US-APAC trade deal leaves out Taiwan, military defense not ruled out

All fun and games until the chip factories are in the crosshairs


US President Joe Biden has heralded an Indo-Pacific trade deal signed by several nations that do not include Taiwan. At the same time, Biden warned China that America would help defend Taiwan from attack; it is home to a critical slice of the global chip industry, after all. 

The agreement, known as the Indo-Pacific Economic Framework (IPEF), is still in its infancy, with today's announcement enabling the United States and the other 12 participating countries to begin negotiating "rules of the road that ensure [US businesses] can compete in the Indo-Pacific," the White House said. 

Along with America, other IPEF signatories are Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Combined, the White House said, the 13 countries participating in the IPEF make up 40 percent of the global economy. 

That list lacks many of the countries included in the failed Trans-Pacific Partnership, a similar trade deal the Trump administration withdrew from in 2017, and signals a US return to asserting its interests in the region. While speaking with Biden, Japanese Prime Minister Fumio Kishida said he hoped the US president would also reconsider America's position in the TPP, which was reformed without US participation. 

A closer look at Taiwan, US relations

Taiwan reportedly sought entry into the IPEF, AP reported, making its absence from the framework more glaring.

The Russian invasion of Ukraine has thrown Taiwan's relationship with China, and its global importance, back under the spotlight. The big difference is Taiwan's potential impact on the global economy: it is a leading manufacturer of advanced semiconductors, controlling 48 percent of the world's chip foundry market and 61 percent of global capacity at 16nm and smaller nodes. 

China hasn't ruled out force as a way to reabsorb Taiwan, which it has expressed a desire to reacquire. Were it to do so, the world's supply of semiconductors would quickly be thrown into question, particularly if some war plans are followed, and that's not necessarily a threat the US accepts. 

"The idea that [Taiwan] can be taken by force, just taken by force, is just not appropriate. It will dislocate the entire region and be another action similar to what happened in Ukraine," Biden said.

When asked by a reporter if America would consider military intervention specifically to protect Taiwan in the event of an invasion, Biden replied yes, mentioning the US had already made that commitment and would thus help defend Taiwan.

The commitment Biden referred to, the 1979 Taiwan Relations Act, terminated formal government relations between Taiwan and the US "to help maintain peace, security and stability in the Western Pacific" by largely appeasing China's desire for it to be the only officially recognized Chinese state. 

The Taiwan Relations Act didn't completely eliminate US military options in the event China invaded Taiwan, though. In the law, the US position on Taiwan is clear: if China sought to "determine the future of Taiwan by other than peaceful means," the United States would be within its rights to "maintain [its] capacity to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan."

A White House official, speaking to the Associated Press, claimed Biden's comments indicated no policy shift. Meanwhile, an administration spokesperson reportedly told Bloomberg the US would supply equipment, but not manpower, to Taiwan if China sought war, and the New York Times noted the president had, by being so blunt, seemingly dispensed with the “strategic ambiguity” previously favored by America on China and Taiwan.

Chinese Foreign Ministry spokesman Wang Wenbin said of the announcement that Biden's comments risk damaging bilateral relations between China and the US. Wang reiterated that China's core interests, which include its sovereignty and territorial integrity, leave "no room for compromise or concession." ®


Other stories you might like

  • Chinese startup hires chip godfather and TSMC vet to break into DRAM biz
    They're putting a crew together, and Beijing's tossed in $750m to get things started

    A Chinese state-backed startup has hired legendary Japanese chip exec Yukio Sakamoto as part of a strategy to launch a local DRAM industry.

    Chinese press last week reported that Sakamoto has joined an outfit named SwaySure, also known as Shenzhen Sheng Weixu Technology Company or Sheng Weixu for brevity.

    Sakamoto's last gig was as senior vice president of Chinese company Tsinghua Unigroup, where he was hired to build up a 100-employee team in Japan with the aim of making DRAM products in Chongqing, China. That effort reportedly faced challenges along the way – some related to US sanctions, others from recruitment.

    Continue reading
  • China is trolling rare-earth miners online and the Pentagon isn't happy
    Beijing-linked Dragonbridge flames biz building Texas plant for Uncle Sam

    The US Department of Defense said it's investigating Chinese disinformation campaigns against rare earth mining and processing companies — including one targeting Lynas Rare Earths, which has a $30 million contract with the Pentagon to build a plant in Texas.

    Earlier today, Mandiant published research that analyzed a Beijing-linked influence operation, dubbed Dragonbridge, that used thousands of fake accounts across dozens of social media platforms, including Facebook, TikTok and Twitter, to spread misinformation about rare earth companies seeking to expand production in the US to the detriment of China, which wants to maintain its global dominance in that industry. 

    "The Department of Defense is aware of the recent disinformation campaign, first reported by Mandiant, against Lynas Rare Earth Ltd., a rare earth element firm seeking to establish production capacity in the United States and partner nations, as well as other rare earth mining companies," according to a statement by Uncle Sam. "The department has engaged the relevant interagency stakeholders and partner nations to assist in reviewing the matter.

    Continue reading
  • Rise in Taiwanese energy prices may hit global chip production
    National provider considering cost increase of 15%, which could be passed on to tech customers

    Taiwan's state-owned energy company is looking to raise prices for industrial users, a move likely to impact chipmakers such as TSMC, which may well have a knock-on effect on the semiconductor supply chain.

    According to Bloomberg, the Taiwan Power Company, which produces electricity for the island nation, has proposed increasing electricity costs by 15 percent for industrial users, the first increase in four years.

    The power company has itself been hit by the rising costs of fuel, including the imported coal and natural gas it uses to generate electricity. At the same time, the country is experiencing record demand for power because of increasing industrial requirements and because of high temperatures driving the use of air conditioning, as reported by the local Taipei Times.

    Continue reading

Biting the hand that feeds IT © 1998–2022