For three years and three months, Taiwan’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has remained stalled. On Nov. 29, members meeting in Vancouver agreed to establish a working group for Costa Rica’s entry — the fifth applicant in line — but not for Taiwan. As Taiwan’s prospects for CPTPP membership fade due to “politically sensitive issues,” what strategy should it adopt to overcome this politically motivated economic exclusion? The situation is not entirely dim; these challenges offer an opportunity to reimagine the export-driven country’s international trade strategy.
Following the US’ withdrawal from the Trans-Pacific Partnership (TPP) under then-US president Donald Trump, then-Japanese prime minister Shinzo Abe salvaged the agreement into the CPTPP. While Washington is not part of the reconfigured agreement, it continues to exert indirect influence to encourage member states, particularly in Latin America, to support Taiwan’s participation.
However, shifting domestic and geopolitical dynamics work against Taiwan’s efforts to secure membership. The White House and US Congress show declining bipartisan interest in multilateral trade agreements. This, combined with China’s growing political, economic and diplomatic influence in the US’ backyard, requires Taiwan to reassess its strategic objectives and timeline for the deal.
Peru and the four CPTPP members in Southeast Asia — Malaysia, Brunei, Vietnam and Singapore — have publicly expressed varying levels of support for China’s membership while collectively showing hesitation regarding Taiwan’s candidacy. Given that the agreement requires unanimous consensus for new member admission, Taiwan’s path to accession appears increasingly narrow — if not entirely blocked. While maintaining diplomatic efforts with supportive nations like Japan and Canada remain important, Taipei would be wise to redirect resources toward completing the US-Taiwan Initiative on 21st-Century Trade, which, though equally fragile, offers some promising opportunities.
US trade negotiations operate through a dual-agency approach, splitting the Indo-Pacific Economic Framework (IPEF) and the US-Taiwan Initiative between the Office of the US Trade Representative (USTR) and the US Department of Commerce. This divided structure has created coordination challenges and implementation inefficiencies for the US and its negotiation partners.
The proposed Cabinet ahead of Trump’s second presidency appears to address these issues by consolidating trade authority under the Department of Commerce, with USTR becoming a subsidiary component. These structural changes could significantly affect trade policy coordination, implementation and overall effectiveness, requiring Taiwan to adapt to the new bureaucratic framework.
After establishing roles in trade negotiations, Taipei should show how the US-Taiwan Initiative, the “tariff-free” bilateral trade agreement, could facilitate moving Taiwan’s high-tech supply chains to the US — a goal the president-elect strongly supports. Specifically, both sides would gain from using common standards to determine product origins when supply chains involve multiple manufacturers. This alignment would help prevent Taiwan from becoming a conduit for tariff evasion or the mislabeling of Chinese-made goods. Given that the US uses a “substantial transformation” test to determine products’ country of origin for tariffs, it is essential to identify which manufacturing operations need relocation.
Trump’s rhetoric about Taiwan Semiconductor Manufacturing Co stealing US jobs, though misguided, has revealed a peril and a path. His misleading perception of Taiwan and failure to recognize its contribution to the US’ technological leadership might worsen due to the country’s trade surplus with the US, its eighth-largest trading partner. However, the solution lies in the flip side of his critique — creating manufacturing jobs and bringing investment to the US — which aligns with US interests and Taiwan’s economic and security goals. To make deals with Trump, Taiwan needs to reframe his view of the country as a contributor rather than a competitor; a team partner, not a traitor. This requires addressing a crucial gap in Taiwan’s trade diplomacy: Engaging its business sectors, including both large corporations, and small and medium-sized enterprises, which comprise 90 percent of businesses.
Taiwan’s business partnerships would be crucial when engaging with a US administration focused on reviving US manufacturing. The strength of Taiwan’s industrial ecosystem — if wisely leveraged — could be key to deal-making with a transactional president. The new cross-bureaucratic economic diplomacy committee under the Executive Yuan, managed by the Ministry of Foreign Affairs, should strengthen government and private sector cooperation, following Taiwan’s successful semiconductor industry development playbook.
Government and private sectors must break from traditional silos to forge a unified partnership with aligned interests. Through this alignment, the Taiwanese government could demonstrate that its support for US economic goals is strategically valuable in the US-China rivalry and practically achievable. This approach would reinforce Taiwan’s essential role in global technology supply chains while highlighting its complementary relationship with US business sectors. Ultimate success hinges on coordinating investment decisions with diplomatic goals in ways that serve US economic interests and Taiwan’s diplomatic objectives.
Taiwan could learn from South Korea’s and Japan’s effective strategies for highlighting their economic and manufacturing contributions to US states. State-level economic diplomacy needs to expand beyond hosting US visitors in Taiwan: It should include joint initiatives within the US, particularly given the incoming Trump Cabinet’s regional emphasis on Florida and New York. Following Seoul’s and Tokyo’s lead, Taiwan could deepen its direct engagement with US states through targeted investments, R&D partnerships and job creation initiatives. This dual federal-state strategy — showing commitment to Washington while generating employment in states like Arizona, Oregon and Texas — should guide Taipei’s approach. Success requires smart investments and clear communication of their value to the US’ economic strength and security.
Given Taiwan’s challenges with CPTPP membership, it must pursue alternative approaches through bilateral trade and targeted multilateral frameworks with member nations. “Digital Trade Partnerships” offer a key opportunity for Taiwan to leverage its tech strengths in agreements focused on cybersecurity, data governance, and artificial intelligence collaboration.
Taiwan should also seek integration with regional frameworks, especially ASEAN’s “Digital Innovation” initiatives through collaborations in smart cities, digital infrastructure and cross-border e-commerce. This focused approach would establish Taiwan as a digital innovation hub while building relationships with Southeast Asian nations outside the CPTPP framework. In today’s geopolitical context, Taiwan’s New Southbound Policy should evolve to incorporate “technological diplomacy” — an underutilized strategy in the current great-power competition.
Cathy Fang is a contributor at the think tank US Taiwan Watch, and an analyst at PLA Tracker and Safe Space. She was a policy analyst at the Project 2049 Institute and served as legislative assistant at Taiwan’s Legislative Yuan.
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