INFORMATION TECHNOLOGY & INNOVATION FOUNDATION| OCTOBER 2021The Evolution of Taiwan’s Trade Linkages With the U.S. and Global Economies STEPHEN EZELL | OCTOBER 2021 Economic, trade, innovation, and global value chain (GVC) linkages between the United States and Taiwan are vitally important to both nations’ advanced technology industries and broader economies. Policymakers should work to deepen them. KEY TAKEAWAYS ▪ In sectors from semiconductors and electrical vehicles to pharmaceuticals, Taiwanese suppliers play key roles in helping make the business models of U.S. advanced-technology enterprises, like fabless semiconductors, tenable. ▪ The United States has deeper inter-industry trade linkages with Taiwan than virtually any other East Asian trade partner. Taiwan supplies more exports for U.S. GVCs than Indonesia, the Philippines, and Thailand combined. ▪ Seventy percent of Taiwan’s GDP relies on exports, which makes it the seventh-most trade-dependent economy participating in global value chains. ▪ The United States should move beyond the Trade & Investment Framework Agreement (TIFA) with Taiwan and pursue a comprehensive free trade agreement that would produce economic and employment benefits for both nations. ▪ The United States should join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and in doing so bring along both South Korea and Taiwan. ▪ The United States and Taiwan should build on the Economic Prosperity Partnership Dialogue (EPPD) by launching an innovation experts’ working group to deepen collaboration in AI, IoT, semiconductors, and biotechnology, among other fields.
INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | OCTOBER 2021 PAGE 1CONTENTS Introduction ....................................................................................................................... 2 Taiwan-U.S. Trade and Economic Linkages ........................................................................... 2 Taiwan-Global Trade and Economic Linkages ........................................................................ 4 Taiwan’s Contribution to Advanced Technology Industries .................................................... 11 Semiconductors ............................................................................................................ 11 Electric Vehicles ........................................................................................................... 16 Impact of Reshoring Initiatives on Global Trade Flows .......................................................... 18 Countries’ Reshoring Strategies and Their Impact ............................................................. 18 Reshoring Best Practices and Lessons Learned ................................................................ 22 Policy Recommendations .................................................................................................. 26 Complete a U.S.-Taiwan Free Trade Agreement ......................................
