The U.S. and Taiwanese governments announced on Wednesday, August 17, that they have begun negotiations on a new bilateral trade pact that includes major investments.

The agreement is being developed amid high tension with the Chinese communist regime, which has threatened both the United States and Taiwan with war if they continue to move forward with their relationship. 

Reasons behind the Taiwan deal

The U.S. Trade Representative announced that the two sides had already “reached consensus on negotiating issues” for a U.S.-Taiwan Initiative on 21st Century Trade.

The negotiations will include issues such as facilitating trade, encouraging good regulatory practices, setting strong anti-corruption standards, improving trade between small and medium-sized enterprises, and deepening agricultural trade.

Digital trade, labor, environmental standards, and possible ways to address market-distorting practices by state-owned enterprises and policies that are unresponsive to markets will also be discussed, according to reports, in a clear reference to China’s communist regime and its companies.

This announcement follows a joint initiative informally proclaimed last June after Washington launched a new regional economic policy that included an agreement with 12 Indo-Pacific countries but left out Taiwan, 

The decision not to include Taiwan came after some Southeast Asian nations expressed fears that the Chinese regime would retaliate against them for including Taiwan, knowing that China does not recognize its independence. Taiwan’s exclusion brought a lot of internal and external criticism against the Biden administration.

Before the launch of the Indo-Pacific agreement (IPEF), a bipartisan group of 252 lawmakers from the U.S. House and Senate urged Biden to include Taiwan in the regional framework to show support.  

While Taiwan was not added to the IPEF, the Biden administration decided to implement a bilateral agreement between the U.S. and the semi-autonomous region of China, which is how negotiations began.

Joe Biden’s administration finally said on Wednesday evening, the 17th, that Taiwan and the United States had reached a “consensus on the negotiating mandate.” The initiative will “deepen our trade and investment relationship, advance mutual trade priorities based on shared values, and promote innovation and inclusive economic growth for our workers and businesses,” said Deputy U.S. Trade Representative Sarah Bianchi.

The agreement in question is not a free trade pact, which is something Taiwan has been struggling to realize. Still, it does appear to be laying the groundwork for a more prosperous and robust relationship that will go some way to limiting the overbearing trade power of the Chinese communist regime. 

Reaction from the Chinese regime

On Thursday afternoon, August 18, Wang Wenbin, a spokesman for China’s Ministry of Foreign Affairs, expressly called on the United States to “refrain from signing agreements” with Taiwan. 

Wang reiterated statements previously made by Chinese Communist Party (CCP) officials that Taiwan is a province of China and their desire for no other country to have formal interactions with it unmediated by regime authorities. 

The announcement comes amid the region’s heightened war tensions in recent decades. The Chinese regime continues military exercises targeting Taiwan. China’s People’s Liberation Army (PLA) recently conducted several live-fire drills around the island, including missile tests and overflights in Taiwanese airspace. 

In addition to seeking to intimidate Taiwan and its trading partners, the Chinese regime appears to be seeking to isolate Taiwan by force, to such an extent that the island’s government described the Chinese military presence in the areas mentioned above as a “blockade.”

In addition to the military “blockade,” the Chinese regime severely punishes Taiwan by limiting imports to the island to the maximum, disrupting the Taiwanese macro-economy that has historically depended on Chinese purchases. 

Before the conflict, Taiwan exported more than twice as much to China as the United States, its second largest foreign market. Taiwan’s government claims its companies have invested nearly $200 billion on mainland soil. But this situation is being rapidly reversed, and there is still much uncertainty about how it will be resolved. 

Indeed, deepening trade relations with the United States and the rest of the West will allow the island to develop a more genuine independence from the communist regime.

The conflict intensifies

The Chinese regime’s relations with the United States and Taiwan had not been going well for several months. The trade war with the U.S. and the development of its ties with Taiwan were seen by the communist authorities as a threat to their sovereignty, which motivated them to move forward with their warlike intimidations and increase tension in the region. 

The visit of the Speaker of the U.S. House of Representatives to Taiwan, Nancy Pelosi, was what finally aroused the fury of the regime and brought the conflict to the point of maximum tension.

Despite the CCP’s threats in its attempt to prevent Pelosi’s meeting with Taiwan’s rulers, the visit took place, and since then, the conflict did not stop escalating.

Consequently, the communist regime deployed six military operational zones placed in front of Taiwan’s leading ports, the overflight of dozens of planes over Taiwanese territory, and thus the escalation of violence and threats of an actual conflict reached a maximum degree of tension, which remains to this day.

The conflict seems to be far from being resolved. The tension that is experienced daily due to the possibility of a real confrontation between the United States and the Chinese regime, together with the allies of each, brings back memories of the Cold War years between the United States and the former Soviet Union when it seemed that a tiny spark could generate a catastrophic explosion. 

The new economic agreement between the United States and Taiwan may give the island a breather, whose citizens will undoubtedly feel more protected by the Western power. Still, it is also expected that the Chinese regime will take even more actions against it and increase its discontent. 

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