The U.S. has a semiconductor problem. There aren’t enough being made, not enough being imported, just not enough. The White House has warned of “escalating vulnerabilities” from the shortage.
But there’s a solution: the U.S. could pursue a broad and generous free trade deal with Taiwan, or the Republic of China. The small nation has a strong record in the production of semiconductors and chips. Taiwan has controlled the talent in the industry for fifty years; it was Taiwanese scientists who were responsible for the “boom in semiconductors and applications that spans from Silicon Valley to Asia.” The U.S. may have a booming industry in data appending and management, but Taiwan can help the U.S. supply chains for hardware.
The time has never been better. Taiwan’s President Tsai Ing-wen has three years left in her second term. It’s tough being president of the Republic of China because the whole of your country’s being exists in relation to the People’s Republic of China, mainland China, and so ROC/Taiwanese politics is all about spending political capital in foreign relations. So because this is Tsai’s second term and she won’t be running for re-election, she can spend that political capital on finalizing a trade deal with the United States. That, along with the devolution of tech supply chains, makes this a key time to pursue such a deal.
In general, Taiwan sees its economic security as a prerequisite for its national security. The less powerful and self-sufficient the Taiwanese economy, the more leverage mainland China has over the smaller country. China can leverage this explicitly or even just implicitly, just hanging the threat of tense relations over the heads of trade between the two countries. And since Big China doesn’t recognize the island as independent, Beijing is likely to take advantage of any opportunity to flex its economic muscle to manipulate the political process.
A U.S.-Taiwan trade deal, however, could provide political cover for other countries to begin negotiations of their own with Taipei. Other countries don’t do much of that now, because they fear retaliation from Beijing. The U.S., however, has no unique reason to be afraid–already-existing tensions can absorb the risk of making China mad, giving room for other countries to trade in more limited degrees.
According to the Heritage Foundation: “A free trade agreement with Taiwan would increase trade for both countries, increase U.S. exports to Taiwan, and provide market-based alternatives to China.” Increasing trade relations with Taiwan not only provides a solid foundation to the United States for economic growth, but a foundation for smart and responsible growth, because as cavalier as the U.S. sometimes seems with respect to labor and environmental standards, Washington actually does a better job on them than a few other countries. Thus, “A BTA between the United States and Taiwan has strong merit. Taiwan would make for an excellent trade agreement partner for the United States, given that the island already has well-established environmental protection, labor, and intellectual property rights laws—common issues of concern for the United States in evaluating its economic partners.”