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US plans to discuss trade deal with Taiwan, says Blinken
The United States says it expects to start talks soon on a trade deal with Taiwan. File photo by Reuters.

US Trade Representative Katherine Tai is expected to take the lead on negotiations with Taiwan, as the coronavirus pandemic continues to take an economic toll

(AF) The United States will soon start discussing a trade deal with Taiwan, US Secretary of State Antony Blinken said in a move likely to upset China.

Although Washington severed diplomatic relations with Taipei in 1979 to recognise Beijing as China’s sole official representative, the US remains Taiwan’s most powerful ally and its top arms supplier.

“I know we are engaged in conversations with Taiwan, or soon will be, on some kind of framework agreement,” Blinken said at a congressional hearing in Washington. “And those conversations should be starting.”

The possibility of a trade deal with Taiwan is likely to infuriate Beijing, which sees the democratic, self-ruled island as part of its territory.

“We are committed to the proposition that Taiwan must have the means to defend itself, and that is consistent with the Taiwan Relations Act,” Blinken said. “We’ve continued to provide significant equipment and sales to Taiwan for that purpose.”

Blinken said US Trade Representative Katherine Tai would take the lead on negotiations with Taiwan, whose economy has proved resilient during the coronavirus pandemic even as a recent surge has undermined confidence.

TRADE UNAFFECTED

The recent spike in cases has hit consumption significantly, although its impact on industrial production and trade has remained limited so far, analysts say.

“Second-quarter growth is likely to weaken, but we expect 2021 annual growth to remain firm at 4.8% given upside surprise in first-quarter exports,” Miao Ouyang, an analyst at Bank of America, said.

She said the central bank is likely to keep policy rates on hold in 2021. “Vaccine supply could remain a near-term bottleneck,” Miao added.

BofA expects GDP growth to weaken notably to 6.5% in the second quarter, mainly driven by a sequential contraction in private consumption.

Last month, Taiwan’s government announced that it would step up its budget for Covid-19 relief measures by NT$210 billion, amounting to 1.1% of its 2020 GDP.

With reporting by Agence France-Presse

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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