus rather than following the US' steps in seeking "decoupling," Wang said.

As the global pandemic batters its economy, the island of Taiwan's economic reliance on the mainland rose to an even higher level. In the first 10 months of 2020, the mainland's imports from Taiwan have increased by 14.8 percent to $161.34 billion, the latest data from the General Administration of Customs showed.

Paal told the Global Times that he doesn't think Biden's administration will put Taiwan at the center of its policy as the incoming administration will give priority to fighting COVID-19, economic recovery, racial injustice and climate change.

Andrew Wheeler, Trump's US Environmental Protection Agency chief, will visit Taiwan in December, media reported. The Chinese Foreign Ministry on Friday urged the US to abide by the one-China principle and stop all forms of official contact with Taiwan to avoid damaging stability across the Taiwan Straits and China-US ties in important areas.  

Observers said the US' demand to strengthen cooperation with the island of Taiwan in the critical sector of semiconductors, as outlined in the statement of the American Institute in Taiwan, will risk paralyzing Taiwan's pillar industry.

With the semiconductor industry contributing about 15 percent of Taiwan GDP, Taiwan has a leading position worldwide in terms of chip manufacturing, which makes it a natural target for the US amid the US' worsening diplomatic ties with the Chinese mainland.

"The US owns core semiconductor technologies, while Taiwan-based foundries like TSMC are good at chip manufacturing. In this sector, Taiwan is complementary to the US, while posing no threat to the US' technological hegemony," Ma Jihua, an industry analyst, told the Global Times.

Ma said that TSMC's plan to build a microchip factory in the US under pressure from the Trump administration implies the US' purpose of getting the island's chip production under its firm control in a bid to ban the Chinese mainland's access to advanced chips.

The Chinese mainland imports about $300 billion worth of microchips a year, of which about $60-70 billion come from Taiwan. "If the mainland shifts to South Korea or uses domestic companies, the island's strategically important semiconductor industry would be paralyzed," Ma said.

With Taiwan "100 percent" dependent on the Trump administration, Taiwan regional leader Tsai Ing-wen's position within the gang-ridden DPP is relatively secure… If support for Taiwan wanes under Biden's administration, however, Tsai's shallow roots within the DPP will be shaken and the DPP is expected to start fighting for power within, soon to be followed by less focus on Taiwan's economic growth, analysts said.

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