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Strengthening Taiwan-U.S. Tech Relations

American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office (TECRO) – in partnership with DOC’s International Trade Administration (ITA) and the Taiwan Ministry of Economic Affairs (MOEA)’s Bureau of Trade (BOFT) – will cooperate through a new Technology Trade and Investment Collaboration (TTIC) Framework that aims to strengthen critical supply chains, including semiconductor supply chains. The Commerce Department’s move is a sign that the Biden Administration may seek to continue to deepen ties with Taiwan as a part of a broader free and open Indo-Pacific strategy.

The Taiwan-U.S. Economic Prosperity Dialogue (EPPD) show how important the Taiwan-U.S. relationship is to US national security and the robust US-Taiwan economic relationship. Both countries discussed collaboration on critical and emerging technology issues and their impact on the existing US-Taiwan economic relationship. Specifically, the two discussed countering foreign economic coercion, strengthening 5G network security, and advancing collaboration across science and technology (S&T) fields.

Taiwan’s role is important in building resilient and safe supply chains, stressing the importance of US-Taiwan ties to ensure they remain safe and secure. In order to do that, some of both the components and products of the supply chain would need to be built on American and other nations’ shores.

– Sandra Oudkirk, Director, AIT

AIT has played a key role in building up Taiwanese direct investment in the United States, including a Taiwan Semiconductor Manufacturing Company (TSMC). TSMC plays a unique role within the US-Taiwan relationship as a “technological powerhouse” and a key provider of components for many critical technology industries. Currently, TSMC produces 92% of the world’s advanced chips and is the world’s largest contract chip producer.

TSMC’s critical lines of production include national security-sensitive chips for F-35 fighter jets, high-performance chips for US military suppliers, and other Department of Defense (DoD)-approved military-grade chips, leading to calls from US lawmakers for TSMC to move some of its production capabilities to the US.

Another important potential avenue of cooperation that Taiwan and the United States should pursue is further coordination on the development of 5G open radio access networks (RAN). Open RAN networks provide an alternative method for developing, testing, and deploying advanced 5G telecommunications networks that are not reliant on inputs from Chinese companies (namely Huawei). Taiwan represents an excellent opportunity as an export market for US 5G capabilities and ICT companies that specialise in telecommunications hardware.

Taiwan and the US have worked in conjunction on these issues for several years, including at a GM Taiwan event that promoted integrated 5G solutions between US and Taiwan companies and a 2021 event showcasing US software solutions for Open RAN technology

As reported by OpenGov Asia, Taiwan’s Minister of Economic Affairs (MOEA) and U.S. Secretary of Commerce have announced the establishment of the Technology Trade and Investment Collaboration (TTIC) framework. The TTIC framework aims to bolster bilateral trade, investment, and industrial cooperation while diversifying critical supply chains. The TTIC talks were conducted by senior officials and are a remarkable indicator of the economic and trade development between Taiwan and the U.S

TTIC also focuses on promoting a two-way investment environment, studying industry trends, and exploring new opportunities and investments in the US market. The two sides are to designate representatives at the bureau level to plan and convene the first meeting of the TTIC in the coming months, the statement said, while providing few other details about the framework’s functions.

The Taiwan-US Trade and Investment Framework Agreement talks are likely to be positive for US interests centred around technology supply chains, while mildly disappointing for Taiwan which is looking for greater market access, according to analysts. Talks on the trade and investment framework will take place against the backdrop of a global semiconductor shortage that has challenged signature American consumer electronics firms.

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