US and Taiwan officials discuss semiconductors, Lithuania in second annual economic dialogue

Initiated by Donald Trump, the meetings, conducted virtually, continue under US President Joe Biden, despite objections by Beijing
The talks touched on bolstering semiconductor production in the US and Washington’s support for Taiwan’s Lithuania office

US-China relations

Robert Delaney

Published: 1:50am, 24 Nov 2021

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Government officials in the US and Taiwan completed a second annual economic dialogue, focusing on semiconductor supply, “economic coercion”, Taipei’s new representative office in Lithuania and other issues that figure in the strained relations Washington and Taipei have with mainland China.

Jose Fernandez, the US under secretary of state for economic growth, energy and the environment, led a team “from across the US government” that met virtually with Taiwan’s economic affairs minister Wang Mei-hua, and the rest of the self-ruled island’s delegation, on Monday evening in Washington, the State Department said on Tuesday.

Conducted under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office against a backdrop of heightened military tensions in the Taiwan Strait, this second edition of the US-Taiwan Economic Prosperity Partnership Dialogue (EPPD) angered Beijing when it was announced last week.

EPPD is another initiative created during the administration of Donald Trump to counter Beijing that US President Joe Biden has continued amid strong bipartisan anti-China sentiment in Washington, along with the bilateral trade war and human rights-related sanctions.

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US and Taiwanese officials discuss chip supply and ‘economic coercion’

Chinese President Xi Jinping has vowed to reunite Taiwan, which Beijing regards as a rogue province, with the mainland eventually, by force if necessary.

The formal US talks with Taiwanese officials were “an opportunity to deepen cooperation and strengthen the robust economic partnership between the two economies”, the State Department said.

In addition to “countering economic coercion”, the talks also focused on supply chain resiliency, “promoting the digital economy, strengthening 5G network security, and advancing collaboration in a variety of science and technology fields”.

China downgrades ties with Lithuania after Taiwan opens de facto embassy

The meeting, which lasted for five hours, also discussed Beijing’s sanctions on Lithuania after the Baltic nation let Taiwan open a representative office under its name in its capital.

“Everyone has witnessed the recent example of Lithuania,” Wang said. “This is why we addressed the situation regarding Lithuania during the meeting.

“We also support that Lithuania is supporting Taiwan in being a free and democratic country, and that they made this decision” to allow Taiwan’s opening of a de facto embassy.

The US State Department made no mention of the office in Lithuania.

A Taiwanese flag at the Taiwanese Representative Office in Vilnius, Lithuania, last week. Photo: EPA-EFE

Last week, the White House said US national security adviser Jake Sullivan spoke with Lithuanian Prime Minister Ingrida Simonyte to discuss “efforts to deepen economic, diplomatic, and defence cooperation”.

The White House statement added that Sullivan “reaffirmed strong US support for Lithuania as it faces attempted coercion from … China”.

The two sides also agreed to cooperate on boosting production of semiconductor chips in the US, an issue that has broad support in both US political parties.

“Everyone can appreciate that semiconductors are used more and more broadly in today’s digital age, so the semiconductor industry is very important,” Wang said.

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“Because of the recent bottleneck in the supply chain of semiconductors, we discussed how to build up a long-term collaboration with our allies, how the US can establish their own [production] capabilities, and how to drive forward both developments,” she added.

Some US policies have already enticed Taiwan to cooperate more with the US on semiconductor production.

Earlier this year, for example, Taiwan Semiconductor Manufacturing Co (TSMC) started building a US$12 billion chip fabrication plant in Phoenix, Arizona.

Noting the federal ban imposed last year on the use of American-made machinery and software to design or produce chips for Huawei Technologies Co, Paul Triolo, director of the tech policy practice at the political risk consultancy Eurasia Group, called the strategy a “creeping US policy that’s cutting off Taiwan from mainland China”.

China’s recent test of a hypersonic missile has created more incentive to move in this direction, he said in a Twitter panel discussion hosted by Neysun Mahboubi, a research scholar at the University of Pennsylvania’s Centre for the Study of Contemporary China.

Chinese hypersonic test included ‘path-breaking second missile launch’

That test, which has rattled the Pentagon, “is tied up with Taiwan in the sense that some of the semiconductors used in high-performance computers used to model the hypersonic glide vehicle’s re-entry into the atmosphere … were made in Taiwan”, Triolo said.

Last week, a bipartisan group of US lawmakers pushed for more funds to bolster America’s chip production, citing as urgent incentives mainland China’s growing industry and the possibility that Beijing might invade Taiwan.

The Senate has already passed the US Innovation and Competition Act, which includes US$52 billion in financing for American semiconductor plants. However, the House has not yet passed its version.

Additional reporting by Mantai Chow