Senate Approves US-Taiwan Trade Deal

Legislation (HR 4004) approving the first phase of the US-Taiwan Initiative on 21st Century Trade is on its way to the President’s desk after being passed by the Senate.

The US-Taiwan deal is not a traditional free trade agreement and the Administration does not believe it requires Congressional approval.

But both chamber of Congress approved the legislation in order to assert Congressional authority over trade and set transparency and consultation requirement for any further agreements negotiated under the initiative.

“This bill demonstrates our strong bipartisan, bicameral support for Taiwan, gives the agreement Congress’s stamp of approval and lays out robust requirements on public transparency and congressional consultation for future trade agreements with Taiwan,” Senate Finance Committee Chairman Ron Wyden (D-Ore) commented.

“It's a win-win that will shore up our economic and strategic partnership with Taiwan and make sure Congress and the American people have a voice and vote when it comes to international trade.”

The agreement encompasses five areas:

• customs administration and trade facilitation,
• good regulatory practices,
• services regulation,
• anti-corruption and
• small and medium-sized businesses.

Congressional Authority

“The Constitution gives Congress authority over trade, because we are the branch closest to the people. With today’s vote in the Senate following a strong show of bipartisan support in the House, Congress has sent a clear message to President Biden that we are serious about safeguarding our Constitutional trade authority and upholding our duty to protect the workers, farmers, families, and small businesses who are impacted most by our trade policies,” according to House Ways and Means Committee Chairman Jason Smith (R-Mo).

The measure:

• provides for Congressional approval of the first trade agreement arising from the US-Taiwan Initiative on 21st Century Trade;

• imposes new congressional consultation and transparency requirements on the Administration with respect to the negotiation of any subsequent agreements arising under the initiative, and requires such agreements be subject to a Congressional vote of approval to take effect and

• reiterates that under the US Constitution, Congress has sole authority over international trade and the President lacks the authority to enter into binding trade agreements without approval from Congress.

Meanwhile, House Foreign Affairs Committee Chairman Michael McCaul (R-Texas), ranking Democrat. Gregory Meeks (NY) and Gerry Connolly (D-Va) introduced the bipartisan Taiwan Tax Agreement Act of 2023, authorizing the Administration to negotiate and conclude a tax agreement with Taiwan.

This potential agreement between the United States and Taiwan would facilitate investment, protect against tax evasion, and allow businesses in both the United States and Taiwan to avoid double taxation.