WASHINGTON — As the Biden administration and Congress consider a potential free trade deal with Taiwan, the Coalition for a Prosperous America (CPA) has documented why such a deal would work against U.S. interests while offering little in the way of meaningful protection for Taiwan. Earlier this month, CPA submitted testimony to the House Ways and Means Committee detailing U.S. support for Taiwan against possible aggression from China. Congress should instead focus upon military and diplomatic cooperation with Taiwan, rebuilding our industrial capabilities at home, and ending America’s financial support for Chinese companies and economic growth.
“We support Taiwan’s right to defend itself from Beijing’s aggression,” said CPA Chair Zach Mottl. “However, Taiwan’s safety is best secured by a strong U.S. industrial economy combined with policies aimed at defunding China’s ability to wage war. Realistically, a trade agreement with Taiwan will not deter Beijing from potential military action. But it will enable more offshoring of America’s high-tech industries. That will do little to preserve America’s industrial security and economic stability in the face of rapidly changing geopolitical alliances.”
In testimony to Congress, CPA noted that trade agreements carry little weight in deterring military aggression. Russia’s recent invasion of Ukraine makes this clear, given the extensive economic ties that Ukraine has held with both the European Union and the United States.
Instead, CPA urges Congress to press for a secure, economically stable U.S. industrial base — something that can offer Taiwan a reliable long-term partner. At present, the U.S. already has strong trading opportunities with Taiwan, and both countries impose low tariff rates. However, Taiwan has consistently engaged in currency manipulation while subsidizing its home industries. As a result, the U.S. ran a $40 billion goods trade deficit with Taiwan in 2021.
A key concern is semiconductors. Any Chinese attack on Taiwan would likely involve an economic blockade of the island, something that would significantly interrupt U.S. supply chains. A free trade agreement could exacerbate America’s glaring dependence on Taiwanese computer chips, leaving the United States even more vulnerable in the event of military conflict.
Rather than negotiate a free trade agreement with Taiwan, in an op-ed in The Washington Times CPA urged Congress to double down on its efforts to block Chinese entities from raising capital in U.S. financial markets. This is particularly relevant for Chinese companies tied to China’s military programs, particularly naval shipbuilding.
“Trade agreements as a foreign policy tool are a failure. Today’s politicians forget that America’s strength was at its apex not with trade deals but with a strong, broad industrial base.,” said Michel Stumo, CEO of the CPA. “At the same time, we must stop funding China’s ability to wage war by excising China from our financial system in the short term, and systematically disentangle our goods production from China over the medium term.”
Click here to read CPA’s testimony to Congress regarding Taiwan.
Click here to read Stumo’s recent op-ed on Taiwan.