US & Taiwan To Launch Trade Talks As G-7 Set To Highlight China Bad Behavior

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by Tyler Durden
Tuesday, Jun 08, 2021 - 01:30 PM

Coming off the highly provocative visit of a trio of US senators to Taiwan over the weekend, The Wall Street Journal is reporting that the Biden administration has launched plans for trade and investment talks with Taiwan, in what Beijing will surely see as creeping efforts to 'normalize' Taiwan independence claims in violation of the longstanding One China policy.

Without giving much in the way of details, Secretary of State Antony Blinken told a House committee hearing on Monday that "We are engaged in conversations with Taiwan, or soon will be—on some kind of framework agreement," when asked about potential deeper talks.

The statement was enough to trigger an expected condemnation out of China's Foreign Ministry, with its embassy in D.C. telling the WSJ that Washington must "stop all forms of official exchanges and contacts with Taiwan, stop elevating its relationship with the Taiwan region in any substantive way."

Taiwan Strait 

Further the statement called for a US return to its commitments under decades-old agreements guided under One China which recognizes mainland sovereignty over the island.

Crucially all of this further comes amid a global semiconductor chip shortage, which increasingly looks to extend into 2023, as the WSJ report notes:

Taiwan is a major source of semiconductors for the U.S., which imported $7 billion last year in chips and $20 billion in other computer and telecommunications equipment out of $60 billion in total imports, double U.S. exports to the island, according to the Census Bureau.

Thus deepening investment and US-Taiwan trade talks appear also geared toward securing reliable and 'safe' supply chains while slowly decreasing dependence on the Chinese tech sector.

Taiwan is also expected to be a central topic of discussion at this week's upcoming G-7 summit in the UK, which Biden and other world leaders will attend in person. Nikkei this week is reporting that for the first time "Discussions are underway on including a reference to the Taiwan Strait in the joint statement to be issued after this month's Group of Seven summit as the U.S. and Japan seek a united front to counter Chinese pressure on the island...".

The strait has never been explicitly mentioned in a G-7 summit statement, and further Chinese human rights abuses centered on the Uyghurs are also expected to receive mention. This comes off May's preparatory meeting of G-7 foreign ministers wherein they underscored "the importance of peace and stability across the Taiwan Strait, and encourage the peaceful resolution of cross-Strait issues."

All of this further ups the ante in terms of the recent uptick in US warship sail throughs of the Taiwan Strait, also as Chinse PLA military drills become more frequent and expansive.