Trading Partner Portal: Taiwan
Interview Series Featuring California’s Key Trading Partners – Featuring Ming-Chi Scott Lai, TECO Director General in San Francisco:
Shared Interest in High Tech, Ag Products Elements in Close Economic Collaboration
CalChamber, August 21, 2020
Forum Examines Role of Taiwan, U.S. in Post-Pandemic Supply Chain Restructuring
CalChamber, December 8, 2020
The rapid economic rise of Taiwan, also known as Chinese Taipei, during the latter half of the 20th century and into the 21st century is attributable to its strong emphasis on trade. Strong export sectors include electronics, machinery, and petrochemicals.
Taiwan has a net trade surplus and has the world’s fifth largest foreign reserves. Its estimated GDP in 2020 was $635.5 billion. Taiwan’s major export partners are China, Hong Kong, the United States, Japan and Singapore. The major import partners are Japan, China, and the United States. CIA World Factbook
Taiwan is a member of the World Trade Organization (WTO), the Asia Development Bank, and the Asia-Pacific Economic Cooperation (APEC) forum. It also has observer status in the Organization for Economic Cooperation and Development (OECD).
US FDI in Taiwan was $17.3 billion in 2019, while Taiwanese FDI into the US was $16.2 billion in the same year. Taiwanese FDI in the US supported 19,000 jobs through workers employed by US Affiliates of majority Taiwan-owned firms and $159 million in research and development in 2017. Taiwan also contributed $1.6 billion to expanding US exports. The top industry sectors for Taiwanese FDI were: semiconductors, communications, electronic components, software and IT services, business machines, and transportation. Select USA
Taiwan supports an estimated 323,456 jobs in the United States through trade and investment from Taiwan affiliated companies, exports of US goods and/or services to Taiwan, almost 90,000 of these jobs can be found in California.
U.S. – Taiwan Trade
Taiwan is the 10th largest importer of U.S. goods. In 2020, the U.S. imported $60.427 billion from Taiwan and exported $30.49 billion in goods to Taiwan. Top export categories included computer and electronic products, non-electrical machinery, chemicals, and oil and gas. The U.S. is Taiwan’s second largest trading partner and a key destination for Taiwanese investors. Taiwanese FDI into the U.S. totaled $19.7 billion in 2020, making it the 9th largest source of FDI. In 2019, Taiwanese owned firms employed 21,000 U.S. workers, invested $178 million into research and development contributed $1.5 billion to U.S. goods exports (Select USA).
“Shortly after the USMCA vote, a bipartisan group of 161 lawmakers sent Lighthizer a letter urging him to work toward starting negotiations with Taiwan. Reps. Steve Chabot (R-Ohio), Albio Sires (D-N.J.), Mario Diaz-Balart (R-Fla.), and Gerry Connolly (D-Va.) led the effort. There was no immediate USTR response.” (Politico)
California – Taiwan Trade
California exported over $7.39 billion to Taiwan in 2020. Top categories included non-electrical machinery, computer and electronic products, transportation equipment, and waste and scrap. California has the second highest amount of exports to Taiwan within the U.S. and Taiwan is the sixth largest importer of California goods and services, the fourth largest in Asia.
In California, Taiwan is the eleventh largest source of FDI through foreign-owned enterprises (FOEs). In 2020, Taiwanese FOEs in California provided 17,493 jobs through 409 firms amounting to $1.55 billion in wages. The top jobs by sector are: wholesale trade, manufacturing, professional/business services, transportation/warehousing/utilities, and other services (World Trade Center Los Angeles FDI Report, June 2021). Several Taiwan-affiliated companies in California are CalChamber members such as: Delta Products Corporation, Kingston Technology, and Super Micro Computer.
Taiwan Economic Information from the Taipei Economic and Cultural Office in Los Angeles (May 2013).
Other Useful Resources:
Quarterly Report on Intellectual Property Rights Protection in Taiwan
Intellectual Property Office, Ministry of Economic Affairs, April – June 2020
Improving Cross-Strait Relations
In the past decade, relations between Taiwan and mainland China have been improving primarily through economic and trade policies. In 2001, Taiwan formally opened direct trade, travel, and postal service from Fujian province in mainland China to the Kinmen and Matsu Islands, which are part of Taiwan but are directly off the coast of China’s Fujian province. These islands (among others) were under dispute between Taiwan and China during the First and Second Taiwan Strait Crises in the 1950s.
In 2002, direct cross-Strait trade became allowed and was followed in later years by openings in cross-Strait transportation, shipping, tourism, and postal service. It was estimated that more than 1.5 million tourists from mainland China visited Taiwan in 2010. China is Taiwan’s biggest trading partner and Taiwanese investments into mainland China range from $150 to $300 billion. In January 2010, three financial memorandums of understanding came into effect between Taiwan and China regarding banking, securities, and insurance further improving relations.
In June 2010, Taiwan and China signed the Economic Cooperation Framework Agreement (ECFA), a landmark agreement between the two. It is hoped that the ECFA will lead to a future free trade agreement between Taiwan and China, as well as improving cross-Strait relations. Another goal of Taiwan after the ECFA is to create stronger trade pacts with other Asia-Pacific regional powers especially ASEAN and the US.
(Sources: U.S. Department of Commerce, U.S. Department of State, CIA World Factbook)
President Tsai Addresses Taiwan’s Diplomatic, Security, and Economic Challenges at Videoconference Jointly Sponsored by US-Based Think Tanks
Office of the President of Taiwan, August 2020
CalChamber Meeting with Taiwanese Representatives
On July 2, 2018, the CalChamber met with Taiwanese representatives including Joseph Ma, Director General of the Taipei Economic and Cultural Office in San Francisco and Simon Lai, Executive Director of the Taiwan Trade Center in San Francisco. They were accompanied by representatives of the local Taiwanese business community in Sacramento.
Taiwan Applies to Join Pacific Trade Deal Days After China
Bloomberg, September 22, 2021
U.S.-Taiwan Free Trade Agreement
The Economic Case For Prioritizing A U.S.-Taiwan Free Trade Agreement
Forbes, February 17, 2021
50 U.S. Senators Call for Talks on Trade Agreement with Taiwan
Reuters, October 1, 2020
US Trade Talks a Boon for Taiwan
Taipei Times, September 7, 2020
There’s No Better Time for Taiwan to Seal a Trade Deal with the US and Bolster its Economy
South China Morning Post, September 4, 2020
Taiwan and US Move Closer to Bilateral Trade Agreement
Nikkei Asian Review, September 1, 2020
Taiwan’s Removal of Restrictions on U.S. Exports of Beef and Pork
U.S. Trade Representative, August 28, 2020
Taiwan to Seek Closer Security Ties, Trade Agreement with U.S.: Tsai
Focus Taiwan, August 13, 2020
Taiwan Seeks to Start Free-Trade Talks With U.S.
The Wall Street Journal, August 12, 2020
Trade, Security Among Top Priorities for New Taiwan Envoy to U.S.
Focus Taiwan, August 4, 2020
Key Country Contacts
A Golden Opportunity for a U.S.-Taiwan Free Trade Agreement
The Project 2049 Institute, February 2019