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Taiwan says it will buy more than US$3 billion worth of US farm products. Photo: EPA

Taiwan steps into trade war breach for US, saying it will buy US$3.6 billion in American agricultural products

  • The rising tension between Beijing and Washington has helped Taipei, as the US Congress and Trump administration move to strengthen ties with Taiwan
  • A letter of intent for the sale will be signed next week in Washington, signalling the apparent political as well as economic dimension to the purchase
Taiwan

In a bid to drive home the message that Taiwan is a reliable US partner at a time of deep and growing distrust between Beijing and Washington, Taipei has announced plans to buy US$3.6 billion worth of American farm products, including soybeans, corn, wheat and meat products. This follows the imposition by Beijing of up to 25 per cent tariffs on US grains in the tit-for-tat trade war involving the world’s two largest economies.

Taiwan said that during a trade mission led by Chen Junne-Jih, Taiwan's deputy minister of agriculture, a letter of intent would be signed next week with US grain and meat exporters. The venue chosen for the signing, the Congressional Visitor Centre in Washington, a gathering place for tourists visiting Congress, signals the apparent political as well as economic dimension to the purchase.

Soybeans are among the US crops Taiwan says it will be buying. Photo: Reuters

“While the US-China relationship is deeply trapped by a trade dispute, Taiwan instead has been a trustworthy trading partner of the US and is taking substantial action to enhance a closer US-Taiwan economic cooperation,” the Taipei Economic and Cultural Representative Office in the US, Taiwan’s de facto American embassy, said in a statement.

US farmers welcomed the deal but said it was small potatoes compared with China, which bought US$19.6 billion in American agricultural products in 2017 before the start of the trade war, including more than US$10 billion in soybeans.

“It’s good, obviously good; we need all the help we can get,” said Mike Appert, who grows soy, corn, sunflower and edible beans on his massive farm in Hazelton, North Dakota. “But we need to get back to business with China. We’re just trying to survive and hang in there.”

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The Chinese embassy in Washington did not immediately respond to a request for comment on the deal.

Agriculture has played a starring role in the year-long trade showdown. In an early response to a series of US taxes on Chinese imports, Beijing in April 2018 imposed tariffs of up to 25 per cent on 128 US products, including pork, soybeans and other farm products, knowing that much of US President Donald Trump’s political support is in heavily Republican rural areas.

A month later, in one of the showdown’s many false starts, Trump tweeted that “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products” before acknowledging that this was contingent on reaching a deal that never came.

Seven months later, Trump announced that China was buying a “tremendous amount” of US soybeans. And in June he said that “China is going to be buying a tremendous amount of food and agricultural product, and they're going to start that very soon, almost immediately”, with little evidence of any such purchasing activity.

The tension between Beijing and Washington – which has morphed to affect visas, education, scientific exchanges and investment policies – has helped Taipei. Amid growing suspicion in Washington of Beijing’s economic ambitions, espionage activities and intellectual property theft, Congress and the Trump administration have strengthened their ties with Taiwan, a self-governing island that Beijing views as a rogue province.

In recent months, the administration has approved higher-level official contact between US and Taiwanese officials than at any time in the recent past – Beijing bridles at any such contact. In July it allowed President Tsai Ing-wen to take extended “layovers” in New York and Denver lasting several days on her trip to visit Caribbean allies. Also in July, the US agreed to a US$2 billion deal to sell tanks and missiles to Taiwan, then in August agreed to a US$8 billion sale of F-16 fighter jets, the first such agreement since 1992.

Why Trump’s record-breaking trade aid for farmers could fail

As the outlook has worsened for American farmers heavily dependent on Chinese markets, the Trump administration has doled out US$16 billion to farmers to compensate them for the losses.

Taiwan was the eighth largest market for US agricultural products in per capita terms in 2018, according to the Taipei Economic and Cultural Representative Office.

Apparently in a move to improve the atmosphere in advance of a possible resumption of US-China trade talks in mid-October, Beijing this week said it would exempt 16 US products from retaliatory tariffs. These included some varieties of animal feed such as alfalfa and fish meal, although China did not relent on big-ticket agricultural products such as soybeans and corn that are causing the most pain in the US farm belt.

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