The Executive Yuan's Office of Trade Negotiations announced today that Taiwan has submitted written comments to assist the U.S. government in its analysis and preparation for an Omnibus Report on Significant Trade Deficits.
Taiwan's comments present the nation's perspective on Taiwan-U.S. trade relations after broad consultations with Taiwan's industrial, government and academic communities, and was forwarded to the U.S. Department of Commerce by the Taipei Economic and Cultural Representative Office in the United States. The Petrochemical Industry Association of Taiwan, China Steel Corp. and other enterprises also submitted written comments from an industry point of view, expressing their hopes for stronger Taiwan-U.S. economic and trade ties, and cooperative industrial links.
The Office of Trade Negotiations said Taiwan's comments focused on the trade balance, fair trade, manufacturing, and future prospects for national defense and security, and discussed the current status and ongoing trends in Taiwan-U.S. bilateral trade. The comments also analyzed import/export and annual trade figures in light of the overall Taiwan-U.S. trade framework, emphasizing the positive results of bilateral trade for both parties and noting the complementary nature of current vertical supply chains.
Highlighting Taiwan's free and open trading system and emphasizing that bilateral trade will not impact U.S domestic job opportunities or industries, a summary of Taiwan's submission follows:
1. In 2016, total Taiwan-U.S. trade in goods and services reached US$84.9 billion. The U.S. trade deficit with Taiwan was US$9.1 billion, which is the sum of a US$13.3 billion deficit in goods (including a US$3 billion surplus in agricultural goods) and a US$4.2 billion surplus in services. Taiwan was the U.S.'s 10th-largest trading partner and seventh largest export market for agricultural products. Overall, the trade relationship is sound.
2. Taiwan and U.S. industries are clearly complementary. Statistics show that vertical integration specialization is as high as 78 percent, with close partnerships in the manufacturing sector and especially close industry links in the integrated circuit sector, fasteners, automotive parts and components, and petrochemicals, all of which are examples of mutually beneficial Taiwan-U.S. cooperation.
3. Taiwan is not a major exporter of the products generating the massive U.S. trade deficit. In traditional manufacturing industries such as steel products, textiles and automobiles that employ many workers, Taiwan's proportion of U.S. imports has gradually fallen over the years. U.S. trade statistics also do not reflect the costs of logistics services and personnel training that Taiwan purchased from the U.S. military, or the cost of maritime vessels. In the future, the two sides should continue to communicate regarding discrepancies in the trade data they produce to increase mutual understanding.
4. Taiwan recognizes the importance of fair trade and strives to foster a fair and open market. The import duty for industrial products averages only 4.2 percent, and domestic laws and regulations are harmonized with international legal norms. For many years, intellectual property right protections and increasing legal transparency have led many U.S. businesses to strengthen their positions in the Taiwan market, while the American Chamber of Commerce in Taipei also continues to view Taiwan as a positive business environment. In the agricultural sector, U.S. products have long enjoyed a huge trade surplus with Taiwan, and will continue to enjoy business opportunities through government procurement programs.
5. Taiwan has strengthened enforcement of trade laws, closely collaborating with the U.S. to control the export of strategic high-tech commodities, while promoting regional stability and peace. Taiwan will also continue to cooperate with the U.S. to prevent violations of trade and customs law.
6. There is vast potential for future Taiwan-U.S. trade and investment. Taiwan is an important buyer of semiconductor machinery, aircraft, agricultural products, services, intellectual property rights and military hardware, and will continue to procure these products from U.S. sources in the future. In the investment field, Taiwanese businesspeople are closely following the "Made in America" policy, especially in the petrochemical, iron and steel, textile and electronics industries, with future U.S. investment by Taiwan businesses expected to be about US$34.1 billion.
7. The year 2017 has also seen enthusiastic exchanges between U.S. and Taiwan industry delegations. The U.S. and Taiwan have taken turns hosting the U.S.-Taiwan Digital Economy Forum; Taiwan received a visit from the U.S. Department of Commerce's smart technology trade mission, and avidly supported the 2017 Select USA forum, with unprecedented levels of participation by various industries and businesses; and around that same time, Taiwan will organize a delegation of top business executives to visit Washington. Taiwan will also host a U.S. Business Day event, and send delegations to the U.S. to explore agricultural trade and cooperation opportunities for their respective manufacturing industries. These exchanges aim to strengthen bilateral trade, investment, and industrial cooperation.
8. With a good track record of resolving difficult issues together, the current administration hopes to enhance U.S.-Taiwan economic and trade relations. Taiwan hopes to increase the frequency of communications and expand the scope of issues for discussion, and is open to any proposals that will strengthen U.S.-Taiwan trade relations on a fair and mutually beneficial basis. In the ever-changing world of international affairs, maintaining and deepening U.S.-Taiwan relations remains Taiwan's top priority.
The Omnibus Report on Significant Trade Deficits is being prepared by U.S. officials in accordance with Executive Order 13786 signed by U.S. President Trump on March 31, 2017, which instructs the secretary of commerce and the United States trade representative to submit the report within 90 days. The Department of Commerce thus published in the Federal Register a notice of public hearing and request for comments to assist in the analysis required for the report. The department indicated that the U.S. had a significant trade deficit in goods with 16 trading partners including China, Japan, Germany and Mexico (Taiwan accounted for the 14th largest deficit). The public hearing is scheduled for May 18.