The Economic Case For Prioritizing A U.S.-Taiwan Free Trade Agreement

The Economic Case For Prioritizing A U.S.-Taiwan Free Trade Agreement

The United States should quickly accept the offer of Taiwanese President Tsai Ing-wen to enter into negotiations for a Free Trade Agreement (FTA)



FTA

. Taiwan has become a focal point in U.S. policy toward the People's Republic of China (PRC), partly due to the aggressive expansion of the latter's military power in the South China Sea and its increasingly hostile actions toward any expression favorable to continued Taiwanese independence. President Biden and his team have signaled that they will not back down on support for the island nation or at least on maintaining the status quo regarding its autonomy. But deepening relations with Taiwan has more than geopolitical importance. Its highly successful economy and the structure of its trade with the United States offer ample justification for closer relations. An FTA is clearly in the economic interests of both nations. 

In recent decades Taiwan has become overly dependent on trade and investment with its next-door neighbor. Taiwan business interests have more than $185 billion invested in mainland China. 400,000 Taiwanese citizens representing 2.5 percent of Taiwan's workforce are based in China. Two-thirds of all Taiwanese economic output is exported to the PRC, and forty percent