With cross-sector integration into global trade: Taiwan's semiconductor industry is strengthening its position through a new trade pact with the USA

With cross-sector integration into global trade: Taiwan's semiconductor industry is strengthening its position through a new trade pact with the USA

Semiconductor production is the most important economic sector in Taiwan and gives the island state great economic importance. Taiwan is now seeking integration into world trade to further strengthen its position. A first step in this direction is a bilateral trade agreement between the USA and Taiwan. Although the agreement initially does not contain any customs exemptions, it is intended to simplify trade transactions. Other conditions of the trade pact, which are still being negotiated, could include other topics.

Taiwan is the main production base for semiconductors and other electronic products and exports them mainly to the USA, China, Hong Kong, Japan and Singapore. Exports account for around 70 percent of annual economic output. However, Taiwan has often been excluded from international trade initiatives in the past. For example, Taiwan was left out of US President Joe Biden's Indo-Pacific Economic Framework in order not to provoke China.

The US-Taiwan trade pact is a milestone for the country, as Taiwan is largely politically isolated. After the Chinese Civil War in 1949, when the Nationalists fled to Taiwan and established their own government there, there is a dispute over who is the rightful China. Taiwan is not officially recognized by most countries in the world and is not a member of the UN and many other international organizations. Taiwan hopes to gain greater international standing through economic strength and other countries' dependence on its products and thereby better protect itself from a possible invasion by China.

Reactions from China to the trade pact have already been negative. China warned against signing pacts linked to Taiwan's sovereignty and predicted that Taiwan's semiconductor industry would be weakened by increased investment abroad.

It remains to be seen how the US-Taiwan trade pact will develop and whether it can help strengthen the Taiwanese economy. The possible intensification of trade could have a positive impact on market access for Taiwanese companies and further boost exports.

According to a report by www.stuttgarter-zeitung.de