The administration of US President Joe Biden has geared its Indo-Pacific Economic Framework (IPEF) toward deepening the US’ integration with the vital region. The launch of an economic framework covering the Indo-Pacific region would be timely, given Washington’s lack of a clear-cut economic strategy for ushering its leadership across the Indo-Pacific.
China has stolen a march on the US as Washington remains on the sidelines when it comes to regional economic integration. With its Belt and Road Initiative, China — the biggest trading partner in the Indo-Pacific region — has left countries in the region “more susceptible to Chinese political pressure while giving China a greater ability to project its power more widely,” a report by the New York-based Council on Foreign Relations said in March last year.
As one of the founding members of the Regional Comprehensive Economic Partnership (RCEP), the largest trade deal between Asia-Pacific nations, China has also asked to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP). Member countries are skeptical about its commitment to CPTPP standards and norms.
China’s economic expansion and its ambition to set new rules for the regional economic order could delegitimize US economic leadership. With that Gordian knot in mind, the Biden administration strongly advocated a comprehensive economic framework in the Indo-Pacific that could signify its commitment toward “shared objectives” with regard to trade, technology, supply chains, infrastructure and other priorities, US Secretary of State Antony Blinken said in December last year.
The IPEF is a different type of agreement. In November last year, US Secretary of Commerce Gina Raimondo said: “We don’t envision this to be a traditional free-trade agreement like CPTPP... It’s designed to be a new sort of more flexible and inclusive framework that we will develop in partnership with our allies.”
Biden’s economic agenda for the Indo-Pacific region could likely meet regional countries’ expectations of Washington’s economic re-engagement. Not only could the IPEF help Washington bolster its relations with regional allies and partners, it could also strengthen its ability to counter China’s increasing economic coercion.
The IPEF has created an opportunity for Taiwan, if it could join the framework, to tighten economic ties with regional partners while expanding its international space. This would bolster Taiwan’s status as a significant stakeholder in the region. Taiwan deserves to be a valued partner in the IPEF, given that it shares the US’ interests and principles toward a free, open and inclusive Indo-Pacific region.
In the early days of the IPEF’s development, Taiwan expressed its determination to be a “full member” of the agreement. President Tsai Ing-wen (蔡英文) in December last year emphasized Taiwan’s willingness to participate in the IPEF, while Minister Without Portfolio John Deng (鄧振中) has expressed Taiwan’s desire to join the framework.
Additionally, Taiwanese business organizations, such as the Taiwanese Chambers of Commerce of North America and the US-Taiwan Business Council, have been calling for Taiwan’s inclusion in the IPEF, underlining its willingness and ability to help the US achieve the objectives within the framework.
While the US might launch the IPEF later this month, Taiwan’s participation in Washington’s grand economic framework remains blurry. US Trade Representative Katherine Tai (戴琪) has yet to respond to Taiwan’s bid.
Despite Washington’s cautious stance toward Taiwan’s membership, Taipei’s participation remains a possibility. A group of 200 representatives from the US Congress has sent a letter to Raimondo and Tai saying that Taiwan should be “invited to participate in the IPEF,” as this could signal that the US “stands with its allies and partners, and will not be bullied by the PRC [People’s Republic of China].”
Meanwhile, Blinken said that the US is not “closing the door” on Taiwan’s inclusion.
Should the US leave Taiwan out of its new economic initiative, it would be a missed opportunity for stronger ties between Taipei and Washington.
Taiwan is crucial to the US’ economic resilience, as it is the US’ eighth-largest trading partner. As a global technological hub and a vital link in global high-tech supply chains, it serves as leverage against China in the competition for cutting-edge technology.
Taiwan and the US also have maintained economic exchanges and cooperation within the Economic Prosperity Partnership Dialogue, in which both sides focus on issues similar to the IPEF’s modules, such as supply chains, the digital economy and technology.
While Taiwan’s invitation to last year’s US Summit for Democracy showed Washington’s appreciation of Taiwan’s vibrant democracy, the same action on the IPEF could demonstrate the US’ recognition of Taiwan’s economic importance.
Moreover, it could underscore Washington’s rock-solid diplomatic and economic commitment to Taiwan. After all, actions speak louder than words.
Taiwan’s advantages in the high-tech industry — competence in dealing with corruption, forging a digital economy and commitment to zero-carbon policies — could contribute to the IPEF’s success and benefit regional countries.
However, there are lingering issues to address, such as physical and emotional pressures endured by migrant workers, and the risk to energy security. A foothold in the IPEF could provide Taiwan with incentives and opportunities to learn from regional countries’ experiences in addressing these challenges. The Tsai administration could put forward the principle: “Taiwan helps the Indo-Pacific, the Indo-Pacific helps Taiwan.”
Given that the US has pursued closer ties with Taiwan and has recognized the country among its leading partners in the Indo-Pacific region, any action deviating from that trajectory would likely be detrimental to Taiwan’s relationship with the US. Failing to include Taiwan in the forthcoming economic framework could also be read as a victory for China, given that Beijing has long sought to obstruct Taiwan’s bid to join economic blocs.
Moreover, to counter China’s efforts to prevent Taiwan from pursuing regional economic integration, having IPEF membership could help enhance Taiwan’s economic ties with ASEAN members and other countries, gradually reducing Taipei’s dependence on the Chinese market.
The US has many reasons to bring Taiwan into its economic framework, especially as it has promised that the IPEF would be “flexible and inclusive.”
To this end, Washington should convince other partners that the IPEF is an integrated economic initiative rather than an “anti-China group,” and membership for Taiwan is not a recognition of its independence or against adherence to the “one China” policy.
Inviting Taiwan to join the IPEF would be a golden opportunity for Washington and its allies to improve ties with Taiwan while supporting its effort to push back against China’s economic coercion. Other democracies, such as Japan, South Korea and Australia, should also support Taiwan’s bid to join the IPEF.
Huynh Tam Sang is an international relations lecturer at Ho Chi Minh City University of Social Sciences and Humanities (HCM-USSH), a researcher at the Taiwan NextGen Foundation and a nonresident WSD-Handa fellow at the Pacific Forum. Phan Van Tim is a research assistant at HCM-USSH.
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