“The United States and Taiwan recognise the significant distortions that can occur to international trade and investment from non-market practices of state-owned and state-controlled enterprises as well as government designated monopolies,” the USTR said.

“The two sides seek to develop provisions to create a level playing field for workers and businesses when competing against these entities in the international marketplace,” it added, without elaborating.

The announcement comes just over a week since US President Joe Biden announced the formation of the IPEF, which 12 Asia-Pacific nations have joined, as the US challenges Beijing by aligning more closely with other countries on economic objectives and national defence.

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Taiwan, which Beijing considers a renegade province and which has no official diplomatic ties with Washington, was not invited to participate despite bipartisan pressure from US lawmakers for its inclusion. Analysts have said that Biden had no choice but to exclude Taiwan to attract other countries, which would be concerned about repercussions from Beijing if they joined a group that counted the island as a member.

But the new pact’s similarities with IPEF are apparent, particularly the emphasis on higher labour and environmental standards and lack of any specific trade guarantees. The US-Taiwan initiative announcement makes no mention of greater access to specific markets.

Instead, the “trade facilitation” component seeks “to harness best practices with respect to easing trade, including accelerated implementation of the WTO’s Trade Facilitation Agreement, adopting provisions on digitalisation of trade facilitation measures and ensuring inclusivity in accessing customs procedures”.

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Deng said the initiative “would help pave the way for Taiwan to reach multiple trade pacts with the United States … and bit by bit, like blocks building, we would be able to forge a bilateral or free trade agreement with the US”.

“The initiative talks will not replace the existing Trade and Investment Framework Agreement negotiations, which have been held between the two sides for decades,” Deng said.

One of the Trade and Technology Council’s aims is to ensure access to digital tools and technologies for enterprises that might otherwise be shut out of the market by larger tech companies, and both sides have pledged to conduct a series of online training sessions for European and American SMEs.

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Similarly, the US-Taiwan initiative will “enhance … SME trade, by collaborating to identify and overcome barriers to trade for SMEs, focusing on trade facilitation for SMEs, sharing and promoting best practices and working together on activities to promote and support SMEs”.

The US trade office said the first meeting of the forum “is expected to be held, under the auspices of AIT and Tecro, later this month in Washington”.

Taiwan’s economics minister, Wang Mei-hua, said that the new initiative would be yet another trade communication channel with the US, and that it would not supersede the US-Taiwan Economic Prosperity Partnership Dialogue between her ministry and the US State Department. She said the third round of those talks, which began in 2020 during former president Donald Trump’s administration, would be likely held in November.

Deng said more trade negotiation channels would not only help consolidate US-Taiwan economic relations but also promote Taiwan’s partnerships with other countries.

Taiwanese Foreign Minister Joseph Wu said he hoped the new initiative would bolster Taipei’s efforts join the Indo-Pacific Economic Framework and the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership.