Scholars say international strategic environment favorable to Taiwan’s inclusion in U.S. supply chain security alliance

Senator Stabenow, a Michigan Democrat, said Thursday at a hearing on the appointment of U.S. Trade Representative nominee David Dyche that she had met with Taiwan‘s representative to the United States, Mei-Chin Hsiao, over the state’s chip shortage for automakers and other electrical appliance manufacturers, and that she was pleased that President Biden was taking action to address the issue of U.S. supply chain security.

Many automakers around the world have recently faced shortages of automotive chips, including Germany, Japan and the United States have sought the assistance of the Republic of China government in hopes that the world’s largest chip maker TSMC (full name Taiwan Semiconductor Manufacturing Corporation, TSMC) will increase its supply.

U.S. lawmakers concerned about chip shortage

In a video conference on the supply chain between the U.S. and Taiwan governments and private companies, including TSMC, in early February, the two sides also discussed addressing the shortage of chips for vehicles.

Taiwan’s representative to the U.S., Mei-Chin Hsiao, told Chinese media in Washington on Thursday that in addition to Debbie Stabenow (D-MI), “a number of members of Congress are concerned” about the shortage of chips for vehicles this month.

“I generally explain the shortage problem because the intermediate suppliers in the last year to cut orders, resulting in chips (chips) to supply other industries, this is a private business practice, and Taiwan chip manufacturers are also working to increase production in response to market demand,” Xiao Meiqin said.

U.S. President Joe Biden signed an executive order Wednesday directing various departmental agencies to conduct a 100-day comprehensive assessment of the vulnerability of four key categories of products produced in the United States, from automobiles to cell phones, which must be used in computer chips, such as high-capacity batteries required for electric vehicles, pharmaceuticals, which are important ingredients in U.S. medicines, and minerals and strategic materials that are vital to U.S. industry and defense industries, such as rare earths, and to A one-year assessment of the supply chain in six major areas, including defense, public health, information and communications technology, transportation, energy and Food production, to enhance U.S. supply chain resilience.

Taiwan as a Key U.S. Partner

Peter Harrell, senior director of international economic and competitiveness affairs at the White House National Security Council, said at a press conference introducing the contents of the executive order the same day, when asked what the response of the government of the Republic of China to Washington’s request for increased chip supply was, he did not want to disclose the details of a particular diplomatic dialogue, but “it’s clear that Taiwan is an important partner of the United States, and we have had constructive conversations with them.”

In an exclusive report issued Wednesday before Biden signed the supply chain executive order, the Nikkei said the U.S. is accelerating efforts to build a “less China-dependent” supply chain for chips and other strategically important products with partners including Taiwan, Japan and South Korea, such as Taiwan, Japan and South Korea for semiconductors and Taiwan for rare earths. For example, in semiconductors with Taiwan, Japan and South Korea; and in rare earths with Australia.

The report said the U.S. plans to share information on important product supply networks with these allies and seek cooperation with each other on complementary products, and the U.S. is also considering how to quickly share these products in an emergency, as well as discussions on how to secure reserves and a framework for excess capacity, while “these partners may be asked to reduce their business dealings with China. “

Taiwan may be formally included in the alliance

Analysts believe that under the current U.S.-China relationship and Taiwan Strait situation, Taiwan may indeed be formally included in the U.S.-led supply chain security alliance.

Kharis Templeman, a fellow at Stanford University’s Hoover Institution and head of the “Taiwan and the Indo-Pacific” project, said he could see Taiwan in such a “formal alliance.

Some asked whether Taiwan could be included in a formal alliance between the United States and the Indo-Pacific countries on supply chain security after Biden signed the executive order, as the Nikkei report said.

Keeley said, “It’s possible, I don’t think there’s anything wrong with that.” The Tsai Ing-wen administration has expressed interest in such an idea, and if it is also a priority for the Biden Administration, the two sides should be able to have some discussions about it, one of the counterproductive effects of Beijing‘s constant pressure on Taiwan since 2016, Keeley said.

Hard for Beijing to stop

“One of the unintended consequences of Beijing squeezing Taiwan is that now if the United States has this pragmatic cooperation with Taiwan, Beijing doesn’t have many tools to stop or oppose such agreements in order to achieve its goal of punishing the United States. So there’s more room now to have that kind of dialogue without worrying about what Beijing might do to hurt Taiwan, if they have that kind of negotiation.”

“Beijing has already done a lot, how much worse can it get? At least the strategic environment right now is extremely conducive to those kinds of discussions. I can totally see this vision of Taiwan in a formal supply chain alliance,” Keeley said.

In response to the Nikkei Shimbun report, Taiwan’s representative to the U.S., Hsiao Mei-chin, responded to the media Thursday that the U.S. side had not yet discussed “the content of the executive order and the implementation model” with Taiwan, except for a letter from White House National Economic Council Director Brian Deese to Taiwan Economic Secretary Wang Mei-hwa expressing appreciation for Taiwan’s active assistance in the automotive chip shortage. The U.S. side has not yet discussed with Taiwan on the “content and implementation mode of the executive order.

The U.S. and Taiwan have signed a memorandum of cooperation

Due to the shortage of personal medical protection supplies, including masks and gloves, in the U.S. at the beginning of last year’s new crown Epidemic, attention has been drawn to the U.S.’s over-reliance on Chinese market sources, and Washington has begun to think more deeply about supply chain security.

As one of the key sources of many high-tech products outside of China, especially computer chips, Taiwan’s role in the global supply chain has also been emphasized, with the Trump administration holding an “Economic Prosperity Partnership Dialogue” with Taiwan last November and signing a memorandum of cooperation on projects including semiconductors, 5G and supply chain security.

The aforementioned Nikkei Shimbun report also mentioned that in the midst of tensions with Beijing, Washington has been calling on economies rich in high-value technology or resources, such as Taiwan, Japan and Australia, to decouple their supply chains from China since last fall.