Taiwan, a key link in global trade chains
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The United States is taking a step closer to Taiwan. The two countries will open formal negotiations for a trade and investment agreement this fall, the office of US Trade Representative Katherine Tai said Wednesday (August 17th). This is a new step in the strengthening of trade relations with the island, of which Beijing claims sovereignty, against a backdrop of Sino-American tensions.
This trade agreement “will enhance trade and investment”and “will promote innovation and inclusive economic growth for our workers and businesses”, said Sarah Bianchi, assistant to the trade representative. The talks will also focus on responses to “market-unfriendly policies and methods”, announced the office of Katherine Tai. Words that can be interpreted as a reference to China.
In a few decades, the island has established itself as an essential link in the planet’s value chains – and not just those of the United States – thanks to its specialization in the manufacture of semiconductors. The country, the size of the Centre-Val de Loire region, provides half of the world’s production, including a majority of latest generation models. Without them, not a missile, a smartphone or even a car can leave the factory. In 2021, a shortage also brought the assembly lines of car manufacturers to a standstill, resulting in losses of around 200 billion euros for them.
“Sophisticated Facilities”
The agreement mentioned by Washington is likely to stir up Sino-American tensions in the Taiwan Strait. These had already gone up a notch during the visit of Nancy Pelosi, the president of the House of Representatives of the United States, on the spot, at the beginning of August. Beijing, which perceived this move as a provocation, considering Taiwan as one of its provinces, responded by launching its most important military maneuvers around the island.
“In case of use of military force or invasion”, factories would become “inoperative”, had warned in early August Mark Liu, the boss of the Taiwanese semiconductor giant TSMC, on the American channel CNN. “The facilities are very sophisticated, then explained the leader, they depend on a real-time connection with the outside world, with Europe, Japan, the United States. »
The company operates the nation’s largest silicon wafer fabs, where it manufactures 92% of the most advanced chips in the world. “The country counts for far more than its 1% share in global gross domestic product, adds Gareth Leather, an economist at the consulting firm Capital Economics. A further escalation in tensions would isolate the island from the rest of the world and lead to further shortages in the automotive and electronics sectors. »
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