Upgraded trade talks with EU on semiconductors signal an advance in Taiwan's standing

Amid a frenzied global hunt for microchips and souring Western ties with China, Taiwan quietly enhanced its international profile on Thursday during landmark trade talks with the European Union.

Discussions, unsurprisingly, focused on semiconductors. Taiwan produces 90 per cent of the world's most advanced chips, which will power the industries of the future, and Europe is desperately seeking the know-how to build a chip supply chain of its own.

But perhaps more important was the symbolism: this was the first ministerial-level trade talks between Taipei and Brussels, co-chaired by the EU's director general of trade, Sabine Weyand, and Taiwan's minister of economic affairs, Mei-Hua Wang.

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It came after months of EU deliberations on how and when to upgrade its annual dialogue with Taipei, but also just a day after the United States launched an economic and trade initiative of its own with Taiwan.

Both moves demonstrate the self-governing island's growing economic and geopolitical importance to the West.

This was a fact Taipei was happy to trumpet, describing the talks as a "major breakthrough in relations with the EU".

The upgrade "shows that in the EU's blueprint for international economic and trade cooperation, the importance of Taiwan has increased", its Ministry of Economic Affairs said in a statement.

"This is the start of what I expect will be a gradual ramping-up of European relations with Taiwan after years of neglect," said Noah Barkin, an analyst of EU-China affairs for Rhodium Group, a research house.

"This is partly out of self-interest: Taiwan is a vital partner in semiconductors as the EU embarks on a push to build up its domestic chips production capacity.

"But it is also a reflection of the EU's deteriorating relationship with China and growing concerns about Beijing's aggressive stance towards Taiwan."

Thursday's talks did not yield many tangible announcements, but Brussels secured Taipei's support for its European Chips Act, a €42 billion (US$48 billion) blueprint to manufacture one-fifth of the world's microchips by 2030.

Taiwan told Brussels that it would "continue to be a trusted partner" on the microprocessors. But while Taiwanese companies are mulling chip-related investments in nations likes Germany, France and Lithuania, the EU's powerful trade department will leave talks about individual investments to its member states.

The EU recognised Taiwan's support for the multilateral sanctioning of Russia by vowing to deepen work on export controls and investment screening, even as it seemed reluctant to play up the significance of the move.

"Besides strong trade and investment ties, the EU and Taiwan are like-minded partners with shared values that are united in their response to Russia's aggression against Ukraine, jointly condemning Russia for the war in Ukraine and adopting sanctions against Russia," read an EU statement.

They also discussed thorny and long-standing trade grievances, including what both sides sees as protectionism in each other's agricultural sectors.

But a bilateral investment agreement, which Taiwanese officials have sought for some time, was not on the agenda.

The EU frequently cites the free-flowing investment into Taiwan to explain why it does not believe such a pact is needed, even if it would be a potent political symbol for Taipei.

The talks drew a predictably furious response from Beijing, whose relations with Brussels are going in the opposite direction.

A spokesman for the Chinese mission to the EU said that Beijing "firmly opposes all forms of official interaction with Taiwan by countries or organizations having diplomatic ties with China".

"We urge the EU side to abide by the one-China principle and not to have official interaction with Taiwan in any form," the spokesman added.

The EU says that its relations with China and Taiwan correspond with its own one-China policy, rather than Beijing's.

Brussels remains annoyed at Beijing's persistent backing for Russia's claims on Ukraine, while China's economic coercion of Lithuania - over a Taiwanese diplomatic presence in Vilnius - has sharpened attitudes too.

China's special envoy for the EU, Wu Hongbo, visited Brussels for talks with the bloc's top Asia officials last week on the first stop of a weeks-long European tour, but reports indicate those talks did not yield much progress.

The EU upgrade with Taiwan had been initially planned late last year, but the EU trade department scrapped it, even as a press release had been written, after a last-minute intervention from European Commission President Ursula von der Leyen's office.

At the time, Brussels was trying to re-engage with Beijing following a sharp deterioration in ties over the first six months of 2021. But ties have frayed further still since then.

"The EU institutions have by now embraced a Taiwan-friendly discourse with a more assertive language on China, which the latest EU-China summit made crystal clear," said Zsuzsa Anna Ferenczy, an assistant professor specialising in EU-Taiwan ties at National Dong Hwa University in Taipei.

"This is a clear sign of consolidating Taiwan's place as a partner on Brussels' agenda and also sent a signal to Beijing that such cooperation is indeed possible within, and not outside, the EU's own one-China policy."

This article originally appeared on the South China Morning Post (SCMP).

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