Ignoring threats from China, America signs formal trade deal with Taiwan

Ignoring intimidations from Beijing, Washington on June 1, 2023, signed with Taipei a trade agreement that would “strengthen and deepen the economic and trade relationship”between the USA and Taiwan. A part of the U.S. – Taiwan Initiative on 21st Century Trade that was launched in June 2022, the agreement will strengthen commercial relations between the two countries by improving customs, investment and other regulations. The agreement has been described as the “first concrete progress” under the Initiative.

Beijing is understandably livid, because such an arrangement of trade with the USA will sabotage the nefarious design by the leaders of the Communist Party of China to isolate Taiwan internationally so that Taipei is forced to succumb to Chinese pressure and accept Chinese sovereignty. The fond hope of China is that all the relationships of Taiwan with the international community must be routed through Beijing.

A formal trade agreement with the USA at this stage will not only end the isolation of Taipei but also is an informal underwriting of the status of Taiwan as an independent entity. It goes to underscore the level of commitment of Washington to Taiwan.

According to the Office of the United States Trade Representative, the first agreement under the Initiative covers the areas of customs and trade facilitation that will streamline border procedures and cut red tape, good regulatory practices that will help enterprises understand better regulatory practices in markets in the U.S. and in Taiwan, services domestic regulations that ensures that service suppliers are treated fairly, anti-corruption to eliminate bribery and other forms of corruption and small and medium sized enterprises that encourages SME trade and investment. Through these provisions, U. S. businesses will be able to bring more products to Taiwan and Taiwanese customers, while creating more transparent and streamlined regulatory procedures that can facilitate investment and economic opportunities in both markets, particularly for small and medium enterprises.

As of now, the volume of business between the USA and Taiwan is significant. In 2020, U.S. exports to Taiwan were a total of $39 billion and imports from Taiwan to the U.S. was $67 billion. Growing business relations of Taipei with the international community will also be a warning to Beijing against any military misadventure against Taiwan.

Analysts have described the development as an “important breakthrough”because it is the first formal trade agreement of Taiwan with the USA. Taiwanese Minister John Deng has explained that it is the diplomatic isolation of Taiwan that stands in the way of formal treaties. “The greatest concern of Taiwanese companies is to become isolated. Every country wants to do business with Taiwan, but when you bring up agreements not a single country dares to sign it.” Now with Washington taking the lead, the misgiving that other countries have on negotiating trade pacts with Taiwan will reduce. It is also an assurance that Taiwan provides a positive environment for trade and good governance.

As Director of Taiwan ASEAN Studies Center Kristy Hsu has pointed out:“The U.S. – Taiwan agreement would create a more efficient and transparent business environment for companies from the two sides. It proves to the international world that if Taiwan is able to engage in such a high-quality initiative with the U.S. that means our commitment to transparency and trade facilitation should have no question.”

The office of the President of Taiwan Tsai Ing-wen has described the agreement as “a key step in Taiwan’s efforts to sign trade agreements with major trading countries.”She looked forward to Taiwan and the USA building an even closer partnership, which would bring about more opportunities for the economy and industries of Taiwan.

Apart from the economic benefits that the trade agreement will bring to Taiwan, it is also a warning to China to keep away from the shores of the island territory. To send a message to China, several senior politicians from American and Europe have visited Taiwan lately, the most famous visit being of Speaker of U.S. House of Representatives Nancy Pelosi; at a time when the Chinese government has stepped up efforts to intimidate Taipei by flying fighter jets and bombers near the island.

Unable to isolate Taiwan diplomatically, the Chinese military has lately started engaging in dangerous manoeuvres in the sky and in the sea, in a vain attempt to threaten the U.S. military. On June 5, 2023, the U.S. military released a video of an unsafe Chinese manoeuvre in the Taiwan Strait. It shows a Chinese naval ship cutting sharply across the path of an American destroyer; forcing the U.S. vessel to slow to avoid a collision. American destroyer USS Chung-Hoon and Canadian frigate HMCS Montreal were conducting a freedom of navigation transit through the Taiwan Strait when a Chinese guided missile destroyer overtook Chung-Hoon on its port side and veered across its bow at a distance of 150 yards. The American destroyer held its course but reduced its speed to 10 knots.

The U.S. Indo-Pacific Command said in a statement the actions of the Chinese ship violated maritime rules of safe passage in international waters. “Chung-Hoon and Montreal’s transit through the Taiwan Strait demonstrates the combined U.S.-Canadian commitment to a free and open Indo-Pacific. The U.S. military flies, sails and operates safely and responsibly anywhere international law allows.”

In May 2023, the Chinese air force performed an unnecessarily aggressive manoeuvre in the air. A Chinese J-16 jet fighter flew directly in front of the nose of a reconnaissance aircraft of the U.S. Air Force; the close call raised the concerns of a possible accident.

The motive behind the aggressive behaviour by the Chinese military is to establish Chinese hegemony over the entire Taiwan Strait and also to isolate Taiwan in an effort to capture the island territory; the way in 1950 the Chinese army captured an independent Tibet.

Subsequent developments show, however, that attempt by Beijing to scare Washington away from Taiwan have fallen flat. On the same day that a Chinese ship conducted a dangerous manoeuvre in the Taiwan Strait, American Secretary of Defense Lloyd Austin made it clear that Washington would not stand for any “coercion and bullying” of its allies and partners. Speaking at the Shangri-La Dialogue in Singapore, Lloyd Austin said the USA was committed to maintaining the status quo on Taiwan and would prefer dialogue over conflict. The best course to counter increasing Chinese assertiveness in the region was to ensure a “free, open and secure Indo-Pacific within a world of rules and rights.”

He said the U.S. was “committed to ensure that every country can fly, sail and operate wherever international law allows. And every country, large or small, must remain free to conduct lawful maritime activities.” Lloyd Austin also made it clear that the USA was committed to deterring China’s claims on Taiwan and warned that Washington had been stepping up defence planning, coordination and training with partner nations in the region. “Deterrence is strong today and it’s our job to keep it that way. The whole world has a stake in maintaining peace and stability in the Taiwan Strait.”

A demonstration of the stepped-up efforts of Washington at reinforcing alliances in Asia was on display between June 1 and 7, 2023, as coast guard ships of the U.S. Japan and the Philippines staged law enforcement drills near the South China Sea over which, too, China wants to establish its hegemony. A scenario of the drill involved the interdiction and boarding of a vessel suspected of carrying weapons of mass destruction. “We are not just all display,” Philippine coast guard official John Ybanez was quoted as saying. “All these exercises that we do will help us to help each other in possible scenarios in the future.” Commanding officer Captain Brian Krautler of the U.S. Coast Guard cutter Stratton said the first trilateral engagement between the coast guards of the three nations “will provide invaluable opportunities to strengthen global maritime governance through professional exchanges and combined operations. Together we will demonstrate professional rules-based standards of maritime operations with our steadfast partners to ensure a free and open Indo-Pacific.”

Observers say the Joe Biden administration of the USA has been strengthening an arc of military alliance in the Indo-Pacific to checkmate China in the South China Sea and in any future confrontation over Taiwan. China wants to deprive the Philippines, Vietnam, Malaysia, Taiwan and Brunei of their rights in the South China Sea. Washington insists that freedom of navigation and over-flight through South China sea under the U.N. Convention on the Law of the Sea and the peaceful resolution of disputes in the busy waterway were in the national interest of the USA.

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