Publication：2023.12

Principal Investigator：顏慧欣Yen, Huai-Shing

Researchers：許裕佳Hsu, Yu-Chia、聶廷榛、黃禾田、林卓元、蔡晴雯、羅婉甄

This study explores the restructuring of the global trade and economic order by the United States in the first half of 2023 and its potential impact on Taiwan. It focuses on three aspects: U.S. foreign policy towards China, high-tech-related regulation, and the supply chain review. The summarised research findings are presented below.

1. U.S. foreign policy towards China : 

In contrast to the executive branch, the U.S. Congress has taken a more distinct stance on countering China. This study delves into topics including countering economic coercion and the broader landscape of US-China competition, analyzing the various bills proposed by the current U.S. Congress. In terms of countering economic coercion, this study compares the United States Countering Economic Coercion Act of 2023 (draft) with the EU's Anti-Coercion Instruments (ACI). This research discovered that the U.S. draft bill leans towards long-term institutionalized cooperation. Apart from countering China's formal use of economic coercion, the U.S. draft also takes into account China's informal use of economic coercion. Additionally, it includes a mechanism to assist countries that are being coerced and establish international cooperation to collectively deter nations that engage in economic coercion. Conversely, the EU's ACI solely concentrates on countering China without providing further suggestions for aiding the countries under coercion.

Furthermore, this study assesses bills regarding economic and trade with China proposed in the 118th U.S. Congress from January 2023 until now. Notably, recent U.S. legislative trends reveal the following key features: Firstly, the U.S. legislative branch currently regards establishing both "domestic manufacturing capacity" and "friend-shoring" as equally significant. Secondly, the U.S. remains dedicated to actively strengthening the safeguarding of key technologies and minimizing any adverse effects resulting from these measures. Thirdly, bills regarding investment restrictions encompass not only high technology but also food safety and the food supply chain, indicating the wider concerns that the U.S. harbors towards China.

Given the difficulty in thawing U.S.-China relations in the short term, Taiwan should take the opportunity to increase its investment in the U.S., thereby enhancing its indispensability to the global supply chain. Furthermore, as a multilateral and institutionalized joint mechanism for responding to economic coercion is still in the process of being formed, it is appropriate for Taiwan to participate in the process actively and to share with others its own experience of necessary assistance and support for the victimized countries in the face of coercion, which would be conducive to enhancing the effective functioning of the mechanism concerned. Finally, to improve Taiwan's economic resilience in response to China's economic coercion, it is advisable to conduct a more comprehensive analysis and discussion about Taiwan's "risk aversion" strategy for industries and sectors that are closely linked to China or products and services that are heavily dependent on a sole specific source. Besides, Taiwan should not only enhance its resilience through its own capacity but also actively seek cooperation partners to establish long-term systemic partnerships in areas that require external assistance during periods of stability.

2. U.S. High-Tech-Related Regulation and Trends in International Alliances:

The U.S. actively cooperates and leagues with key international allies regarding semiconductor or other technology fields. Some specific programs include the "Export Controls and Human Rights Initiative Code of Conduct (ECHRI)" and the ban on the usage of commercial spyware. Regarding export control on semiconductor, the U.S.-Japan-Dutch Tripartite Agreement and the U.S.-EU Trade and Technology Council (TTC) Working Group have continually been under discussion. This study also includes the outbound investment screening regime currently being discussed by the Biden  Administration as one of the aspects to evaluate U.S. high-tech regulation. In this context, the study presents the following observations and recommendations:

(1)       Taiwan should actively strive to become one of the CFIUS Excepted Foreign States, which would also allow us to review our investment screening mechanism.

(2)       U.S. export control on semiconductor will affect the global supply chain and present challenges and opportunities for Taiwan's semiconductor industry.

(3)       The U.S. restrictions on multinational investment in semiconductor may accelerate China’s efforts to increase self-reliance, and China's domination of mature node semiconductors may become Taiwan's main competitor.

(4)       Taiwan and the U.S. should continue strengthening cooperation in the semiconductor field by sharing research and development (R&D) resources and market intelligence to jointly meet the challenges of global technological competition.

3. Review of the U.S. Supply Chain Policies

This study focuses on the CHIPS and Science Act and the Inflation Reduction Act (IRA), analyzing how do these measures promote supply chain security. Overall, the U.S. industrial policy has yielded promising initial results despite being questioned internationally in recent years. Thus, Taiwan should view this as new opportunity to diversify the economic risks, satisfy customer demands, carve out new markets, and foster industrial upgrading. Therefore, this study believes that in the future, we should make use of exchange mechanisms such as the Economic Prosperity Partnership Dialogue (EPPD) and the Technology Trade and Investment Collaboration Framework (TTIC) to discuss with the U.S. options and ways to deepen cooperation, which may include: (1) assisting Taiwan's semiconductor enterprises in benefiting from the subsidies provided by the US Department of Commerce in a smooth and orderly manner; (2) leveraging the EPPD and TTIC mechanisms to explore the modalities and feasibility for Taiwan to utilize the International Technology Security and Innovation (ITSI) Fund project supported by Department of State; and (3) discussing the feasibility of establishing a substantial Taiwan-U.S. partnership on critical minerals.

Chinese：https://web.wtocenter.org.tw/Page/89/401737